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Economists’ projections of interest rates and unemployment have proved too high

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Re: Economists’ projections of interest rates and unemployment have proved too high

#81

Post by tree3 »

aishvar wrote: post #34
tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

That's just flat false. Look at the latest CPI report: https://www.bls.gov/news.release/pdf/cpi.pdf It includes the list of items, weightings, and price changes. All 3 of those (shelter, medical care, and education) are on there.

What he said was:

> It doesn't include enough

Re: Economists’ projections of interest rates and unemployment have proved too high

#82

Post by nathan_compton »

twic wrote: post #78
nathan_compton wrote: post #66

Earlier quoted context omitted.

That I can believe, but it seems a bit double-speaky to call it a savings glut, right? My untutored intuition tells me that its a glut of savings in a small number of people's hands. People who don't have a glut of savings, or even significant debt, which is a lot of people, can probably think of a lot of good uses for that money. Assuming this sketch is accurate, the problem is too much money in the hands of too few…

The thing that's glutted is the savings themselves - the number of dollar bills that have been scanned in and put in spreadsheets. That the spreadsheets are in the name of a small fraction of the population doesn't change the fact that there is a glut of the dollars.

Pretty sure it does - if you split that "glut" up evenly across the population of, say, earth, I'm pretty sure they would find more than "marginal returns" on its expenditure - perhaps not in the form of literal investments in monetary instruments, though. When its concentrated in the hands of a few, its marginal value is very small. The very wealthy aren't looking to spend that money on like actually useful things like health care or paying off their student debts or housing or education. They want to get returns.

The world would be a better place if that money was in the hands of more people.

If you ask non-wealthy humans, there is plenty of stuff to spend money on. It only looks like a glut if you're a rich person.

Re: Economists’ projections of interest rates and unemployment have proved too high

#83

Post by claudeganon »

jmartrican wrote: post #79
claudeganon wrote: post #15

Earlier quoted context omitted.

Do you know does MMT says about printing money for the express purpose of infrastructure development? I’d be interested to see what their take would be on doing so for doing things like high speed internet expansion, decentralized green grids, etc. In housing, the fed doing this has obviously led to real estate asset bubbles, but what would happen in the case of public assets?

Is this what China is doing? I often wonder about whether there are real downsides to just printing money as long as the rest of the world buys into your currency. Seems like printing money fails only when there is lost in confidence. But as long as the confidence is there, maybe it can just continue working.

The United States flies nuclear bombs around the world and parks them off coasts of other countries. I’d like to see an economist explain the impact of this in the stability of US currency as well.

Re: Economists’ projections of interest rates and unemployment have proved too high

#84

Post by steveklabnik »

rayiner wrote: post #64
tuberelay wrote: post #23

The official US inflation measure is garbage. It doesn't include enough of the big 3 costs in people's lives : housing, education and healthcare. It includes whacky stuff like "oh your cellphone is faster now than 5 years ago, we're going to say that you're getting 10x the phone for roughly the same price and use that to disprove inflation". It ignores asset inflation (stocks, real estate, venture capital, everything…

Most inflation measures include housing, education, and healthcare. The perception that the national inflation measure isn’t accurate is rooted in the fact that a small but very vocal segment of the population (yuppies in coastal metro areas) are facing very high housing and educational costs. But that’s not true of most people. Housing prices aren’t skyrocketing in the Kansas City suburbs. Most people aren’t in coll…

I don't know if Austin is considered a "coastal metro area" or a "Kansas City suburb," but it's certainly happening here. Largely due to tech.

Re: Economists’ projections of interest rates and unemployment have proved too high

#85

Post by jfengel »

virmundi wrote: post #7
joshuaellinger wrote: post #2

Except for the MMT people. They mostly got it right but they don't count as 'real' economists to the WSJ.

MMT is not enough to google for. Who are they and what do they think/teach?

Modern Monetary Theory is the idea that the government can go ahead and just pay all its debts with IOUs, which is all cash really is anyway. You don't need taxes to pull in cash and dole it out, which just complicates things. You might do it anyway, to control inflation, but even orthodox Keynesian theory says that a little inflation is a good thing (since it encourages people to invest rather than put their money under a mattress).

The idea is to pump enough cash into the economy that employers (or worst case, the government itself) will find jobs for everybody who wants to work.

It's kind of the flip side of the inflation-averse Chicago/Austrian school of economics, with mainstream Keynesian economics in between. The Chicago school is strongly associated with the right wing, and MMT is receiving a lot of attention right now from the left, who want to use it to fund a lot of progressive spending policies.

Re: Economists’ projections of interest rates and unemployment have proved too high

#86

Post by tvanantwerp »

joshuaellinger wrote: post #2

Except for the MMT people. They mostly got it right but they don't count as 'real' economists to the WSJ.

I think the reliance on being able to adjust tax rates--especially upwards--makes MMT a non-starter politically. You'd basically have to remove the power of taxation from legislative bodies to unaccountable agencies, similar to how the Fed controls interest rates. And good luck convincing any legislative body to give up that power.

Re: Economists’ projections of interest rates and unemployment have proved too high

#87

Post by aazaa »

> Economists have been casting around for the answer, a theory to explain their inability to peer accurately in the months ahead, let alone the years. ...

No mention of "quantitative easing" anywhere.

QE ran in various forms from 2008-2013. Short term rates were held at zero in the US from 2008-2015. Several industrialized areas now have negative nominal rates. The Fed has started QE back up again to prop up the failing repo market, insisting that what's happening isn't another round of QE. None of these unusual activities were considered worth discussing by most economists prior to 2008. No wonder why their predictions are so off the mark.

Can ultra-loose monetary policy lead to marketplace distortions? Can it lead to malinvestments like we see in the tech sector? Can it lead companies into a false sense of security, delaying and scaling back layoffs, because the usual economic signals have been swept under the rug by government policies?

Of course. The only surprise here is that the WSJ chooses to completely ignore these completely obvious distortions.

Re: Economists’ projections of interest rates and unemployment have proved too high

#88

Post by CoolGuySteve »

duxup wrote: post #29

Is it because say unemployment has proven to be a strange concept these days with "underemployment" being a larger concern? Perhaps they were simply predicting the wrong thing / things that don't seem as relevant.

The US non-farm payrolls report does include average hourly earnings and average hours worked per week but for some reason it's not as widely reported. IMO the multiple of those 2 values and participation rate are much more meaningful than the total number of jobs added or removed.

The average hourly earnings has been hovering around a 3% YoY increase for years now: https://tradingeconomics.com/united-states/average-hourly-ea...

Re: Economists’ projections of interest rates and unemployment have proved too high

#89

Post by SketchySeaBeast »

drcode wrote: post #45
oblio wrote: post #32

Earlier quoted context omitted.

There's been fads bigger than Bitcoin that no one remembers anymore. The true test of Bitcoin is longevity.

No, there has never been a "fad" that had a 100 billion dollar market cap.

I wonder what the total worth of tulips during tulip mania were worth.

Re: Economists’ projections of interest rates and unemployment have proved too high

#90

Post by jokoon »

Politically I will always be against policies that attempt to reduce unemployment. It's counter productive. Jobs is not a good metric.

There are way too many subsidies to sustain wage slavery. I'm not against capitalism, but fighting unemployment has not reduced inequality. The UBI, even at a low amount, would enable a much more virtuous labor economy.

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