Inflation is differential and restructuring (2021) • Hacker News Board

Re: Inflation is differential and restructuring (2021)

#191

Post by achenatx » Fri, May 27, 2022, 9:10 PM UTC

throw0101a wrote: post #95

frankfrankfrank wrote: post #57

Earlier quoted context omitted.

The thing that has nagged at you as it has me, is the simple fact that not only was “economics” conjured and molded by and for the interests of the upper echelon of society, to control the language and thoughts about its terms; but that at the core of it, it’s nothing more than fraud, deception, con artistry. That’s all inflation is too, fraud that if you would commit it, e.g., you added filler to some product you de…

> You are given currency coupons in exchange for your work, and then more of those coupons are just forged than correspond to actual work having been done, thereby defrauding you out of the value of your work, also commonly called theft of service. All currency is made up. Even gold, or bitcoin, or giant rocks: * https://en.wikipedia.org/wiki/Rai_stones The only thing that has "inherent" value to humans is air/oxygen…

>>The only thing that has "inherent" value to humans is air/oxygen, shelter, water, and food. Everything else is psychological projection for convenience.

This isnt really true. If you put someone in solitary confinement for long enough they will go insane.

People commit suicide for a variety of mental health reasons.

Mental health is absolutely as important as physical health and it isnt obvious where to draw the line for required vs. convenient.

There is also health/medicine/medical care/sanitation.

There are also secondary requirements that enable the production capacity for the above stated requirements.

Re: Inflation is differential and restructuring (2021)

#192

Post by achenatx » Fri, May 27, 2022, 9:19 PM UTC

1ncorrect wrote: post #132

frankfrankfrank wrote: post #57

Earlier quoted context omitted.

The thing that has nagged at you as it has me, is the simple fact that not only was “economics” conjured and molded by and for the interests of the upper echelon of society, to control the language and thoughts about its terms; but that at the core of it, it’s nothing more than fraud, deception, con artistry. That’s all inflation is too, fraud that if you would commit it, e.g., you added filler to some product you de…

My current thesis, from a position of absolute agnostic ignorance, is economics is what filled the void in society vacated by religion after the enlightenment. They’re functionally indistinguishable, with mythology replaced by mathematics, and God replaced with GDP. Similarly, they’re both arbitrary rules; conjured, imposed, and protected from scrutiny by the ruling class. That’s not to say it’s not useful, but I fin…

the difference between economics (or science) and religion is that economics is used to predict the future. When economics fails to predict the future, the models are changed until they can predict the future.

religion tells you what goals you should have and how you should live a life, passing judgement and establishing morality.

They are orthogonal to each other.

Re: Inflation is differential and restructuring (2021)

#193

Post by BirdieNZ » Fri, May 27, 2022, 9:36 PM UTC

littlestymaar wrote: post #190

BirdieNZ wrote: post #20

Earlier quoted context omitted.

> That's how we get figures saying that computers cost 20 times less than what they used to be when in reality it costs a little less than 2 times less. Can't you buy old PCs for 20 times less than a (second-hand) modern PC? I bet this Pentium 4 desktop cost around NZ$2000 new: https://www.trademe.co.nz/a/marketplace/computers/desktops/n... but now it's going for NZ$100.

> Can't you buy old PCs for 20 times less than a (second-hand) modern PC? You can, but it's basically a paperweight at this point (I doubt you can even find a recent OS that boots it). Whereas back in the day, such a computer allowed me to play AAA games, browse the web, watch movies, and use the MS office suite for work or studies. Just as the average today's computer. There have been gains (engineering or scientifi…

You can still do all those things on the Pentium 4 (boot up Windows XP, install Morrowind, use MS Office 2000 or whichever version was current, watch The Matrix), but the cost to buy the PC is significantly less (even taking into account the second-hand nature of the PC).

It isn't comparing like to like to compare the cost of a modern PC to one 20 years old, with modern games, modern websites, modern Office products etc.

Re: Inflation is differential and restructuring (2021)

#194

Post by achenatx » Fri, May 27, 2022, 9:53 PM UTC

barry-cotter wrote: post #64

lordnacho wrote: post #39

Wow, this was the article I was looking for, it summarizes a number of thoughts about economics that I'd been having since the undergraduate days: - There's an authority about the field that really isn't deserved. The models are not made properly, and there's a lot of hand-waiving. I studied economics with a class of engineers and everyone pointed this out. - The pop-sci version of economics is a bunch of easy quips.…

> The econ 101 version of economics is dominant in popular thought. You see it everywhere in newspapers. If only. Rent control wouldn’t exist. Policies that couldn’t pass any sane cost benefit trade off would be abolished. There would be a smooth, graduated marginal tax schedule. There would be congestion taxes on traffic. The world would be incredibly different if Econ 101 was widely understood.

not necessarily. One of the things Ive come to understand is that economic efficiency is not always the top priority. In many cases people want reduced variance. In return they are ok with less efficiency.

Economics can predict the outcome, but cannot make a value judgement between two options.

I used to think some people were irrational (especially when they disagreed with my logical viewpoint). It turns out that everyone is irrational, they simply have different opinions of the relative priority of values. For example it might be worth it to them to trade off long term economic efficiency for short term reduction in variance.

Nationalized health care, social security, and rent control are all examples of policies that reflect this value system.

"Freedom" is not a universal value. In fact many people are willing to trade freedom for security (or reduction in variance). They are not wrong or bad people, they just have a different opinion of priorities.

Re: Inflation is differential and restructuring (2021)

#195

Post by adammarples » Fri, May 27, 2022, 11:22 PM UTC

Bafflingly long article which I read all the way to the end waiting for a point. The first point was interesting, inflation is an average, maybe its variance can tell us something. The current inflationary spike is evidently driven by used car prices. Then a long ramble to conclude that it's caused by large corporations. Driving up used car prices? OK

Re: Inflation is differential and restructuring (2021)

#196

Post by dinom » Sat, May 28, 2022, 12:25 AM UTC

simonh wrote: post #189

dinom wrote: post #173

Earlier quoted context omitted.

Useful is in the eye of the behold... that's largely the point. No one can judge what or how "useful" something is besides the rightful owner of the asset. That includes cash (under a mattress), bonds, stocks, options, toilet paper, apples, bananas, etc. If short term bills are serving a "useful economic function" and "in-the-mattress savings" does not... then there must be some asset that serves "the most useful eco…

There’s no appeal to authority or need for me to know the ‘intrinsic’ value of things. It’s up to individual people what they will pay for things, or sell them for. That’s what a market is. Short term paper pays interest because it’s issued by people who need short term money and are willing to pay for it. There’s no central authority setting its value, no objective criteria, no law of physics, just actual people cho…

> That’s what a market is.

To win me you need to consider the difference between a free market vs. a coerced or highly regulated one; the dynamics likely change.

> even central governments don’t set the value of money

And the difference between real and nominal rates? I'd say your statement is largely true but that doesn't mean a central bank doesn't try to manipulate real rates. That's actually their charter... price stability.

However, there is a strong argument to be made that they're not very good at it and can make things worse. The last year of exceptionally high inflation is a rather obvious real-world example.

> Nobody needs you to keep money in a mattress

Maybe true, but the question isn't what do others need... it's who gets to allocate my capital? I contend it should be me, you seem to think otherwise. Why should the government actively try to de-value people's savings? Is it a good thing to squeeze elderly retirees back into the work-force?

This is what you're implying when you say "Devaluing in-the-mattress savings is a good thing". It could be a bad thing; again esp. for pensioners and people who don't have better investment opportunities.

It's not just a question of "does the theory hold water" but also one of morality. This is why I think the phrase "in-the-mattress savings" is loaded and full of hooey. It just sounds like you're telling me I'm an idiot and can't be trusted to spend my own money wisely? It's not convincing and quite insulting to boot! Lol

I believe savings is always a good thing and it's up to the individual to determine their own preference in terms of allocation; some under a mattress and maybe some in a shoebox or some short General Dynamics puts.

The point is it's up to the individual. Why should someone else have a say when they haven't been entrusted? That is the very gist. Why should someone else have a say when they haven't been entrusted?

Freedom and liberty vs. tyranny. That's it... you're going to have a hard time convincing me that financial repression is the moral high ground.

Re: Inflation is differential and restructuring (2021)

#197

Post by ekianjo » Sat, May 28, 2022, 12:46 AM UTC

actionablefiber wrote: post #169

ekianjo wrote: post #167

Earlier quoted context omitted.

> if I sock away my first paycheck flipping burgers under my mattress and do nothing with it for 50 years, a deflationary regime means I can take it back out and buy a lot more with it than someone with their first paycheck flipping burgers today. Thats still true with inflation too. No idea what your point is.

How is that true with inflation? Under the exact same scenario but with an inflationary monetary policy, any money you sock under your mattress dwindles down to a fraction of its purchasing power over the course of many decades if it is not invested into a vehicle that generates returns. That could be equities, bonds, housing, or even an interest-bearing savings account. The point is that an inflationary regime incen…

So you would have to assume that investments would be worthless in a non inflationary state which is a big stretch of the imagination. You think there were no tech revolutions and investments going on while everyone was at the gold standard?

Re: Inflation is differential and restructuring (2021)

#198

Post by dataflow » Sat, May 28, 2022, 4:05 AM UTC

neilwilson wrote: post #47

dataflow wrote: post #40

At the risk of going off-topic: I'd also like someone to write a similar blog post providing a convincing explanation of why the national debt supposedly isn't wrecking the US's future big time. To me it absolutely is, because you can only keep borrowing money and paying the (increasingly large) interest on it for so long. Eventually it'll exceed your revenue and you have no choice but to print money and hyperinflate…

They say that Economics is the science on mistaking stocks for flows, and this is a very good example. Interest is denominated in $/month. Loans are denominated in $. Mixing those up is like mixing up miles per hour and miles. They are different units of measurement - the first is a flow, the second is a stock. Remember that bankers are people too, and they eat just like you do. Therefore interest is nothing more tha…

No, I'm not mistaking stocks for flows. I'm not sure where you got the idea that I'm mixing up interest with the loan principal.

I'm sorry but your long-winded explanation (as this topic always produces for reasons I never understand) just isn't something I can make sense of. You're pointing out loops in the payment graph. Sure there are, nobody claimed the graph is loopless. But that obviously doesn't imply 100% of the flow is going through a closed loop. The more you increase the outward flow the more you need to increase the inward flow, and the extent to which you can do the latter is not limitless. This seems too obvious to me to convince myself it can be just hand-waved away with a complicated explanation.

> There is no need for government to pay interest at all. It's entirely a policy choice.

I don't know why you purchase (say) bonds, but most people I know purchase them for the interest, not out of some sense of patriotic goodwill. You'd think if the government could get the same loans with the same terms without paying interest, then they would avoid paying interest...

Nobody's explanation of this ever makes sense to me, like you can see above. Half of it always seems overcomplicated (missing half the issue) and the other half just seems outright wrong. (This is precisely why I said someone needs to write a convincing & comprehensible blog post on this.)

Re: Inflation is differential and restructuring (2021)

#199

Post by refurb » Sat, May 28, 2022, 4:30 AM UTC

kn0where wrote: post #162

refurb wrote: post #50

Earlier quoted context omitted.

Because non-wage compensation has made up a bigger and big part of total compensation - healthcare, 401k match, fringe benefits, bonuses, etc. My dad worked as a teacher and got a super fat pension - that’s not included. Total compensation has risen much more than hourly wage.

There are tons of employers out there that don’t match 401k contributions, make employees pay their healthcare premiums out of their salary, and don’t give meaningful bonuses.

Sure, but does that mean you just ignore non-cash compensation when looking at employee compensation? Of course not.

Re: Inflation is differential and restructuring (2021)

#200

Post by lottin » Sat, May 28, 2022, 9:38 AM UTC

FabHK wrote: post #70

lottin wrote: post #56

Earlier quoted context omitted.

> Inflation can be thought of as a high dimensional vector with dimensions equal to the number of objects you buy with money. No, that's just the changes in individual prices. Inflation is the change in the price level, and it has always been that. Nobody has changed subreptitiously the definition of inflation in order to rip you off.

Inflation the scalar product (inner product) of the vector of price changes and the vector of basket quantities, with the former being uniform for the entire market, but the latter being different for different consumers, which is why an "average" basket is chosen for the official inflation number.

This is incorrect. You're confusing an estimator (the CPI) with the actual quantity being estimated (inflation). For example, the GDP deflator, which is another estimator of inflation, is not a weighted average.