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The Economy

blog.samaltman.com

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Re: The Economy

#181

Post by Tossrock »

crassus wrote: post #127
klunger wrote: post #7

He just suggested a basic income for everybody. I just wanted to point this out in case people missed it when skimming.

Basic income is a potentially unlimited liability without any government control over fertility. If the needs of the portion of the population that are net consumers grow quicker than the surplus from net producers, an economic apocalypse happens sooner or later. In a world of dysgenic fertility, this is guaranteed[1]. [1] http://charltonteaching.blogspot.com/2014/06/dysgenics-is-mo...

The entire premise of this completely unsubstantiated blog post is refuted by the well-substantiated Flynn effect: http://en.wikipedia.org/wiki/Flynn_effect

Re: The Economy

#182

Post by MaysonL »

nostromo wrote: post #134

We need to find the next big growth engine. Like "the internet" big, or its baby brother "mobile" big. (Imagine what the US economy would be like without those growth engines. Even with them, their effect on the US GDP growth chart in the article is unnoticeable.) I have a hard time thinking of things that could be so dramatic in terms of growth. AI, radical life extension, space elevators, renewables... I'm not sure…

The next big growth engine could and should, if the Congress were to choose to emprace it, be a large infrastructure and public works budget (especially given the current low interest rate environment, and the large number of people unemployed and underemployed). Our bridges and highways and air traffic control system could really use it. Of course, keeping the waste, fraud, and abuse in that budget down to a minimum would be difficult, given current Congresspeople and their priorities and agendas.

Re: The Economy

#183

Post by gone35 »

DINKDINK wrote: post #154
yahelc wrote: post #46

Earlier quoted context omitted.

Agreed. Further, there's little evidence that Debt-to-GDP over 100% (despite "feeling" meaningful, because, 100%!) has any kind of predictive value for the long term direction of an economy, particularly one that has unusually low interest rates. If Debt-to-GDP were a problem for the US, you'd expect higher interest rates, not lower ones, as investors would be demanding higher returns on US debt. The fact that intere…

>The fact that interest rates on Treasury bonds remain so low, despite our debt levels and despite certain political figures repeatedly attempting to force the US Government to default on that debt, is prima facie refutation of the idea that no one in the market actually thinks US debt levels pose a major macroeconomic problem in the short to medium term. Not necessarily. If you have to ask yourself what the country…

The more a country is in debt (especially to other countries) the more their foreign debtors have leverage over what policies the debted country can enact.

Not necessarily, because national debt (eg bonds, t-bills, etc) can be owned by anyone, not just foreigners. In the case of the US, as it happens, most national debt is overwhelmingly owned by Americans --think your IRA: whatever percentage of bonds you own is government debt to you.

The confusion arises because one particular strategy of hedge funds in the past has been to buy up huge controlling amounts of dollar-denominated bonds/debt from small export-dependent countries so that, if the country's economy slows down and they have to devaluate their currencies to boost exports (and thus growth), they end up unadvertently increasing the amount owed to the hedge funds in dollars. This can easily get way out of hand, thus causing the well-publicized financial crises of the 1990s, Argentina's, Greece[1] etc. But this scenario obviously does not apply for countries that do not issue foreign-currency bonds, like the US.

[1] The case of Greece is even worse because they cannot even devaluate "their" currency to boost exports, so all they can do is intentionally depress or deflate their economy to make everything (salaries, land, inputs) massively cheaper; or refinance their debt with EU-backed loans.

Re: The Economy

#184

Post by muzz »

jeffdavis wrote: post #166
pingburg wrote: post #142

Earlier quoted context omitted.

Not being sarcastic here. 2013 A = Debt is around: $17.5 trillion B = Debt Service: $416 billion C = Average Rate: 2.38% ($416 billion / $17.5 trillion) D = U.S. Tax Revenue: +/- $2.8 Trillion Things won't get interesting until B approaches D. So one way of looking at is if everything remained constant (which it won't) you'd need 15% interest rates on the current debt for debt service to approach tax revenue. If inte…

"Things won't get interesting until B approaches D." I'd say things would get pretty interesting well before that point. B=D is just the point at which a default is inevitable (unless much higher tax revenue is achievable without causing other problems). But the problem is that the interest rates are so low now that large increases are not outlandish. 7 years ago, the rate was more than double what it is now. Looking…

Interest payments as a percentage of GDP are actually much lower now than they've been in the past:

http://research.stlouisfed.org/fred2/series/FYOIGDA188S

Re: The Economy

#186

Post by muzz »

Humjob wrote: post #66
tdees40 wrote: post #24

I'm not clear on how any of this will lead to a recession. Why will high Debt-to-GDP or government spending send the economy into a recession? Q1 GDP numbers were clearly affected by dismal weather (although still bad), but labor markets are improving markedly, and there are reasons for optimism. I don't see this as a very convincing bear case. For the bull case, see this post, from a guy who's been right about every…

If government debt grows high enough then an increasingly large percentage of federal spending will be devoted to paying interest on that debt rather than on arguably more useful areas which create future prosperity, such as education and scientific research. After a certain point this becomes unsustainable and bad things start to happen, ranging from total political & economic collapse (Germany in the 1920s) to hype…

Here is a chart of that percentage over time:

http://research.stlouisfed.org/fred2/series/FYOIGDA188S

Re: The Economy

#187

Post by marcosdumay »

api wrote: post #20

I have gradually become convinced by mountains of evidence from many quarters that the Keynesians are right-- we are in a demand constrained economy. One of the problems I think is that economists and politicos tend to always be fighting the last war. In the late 1970s to early 1980s -- the last time the economy seemed this systemically bleak -- the problem was insufficient capital available for investment combined w…

Well, first, Keynes created an interesting theory, where time couldn't change anything, and real wealth don't actually appear. It's no wonder people want to ignore it, yet it successfully teaches how to solve one kind of problem.

Our current problem is that, since we learned that one piece of tech, we started applying it to every economical problem we saw. Thus since the 40's no economical crisis could by solved by keynesianism; if it could, there wouldn't be a crisis there.

Re: The Economy

#188

Post by muzz »

sachinag wrote: post #116
sama wrote: post #33

Earlier quoted context omitted.

i am a bull. i just think that we should talk about what the problems are. ignoring them is not a good way to fix them.

Debt to GDP isn't a problem: http://www.peri.umass.edu/fileadmin/pdf/working_papers/worki... (very widely circulated paper, given that they lowered the boom on Reinhart/Rogoff)

Yes, Altman's point #2 is essentially the Reinhart-Rogoff fallacy that was widespread a few years ago, before being debunked.

Re: The Economy

#189

Post by crassus »

Tossrock wrote: post #181
crassus wrote: post #127

Earlier quoted context omitted.

Basic income is a potentially unlimited liability without any government control over fertility. If the needs of the portion of the population that are net consumers grow quicker than the surplus from net producers, an economic apocalypse happens sooner or later. In a world of dysgenic fertility, this is guaranteed[1]. [1] http://charltonteaching.blogspot.com/2014/06/dysgenics-is-mo...

The entire premise of this completely unsubstantiated blog post is refuted by the well-substantiated Flynn effect: http://en.wikipedia.org/wiki/Flynn_effect

Probably a positive environmental effect masking decline in genetic potential IQ, which there is evidence for: http://www.xenosystems.net/dysgenic-reactions/

Re: The Economy

#190

Post by pchristensen »

michaelochurch wrote: post #40

It's a dismal situation. Low interest rates mean cheap money in theory, but the "people" best equipped to take advantage of it are corporations. It's not like average people are able to start businesses just because the interest rate is low. However, low interest rates mean the penalty (to companies) for hoarding and for general risk aversion is also low. This means that lousy executives don't get a lot of investor p…

Just to be clear, pretty much every point you made about startups directly conflicts with the sample of ~10 SF/SV companies I talked with during a recent job search

- base salaries at funded startups are good. Equity could vary greatly depending on how much salary you asked for - insurance is 100% paid for employees and 50%+ paid for family - I didn't discuss relocation but I was relocated to SF 2 yrs ago by a startup - Very, very smart and capable co-workers - Vacation days were untracked or 15+, and there was a separate allotment of sick days - Most teams were The one point you nailed is all open-plan offices, everywhere, all the time.

I don't know what you're basing your statements on, and maybe it's different in other parts of the country, but in SV/SF right now, if you're a demonstrably good developer, you're in extremely high demand and many, many excellent companies are competing fiercely to hire you.

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