Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Four Basic Truths of Macroeconomics

bloomberg.com

Post reply on HN
Print view View original

41–50 of 286 posts

Re: Four Basic Truths of Macroeconomics

#41

Post by chordalkeyboard »

AngrySkillzz wrote: post #36
chordalkeyboard wrote: post #34

Earlier quoted context omitted.

> Ah you get it. That's the idea. Buy gold if you want, I don't care, but money is an intermediary, not a long-term store of value. Only because the wealthy benefit from depreciating currency. It doesn’t have to be this way, and it is this way because of policy that is designed to benefit the ultra-wealthy. > They're paying you less value so it's a decrease. You're tripping yourself up focusing on units. They’re payi…

> Only because the wealthy benefit from depreciating currency Source this claim. Everyone benefits from a depreciating currency because inflation provides a buffer against deflationary spirals that lead to large recessions and job losses for people of all classes. Tell me exactly how inflation benefits only the ultra-wealthy and not anyone else. > because the oligarchs want workers’ wages to go down. I would suggest…

> Source this claim.

Asset price inflation vs depreciation of debt in real terms. Wealthy people hold assets that are valued in currency. Depreciating currency causes those assets to go up in nominal terms, and additionally depreciating currency causes a flight to assets. Wealthy people (by definition) have more assets than non-wealthy people, hence this flight from currency to assets bids up the prices of assets.

> Everyone benefits from a depreciating currency, because inflation provides a buffer against deflationary spirals that lead to large recessions.

Thats a theory-laden and motivated explanation. Surely you can do better than just argument by assertion?

> Tell me exactly how inflation benefits only the ultra-wealthy and not anyone else.

Thats not my claim.

> I would suggest that you clarify this claim so it does not sound so much like a conspiracy theory.

I suggest you do your own research and discover that the central bank is very much fact and not at all theory.

Re: Four Basic Truths of Macroeconomics

#42

Post by xyzzyz »

AnthonyMouse wrote: post #30
NortySpock wrote: post #11

Earlier quoted context omitted.

Regarding point 5: increasing population via reproduction adds workers in 16-18 years. Immigration adds workers immediately. Additionally, immigration increases both labor supply (obviously) but also labor demand (more consumption, because immigrants buy stuff and services just like anyone else) and as a result wages are flat even when a lot of immigrants join the economy in a short amount of time. "This has been tes…

> "This has been tested under conditions such as the Mariel Boat Lift, where a large number of Cuban immigrants all joined the Miami labor market in a short period of time, increasing labor supply by 7% very quickly. Research found that there was practically no impact on wages and employment for locals." The problem with all of these studies is that they only apply to the specific circumstances of the study which wil…

Also, what would happen if the Miami economy hadn't had been experiencing a boom in cocaine industry during the same time period?

Re: Four Basic Truths of Macroeconomics

#43

Post by remedialhedge »

arcticbull wrote: post #38
AngrySkillzz wrote: post #25

Earlier quoted context omitted.

Sadly it isn't really worth arguing econ on HN. This place is full of cranks when it comes to that, unfortunately. Maybe better if we all just stick to programming.

It's amazing how otherwise brilliant folks get caught up in this anarchocapitalist conspiracy theory mumbo jumbo. There's a few bits of plumbing in this world you'd do best to familiarize yourself with so you can raise your socioeconomic stature with maximum efficiency, economics is one of them. I only tilt at them because I hope that they'll benefit from an understanding of how these things work in reality.

It is strange, but I think it makes sense culturally. HN grew out of that particular libertarian, anti-establishment "hacker" subculture, where it is very common to believe that the government and etc. is out to screw you. Rather than like, the government is also made up of people, the same kind of smart, educated people that might otherwise have worked at your startup, and the reason most of them chose to go into government is because they think that problems like macroeconomics and public finance and etc. are interesting.

But no, us tech dweebs are the righteous little guys fighting back against the rigged system, man!

Re: Four Basic Truths of Macroeconomics

#44

Post by dragonwriter »

chordalkeyboard wrote: post #34
arcticbull wrote: post #28

Earlier quoted context omitted.

> It means the people who save by depositing cash in the bank lose value over time, causing them to purchase investments out of necessity. Ah you get it. That's the idea. Buy gold if you want, buy real estate, buy annuities, buy fixed incomes, I don't care, but money is an intermediary - not a long-term store of value. If you treat it as one you'll have a bad time. Just like if you treated your car as a boat. It'll w…

> Ah you get it. That's the idea. Buy gold if you want, I don't care, but money is an intermediary, not a long-term store of value. Only because the wealthy benefit from depreciating currency. It doesn’t have to be this way, and it is this way because of policy that is designed to benefit the ultra-wealthy. > They're paying you less value so it's a decrease. You're tripping yourself up focusing on units. They’re payi…

> Only because the wealthy benefit from depreciating currency.

Net debtors benefit from a depreciating currency, in first order effects. Beyond first order effects, a currency with gradual depreciation but low volatility benefits everyone. As everyone includes the rich, it is true that they benefit, but not especially true.

> the units depreciated because the oligarchs want workers’ wages to go down.

The alternative is not “employment at the same wages” when demand drops, it's “production cuts and unemployment, resulting in larger second order demand drop, resulting in more production cuts and unemployment, etc.” That this is generally worse for everyone including the working class, both as a whole and even many of the workers in the sector seeing the initial demand drop should be pretty easy to see.

Re: Four Basic Truths of Macroeconomics

#45

Post by remedialhedge »

chordalkeyboard wrote: post #41
AngrySkillzz wrote: post #36

Earlier quoted context omitted.

> Only because the wealthy benefit from depreciating currency Source this claim. Everyone benefits from a depreciating currency because inflation provides a buffer against deflationary spirals that lead to large recessions and job losses for people of all classes. Tell me exactly how inflation benefits only the ultra-wealthy and not anyone else. > because the oligarchs want workers’ wages to go down. I would suggest…

> Source this claim. Asset price inflation vs depreciation of debt in real terms. Wealthy people hold assets that are valued in currency. Depreciating currency causes those assets to go up in nominal terms, and additionally depreciating currency causes a flight to assets. Wealthy people (by definition) have more assets than non-wealthy people, hence this flight from currency to assets bids up the prices of assets. >…

> Depreciating currency causes those assets to go up in nominal terms

That does not increase the real value of those assets, and it does not have any distributional consequences.

> Thats a theory-laden and motivated explanation

You could go read like, any of the vast literature on the great depression, the things that caused it and the things that made it worse. But you'd rather expose your ignorance on the Internet for us to see.

> discover that the central bank is very much fact and not at all theory.

I happen to know a lot about central banking, actually. You might be pulling a Dunning-Kruger on this one.

Re: Four Basic Truths of Macroeconomics

#46

Post by arcticbull »

remedialhedge wrote: post #43
arcticbull wrote: post #38

Earlier quoted context omitted.

It's amazing how otherwise brilliant folks get caught up in this anarchocapitalist conspiracy theory mumbo jumbo. There's a few bits of plumbing in this world you'd do best to familiarize yourself with so you can raise your socioeconomic stature with maximum efficiency, economics is one of them. I only tilt at them because I hope that they'll benefit from an understanding of how these things work in reality.

It is strange, but I think it makes sense culturally. HN grew out of that particular libertarian, anti-establishment "hacker" subculture, where it is very common to believe that the government and etc. is out to screw you. Rather than like, the government is also made up of people, the same kind of smart, educated people that might otherwise have worked at your startup, and the reason most of them chose to go into go…

Very true. I also wonder if it has to do with folks in high school and college just not having money, so why bother paying attention to ECON material? It's all abstract.

It's like the Futurama joke from Future Stock:

  “Oh my god! I’m a millionaire! Suddenly, I have an opinion on the capital gains tax!”

Re: Four Basic Truths of Macroeconomics

#47

Post by chordalkeyboard »

arcticbull wrote: post #40
chordalkeyboard wrote: post #34

Earlier quoted context omitted.

> Ah you get it. That's the idea. Buy gold if you want, I don't care, but money is an intermediary, not a long-term store of value. Only because the wealthy benefit from depreciating currency. It doesn’t have to be this way, and it is this way because of policy that is designed to benefit the ultra-wealthy. > They're paying you less value so it's a decrease. You're tripping yourself up focusing on units. They’re payi…

> Only because the wealthy benefit from depreciating currency. It doesn’t have to be this way, and it is this way because of policy that is designed to benefit the ultra-wealthy. Do they? Generally inflation benefits debtors and not lenders, because debts are denominated in dollars in the year of issue, and repaid in future dollars, which are worth 2% less per year. Overwhelmingly poor and middle class folks are debt…

> Do they? Generally inflation benefits debtors and not lenders, because debts are denominated in dollars in the year of issue, and repaid in future dollars, which are worth 2% less per year.

Yes, exactly. This allows wealthy people to borrow money and pay it back with less value.

> Overwhelmingly poor and middle class folks are debtors (think mortgages).

Poor people often don’t have access to these extremely low interest rates because of structural inequalities and credit requirements (and exceptions tend to leave them worse off as well, see the subprime fiasco). Meanwhile the cheap credit bids up the prices of those assets, benefitting the people who have them (wealthy) as opposed to the people buying them (upwardly mobile or aspirational).

> Mortgages have become more and more affordable each year. This means folks can afford more and more house for the same money, after all the bulk of the payment of a 30 year fixed is interest for the first 10+ years.

Not in aggregate, because the cost of a house increases as people bid for houses with the cheap credit.

> Yeah but at the end of that day that's irrelevant. The only thing that matters is what those units represent. If I gave you 5 today and 3 tomorrow does that mean anything? Or course not. 5 what and 3 what? That's what we're talking about

Right, and at the end of the day those units represent less value because of the actions of the central bank. Furthermore those actions were intended to have that exact effect. So how are you claiming that business owners are supposed to work in opposition to central bank policy? Clearly if the central bank wants wages to decrease in real terms, and business owners increase them nominally to make them neutral in real terms, this frustrates central bank policy and they will logically just print more money.

> It's your responsibility in a capitalist society to allocate capital most productively and so if this particular allocation isn't the most productive, your job is to go find it.

The problem is the distorting effect of low interest rates means that what is productive in terms of nominal r.o.i. is not what is productive in real terms, but the market distortions are so pervasive and persistent that people have to chase the nominal returns. This is incredibly destructive to value, society, and community.

Re: Four Basic Truths of Macroeconomics

#48

Post by AngrySkillzz »

dragonwriter wrote: post #44
chordalkeyboard wrote: post #34

Earlier quoted context omitted.

> Ah you get it. That's the idea. Buy gold if you want, I don't care, but money is an intermediary, not a long-term store of value. Only because the wealthy benefit from depreciating currency. It doesn’t have to be this way, and it is this way because of policy that is designed to benefit the ultra-wealthy. > They're paying you less value so it's a decrease. You're tripping yourself up focusing on units. They’re payi…

> Only because the wealthy benefit from depreciating currency. Net debtors benefit from a depreciating currency, in first order effects. Beyond first order effects, a currency with gradual depreciation but low volatility benefits everyone. As everyone includes the rich, it is true that they benefit, but not especially true. > the units depreciated because the oligarchs want workers’ wages to go down. The alternative…

Thanks, I am glad someone else actually has the energy to explain this.

Re: Four Basic Truths of Macroeconomics

#49

Post by gowld »

AngrySkillzz wrote: post #12
xnx wrote: post #7

"I also think measures of price inflation are almost useless over the long run, because a person today consumes a very different bundle of goods than one in, say, 1950." I agree with this wholeheartedly. How do we put a value on the fact that, for the cost of no more than a day's labor, most in the US can have a handheld device with access to nearly the sum total of the world's knowledge and entertainment? No one, at…

It is tricky, but they try to apply what are called "hedonic adjustments." [1] If a new iPhone comes out that is way better than last year's iPhone, but it is the same price, then that's deflation! You got more stuff for the same price. Or even if your new plasma TV is more expensive than the old CRT, how do you compare them to decide whether the price level has increased or decreased while attempting to hold "qualit…

Progress is different from deflation. Hedonic adjustments is a trick to steal the benefits of progress from workers.

Re: Four Basic Truths of Macroeconomics

#50

Post by chordalkeyboard »

dragonwriter wrote: post #44
chordalkeyboard wrote: post #34

Earlier quoted context omitted.

> Ah you get it. That's the idea. Buy gold if you want, I don't care, but money is an intermediary, not a long-term store of value. Only because the wealthy benefit from depreciating currency. It doesn’t have to be this way, and it is this way because of policy that is designed to benefit the ultra-wealthy. > They're paying you less value so it's a decrease. You're tripping yourself up focusing on units. They’re payi…

> Only because the wealthy benefit from depreciating currency. Net debtors benefit from a depreciating currency, in first order effects. Beyond first order effects, a currency with gradual depreciation but low volatility benefits everyone. As everyone includes the rich, it is true that they benefit, but not especially true. > the units depreciated because the oligarchs want workers’ wages to go down. The alternative…

> As everyone includes the rich, it is true that they benefit, but not especially true.

Asst holders benefit disproportionately, as do debtors. The people who benefit most have both assets and debt. These are wealthy people.

> The alternative is not “employment at the same wages” when demand drops, it's “production cuts and unemployment, resulting in larger second order demand drop, resulting in more production cuts and unemployment, etc.”

So by tricking people into taking less compensation for the same amount of work, we benefit how? If demand decreases then production should decrease, because less production is indicated.

> That this is generally worse for everyone including the working class, both as a whole and even many of the workers in the sector seeing the initial demand drop should be pretty easy to see.

No, I’m seeing the opposite. When the automobile replaced the horse-and-buggy, demand for buggy whips decreased as it should have. printing money so that the buggy whip makers didn’t notice that there was less demand for their product would have been a disservice

Post reply on HN