181–190 of 266 posts
So I'm hearing the " the dollar is over, throw everything into gold, fiat money is doomed" in other forums. Can anyone give some conterpoints to that narrative?
The same will happen here, the Fed is creating lots of inflation, but not enough to cancel out the deflation caused by the virus and lockdown.
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"Most economists" never believed that. Lots of people in finance did, sure, but they're not economists.
"Well, unquestionably, housing prices are up quite a bit; I think it's important to note that fundamentals are also very strong. We've got a growing economy, jobs, incomes. We've got very low mortgage rates. We've got demographics supporting housing growth. We've got restricted supply in some places. So it's certainly understandable that prices would go up some. I don't know whether prices are exactly where they shou…
I’ve said in other parts of the thread that economists can, in fact, be wrong sometimes. I just find the people making completely unjustifiable assertions about the economy, while simultaneously castigating the economics profession as some cabal of out-of-touch elites who can’t be trusted, unconvincing, when I know that the vast majority of economists are simply researchers trying to understand the world and how to improve it.
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>Future generations pay this back not through taxes but through inflation. I don't think that's a fair characterization. Inflation helps people with student loans (salary grows but debt stays the same) and hurts people with retirement accounts full of bonds. Broadly speaking, inflation helps the young (by closing the wealth gap between haves and have-nots).
The actual reason why inflation hurts young people has to do with economic stability and its cascading effects on the economy. A period of significant inflation can wipe out generational mobility. Inflation has a minimal effect on "closing the wealth gap" in comparison and I think it's irresponsible to act like hyperinflation would be a reasonable way to solve economic inequality.
In recent times, the fed has been below its 2% inflation target.If it missed on the other side, and inflation went to 3-4%, I think that would be totally reasonable economic policy. Double digit inflation, however, would end up making everyone poorer.
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I didn't say the Fed calculated it. I did say they reference it to say their policies (or whoever's policies) aren't causing inflation. When a majority of leading economists subscribe to economic views that don't reflect the lived reality of an average person, it may not be a conspiracy, but the effect (groupthink) is similar.
Sorry, but it's at this point in the thread that I realize that talking to tech bros on hacker news about monetary policy is actually the seventh circle of hell. Glhf. Your claim, to be clear, is that inflation is occurring, but the BLS is hiding it, so that the Fed can hit their targets easier? Why stop there-maybe the board of governors also brings Beyonce in during their closed meetings for private concerts, and p…
> But over the same period, the Consumer Price Index for new vehicles – so this is one of the many subcategories of CPI – has risen only 22%. In fact, it rose 22% from 1990 to 1997, and today is flat with where it had been in 1997.
So inflation only accounts for log(1.22)/log(1.77) = 37% of the price rise.
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Sorry, but it's at this point in the thread that I realize that talking to tech bros on hacker news about monetary policy is actually the seventh circle of hell. Glhf. Your claim, to be clear, is that inflation is occurring, but the BLS is hiding it, so that the Fed can hit their targets easier? Why stop there-maybe the board of governors also brings Beyonce in during their closed meetings for private concerts, and p…
>Sorry, but it's at this point in the thread that I realize that talking to tech bros on hacker news about monetary policy is actually the seventh circle of hell. Glhf. Appealing to the authority of mainstream economists in a perpetual state of groupthink is not an argument. It is this kind of hostile and borderline elitist attitude that scares away people from discussing monetary policy and makes it seem more comple…
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This is not accurate. A "plummet" in value when it comes to the fallen angels that the Fed is purchasing is more like a 10% drop, and even if you treat the difference between the "true" value of the bonds (if the Fed didn't purchase them) and what the Fed pays as a surplus, the aggregate value of all those surpluses is still tiny in the grand scheme of things.
LQD, a corporate bond ETF, plunged -20%. It likely would have fallen even further, until the fed decided to intervene and buy corporate bond ETFs. Now LQD has fully recovered and is back to pre-corona virus levels. More interesting is the rebound in HYG, another Corp bond ETF, which is 50% BB rating, and the remaining 50% below BB rating. I imagine those will get downgraded and be even worst. Now what happens when co…
What matters isn't the size of the Fed's balance sheet or what it contains. The Fed's balance sheet is "invisible" to the private-sector economy. This expansion of their balance sheet is simply a reflection of the stimulus we're doing. When the Fed expands their balance sheet, what they're doing is replacing private-sector assets with liquid cash. Given that the stimulus is appropriate for the economy, this is all fi…
>When the Fed expands their balance sheet, what they're doing is replacing private-sector assets with liquid cash. Given that the stimulus is appropriate for the economy, this is all fine. It's not anything that future generations have to "pay back." And it's not going to cause a collapse of the dollar. This is simply not true. The Fed is buying assets at a premium (otherwise counterparties wouldn't sell the assets t…
Most countries are actually passing larger fiscal stimulus measures than the USA so far, at least relative to their existing currency base, so wouldn't this mean every currency hyperinflates all at once?
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I don't think the problem at the current time is inflation - it's deflation. There's less money chasing the same amount of goods and services. That was the case during the Great Depression - and the Fed exacerbated things at that time by not intervening in controlling the money supply because they were bound by rules which prevented them from doing so. If inflation suddenly increases, then the Fed has tools to combat…
> They can sell off some of their balance sheet or raise interest rates to reduce the amount of money in the system. The Fed was unable to unwind more than ~$650B out of $4T from their balance sheet in one of the longest expansion periods in US history. How will they do this? This is not a rhetorical question, I am genuinely curious in how people think this will be done if the Federal Reserve itself can't do it (eith…
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>When the Fed expands their balance sheet, what they're doing is replacing private-sector assets with liquid cash. Given that the stimulus is appropriate for the economy, this is all fine. It's not anything that future generations have to "pay back." And it's not going to cause a collapse of the dollar. This is simply not true. The Fed is buying assets at a premium (otherwise counterparties wouldn't sell the assets t…
I don't think the problem at the current time is inflation - it's deflation. There's less money chasing the same amount of goods and services. That was the case during the Great Depression - and the Fed exacerbated things at that time by not intervening in controlling the money supply because they were bound by rules which prevented them from doing so. If inflation suddenly increases, then the Fed has tools to combat…
Fed is backed into a corner where it can’t raise rates without crashing the market and can’t lower rates now that we’re at 0.
Earlier quoted context omitted.
>Sorry, but it's at this point in the thread that I realize that talking to tech bros on hacker news about monetary policy is actually the seventh circle of hell. Glhf. Appealing to the authority of mainstream economists in a perpetual state of groupthink is not an argument. It is this kind of hostile and borderline elitist attitude that scares away people from discussing monetary policy and makes it seem more comple…
Please, this isn’t Soviet Russia, economists disagree about practically everything, so the whole argument that the profession has a serious groupthink problem is unconvincing to me. The reason why economists mostly agree on this particular topic-the way the Fed operates-is because it’s exceedingly transparent, theoretically (not to mention mathematically) simple, and empirically verifiable.
They disagree on a lot of things, that is true, but the one thing they all seem to agree upon (except for Austrian economists) is that the economy can be effectively modelled and that effective policy prescriptions can be derived from said statistical models. It is a supremely complex system and it is the pretence of knowledge (in the words of Hayek) to believe that you can use monetary policy to command it, much less policies based upon empirical models which are as you say constantly bickered and debated about.
Furthermore, the Fed is not exceedingly transparent - audits of its operations and its meeting minutes are classified and are not open to public review, as is the case with most central banks in the world. I know because I've tried to ask for copies of open market operation details from my central bank (the Swedish Riksbank) but was denied as they are classified by law (which is incredibly unusual for a society where other government agencies publish everything, including income tax returns).