7 ms·

> ... currencies haven't been debased ... We’ve printed trillions of dollars and Congress is en route to print trillions more. The price for that has yet to be

by koolba 6y ago

> ... currencies haven't been debased ... We’ve printed trillions of dollars and Congress is en route to print trillions more. The price for that has yet to be paid.

ahepp 6y ago
Yet interest rates have yet to respond (unless I have missed some major news). You are correct to point out the risk, but I don't think we can call it currency debasement yet.
- kangaroozach 6y ago
  Printing money is debasing currency, no? We are stealing purchasing power from every holder of dollars.
  - klodolph 6y ago
    This is incorrect. The value of money will change, and the amount of money will change, but they are not perfect mirrors of each other.
  - ahepp 6y ago
    Only if the purchasing power of a dollar goes down. I know MMT is controversial, but I think of it more as a focus on empiricism. Sure, rationality suggests that printing dollars will reduce the value of dollars. But kickstarting inflation is in some ways the entire point, no? And it has remained consistently below FR targets for the past decade (I believe, I'm not an economist and I'm not looking at any charts)
    - jbay808 6y ago
      If I run a bakery and you run, say, the Mint... Ten years ago, I bake a loaf of bread, and sell it for a dollar. Then I invent an amazing machine that can produce the same bread more cheaply. I'm about to drop my bread prices, but you mint some new coins and add them into circulation. So I keep the price at a dollar per loaf. I scrutinize my bread supply chain to the last detail. I optimize the flour, I optimize the temperature. I fire all the workers and replace them with machines. I'm saving every penny I can. Loaves get made faster! Loaves get made cheaper! Bread is flying off the conveyor belt! You pull a lever and crank up the printing press. Dollars are being added in the millions, in the billions! The price of bread stays at a dollar; has the currency been debased? I honestly don't know.
      - jbay808 6y ago
        (Addendum: If your salary was a dollar ten years ago, and a dollar today, you can afford just as much bread as you used to, but your chance of buying a majority share in my bakery, or outbidding me on a house in a good school district, has gone way down.)
      - chii 6y ago
        > The price of bread stays at a dollar; has the currency been debased? I honestly don't know. i say no it hasn't. Imagine a third person, who mows lawn for $1 an hour. He has not improved his lawn mowing during this time period which the baker has made improvements to bread making. So the work of mowing the lawn for $1 should stay the same regardless of what the bakers did - and therefore, the lawn mower being able to buy bread for $1 is not unreasonable.
      - imtringued 6y ago
        You are building pressure into the system. It's like letting a dam fill up. That water is not circulating (please bear with tiny mistakes in my analogies). It's staying somewhere and it is ready to be deployed at any given time. If there is a natural disaster or any other kind of pressure to empty the dam then there is a very real risk of a flood. The currency has not been debased. However, the potential for it to debase in the future has grown massively. One day politicians are going to discover sensible policy (maybe Biden will do it, I don't know) and somehow magically increase inflation. That same day will open all floodgates on all dams. The correct strategy would be to increase taxes and interest rates and cut stimulus spending once that has happened and we'll be fine. Crying hyperinflation is not the right strategy.
    - vbtemp 6y ago
      Have you had to pay for medical care, child care, housing, care for elderly or disabled loved ones and/or education?? How on earth can you say that inflation has remained low??? All of those have become insanely expensive and people die all the time because they can't afford them! Just because cheap, crappy electronics and egg McMuffins don't appreciate in cost and stay crappy and cheap does NOT mean inflation is low. Anyone can play stupid games where you say inflation is low if you only pick certain goods made by robots or poor people overseas.
      - freeone3000 6y ago
        But none of those things have risen at the same rate, or even comparable rates. The increase in childcare has kept up with the average wage increase, but education is hundreds of times more! I don't even know how you'd price medical care, as everyone is effectively charged differently, even for the same service. Housing doesn't track either of those -- purchasing follows literally nothing, renting follows local wage. So what's going on here? (As a note, local wages have risen less than the government's calculation of inflation, which is primarily food and secondarily consumer goods)
        throw0101a 6y ago
        > […] but education is hundreds of times more! You're not wrong, but I ran into an interesting observation: yes the prices for many high-end institutions have gone up, but those are 'list' prices. How many people pay list? How many people get bursaries and offsets from endowments? I'd be interested in seeing those stats.
    - imtringued 6y ago
      From what I can tell MMT is about carefully choosing the right place and strategy to print money. By recognizing what the real limits to borrowing are you also gain an understanding of what to spend the borrowed money on.
  - throw0101a 6y ago
    No, it is not. Inflation causes purchasing power to drop. An increased money supply is necessary, but not sufficient. You also need velocity: The equation for inflation is: M x V = P x Q Everyone talks about "printing money" (money supply: M) with the Fed, but no one seems to pay attention to velocity (V). Which has dropped off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
    - freeone3000 6y ago
      What makes V increase? A new big investment opportunity? A savings tax? What starts money circulating?
      - throw0101a 6y ago
        Economic activity: > The velocity of money (or the velocity of circulation of money) is a measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period.[3] * https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money Good video by a CFA trainer: * https://www.youtube.com/watch?v=l0mh7cCjwDU https://www.youtube.com/watch?v=l0mh7cCjwDU The first 10 minutes (maybe 20) probably has the most pertinent information to this discussion, but I've found the entire video to be interesting on inflation.
        Gatsky 6y ago
        But what if you had an artificial cessation of economic activity which then suddenly resumed in the midst of a massive fiscal stimulus, unprecedented supply chain disruption and geopolitical manipulation of free trade?
        throw0101a 6y ago
        We're about to find out. The traditional thing to do is raise interest rates when things start getting hot. But having "too much" economic activity is in some ways better than not enough with people being unemployed and such.
- waterhouse 6y ago
  Ceteris paribus, creating more money reduces its value. If, over some time period, you double the money supply, yet the monetary price of a basket of consumer goods stays the same, then that means the monetary price would have been cut in half if you hadn't printed anything. So, just because other effects are strong enough to counteract your debasing doesn't mean you're not debasing the currency.
  - eli_gottlieb 6y ago
    >Ceteris paribus, creating more money reduces its value. Ceteris is not paribus at all. If we're complaining about potential inflation rather than worrying about the raging pandemic and a full-blown depression like unto the Great Depression, we're in comparatively good shape!
  - vkou 6y ago
    > Ceteris paribus, creating more money reduces its value. That is correct. What you're missing is that a large fraction of created money used to come from banks lending money. During a recession, or a pandemic, that lending tightens, which slows the rate at which money is created, and speeds the rate at which money starts getting destroyed. It's why the fed prints money during recessions, and destroys money during economic booms.
- anewaccount2021 6y ago
  We printed more money last year than we printed from 1776-2000. The dollar has already lost 99% of its purchasing power from its inception (that isn't agitprop, its a verifiable fact when measured against fixed commodities over time). How much house can a dollar buy versus twenty years ago? If the dollar was indeed rising in value over time, a dollar would buy more house today than in 2000. Before we left the gold standard, a dollar indeed held its purchasing power over decades. The price of gold is effectively an inverse measure of the value of a dollar given that the amount of gold is basically fixed.
  - karpierz 6y ago
    How many iPhones can a dollar buy 20 years ago?
    - jbay808 6y ago
      How many Dodo birds can a dollar buy today? A better question might be, how much would you have volunteered to pay twenty years ago for the functionality an iPhone gets you today? In 2001, if today's iPhone were being sold, what price would have made it a successful product among average consumers? (Not, say, the military or super-wealthy). I think... Less than $10,000 for certain, less than $5,000 most likely. In that sense the price has certainly come down, but semiconductors and electronics has obviously gone through rapid technological scaling and deflation is expected in that sector.
- pishpash 6y ago
  Interest rates have yet to respond because they are being held down actively by central banks. Those are not market forces.
  - NeutronStar 6y ago
    > Those are not market forces. Neither is printing money.
  - ahepp 6y ago
    I actually mis-spoke. I meant to say "inflation has yet to respond". Interest rates is the manipulated variable, inflation is the observed. Appreciate you catching that.
  - imtringued 6y ago
    I agree. The interest rates should be mildly positive and go up over time. Inflation is almost on track in the US. The only missing piece is a public declaration that there will be no more easy money in the future. That will drive up inflation to slightly above 2% because everyone will be scrambling to do productive work.
throw0101a 6y ago
> We’ve printed trillions of dollars and Congress is en route to print trillions more. First off: it's not Congress that controls the money supply, it's the Fed. They're independent. > The price for that has yet to be paid. What price is that? Inflation? Japan's M2 has risen a lot, and it hasn't seen any for decades: * https://fred.stlouisfed.org/series/MYAGM2JPM189S https://fred.stlouisfed.org/series/MYAGM2JPM189S * https://fred.stlouisfed.org/series/FPCPITOTLZGJPN https://fred.stlouisfed.org/series/FPCPITOTLZGJPN Japan's interest rate has been below 1% since April 1995: * https://fred.stlouisfed.org/series/INTDSRJPM193N https://fred.stlouisfed.org/series/INTDSRJPM193N From 2002 to 2006 it was 0.1%. The equation for inflation is: M x V = P x Q Everyone talks about "printing money" (money supply: M) with the Fed, but no one seems to pay attention to velocity (V). Which has dropped off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V The Austrian, Milton Friedman Monetarists have been squawking about inflation for ten years: > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://economics21.org/html/open-letter-ben-bernanke-287.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... Meanwhile the Keynesians have been saying it wouldn't be a problem. Both sides made predictions, results are in, the experiment is over: Start listening to Keynesians.
- lettergram 6y ago
  You sure inflation isn’t here? Houses are up massively, land, cars, stocks, crypto, etc. The inflation measurement is off. But the inflation is here.
  - throw0101a 6y ago
    You list assets, which have generally always gone up in value over time. Inflation, i.e. CPI, is (roughly) about cost of living through a basket of goods: * https://awealthofcommonsense.com/2021/01/inflation-truthers/ https://awealthofcommonsense.com/2021/01/inflation-truthers/ * https://news.ycombinator.com/item?id=25644580 https://news.ycombinator.com/item?id=25644580 If you don't believe the government-published CPI you can confirm their work, as others have done: * https://en.wikipedia.org/wiki/MIT_Billion_Prices_project https://en.wikipedia.org/wiki/MIT_Billion_Prices_project For your items: * Monthly carrying costs haven't changed much: prices up, but mortgage rates are down. Plus average square footage has gone up, so you're getting more. * Land depends on location, and urban prices have gone up because it's more cool to live in the city now than in the 1970s and 1980s. I live in Toronto, so I know all about land/housing prices over the last 10-15 years. * Modern cars have more power, while burning less fuel, and being safer, and on average lasting longer, for the same money. I own a 2003 Golf that I paid $30K for (in 2003). What's available for $30K is a lot better, and the equivalent dollars today is closer to $40K—which gets you some sweet things. * I was invested in 2008: I've seen stocks go up and down. * Crypto is a Ponzi scheme.
bertjk 6y ago
The price is paid every time someone has to overpay for housing, and every time someone deposits money into their 401K which will invariably be invested chasing riskier and higher priced assets, whose future returns increasingly depend on stock appreciation, and less on dividend yields which will never catch up. Consider for a moment the common advice to just "buy and hold the SP500", and then the recent news that TSLA just joined the same. They are slowly making it a foregone conclusion that any policy that favors companies with actual operating returns over inflating ratios will necessarily crush everyone's retirement portfolios, and therefore any such move would be politically untenable.
- imtringued 6y ago
  Yes, this is why I always say that capital gains taxes should be increased and dividends taxes decreased. It discourages hoarding. You can make capital gains off of so many different reasons that have nothing to do with the performance of the stock. It's insane. Meanwhile dividends are entirely dependent on the income of a company. You can't cheat dividends because it's the company that has to pay them, not other investors that can drive irrational behavior.
iav 6y ago
My estimate is the death toll from Covid is saving trillions in future benefit obligations for the US overall. From a GAAP perspective, the epidemic might come out a wash. This contrasts with the 1918 pandemic, which mainly killed the young and productive.
- bildung 6y ago
  The US isn't a small business, and as such debt works different. If the US now borrows $1 trillion, it currently pays essentially 0% interest. Assuming 2% inflation that means the whole debt has a value of just 370 billion in 50 years, without paying back a single cent. But this is only the beginning: If the US gets that $1 trillion debt, that money didn't just vanish. It gets spent in the economy, people consume things, stay employed etc., infrastructure gets developed and so on. ROI is usually there after only a few years: "Research [...] showed that one dollar of public money spent during the 2007-09 crisis could generate 2.5 dollars of output in five year’s time." https://theconversation.com/how-much-bang-for-a-buck-working-out-the-returns-on-government-spending-34393 https://theconversation.com/how-much-bang-for-a-buck-working... So for every $100 the country borrows in the current climate, it only has to pay back a $37 in 50 years while getting returns of over $200 in 10 years.
vkou 6y ago
> We’ve printed trillions of dollars and Congress is en route to print trillions more. The price for that has yet to be paid. The majority of dollars in existence do not come from the printing presses of the Fed. The majority of dollars in existence appear from thin air on the balance sheets of fractional reserve banks, when they lend money, for business loans, personal loans, and mortgages. During a recession, people borrow less money, and businesses tighten their belts. In order to prevent the monetary supply from shrinking (thus causing deflation[1]), the fed generally needs to start printing money. Now, we may say that they printed too much money, or that the money did not go to the best possible places for it, but from 30,000 feet, turning on the printing presses was a sound move. [1] Deflation is utterly horrible, and should be avoided at all costs.

by koolba 6y ago

> ... currencies haven't been debased ... We’ve printed trillions of dollars and Congress is en route to print trillions more. The price for that has yet to be paid.

ahepp 6y ago

Yet interest rates have yet to respond (unless I have missed some major news). You are correct to point out the risk, but I don't think we can call it currency debasement yet.

kangaroozach 6y ago
Printing money is debasing currency, no? We are stealing purchasing power from every holder of dollars.
- klodolph 6y ago
  This is incorrect. The value of money will change, and the amount of money will change, but they are not perfect mirrors of each other.
- ahepp 6y ago
  Only if the purchasing power of a dollar goes down. I know MMT is controversial, but I think of it more as a focus on empiricism. Sure, rationality suggests that printing dollars will reduce the value of dollars. But kickstarting inflation is in some ways the entire point, no? And it has remained consistently below FR targets for the past decade (I believe, I'm not an economist and I'm not looking at any charts)
  - jbay808 6y ago
    If I run a bakery and you run, say, the Mint... Ten years ago, I bake a loaf of bread, and sell it for a dollar. Then I invent an amazing machine that can produce the same bread more cheaply. I'm about to drop my bread prices, but you mint some new coins and add them into circulation. So I keep the price at a dollar per loaf. I scrutinize my bread supply chain to the last detail. I optimize the flour, I optimize the temperature. I fire all the workers and replace them with machines. I'm saving every penny I can. Loaves get made faster! Loaves get made cheaper! Bread is flying off the conveyor belt! You pull a lever and crank up the printing press. Dollars are being added in the millions, in the billions! The price of bread stays at a dollar; has the currency been debased? I honestly don't know.
    - jbay808 6y ago
      (Addendum: If your salary was a dollar ten years ago, and a dollar today, you can afford just as much bread as you used to, but your chance of buying a majority share in my bakery, or outbidding me on a house in a good school district, has gone way down.)
    - chii 6y ago
      > The price of bread stays at a dollar; has the currency been debased? I honestly don't know. i say no it hasn't. Imagine a third person, who mows lawn for $1 an hour. He has not improved his lawn mowing during this time period which the baker has made improvements to bread making. So the work of mowing the lawn for $1 should stay the same regardless of what the bakers did - and therefore, the lawn mower being able to buy bread for $1 is not unreasonable.
    - imtringued 6y ago
      You are building pressure into the system. It's like letting a dam fill up. That water is not circulating (please bear with tiny mistakes in my analogies). It's staying somewhere and it is ready to be deployed at any given time. If there is a natural disaster or any other kind of pressure to empty the dam then there is a very real risk of a flood. The currency has not been debased. However, the potential for it to debase in the future has grown massively. One day politicians are going to discover sensible policy (maybe Biden will do it, I don't know) and somehow magically increase inflation. That same day will open all floodgates on all dams. The correct strategy would be to increase taxes and interest rates and cut stimulus spending once that has happened and we'll be fine. Crying hyperinflation is not the right strategy.
  - vbtemp 6y ago
    Have you had to pay for medical care, child care, housing, care for elderly or disabled loved ones and/or education?? How on earth can you say that inflation has remained low??? All of those have become insanely expensive and people die all the time because they can't afford them! Just because cheap, crappy electronics and egg McMuffins don't appreciate in cost and stay crappy and cheap does NOT mean inflation is low. Anyone can play stupid games where you say inflation is low if you only pick certain goods made by robots or poor people overseas.
    - freeone3000 6y ago
      But none of those things have risen at the same rate, or even comparable rates. The increase in childcare has kept up with the average wage increase, but education is hundreds of times more! I don't even know how you'd price medical care, as everyone is effectively charged differently, even for the same service. Housing doesn't track either of those -- purchasing follows literally nothing, renting follows local wage. So what's going on here? (As a note, local wages have risen less than the government's calculation of inflation, which is primarily food and secondarily consumer goods)
      - throw0101a 6y ago
        > […] but education is hundreds of times more! You're not wrong, but I ran into an interesting observation: yes the prices for many high-end institutions have gone up, but those are 'list' prices. How many people pay list? How many people get bursaries and offsets from endowments? I'd be interested in seeing those stats.
  - imtringued 6y ago
    From what I can tell MMT is about carefully choosing the right place and strategy to print money. By recognizing what the real limits to borrowing are you also gain an understanding of what to spend the borrowed money on.
- throw0101a 6y ago
  No, it is not. Inflation causes purchasing power to drop. An increased money supply is necessary, but not sufficient. You also need velocity: The equation for inflation is: M x V = P x Q Everyone talks about "printing money" (money supply: M) with the Fed, but no one seems to pay attention to velocity (V). Which has dropped off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
  - freeone3000 6y ago
    What makes V increase? A new big investment opportunity? A savings tax? What starts money circulating?
    - throw0101a 6y ago
      Economic activity: > The velocity of money (or the velocity of circulation of money) is a measure of the number of times that the average unit of currency is used to purchase goods and services within a given time period.[3] * https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money Good video by a CFA trainer: * https://www.youtube.com/watch?v=l0mh7cCjwDU https://www.youtube.com/watch?v=l0mh7cCjwDU The first 10 minutes (maybe 20) probably has the most pertinent information to this discussion, but I've found the entire video to be interesting on inflation.
      - Gatsky 6y ago
        But what if you had an artificial cessation of economic activity which then suddenly resumed in the midst of a massive fiscal stimulus, unprecedented supply chain disruption and geopolitical manipulation of free trade?
        throw0101a 6y ago
        We're about to find out. The traditional thing to do is raise interest rates when things start getting hot. But having "too much" economic activity is in some ways better than not enough with people being unemployed and such.
waterhouse 6y ago
Ceteris paribus, creating more money reduces its value. If, over some time period, you double the money supply, yet the monetary price of a basket of consumer goods stays the same, then that means the monetary price would have been cut in half if you hadn't printed anything. So, just because other effects are strong enough to counteract your debasing doesn't mean you're not debasing the currency.
- eli_gottlieb 6y ago
  >Ceteris paribus, creating more money reduces its value. Ceteris is not paribus at all. If we're complaining about potential inflation rather than worrying about the raging pandemic and a full-blown depression like unto the Great Depression, we're in comparatively good shape!
- vkou 6y ago
  > Ceteris paribus, creating more money reduces its value. That is correct. What you're missing is that a large fraction of created money used to come from banks lending money. During a recession, or a pandemic, that lending tightens, which slows the rate at which money is created, and speeds the rate at which money starts getting destroyed. It's why the fed prints money during recessions, and destroys money during economic booms.
anewaccount2021 6y ago
We printed more money last year than we printed from 1776-2000. The dollar has already lost 99% of its purchasing power from its inception (that isn't agitprop, its a verifiable fact when measured against fixed commodities over time). How much house can a dollar buy versus twenty years ago? If the dollar was indeed rising in value over time, a dollar would buy more house today than in 2000. Before we left the gold standard, a dollar indeed held its purchasing power over decades. The price of gold is effectively an inverse measure of the value of a dollar given that the amount of gold is basically fixed.
- karpierz 6y ago
  How many iPhones can a dollar buy 20 years ago?
  - jbay808 6y ago
    How many Dodo birds can a dollar buy today? A better question might be, how much would you have volunteered to pay twenty years ago for the functionality an iPhone gets you today? In 2001, if today's iPhone were being sold, what price would have made it a successful product among average consumers? (Not, say, the military or super-wealthy). I think... Less than $10,000 for certain, less than $5,000 most likely. In that sense the price has certainly come down, but semiconductors and electronics has obviously gone through rapid technological scaling and deflation is expected in that sector.
pishpash 6y ago
Interest rates have yet to respond because they are being held down actively by central banks. Those are not market forces.
- NeutronStar 6y ago
  > Those are not market forces. Neither is printing money.
- ahepp 6y ago
  I actually mis-spoke. I meant to say "inflation has yet to respond". Interest rates is the manipulated variable, inflation is the observed. Appreciate you catching that.
- imtringued 6y ago
  I agree. The interest rates should be mildly positive and go up over time. Inflation is almost on track in the US. The only missing piece is a public declaration that there will be no more easy money in the future. That will drive up inflation to slightly above 2% because everyone will be scrambling to do productive work.

throw0101a 6y ago

> We’ve printed trillions of dollars and Congress is en route to print trillions more. First off: it's not Congress that controls the money supply, it's the Fed. They're independent. > The price for that has yet to be paid. What price is that? Inflation? Japan's M2 has risen a lot, and it hasn't seen any for decades: * https://fred.stlouisfed.org/series/MYAGM2JPM189S https://fred.stlouisfed.org/series/MYAGM2JPM189S * https://fred.stlouisfed.org/series/FPCPITOTLZGJPN https://fred.stlouisfed.org/series/FPCPITOTLZGJPN Japan's interest rate has been below 1% since April 1995: * https://fred.stlouisfed.org/series/INTDSRJPM193N https://fred.stlouisfed.org/series/INTDSRJPM193N From 2002 to 2006 it was 0.1%. The equation for inflation is: M x V = P x Q Everyone talks about "printing money" (money supply: M) with the Fed, but no one seems to pay attention to velocity (V). Which has dropped off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V The Austrian, Milton Friedman Monetarists have been squawking about inflation for ten years: > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://economics21.org/html/open-letter-ben-bernanke-287.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... Meanwhile the Keynesians have been saying it wouldn't be a problem. Both sides made predictions, results are in, the experiment is over: Start listening to Keynesians.

lettergram 6y ago
You sure inflation isn’t here? Houses are up massively, land, cars, stocks, crypto, etc. The inflation measurement is off. But the inflation is here.
- throw0101a 6y ago
  You list assets, which have generally always gone up in value over time. Inflation, i.e. CPI, is (roughly) about cost of living through a basket of goods: * https://awealthofcommonsense.com/2021/01/inflation-truthers/ https://awealthofcommonsense.com/2021/01/inflation-truthers/ * https://news.ycombinator.com/item?id=25644580 https://news.ycombinator.com/item?id=25644580 If you don't believe the government-published CPI you can confirm their work, as others have done: * https://en.wikipedia.org/wiki/MIT_Billion_Prices_project https://en.wikipedia.org/wiki/MIT_Billion_Prices_project For your items: * Monthly carrying costs haven't changed much: prices up, but mortgage rates are down. Plus average square footage has gone up, so you're getting more. * Land depends on location, and urban prices have gone up because it's more cool to live in the city now than in the 1970s and 1980s. I live in Toronto, so I know all about land/housing prices over the last 10-15 years. * Modern cars have more power, while burning less fuel, and being safer, and on average lasting longer, for the same money. I own a 2003 Golf that I paid $30K for (in 2003). What's available for $30K is a lot better, and the equivalent dollars today is closer to $40K—which gets you some sweet things. * I was invested in 2008: I've seen stocks go up and down. * Crypto is a Ponzi scheme.

bertjk 6y ago

The price is paid every time someone has to overpay for housing, and every time someone deposits money into their 401K which will invariably be invested chasing riskier and higher priced assets, whose future returns increasingly depend on stock appreciation, and less on dividend yields which will never catch up. Consider for a moment the common advice to just "buy and hold the SP500", and then the recent news that TSLA just joined the same. They are slowly making it a foregone conclusion that any policy that favors companies with actual operating returns over inflating ratios will necessarily crush everyone's retirement portfolios, and therefore any such move would be politically untenable.

imtringued 6y ago
Yes, this is why I always say that capital gains taxes should be increased and dividends taxes decreased. It discourages hoarding. You can make capital gains off of so many different reasons that have nothing to do with the performance of the stock. It's insane. Meanwhile dividends are entirely dependent on the income of a company. You can't cheat dividends because it's the company that has to pay them, not other investors that can drive irrational behavior.

iav 6y ago

My estimate is the death toll from Covid is saving trillions in future benefit obligations for the US overall. From a GAAP perspective, the epidemic might come out a wash. This contrasts with the 1918 pandemic, which mainly killed the young and productive.

bildung 6y ago
The US isn't a small business, and as such debt works different. If the US now borrows $1 trillion, it currently pays essentially 0% interest. Assuming 2% inflation that means the whole debt has a value of just 370 billion in 50 years, without paying back a single cent. But this is only the beginning: If the US gets that $1 trillion debt, that money didn't just vanish. It gets spent in the economy, people consume things, stay employed etc., infrastructure gets developed and so on. ROI is usually there after only a few years: "Research [...] showed that one dollar of public money spent during the 2007-09 crisis could generate 2.5 dollars of output in five year’s time." https://theconversation.com/how-much-bang-for-a-buck-working-out-the-returns-on-government-spending-34393 https://theconversation.com/how-much-bang-for-a-buck-working... So for every $100 the country borrows in the current climate, it only has to pay back a $37 in 50 years while getting returns of over $200 in 10 years.

vkou 6y ago

> We’ve printed trillions of dollars and Congress is en route to print trillions more. The price for that has yet to be paid. The majority of dollars in existence do not come from the printing presses of the Fed. The majority of dollars in existence appear from thin air on the balance sheets of fractional reserve banks, when they lend money, for business loans, personal loans, and mortgages. During a recession, people borrow less money, and businesses tighten their belts. In order to prevent the monetary supply from shrinking (thus causing deflation[1]), the fed generally needs to start printing money. Now, we may say that they printed too much money, or that the money did not go to the best possible places for it, but from 30,000 feet, turning on the printing presses was a sound move. [1] Deflation is utterly horrible, and should be avoided at all costs.