Why are interest rates so low? • Hacker News Board

Re: Why are interest rates so low?

#151

Post by TeMPOraL » Mon, Mar 30, 2015, 9:36 PM UTC

bwanab wrote: post #37

colund wrote: post #6

Why the obsession of economic growth? In Sweden we currently have negative prime interest rate and people have higher salaries than ever and housing prices are all time high. This greed doesn't lead to less global warming or happier people. I think politicians and economists should start thinking about what actually makes people happy. Economics is efficient management of resources nothing else. Giving the population…

You make a very good point. However, the obsession with economic growth itself isn't the problem - it's how economic growth is measured. As an example, if a hurricane sweeps through Florida doing billions in damage, Florida is surely worse off, but because of the rebuilding activity that follows, it will register significant growth. As you state, we need to think about what makes people happy. Economics is a great to…

I disagree. The economic growth is very much the problem. You can multiply abstract integers all you want and everything will be fine, but unfortunately the economy is coupled with the real world. Exponential growth means exponentially increasing resource use and energy needs, which is simply unsustainable. We need to cut off that exponent, or else the only singularity we will hit will be the brick wall of "oh shit, we just run out of habitable planets".

Re: Why are interest rates so low?

#152

Post by ethbro » Mon, Mar 30, 2015, 9:36 PM UTC

cmdkeen wrote: post #119

beamatronic wrote: post #104

Earlier quoted context omitted.

I'll take "peace" over "growth" at this point.

The world as a whole is in one of its most peaceful periods ever. The 1990s saw a genocide in Europe, horrific civil wars in Africa, before that you had the Cold War with all of its attendant problems. Growth and Peace aren't mutually incompatible aims.

> Growth and Peace aren't mutually incompatible aims.

Indeed, I'd offer that Economic Stagnation and Peace might be mutually incompatible situations.

Re: Why are interest rates so low?

#153

Post by anigbrowl » Mon, Mar 30, 2015, 9:36 PM UTC

colund wrote: post #6

Why the obsession of economic growth? In Sweden we currently have negative prime interest rate and people have higher salaries than ever and housing prices are all time high. This greed doesn't lead to less global warming or happier people. I think politicians and economists should start thinking about what actually makes people happy. Economics is efficient management of resources nothing else. Giving the population…

Because of population growth, which is slowing but far from finished. If the population is getting larger and the economy is not, then there are fewer economic resources available per person. Also, even in a stable population, if there is no economic growth then there tends to be an increase in economic inequality, because then economic transactions are zero-sum in the aggregate (by definition) and so the people who have more money at the beginning have leverage in any economic negotiation, ie they are more likely to be price makers than takers.

Economics is efficient management of resources nothing else. Giving the population ability to stay healthy with affordable health care, moderate taxes and stability should be a main priority.

Those things are economics problems. 'Efficient management of resources' is really quite complex, even if everyone were agreed about what we consider efficient, which we're not.

Re: Why are interest rates so low?

#154

Post by logfromblammo » Mon, Mar 30, 2015, 9:38 PM UTC

sumedh wrote: post #111

dgregd wrote: post #53

Earlier quoted context omitted.

> many bank/insurance/pension calculations It will also clearly show how big banks, HFT companies are making huge profits. They are slowly pulling money out of your pension fund. Banks do not produce, they have no income from dividends, so how they earn?

> Banks do not produce, they have no income from dividends, so how they earn? They provide capital without which you cannot produce anything. They make money by difference of rates between deposits and lending.

They provide currency, which can be used to acquire capital.

Do not confuse this with providing capital. The person who gives you a fence-painting robot is providing capital. The person who gives you 10000 coupons for a free fence-painting robot is not providing anything, if the person who issued the coupons does not actually have any robots.

Banks lubricate the machinery of business, theoretically making productive work more efficient. To the extent they do so, they can reasonably capture a share of those gains.

But once they are trusted in that capacity, they are now in a position to take money by less-honest means, in a manner largely indistinguishable from their legitimate functions by the casual observer.

Re: Why are interest rates so low?

#155

Post by anigbrowl » Mon, Mar 30, 2015, 9:40 PM UTC

enraged_camel wrote: post #73

jseliger wrote: post #25

Earlier quoted context omitted.

Why the obsession of economic growth? One alternate question might be, "At what point in time do you consider the economy to have become 'big enough' that you don't care about growth?" Today? 2000? 1990? 1970? The people who might think today is "big enough" might also have thought that say 1990 was big enough, and yet very few people would want to be limited to 1990's tech / culture. It seems reasonable to imagine t…

You can have technological, scientific and cultural advancement without economic growth. Building more shopping malls out in the suburbs leads to growth, but it doesn't advance society.

That's backwards; your example is one of economic growth without technological, scientific, or cultural advancement. By contrast, the invention of the laser didn't yield much economic growth for a long time because nobody was too sure how to commercialize it, but once the ability to produce an intense light at a single narrow wavelength got some utility, economic growth resulted automatically.

Re: Why are interest rates so low?

#156

Post by NickM » Mon, Mar 30, 2015, 9:45 PM UTC

jdmichal wrote: post #116

collyw wrote: post #90

Earlier quoted context omitted.

I have discussed this with friends recently. Why do we need growth? I don't need a faster iPhone, or more tech. I honestly don't see my life being any better for the last ten years worth of "growth" (much of which seems to have been pumping up asset prices). I would quite like to relax and coast a bit in life, but with the constant chasing of growth by everyone else, standing still means you will get left behind (i.e…

So you'd be happy without the last 10 years, with your iPhone that was initially released 8 years ago -- and which promptly increased the cell phone market from race-to-the-bottom "dumb phones" to high-margin "smart phones"?

As someone who owns an iPhone, I don't think it's really substantially improved my quality of life. It makes some things more convenient, but doesn't really enable me to do anything I couldn't do before with other separate devices, and it can be a major source of distraction at times.

Re: Why are interest rates so low?

#157

Post by ctl » Mon, Mar 30, 2015, 9:45 PM UTC

msandford wrote: post #94

dageshi wrote: post #80

Earlier quoted context omitted.

Didn't that deflationary spiral happen in Japan? The lost decade?

Hasn't Japan been printing tremendous amounts of money to try and prevent it, with no end in sight? At what point does that get discredited?

That's exactly why it's called a deflationary spiral: once you're in it, it's hard to get out even with aggressive monetary policy.

Re: Why are interest rates so low?

#158

Post by anigbrowl » Mon, Mar 30, 2015, 9:52 PM UTC

xorcist wrote: post #129

aetherson wrote: post #89

Earlier quoted context omitted.

Things that you can do today that you couldn't do in 1990: * Survive much longer with many types of cancer. * Live a pretty normal life, more or less indefinitely, despite being HIV+ * See your grandkids that live in a different state via a high-quality video connection. * Enjoy television shows that offer multi-month and multi-year arcs and are designed to be consumed by dedicated fans in order, rather than principa…

While all those points are true, they are mainly because of advancing science, rather than economic growth. Those are partly interconnected, but there are also important differences. The Internet as you know it is also a direct product of its academic background. That's why we have had network neutrality so inherent in its culture. That's why there are only peers, not producers and consumers. If it had been designed…

No. Advancements in science are where you show that it's possible to do something in particular, like control the level of HIV in someone's bloodstream or make a better airbag. Wonderful! But turning that knowledge into a technology that can be deployed to the people that need, and then actually deploying it, involves a lot of resources - both material and and labor - and those resources come with a price tag.

It's not like once we learn something in the lab we can just make it available to everyone for free. I mean, you could go to Wikipedia right now and read about, say, aeronautics and all the theory of how air flowing over a wing can provide lift, and articles on structural engineering and so on. But having that knowledge is not the same thing as having a plane, or having access to a plane ticket. If you would like to fly from A to B, you need a functional aircraft first.

Re: Why are interest rates so low?

#159

Post by brandonmenc » Mon, Mar 30, 2015, 9:53 PM UTC

Mikeb85 wrote: post #74

cloakandswagger wrote: post #58

Earlier quoted context omitted.

How is it not an answer? He's saying that the "greed" described by the original commenter is the same source of innovation that's given us all of the modern amenities we enjoy today. Conversely, I would say outright dismissing the pursuit of growth is not an answer.

> He's saying that the "greed" described by the original commenter is the same source of innovation that's given us all of the modern amenities we enjoy today. And is life any better today than in 1990? Are we happier? I think he's arguing that material possessions don't necessarily correlate to 'quality of life' and happiness. I would personally be pretty happy without a car or computer. But I live in a ridiculous c…

> My happiest childhood memories where on my grandfather's farm. My wife's happiest childhood memories where in her small village in an 'under-developed' country.

Those are happy memories because you had a happy childhood, not because there was less "stuff."

Some of my happiest memories are of biking through the suburbs to go hang out at the mall. Why? Because I didn't have a care in the world back then.

Re: Why are interest rates so low?

#160

Post by marcosdumay » Mon, Mar 30, 2015, 9:54 PM UTC

mcguire wrote: post #127

enraged_camel wrote: post #73

Earlier quoted context omitted.

You can have technological, scientific and cultural advancement without economic growth. Building more shopping malls out in the suburbs leads to growth, but it doesn't advance society.

Can you? How can you have technological or scientific advancement without someone to pay for it in advance? Who would pay for it without a reasonable expectation of getting more out than they had to put in? (For some reason, I'm reminded of the Superconducting Super Collider and the western invention (discovery? reverse-engineering?) of porcelain.) I'm going to leave the idea of "cultural advancement" alone, 'cause I…

Some advancements just redistribute money from an older incumbent to a new one (that will want to research it).

Anyway, there are plenty of technological developments that bring money to their creator, bring positive overall wealth to the population, but counts as a negative at the GDP accounting. I guess that's the cause of lots of the "let's not care about growth" cries. Well, let's fix our GDP measurement first! (And yes, I know there are several people working on it.)