Earlier quoted context omitted.
The USA before 1913. See [1] for a detailed treatment of economies that thrived without central banking. [1] http://www.amazon.com/dp/B004VMUL6G
What about an example of a major economy without a central bank that survived a major depression (say, the size of the Great Depression)? Or counterexamples? (I believe there are counter-examples -- nations with no central bank that took a worse beating than other nations that had a central bank during a major recession -- but I cannot remember them. Sorry.)
Why are interest rates so low?
231–238 of 238 posts
Re: Why are interest rates so low?
#232Why 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…
>Why the obsession of economic growth? Unemployment in the US is around 5.5%. Growth is correlated with jobs, expendable income, etc. So its important if you want to lower real unemployment. >In Sweden we currently have negative prime interest rate and people have higher salaries than ever and housing prices are all time high. France went, roughly, this route a decade or two ago. Now they have riots in the streets be…
That's an official statistic (US Bureau of labor statistics) that is, in all reality, fiction. Might want to look at ANY other analysis, other than the announced statistic. Like simply comparing the (est) population to the (est) jobs. Turns out it's more like 10% at best, but that's not the end. Yahoo, Experian, Amazon, etc. The vast majority of the tech employed have become contractors. At least be reasonable enough to do your research.
Saying GDP has increased is another statistical mischaracterization. There has been some very clever manipulation by the USG (http://seekingalpha.com/article/1368001-u-s-governments-new-...).
You seem to be woefully glib about topics you haven't been following. Growth hasn't helped the situation as there hasn't been much at all, if any. Rigid financial systems have failed and will do so again if the interest rate (inevitably?) spirals out of control. The executive branch talking heads and investing-in-debt schemes have been paying off for the last few years. It's been increasingly difficult to determine what lengths the fed will go to, in stabilizing the economy and maintaining a positive spin.
Re: Why are interest rates so low?
#233Earlier quoted context omitted.
Dividends are a tax inefficient way to compensate share holders because dividends are taxable. I hope dividends disappear. Share buybacks increase net asset value without any tax impact. There might be a downside, but I haven't heard it yet.
Increases in net asset value are taxed when you realize them by selling the asset, and (to my understanding) at the same rate as qualified dividends. So where is the advantage?
Re: Why are interest rates so low?
#234Earlier quoted context omitted.
> You print 100, you owe 110 counting interest. Um, no. I agree that printing money has bad side effects, but this is not one of them. Here's a better way of looking at it. You currently have a money supply of 1000. That money supply is matched up to 1000 units of goods and services. Assuming this situation has been stable for a while, there will be some set of equilibrium prices. Now you print 100. The total money s…
I think you are being a little unfair to Keynes here. Printing money doesn’t make people think that there are more goods and services. Money is a real thing, is a medium of exchange and there is a demand for it. If you have not enough supply of it the economy suffers. Also, it’s deserved to note that the preferred Keynesian way of stimulating the economy is by fiscal policies (investing from the government), and not…
It makes people think they are wealthier, which amounts to the same thing. I'm not saying people are logical in this respect; I'm just saying that it happens, or at least that Keynes claimed that it happens. (I actually don't really disagree with him in principle; I'm not sure the effect in practical terms is as significant as he appeared to think it was.)
> Money is a real thing, is a medium of exchange and there is a demand for it.
These are actually two different things, not one. The use of money as a medium of exchange is different from the use of money to store value over time.
Demand for money as a medium of exchange can become arbitrarily small by allowing prices to fall as economic efficiency improves. Keynes appeared to think this was a Bad Thing, but AFAIK he never actually demonstrated why, he just asserted it without proof and everyone believed him. Certainly there are examples where the price of a given quantity of some good (such as a given amount of computing power) has dropped by many, many orders of magnitude, without any discernible negative impact. So an obvious alternative to printing more money so there's enough medium of exchange is to require less of the medium of exchange for each transaction.
The use of money to store value over time is what really creates significant demand for money. However, printing money in order to satisfy this demand defeats the purpose, because it reduces the value of money.
> the preferred Keynesian way of stimulating the economy is by fiscal policies (investing from the government), and not by “printing” money, but that is not possible in Europe or the States because politics
This is a good point, yes. However, I would add that the reason why the fiscal policy "solution" is not politically acceptable in Europe or the US is that was tried (in the 1930s during the Great Depression, and again to an extent after World War II) and didn't work, because governments are atrociously bad at picking the right investments. So now governments prefer to print money and hand it to private investors, who, while they are still bad at picking good investments, are at least less bad at it than governments. (But there are still other bad side effects, such as an economic meltdown once in a while.)
Re: Why are interest rates so low?
#235Earlier quoted context omitted.
Growth!=Technological progress. I'm not sure what else there is to say. Do you realise you made this logical jump? Does it not need expanding upon or justifying? Do you not think it might be the source of the difference other people have?
To address growth != tech progress. You're right. per capita growth comes from a few things. 1, operating at max utilization. Full employment. Going from 50% to 90% will grow the GDP. 2, saving. Building on what we already have to improve. Building bridges, long lasting homes, etc to that we can be more efficient in the future. 3, technological progress (also finding oil deposits, etc) Tech progresss -> growth. That…
Re: Why are interest rates so low?
#236Earlier quoted context omitted.
What about an example of a major economy without a central bank that survived a major depression (say, the size of the Great Depression)? Or counterexamples? (I believe there are counter-examples -- nations with no central bank that took a worse beating than other nations that had a central bank during a major recession -- but I cannot remember them. Sorry.)
Nobody can offer such an example, because the boom-bust (depression) cycle itself is caused by the interventions of central bankers.
Re: Why are interest rates so low?
#237Earlier quoted context omitted.
>Why the obsession of economic growth? Unemployment in the US is around 5.5%. Growth is correlated with jobs, expendable income, etc. So its important if you want to lower real unemployment. >In Sweden we currently have negative prime interest rate and people have higher salaries than ever and housing prices are all time high. France went, roughly, this route a decade or two ago. Now they have riots in the streets be…
> Unemployment in the US is around 5.5% That's an official statistic (US Bureau of labor statistics) that is, in all reality, fiction. Might want to look at ANY other analysis, other than the announced statistic. Like simply comparing the (est) population to the (est) jobs. Turns out it's more like 10% at best, but that's not the end. Yahoo, Experian, Amazon, etc. The vast majority of the tech employed have become co…
and the Swedish one is 100% honest? Oh okay. If you bothered to understand this topic you would know that there are different categories of unemployment (U6, etc). I chose the one that best fir the comparision with Sweden.
>You seem to be woefully glib about topics you haven't been following. G
and you're yet another anti-US HN "expert" unwilling to accept the facts or understand how national economies work. That attitude will get you precious upvotes here (I see you got your token anti-fed comment in, so on HN bingo you're doing pretty good), but its not remotely tied to reality.
Re: Why are interest rates so low?
#238Earlier quoted context omitted.
Nobody can offer such an example, because the boom-bust (depression) cycle itself is caused by the interventions of central bankers.
That's a pretty bold claim for which to cite no sources.