31–36 of 36 posts
Maybe occasional shocks to the labour market would be a good policy going forwards. It seems a lot of people have suddenly found much better jobs just by being forced to look...
Maybe occasional shocks to the labour market would be a good policy going forwards. It seems a lot of people have suddenly found much better jobs just by being forced to look...
Shocks to the labour market without an adequate safety net to cushion folks from the personal fallout of labour market shocks is a good recipe for resentment
Im all for adequate safety nets. I like UBIs personally and the response to the pandemic (on both sides of the pond) isn't far off of that.
Earlier quoted context omitted.
> An economy can usually make more of stuff, or substitutes, and/or consume relatively painlessly. The pain kicks in when the financial sector feels pain. The real economy reshuffles if it's financed adequately Isn't money just an abstraction over resources? In essence i think you're saying that creating goods is not a problem assuming there are sufficient resources to make the goods and sufficient resources to compe…
Yes and no. Money is an abstraction over resources. However, it's not quite that simple once you add credit/borrowing into the mix. We no longer trade sheep for lumber; we no longer buy lumber with cash from our wallet. Instead, we borrow from the bank, buy more lumber than we could otherwise afford, on the assumption we can turn around and sell finished houses before the loan comes due. If the bank stops lending, we…
That's why the financial sector is the weak link, and also why it's very well-compensated. Finance is a future-prediction problem: you do well if you successfully predict which investments will pay off, and you go bankrupt if you fail. Predicting the future has always been hard.
The reason we get these boom/bust crises is because instead of using their own judgment, many people, when faced with a hard problem, will just do what everyone else is doing. So the whole financial industry lemming-trains into bad investments, and then when they bust, they all go bankrupt and there's no resources to go around until the wreckage has been cleared away and placed in more independent manager's hands.
Earlier quoted context omitted.
> An economy can usually make more of stuff, or substitutes, and/or consume relatively painlessly. The pain kicks in when the financial sector feels pain. The real economy reshuffles if it's financed adequately Isn't money just an abstraction over resources? In essence i think you're saying that creating goods is not a problem assuming there are sufficient resources to make the goods and sufficient resources to compe…
"Isn't money just an abstraction over resources?" I think the economics of money tends to compete on which common sense, to follow. Taken to the extreme, you could say that money doesn't matter. Only resources and the real economy matter. That, IMO, is negated by the history of money economics affecting the real economy. Money shortage is a thing. If the economy hadn't been funded, the resource shuffling wouldn't hav…
Yeah, but all those things describe situations where money and resources got out of whack.
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There is no free lunch. Printing more dollars doesn’t mean you have more money. Lowering interest rates so it’s cheaper to borrow doesn’t mean you have more money. The government buying up bad assets doesn’t mean those assets suddenly have a higher value. There is no free lunch. Eventually asset prices reflect underlying value - not too many dollars chasing too few assets. Eventually inflations forces higher interest…
> Printing more dollars doesn’t mean you have more money. Often it does, because “printing money” avoids a cascading effect of negative feedback. Imagine in the days before FDIC insurance that due to a sudden asset depreciation or error, a large bank does not have cash on hand to meet customer withdrawals today. Because of uncertainty, other banks are not willing to lend to the troubled bank on short notice. If the F…
If my wages suddenly get reduced by 20% so I start borrowing against the equity in my home that solves the immediate problem but also creates another problem.
Earlier quoted context omitted.
Yes and no. Money is an abstraction over resources. However, it's not quite that simple once you add credit/borrowing into the mix. We no longer trade sheep for lumber; we no longer buy lumber with cash from our wallet. Instead, we borrow from the bank, buy more lumber than we could otherwise afford, on the assumption we can turn around and sell finished houses before the loan comes due. If the bank stops lending, we…
Credit is an abstraction over future resources. When you take out a loan, you're basically saying "I am betting that I can produce enough in the future to pay back the resources that I am using now." And if you don't, you're on the hook for it, and potentially go bankrupt. That's why the financial sector is the weak link, and also why it's very well-compensated. Finance is a future-prediction problem: you do well if…