Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

In Fed and Out, Many Now Think Inflation Helps

nytimes.com

Post reply on HN
Print view View original

71–80 of 236 posts

Re: In Fed and Out, Many Now Think Inflation Helps

#71

Post by NikolaTesla »

nazgulnarsil wrote: post #32
nhebb wrote: post #20

Earlier quoted context omitted.

> Given that the entire point of the Federal Reserve is to promote inflation I can't tell if you're being sarcastic, but the Fed has three mandates [1], one of which is to stabilize prices: "maximum employment, stable prices, and moderate long-term interest rates." [1] http://www.law.cornell.edu/uscode/text/12/225a

Stable prices is a euphemism for inflating just enough to keep nominal prices the same even as productivity in the economy dramatically increases.

I would say it's a euphemism for debasing just enough to keep a small minority enriched without the masses discovering it via overt price inflation and/or without the masses outside the US realizing that the value of their goods and services are being debased for the same reason.

Re: In Fed and Out, Many Now Think Inflation Helps

#72

Post by mistermann »

cotsuka wrote: post #60
enoch_r wrote: post #53

Absolutely no discussion of inflation is complete without recognition of the fact that inflation and inflation expectations are at historically low levels [1] right now. Economists aren't arguing that we should inflate our way out of debt--they are arguing that we should return to the historical norm. Of course, it's possible that these economists are secretly just pushing inflation as the "hidden tax" we're all up i…

Austrian school not holding much weight with academics is like wondering why creationism doesn't hold much weight with academics. Lots of things can be explained with creationism, but it doesn't mean it's right. Many Austrian economists rail against the use of quantitative models and such. But without them, how can you measure the efficacy of your policies? Faith that the policy works... But most academics like to be…

I'm not sure how this casts doubt on the Austrians or supports the Keynesians, or vice versa.

Re: In Fed and Out, Many Now Think Inflation Helps

#73

Post by jayfuerstenberg »

codex wrote: post #62

Mild inflation promotes growth by encouraging money to be put to use rather than sit idly in savings. Banks make more aggressive loans to keep yields high.

Inflation can take a long time to trickle out from the major banks and lending institutions and down to businesses and finally down to average consumers.

What no economist can tell you though is how those irrational consumers will truly behave.

If you throw more money at me, I'm not going to spend more money, I'm probably hold on to it and invest it in other assets.

I guess I'm breaking the system.

Re: In Fed and Out, Many Now Think Inflation Helps

#74

Post by cotsuka »

ra wrote: post #59
enoch_r wrote: post #53

Absolutely no discussion of inflation is complete without recognition of the fact that inflation and inflation expectations are at historically low levels [1] right now. Economists aren't arguing that we should inflate our way out of debt--they are arguing that we should return to the historical norm. Of course, it's possible that these economists are secretly just pushing inflation as the "hidden tax" we're all up i…

My (layman's) understanding of it is that central banks seek to keep inflation within a target range; in Australia this is between 2 and 3 percent [1]. The primary tool to manage inflation is interest rates, however interest rate movements also have other effects, positive and negative, so it's not as simple as turning on a tap. It's important not to let inflation get too high because that makes new investment unattr…

The other important thing is to reduce uncertainty as much as possible. You don't want your inflation rates to bounce around like crazy from day to day. Instead, you'd like to be able to keep them within certain limits so people can plan ahead to the future.

If I'm not sure what inflation will be day-to-day, I can't make an accurate prediction as to whether I should save my money or spend it.

Re: In Fed and Out, Many Now Think Inflation Helps

#75

Post by snowwrestler »

jswinghammer wrote: post #8

Given that the entire point of the Federal Reserve is to promote inflation it's probably good that they think it's a good idea-otherwise why do they think that they exist? The whole problem is that inflation is theft. You are basically having your property taken out from under you without realizing it. It's historically been very popular as a means of taxing the public without them realizing that's what you're doing.…

Inflation is only theft if you insist on storing value in cash--a financial instrument that is not designed to hold value.

A major reason to manage for low, consistent inflation is to train people to put their money into real assets.

Re: In Fed and Out, Many Now Think Inflation Helps

#76

Post by Houshalter »

>Rising prices help companies increase profits

I don't get this. It's people spending more because they have more money through inflation that increases profits. Not prices themselves getting higher, that's just the affect. In any case what does it matter since you have more money, but money is worth that much less. The total wealth is the same.

>rising wages help borrowers repay debts.

Right but it's a zero-sum game. The borrower benefits but the lender loses. Also only works once. If lenders know there is a chance of inflation they will proportionally raise their interest rate they are willing to lend at to make up for the risk.

Inflation is just a tax on the entire economy as everyone that owns money loses some of the value of their money. In the case of printing money, all that value goes to whatever group receives the printed money.

Re: In Fed and Out, Many Now Think Inflation Helps

#77

Post by MaysonL »

ams6110 wrote: post #5

I guess nobody remembers the Jimmy Carter era? "Stag-flation" (Inflation and no growth), 16% interest rates on mortgages, the "misery index" in the news every day?

Study the career as Fed chairman of Arthur F. Burns, chairman from 1970 to 1978, appointed by Richard Nixon, before you blame stagflation on Carter.

Re: In Fed and Out, Many Now Think Inflation Helps

#78

Post by cotsuka »

mistermann wrote: post #72
cotsuka wrote: post #60

Earlier quoted context omitted.

Austrian school not holding much weight with academics is like wondering why creationism doesn't hold much weight with academics. Lots of things can be explained with creationism, but it doesn't mean it's right. Many Austrian economists rail against the use of quantitative models and such. But without them, how can you measure the efficacy of your policies? Faith that the policy works... But most academics like to be…

I'm not sure how this casts doubt on the Austrians or supports the Keynesians, or vice versa.

I'm saying calling something Austrian or Keynesian is inherently political. We should come up with economic models, whether they're Austrian, Keynesian, alien, or dumb, test them against data to see if they hold up, and refine until we get close. Aka, what scientists do.

Great article the other day from Krugman about this very topic. Economics might be a science, but economists are not being scientists about it. http://krugman.blogs.nytimes.com/2013/10/21/maybe-economics-...

Re: In Fed and Out, Many Now Think Inflation Helps

#79

Post by jowiar »

BrandonMarc wrote: post #67
jswinghammer wrote: post #8

Given that the entire point of the Federal Reserve is to promote inflation it's probably good that they think it's a good idea-otherwise why do they think that they exist? The whole problem is that inflation is theft. You are basically having your property taken out from under you without realizing it. It's historically been very popular as a means of taxing the public without them realizing that's what you're doing.…

Exactly. Continuous inflation is frankly the only plan the government has to deal with the national debt. Borrow now, and in the future when your currency is weaker and less valuable, the amount borrowed will seem smaller (and in pragmatic terms will be by that point). Of course it's destructive to the average person / taxpayer, but who cares about them? Nobody does who's in charge, that's for sure.

I think you may have this flipped.

Inflation is, more than anything else, a tax on cash (and last time I checked, your average person didn't have a whole lot of cash on hand). Practically speaking, it helps debtors at the expense of creditors by shrinking the value of liabilities on the books.

The debt hysteria we see isn't because the elite don't care enough about inflation - it's because the costs of it fall more heavily on those who write big checks to political campaigns.

Re: In Fed and Out, Many Now Think Inflation Helps

#80

Post by ekianjo »

cotsuka wrote: post #60
enoch_r wrote: post #53

Absolutely no discussion of inflation is complete without recognition of the fact that inflation and inflation expectations are at historically low levels [1] right now. Economists aren't arguing that we should inflate our way out of debt--they are arguing that we should return to the historical norm. Of course, it's possible that these economists are secretly just pushing inflation as the "hidden tax" we're all up i…

Austrian school not holding much weight with academics is like wondering why creationism doesn't hold much weight with academics. Lots of things can be explained with creationism, but it doesn't mean it's right. Many Austrian economists rail against the use of quantitative models and such. But without them, how can you measure the efficacy of your policies? Faith that the policy works... But most academics like to be…

Academics being funded by Keynesian politicians has surely nothing to do with it.
Post reply on HN