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

Why the 2% inflation target? (2023)

sites.lsa.umich.edu

Post reply on HN
Print view View original

611–619 of 619 posts

Re: Why the 2% inflation target? (2023)

#611

Post by kortilla »

wolverine876 wrote: post #425
kortilla wrote: post #372

Earlier quoted context omitted.

Technology is the only reason the economy could somewhat continue during the pandemic. Did you hear about working from home? Technology is how we got a vaccine so quickly. Technology is how we tracked the spread. Technology is how we notified of potential exposure. Nobody with a humanities background did anything meaningful to help compared to the last pandemic. It was all technology, engineering, medicine, and scien…

> Nobody with a humanities background did anything meaningful If you learned a bit about it, you wouldn't show off rigid tunnel vision or you might express yourself clearly and without the blind destruction of hyperbole. Why did people make or not make vaccines? Humanities (and social science). How were they funded, regulated, etc.? Ditto. What is the scientific method? Humanities (really). Why did the US and EU as e…

They were funded by other scientists and medical professions who became heads of the CDC, etc. People from humanities are ill quipped to select grant recipients for any real research.

The scientific method is philosophy, but the majority of humanities never go anywhere near the scientific method other than to convince themselves that doing a qualitative oral survey of some classmates is just as much a “science” as the falsifiable ones.

> Why did people take or not take vaccines? Humanities,

The failure of humanities to produce any meaningful predictive behavior of humans is a pretty good example of why it’s a failed branch of inquiry.

> mastered messaging and mass political communication, which is humanities.

The people who have done this are completely outside of the grasp of the humanities taught in US universities. Every Ivy League economist, sociologist, social psychologist, etc that was in US leadership for the last 20 years has done nothing but flounder.

Re: Why the 2% inflation target? (2023)

#612

Post by Wytwwww »

npoc wrote: post #323
Wytwwww wrote: post #87

Earlier quoted context omitted.

Still preferable to deflation. At least the working class has something that can be stolen..

In a healthy economy, deflation (i.e. falling prices) is a good thing. Things get cheaper over time - it's the utopia we should be living in now. We've made massive increases in production efficiency across the board over the years, but the banks and government have creamed off all those efficiency gains for themselves, by printing money, creating the illusion that everything is instead going up in value, and have ma…

If the real costs is decreasing that's usually good, a decrease in nominal prices not so much. Why would you invest into increasing productivity etc. if you know that you revenue will only go down Longterm? Generally we'd want to quality to increase while prices stay more or less the same to encourage innovation.

> We've made massive increases in production efficiency

Likely much if not most of that wouldn't have happened if monetary supply was constrained and there would have been a lot less investment.

> the real value of the already enormous debts would increase even if the nominal value didn't

Why would you even want that to happen? I mean that was a pretty common situation in the 19th century and generally and it was pretty horrible. Imagine if you were a farmer who had a mortgage and the price of the goods you were selling kept going down every year... OTH other hand you could just buy government bonds and spend your days not doing anything useful (e.g. if you were an English aristocrat on a fixed income).

> By keeping the money supply increasing, the economies are collapsing slowly instead

Except they are not collapsing. What we have now is generally a huge improvement over the permanent boom and bust cycles that kept happening until the 1930s in large part because the money supply was constrained and increased at a slower pace than the economy was growing.

> ultimately ending in hyperinflation.

What are you basing this prediction on?

Re: Why the 2% inflation target? (2023)

#613

Post by Wytwwww »

silent_cal wrote: post #603
bradjohnson wrote: post #359

Earlier quoted context omitted.

Deflation is not a healthy system under capitalism, where people must work to survive. In the ideal scenario the value of work would approach zero due to a reduction of money in circulation. Work done yesterday would always be worth more than work done today and generational wealth would eventually become necessary to not be locked in servitude to the wealthy.

This isn't true historically. In ancient times, a day's labor was the unit of currency. A "talent" in the Bible, for example, is a unit of metal representative of a day's wages.

> A "talent"

Was equal to about 26 kilograms. For most labourers that was about 10 years worth of wages...

Re: Why the 2% inflation target? (2023)

#614

Post by chowchowchow »

pdonis wrote: post #563
chowchowchow wrote: post #434

Earlier quoted context omitted.

> Economic growth means producing more goods and services. How do you incentivize this? Your view seems fairly communist. Also how does a net new innovation factor into this framework. New pharmaceuticals for previously untreatable diseases for example. What slice of the fixed money pie do those get? > But that is because the quantity of Bitcoin is not fixed. People can mint more. Sorry pal this is sophistry. Your co…

> how does a net new innovation factor into this framework. New pharmaceuticals for previously untreatable diseases for example. What slice of the fixed money pie do those get? Whatever slice the free market determines. And any "slice" that anyone gets is constantly changing, since money is exchanged constantly. So thinking of a fixed supply of money (or even a non-fixed supply of money) as having some fixed allocati…

Oh. I meant which slice of the fixed money pie is invested into this. How do you incentivize the risk-taking if capital is so expensive.

Re: Why the 2% inflation target? (2023)

#615

Post by vel0city »

bsdpufferfish wrote: post #585
vel0city wrote: post #557

Earlier quoted context omitted.

Your argument of governments are supposed to protect property rights still applies for bonds and stocks and other investments, so once again still not exactly an argument for incentivizing speculation on pieces of paper or shiny objects instead of productive assets. The point of fiat isn't to give returns to those who worked hard by burying paper in their backyard, the point of fiat is to be an easy medium of exchang…

> property rights No you are conflating two topics. Property rights is not propping up stocks and bonds. It's protecting ownership so you can invest in building things over the long term without them being taken. Similar reasons encourage the government to protect the value of their currency. > the point of fiat is to be an easy medium of exchange The stated goal of the federal reserve is price stability, not exchang…

> Property rights is not propping up stocks and bonds.

I'm not talking about propping up stocks and bonds, I'm talking about ensuring fair, open markets for such things. I'm entirely talking about "protecting ownership so you can invest in building things over the long term without them being taken." That same concept of the government protecting your ownership of some shiny objects applies to protecting shareholders from a company publishing fraudulent financial statements, or selling bonds that are actually objectively worthless with actual review, or shenanigans that effectively remove such ownership aspects.

> 0% is hardly a massive incentive to hold cash.

Negative rate bonds are (or at least were) a thing as well. If it costs more to put your shiny objects and fancy paper in a safe and protect it than having an account at a bank then there's incentive on it even if there are costs. And sure, even with inflation there's still some incentive to hold some amount of dollars. Liquidity has value after all. Even though I'm OK with some slight inflation on dollars I still tend to hold some amount of them. After all, I didn't buy lunch with stocks!

And even then, it is not about 0% being an incentive to hold, it is about not having an incentive to invest. As I already stated, IMO its worse for society overall to encourage people to hoard fancy paper and shiny objects compared to actually investing it. But hey maybe you'd prefer for people to not invest in bonds and what not and instead just have piles of fancy paper and shiny objects instead of roads and infrastructure and more productive enterprises. I'm sure that'll work out well for them.

Re: Why the 2% inflation target? (2023)

#616

Post by Wytwwww »

npoc wrote: post #452
bradjohnson wrote: post #359

Earlier quoted context omitted.

Deflation is not a healthy system under capitalism, where people must work to survive. In the ideal scenario the value of work would approach zero due to a reduction of money in circulation. Work done yesterday would always be worth more than work done today and generational wealth would eventually become necessary to not be locked in servitude to the wealthy.

How can the value of work ever approach zero? Human work is value. The value of anything simply derives from the quantity and quality (demand/supply) of the human work that goes into producing it. In the current inflationary system, people are working for something that the banking system produces for almost nothing i.e. in the eyes of the banks/government, they are working for almost free.

> How can the value of work ever approach zero? Human work is value.

It would never reach zero, it would keep approaching zero though (relative to the amount of money of people who earnt it before you).

Basically, someone could just hoard the cash they have at 0% risk and still get richer than you over time even if you manage to save 100% of your salary. How is that a reasonable system that encourages growth in productivity?

Of course we have bonds but when real interest rates are close to zero than doesn't work that well like in a deflationary system e.g. throughout much of the 1800s yields were 4-5% and deflation was basically the standard outside of major wars since the economy was growing faster than the supply of money was, so basically you could just not do anything productive with your wealth and still do fine, that's basically how British aristocrats from all the novels (and similar parasitical classes) sustained their lifestyles while not providing anything useful in return to the working classes whose taxes and severely depressed incomes made this whole thing possible).

Re: Why the 2% inflation target? (2023)

#617

Post by apelapan »

smegger001 wrote: post #236
apelapan wrote: post #202

Earlier quoted context omitted.

Did the computer revolution really make things that much more efficient? Great savings and new possibilities on many fronts, but also enormous expenses and a whole lot of lost flexibility and individual agency. I'm sure it is an efficiency win on the total, but perhaps not as gigantic as often assumed.

Do you see typing pools in every large office anymore? Nope, word processors replaced all of them. Do accountants spend several weeks calculating desk sized spreadsheet by hand anymore? no because excel and other digital spreadsheets are able to tabulate data automatically. that's all major efficacy savings

Yep, major savings from those two things. But then someone in this efficient office decides to automate a few more workflows and spend 200k building a digital paper form that is used four times per year and misses a crucial field so that is not "supposed to be needed", so that every use of the form requires a phone call or five. This would not have happened with a paper form and human first recipient.

There is an efficiency gain in total, but a lot of losses that eat at the actual wins.

Re: Why the 2% inflation target? (2023)

#618

Post by bradjohnson »

silent_cal wrote: post #604
bradjohnson wrote: post #201

Earlier quoted context omitted.

If we operated on a deflationary currency, the value of your labour would be tied to cost of goods, and your salary would decrease each year, while the rich continued to accumulate more of the proportion of cash. Working people would still have to spend most of their income on survival, while the rich would be free to sit on piles of deflationary currency and become even richer. In an inflationary currency, the rich…

I think this is just propaganda that you've accepted. You think it's bad if things get cheaper? And you think people would just sit there while their employer decreases their wages every year? Not going to happen. Also, we already get wage decreases each year because of inflation. If you don't get a significant raise every single year you're losing purchasing power. And even then, you have to wait a whole year. The f…

> I think this is just propaganda that you've accepted.

It's just logical inference. Your point of view shallowly considers everyone as consumers without thinking about the fact that if "things get cheaper", that means that labour has also gotten cheaper. You assert that people won't "sit there" while employers reduce their wages, but that's exactly what would HAVE to happen in this system. Otherwise the company would go under because their product or service gets cheaper each year, but labour stays the same or increases in cost. Especially under capitalism which demands constant growth.

It simply would not make sense to pay someone the same price for a bushel of wheat when the cost of bread has reduced to a fraction of its original price. I don't know why you say that it is propaganda to acknowledge this extremely simple logical inference.

Re: Why the 2% inflation target? (2023)

#619

Post by Entwickler »

npoc wrote: post #594
Entwickler wrote: post #528

Earlier quoted context omitted.

Proof of work was the first of the consensus algorithms to be used with blockchains because Satoshi (imo, probably Hal Finney) likely didn't know about Proof of Stake at the time. By the time it was being discussed, Satoshi was already becoming less active in the community. The claim PoS is not the best store of value is asinine. PoW in BTC has consolidated around a cabal of a handful of miners and the power usage is…

Proof of stake is not really any different to the fiat system it's trying to replace. If a money isn't proof-of-work then it implies that some people can create it without doing work. Gold's proof-of-work stood it in good stead for thousands of years. It was only some of it's physical limitations that led to fiat beating it. In fact fiat would be worthless if it wasn't boot-strapped into having value by originally re…

"Proof of stake is not really any different to the fiat system it's trying to replace." Please elaborate.

"If a money isn't proof-of-work then it implies that some people can create it without doing work" Have you seen how much work goes into being a validator? There is definitely work being done - just much more sophisticated that guessing a random value...

Agreed on crypto not having the physical limitations and on the trend of fiat to inflate. I just can't agree on the other points.

Post reply on HN