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I consider this debate an unresolved issue in economics. We don't know how to create a genuinely balanced and productive economy. Option #1: deflationary econo

by api 8y ago

I consider this debate an unresolved issue in economics. We don't know how to create a genuinely balanced and productive economy. Option #1: deflationary economy where monetary velocity collapses and with it employment, investment, and innovation, ending in permanent depression (dark age) and slavery to a money-hoarding landed rentier class. Board game: Monopoly. Option #2: inflationary economy that prioritizes spending and investment over saving, runs on debt, and ends with slavery to consumerism, bullshit jobs, and landfills overflowing with junk. Board game: Risk. Pick your poison. In the 20th century most nations went for option #2 because those that didn't tended to be overcome by the financial and military power of those that did. China is currently performing the most extreme inflationary economics experiment in history. This post makes me remember a definition I heard once in school of economics: "the science of why everything sucks."

armin_maurice 8y ago
I mean it is resolved, and your two options kind of show it. The resolution is very low and slow inflationary economics, to match the growth rate in the economy. This should prioritize a safe level of saving and investment. Higher and lower rates of inflation can be enforced (via central banks) to help fight recession or demand driven inflation (price level increases). However constantly tweaking inflation rates to get the exact right level for the current period of countries economic cycle (debt/savings levels, price levels etc...) is quite difficult. So yes we do know "how" to balance an economy in a general sense, in the same way we know how to build a web application in the general sense, but there is always work do be done in the details.
- api 8y ago
  We've been trying to do that. The problem is that macroeconomic inflation is a big sausage number that doesn't really say much about the reality on the street. Take a look at this: http://thesoundingline.com/why-inflation-is-much-worse-than-the-headline-numbers-suggest/ http://thesoundingline.com/why-inflation-is-much-worse-than-... Price stability has only been achieved for a few categories of things and the divergence is huge.

by api 8y ago

armin_maurice 8y ago

I mean it is resolved, and your two options kind of show it. The resolution is very low and slow inflationary economics, to match the growth rate in the economy. This should prioritize a safe level of saving and investment. Higher and lower rates of inflation can be enforced (via central banks) to help fight recession or demand driven inflation (price level increases). However constantly tweaking inflation rates to get the exact right level for the current period of countries economic cycle (debt/savings levels, price levels etc...) is quite difficult. So yes we do know "how" to balance an economy in a general sense, in the same way we know how to build a web application in the general sense, but there is always work do be done in the details.

api 8y ago
We've been trying to do that. The problem is that macroeconomic inflation is a big sausage number that doesn't really say much about the reality on the street. Take a look at this: http://thesoundingline.com/why-inflation-is-much-worse-than-the-headline-numbers-suggest/ http://thesoundingline.com/why-inflation-is-much-worse-than-... Price stability has only been achieved for a few categories of things and the divergence is huge.