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Imagine a doctor stating "a healthy patient's heart rate is 70 bpm" and prescribing ever escalating medication and surgery to try and keep the heart rate at 70

Imagine a doctor stating "a healthy patient's heart rate is 70 bpm" and prescribing ever escalating medication and surgery to try and keep the heart rate at 70 bpm, regardless of age or whether the patient is sleeping or sprinting or recovering from previous surgery. Welcome to the world of central banking.

dnautics 7y ago
It's great for the pharma companies and the surgeons! Keep the interventions coming.
pas 7y ago
Central banking - especially in the US - tries to keep inflation and unemployment low. In accordance with Real Business Cycle theory. The theory says that the central bank should help speed up the economy when it's too slow, and apply the brakes when it's getting too hot. The problem is that when a recession (inevitably) hits, it'd be good if people had savings, social security, etc. If there were structured ways to unravel over-leveraged investments, and so on, without hurting the people.
- RhodesianHunter 7y ago
  The real problem is that monetary policy is only half of the coin, and the other half, fiscal policy, seems to never be enacted according to the theory. Just look at the current state of it, with record budget deficits at the height of a bull run.
  - pas 7y ago
    Every theory, plan, ideology when meets with real life humans gets transformed. Socialism (state socialism, gulags, holodomor), buddhism (genocie in Myanmar), christianity (from megachurches and westboro baptist church to serious "internal" affairs like sexual abuse), islam (ISIL/ISIS), and the list is probably endless. There are a lot of people working on solving the fiscal policy issue. And apparently just as many trying to stick to their guns and boneheaded over-simplistic arguments.
- WalterBright 7y ago
  > Central banking - especially in the US - tries to keep inflation and unemployment low. Fiat money (central banking) is the cause of endemic inflation, not the cure. There was no net inflation in the US money from 1800-1914, and pretty much continual inflation since. The whole point of central banking is to inflate the currency to provide money for the government to spend without needing to raise taxes.
  - QuesnayJr 7y ago
    Who cares? Real economic growth is much higher in the continual inflation era than it was before. Inflation is a nothing problem, especially now that inflation is only about 2% a year.
    - WalterBright 7y ago
      > Real economic growth is much higher in the continual inflation era than it was before Is it? I'm not so sure.
  - aeternum 7y ago
    What's the problem with inflation? It seems to me that it is a very effective wealth tax. Almost trivial to collect, and it greatly benefits those with debt including governments.
    - WalterBright 7y ago
      > it greatly benefits those with debt Since the interest rate is increased to account for inflation, it doesn't benefit debtors who can't just print more money to cover it (like the government does).
  - pas 7y ago
    > The whole point of central banking is to inflate the currency to provide money for the government to spend without needing to raise taxes. Bullshit. The whole point of central banking is to provide price stability (which is predictable, stable, low ~2% inflation), that is to manage the money supply to follow the growth (or shrinking) of the economy.
- samsonradu 7y ago
  An interesting book right on the subject: https://www.bridgewater.com/big-debt-crises/Principles-For-Navigating-Big-Debt-Crises-By-Ray-Dalio.pdf https://www.bridgewater.com/big-debt-crises/Principles-For-N...
RhodesianHunter 7y ago
This comment reads exactly like an anti-vac rant. Person with almost certainly no economics background rants about things they don't understand based on a bunch of YouTube videos and Twitter threads they've watched.
WalterBright 7y ago
> Welcome to the world of central banking. Milton Friedman writes about this in "Monetary History of the United States". He shows with graphs that the monetary stability was greater before the Fed was established (in 1914) than after. The Fed was simply unable to react as quickly as free banking did.

dnautics 7y ago

It's great for the pharma companies and the surgeons! Keep the interventions coming.

pas 7y ago

Central banking - especially in the US - tries to keep inflation and unemployment low. In accordance with Real Business Cycle theory. The theory says that the central bank should help speed up the economy when it's too slow, and apply the brakes when it's getting too hot. The problem is that when a recession (inevitably) hits, it'd be good if people had savings, social security, etc. If there were structured ways to unravel over-leveraged investments, and so on, without hurting the people.

RhodesianHunter 7y ago
The real problem is that monetary policy is only half of the coin, and the other half, fiscal policy, seems to never be enacted according to the theory. Just look at the current state of it, with record budget deficits at the height of a bull run.
- pas 7y ago
  Every theory, plan, ideology when meets with real life humans gets transformed. Socialism (state socialism, gulags, holodomor), buddhism (genocie in Myanmar), christianity (from megachurches and westboro baptist church to serious "internal" affairs like sexual abuse), islam (ISIL/ISIS), and the list is probably endless. There are a lot of people working on solving the fiscal policy issue. And apparently just as many trying to stick to their guns and boneheaded over-simplistic arguments.
WalterBright 7y ago
> Central banking - especially in the US - tries to keep inflation and unemployment low. Fiat money (central banking) is the cause of endemic inflation, not the cure. There was no net inflation in the US money from 1800-1914, and pretty much continual inflation since. The whole point of central banking is to inflate the currency to provide money for the government to spend without needing to raise taxes.
- QuesnayJr 7y ago
  Who cares? Real economic growth is much higher in the continual inflation era than it was before. Inflation is a nothing problem, especially now that inflation is only about 2% a year.
  - WalterBright 7y ago
    > Real economic growth is much higher in the continual inflation era than it was before Is it? I'm not so sure.
- aeternum 7y ago
  What's the problem with inflation? It seems to me that it is a very effective wealth tax. Almost trivial to collect, and it greatly benefits those with debt including governments.
  - WalterBright 7y ago
    > it greatly benefits those with debt Since the interest rate is increased to account for inflation, it doesn't benefit debtors who can't just print more money to cover it (like the government does).
- pas 7y ago
  > The whole point of central banking is to inflate the currency to provide money for the government to spend without needing to raise taxes. Bullshit. The whole point of central banking is to provide price stability (which is predictable, stable, low ~2% inflation), that is to manage the money supply to follow the growth (or shrinking) of the economy.
samsonradu 7y ago
An interesting book right on the subject: https://www.bridgewater.com/big-debt-crises/Principles-For-Navigating-Big-Debt-Crises-By-Ray-Dalio.pdf https://www.bridgewater.com/big-debt-crises/Principles-For-N...

RhodesianHunter 7y ago

This comment reads exactly like an anti-vac rant. Person with almost certainly no economics background rants about things they don't understand based on a bunch of YouTube videos and Twitter threads they've watched.

WalterBright 7y ago

> Welcome to the world of central banking. Milton Friedman writes about this in "Monetary History of the United States". He shows with graphs that the monetary stability was greater before the Fed was established (in 1914) than after. The Fed was simply unable to react as quickly as free banking did.