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Alan Greenspan has died

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Re: Alan Greenspan has died

#221

Post by margalabargala »

bko wrote: post #210
margalabargala wrote: post #187

Earlier quoted context omitted.

The state of tech goods is such that they become obsolete and have a finite lifespan, due to battery and compute needs, as well as the "fashion" element of having the newest thing. The price is dropping over time because you're getting something literally less valuable. The analogy would be, would you pay the same for a bag of rice expiring in 2 years, as one expiring in 2 months? The argument you're trying to make,…

Finite lifespan and batter don't degrade on a new iPhone that happens to be last years model. The "fashion" element is BS. Almost no one can tell what iPhone is which. It's literally the same phone now or 6 months from now. It doesn't "expire". You're really stretching here. Same thing is true for Android and pretty much most electronics or TVs.

Okay, sure, if you don't personally value the things other people value that decrease over time, then it wouldn't make sense for you to buy things at full price.

Other people value those things, and can in fact tell the difference, and thus buy full price iPhones.

Re: Alan Greenspan has died

#222

Post by throw0101d »

flipnotyk wrote: post #172
throw0101d wrote: post #158

Earlier quoted context omitted.

I would think it would be the opposite, as the old joke-y "Golden Rule" goes: He who has the gold makes the rules. > 3) Asset owners thus become "more valuable" by measure of currency. Under the Gold Standard the currency itself is also an asset, much more so than under (so-called) fiat. In a supply-demand situation where supply is finite, and demand is potentially limitless, then the suppliers can charge higher pric…

>If wages increase with inflation... Big "if", unfortunately.

US wages stagnated from roughly 1974 to 1994, after which they rose:

* https://www.noahpinion.blog/p/so-why-did-us-wages-stagnate-f...

* https://www.noahpinion.blog/p/at-least-five-interesting-thin...

The recent Iran-Hormuz oil shock notwithstanding, the major affordability issue in recent years has been housing, and that's more of a land-use policy issue.

Re: Alan Greenspan has died

#223

Post by throw0101d »

paulddraper wrote: post #204
throw0101d wrote: post #15

Earlier quoted context omitted.

> He wrote about how the gold standard created responsible spending and more equality in the world: The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: * https://en.wikipedia.org/wiki/Gilded_Age It should also be noted that the gold standard did not bring any kind of price stability: * https://archive.is/https://www.theatlantic.com/business/arch... Further, sticking…

> The Gilded Age Which saw 40% increase in median real wages over 30 years. [1] > It should also be noted that the gold standard did not bring any kind of price stability: Prices are * 475%* what they were 50 years ago, far exceeding price changes under the gold standard. > Further, sticking to the gold standard made the Great Depression worse as it reduced flexibility and options of central banks had, and made defla…

> Which saw 40% increase in median real wages over 30 years. [1]

Which occurred in spite of the Gold Standard, rather than because of it:

* https://econbrowser.com/archives/2012/09/the_gold_standa_1

There were major periods of instability during that period. Growth that is unlikely to be repeated:

* https://en.wikipedia.org/wiki/The_Rise_and_Fall_of_American_...

> Prices are 475%* what they were 50 years ago, far exceeding price changes under the gold standard.*

And wages would have been worse under a Gold Standard:

* https://econbrowser.com/archives/2012/09/return_to_the_g

> It did make deflation worse. Deflation = Bad is an assumed tenant of modern economics.

It is not an assumed tenant, it is (or was for many millions) a lived experience.

Let us say a farmer had taken out a mortgage in 1928, and let us say his mortgage payment was US$20 (equivalent of 1 oz. of gold). In May 1929 he would have had to have sold 114 pounds of cotton to earn $20 (or 18 bushels of wheat, 23 of corn, 44 of oats). By May 1932 he would have had to sold 369 pounds of cotton (or 38 bushels of wheat, …):

* https://www.sciencedirect.com/science/article/abs/pii/030439...

* https://econbrowser.com/archives/2012/02/why_not_abolish

And it would have been the same for selling any good or service: to pay whatever debts you had (mortgage, car/business/student loans) you would have to work more to earn the same amount of money. Is that good?

Re: Alan Greenspan has died

#224

Post by boppo1 »

margalabargala wrote: post #182
boppo1 wrote: post #169

Earlier quoted context omitted.

>That in aggregate makes the economy much worse. Does it really? A lot of our problems seem to stem from conspicuous consumption. People will still need things (food shelter clothing) and that will motivate purchasing. "Oh n0es people won't buy flavor of the month consumer garbage, what ever will we do" just doesn't track.

> Does it really? It does, really. Conspicuous consumption is a miniscule part of the economy, and for every person whose conspicuous consumption drops, you'll have 5 people who can no longer afford food and shelter. If you'd like to learn more, I'd encourage you to take an economics class at any local community college. Intro level should teach you about lots of new things including this, much more than you'd learn…

I took multiple econ classes in college. Just because it's in the books doesn't mean it's true. Not to mention some of the books we studied were contributed to by people involved in the interventionist monetary regime. LIRP scooped the guts out of the middle class & handed it to the tech industry and I've seen nothing convincing to the contrary. Expecting everyday people to learn about inflation and manage a portfolio to try and make sure their earnings aren't eroded is borderline class-war. And I'm no socialist.

Re: Alan Greenspan has died

#225

Post by margalabargala »

boppo1 wrote: post #224
margalabargala wrote: post #182

Earlier quoted context omitted.

> Does it really? It does, really. Conspicuous consumption is a miniscule part of the economy, and for every person whose conspicuous consumption drops, you'll have 5 people who can no longer afford food and shelter. If you'd like to learn more, I'd encourage you to take an economics class at any local community college. Intro level should teach you about lots of new things including this, much more than you'd learn…

I took multiple econ classes in college. Just because it's in the books doesn't mean it's true. Not to mention some of the books we studied were contributed to by people involved in the interventionist monetary regime. LIRP scooped the guts out of the middle class & handed it to the tech industry and I've seen nothing convincing to the contrary. Expecting everyday people to learn about inflation and manage a portfoli…

Did you miss the part in the classes where depressions happened ever decade or two before current policy?

Those who refuse to learn from history are doomed to repeat it. History spent a lot of time being deflationary, and most of that time had abysmal economies for anyone who wasn't nobility.

Re: Alan Greenspan has died

#226

Post by wonnage »

twothreeone wrote: post #197
wonnage wrote: post #176

Earlier quoted context omitted.

There is an idea floating around that trade imbalances create global inequality (Trade Wars are Class Wars by Klein & Pettis) and the original sin was adopting the dollar as the reserve currency instead of something like Bancor ( https://en.wikipedia.org/wiki/Bancor )

Interesting, thanks for the pointer! Though, since we're dealing in hypotheticals already: wouldn't the expectation be that whoever gained the upper hand on the world stage would've aimed for de-facto control over whichever currency system was in place anyways?

Yeah, they could just inflate Bancor the same way a country can with their own currency today (i.e, printing dollars) to manage their debts

Tbf it was proposed in a time where globalization was a good thing and there was naive optimism about international organizations!

Re: Alan Greenspan has died

#227

Post by somenameforme »

notahacker wrote: post #193
somenameforme wrote: post #177

Earlier quoted context omitted.

Two points I'd hit on: 1) Deflation causes debt to become more expensive. Inflation causes your money to become worth less. There's a simple solution to debt becoming more expensive, but no practical solution to you getting a pay-cut every year, especially when a sizable chunk of people don't even realize they're getting a pay-cut and don't want to be unthankful for a "raise." That issue alone already causally explai…

> 1) Deflation causes debt to become more expensive. Inflation causes your money to become worth less. There's a simple solution to debt becoming more expensive, but no practical solution to you getting a pay-cut every year, especially when a sizable chunk of people don't even realize they're getting a pay-cut and don't want to be unthankful for a "raise." That issue alone already causally explains much of the rise i…

You're engaging in a pretty common fallacy by taking the contemporary standard, in a world full of wild inflation and funny money, retroactively applying it backwards, seeing [correctly] that it wouldn't work, and thus concluding that funny money is needed. But you need to consider the impacts of the funny money itself.

One fundamental difference is that inflationary systems incentivize the hoarding of 'things', like housing, as a means of escaping inflation. This is because the price of 'things' will always increase with inflation. But in stable or deflationary systems there's no inflation to hide from and the price of 'things' is stable or can even decrease over time, so there's no longer a hoarding incentivization for 'things.'

So you can see a visible impact of this in housing prices. In the 50s a typical house used to cost about 2 median salaries. [1] Go further back in time and you're down to 1 median salary. In modern times, we're at historic highs of a median home costing 5x a median salary, and in desirable locations like western California it even gets up to 12x local median salary for a median home. [2] That's median, not Beverley Hills.

So yes, in modern times you need endless funny money to do achieve even basic societal things, like owning a roof over your head. But that's because of the funny money. And this is before we get into realities like the fact that when the government 'prints' a trillion dollars, most all of that is going to end up in the pockets of the wealthiest of society giving them even more money to speculate with, driving prices up even more. And much more, there are endless self feedback mechanisms that have left us in a vicious cycle that's probably inescapable at this point.

Real wages are up 14% over the past 47 years [3], and we now have a trillionaire. That's inflation for you. What do you think they'll call this era in the future?

[1] - https://www.huduser.gov/portal/sites/default/files/pdf/Housi...

[2] - https://www.jchs.harvard.edu/blog/home-prices-surge-five-tim...

[3] - https://fred.stlouisfed.org/series/LES1252881600Q

Re: Alan Greenspan has died

#228

Post by paulddraper »

throw0101d wrote: post #223
paulddraper wrote: post #204

Earlier quoted context omitted.

> The Gilded Age Which saw 40% increase in median real wages over 30 years. [1] > It should also be noted that the gold standard did not bring any kind of price stability: Prices are * 475%* what they were 50 years ago, far exceeding price changes under the gold standard. > Further, sticking to the gold standard made the Great Depression worse as it reduced flexibility and options of central banks had, and made defla…

> Which saw 40% increase in median real wages over 30 years. [1] Which occurred in spite of the Gold Standard, rather than because of it: * https://econbrowser.com/archives/2012/09/the_gold_standa_1 There were major periods of instability during that period. Growth that is unlikely to be repeated: * https://en.wikipedia.org/wiki/The_Rise_and_Fall_of_American_... > Prices are 475%* what they were 50 years ago, far exc…

> And it would have been the same for selling any good or service: to pay whatever debts you had (mortgage, car/business/student loans) you would have to work more to earn the same amount of money. Is that good?

That’s not apples to apples.

Deflation (or at least reduced inflation) means reduced interest rates.

Re: Alan Greenspan has died

#229

Post by KingMob »

twoodfin wrote: post #203

My favorite bit of Greenspan lore: Texas Senator Phil Gramm (pretty sure it was him) was a prominent GOP member of the Senate Banking Committee. Of course, Greenspan often testified there. Gramm would always ask Greenspan, along with his other questions, “Mr. Chairman, what’s the ideal capital gains tax rate?” Greenspan never missed a beat: “Zero.” Agree or disagree, you always knew where he stood!

> Agree or disagree, you always knew where he stood!

This is always such a weird phrasing to me. We collectively praise politicians for this (and admittedly, many of them will just say anything to get elected), but the phrase discourages the idea that learning and changing your mind is valuable.

(Not trying to single you out, just writing about how we collectively do this. I'm sure I've done it in the past.)

Re: Alan Greenspan has died

#230

Post by dessimus »

bko wrote: post #39
bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure. Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technol…

>Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper?

This can only really happen if the rate of efficiency gains consistently out pace resource and labor costs, such that the marginal cost of delivering produce to market is flat or decreases for the farmer over time.

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