7 ms·

Exactly. Mainstream actually educated economists are right, not people hyperventilating about money printing. On top of what you said about the effect of print

Exactly. Mainstream actually educated economists are right, not people hyperventilating about money printing. On top of what you said about the effect of printing making valuations high, only temporarily and only on paper, the opposite lack of printing, is actual redistribution towards the rich in a much more real and persistent way. Insufficiently inflationary money can be used as a way for the rich to withdraw from the private economy when things are getting too turbulent and park their wealth in government paper having greater than market rates of returns (on a risk adjusted, liquidity adjusted basis). If government money didn't exist, these people would have to stay in the turbulence when the economy hits a storm. In a private economy, it's normal for returns on assets to occasionally turn negative. Wealth is sometimes difficult to keep constantly growing year after year. With low inflation, the rich can divest from private assets at the first sign of trouble, shrink or close businesses, kick employees to the curb and they get to park their wealth in government guaranteed paper. A deflationary government currency is basically a subsidy for causing unemployment and destroying careers, a subsidy that often gets indirectly paid by the poor. Money printer keep going brrr please.

jkhdigital 6y ago
Not sure if you intended to, but despite the hand-waviness this sounds like you’re making an argument for a return to hard currency...
- BenoitEssiambre 6y ago
  Because I am fairly pro market but read enough mainstream economics to know that government paper retaining value more than private assets is much more of a distortion than said paper gradually losing value towards its intrinsic value of nothing. The thing is, stable money that predictably loses value is a great thing to have for the economy as it allows people to negotiate contracts and conduct business in a predictable manner. Medium of account, medium of exchange etc. Money being a store of value is an unfortunate consequence of it being a medium of exchange that often has to be mitigated. Fiat should never be widely used for saving. Money is just an IOU. When everyone's savings are IOUs, on average everybody indirectly owes everybody else their savings. Instead, savings should be tied to real stuff such as businesses, inventory, production capacity etc. not just all be pure promises. When too many people hoard pure promises and all believe that it's true wealth, bad things happens. Hard currencies while not good for conducting business since they are too unstable might be better as stores of value as they fluctuate and have negative returns when they should so tend to not crowd out other asset markets as much as government stabilized currencies do when inflation is not high enough. Just make sure the government does not try to stabilize hard currencies. That caused the great depression.
  - biztos 6y ago
    I think I follow this, but isn’t owning say an index fund just another IOU, itself made up of smaller IOU’s? And isn’t that the main way normal people’s savings can be tied to “real stuff?”
    - BenoitEssiambre 6y ago
      Stocks are also IOUs on a certain level but they are not far removed from a real productive assets creating real value (the company that the stock gives you ownership of). Things can get speculative with stocks too, though usually far less than in the cryptocoin realm. If you add up all the IOUs in the economy, financial assets are cancelled by financial liabilities and what remains is real stuff which in economics is called "investment". The nomenclature can be a bit confusing because in finance they use the same word to mean the contract, the claim or the IOU not the physical asset. The equation for GDP is Consumption plus Investment (sometimes government consumption and investment and exports are broken out). Investment is not financial assets or money or bonds which all cancel out at the global level. Investment means factories built, equipment built, less tangible things like knowledge and intellectual property count too in theory but are sometimes hard to measure. It's important to have a good level of investment. Promise hoarding can crowd it out when things get too speculative. The economy can get into a bad Nash equilibrium where people are chasing IOUs instead of producing real value.
    - MrMan 6y ago
      You are only permitted to own real stuff to the extent that other people can be somehow dissuaded from taking it, and instead of working against you, can be convinced to work together and to trade instead of taking things by force. It’s all trust or the lack of it, just agreements to keep moving society forward instead of reverting to more competitive models of subsistence
  - RhodoGSA 6y ago
    Great comment! Def made me think alot. Seems you can replace your entire argument with crypto. Money printer goes brrr, money gets locked in crypto, does nothing for the economy, leading to massive inequality. Crypto can be though of as "Savings" in your analogy. BTC might cause a economic meltdown if $10T gets locked in'Savings'.
natenthe 6y ago
"Mainstream actually educated economists are right, not people hyperventilating about money printing." The thesis of your post is literally a fallacious argument - the argument from authority. The textbook definition. Yes, the "experts" are always right, like the experts that ran LTCM, the hedge fund run by rocket scientists that crashed the economy (until being bailed out by the Fed) /s I would go on with more examples of fallacious "argument from authority" logic gone wrong, but I don't have the time.
- BenoitEssiambre 6y ago
  ouch burned... except that it isn't the thesis of my post, I just started it by hooking into your argument about education.
  - natenthe 6y ago
    I didn't make an argument about education. I made a comment referencing mass financial and economic illiteracy in America. An economic theory is not right or wrong, good or bad, or otherwise based what the "educated, mainstream experts" believe. The history of human knowledge is essentially a history of paradigms (sometimes temporarily useful) being proven completely wrong, with some non-mainstream ideas being proven right. QE and mainstream economics, in my opinion, will turn out the same way, and end up causing the destruction of arguably the wealthiest nation in human history. It's only a "burn" if you actually think it's a legit argument. I was just pointing out that it is not. "One of the great commandments of science is, "Mistrust arguments from authority." ... Too many such arguments have proved too painfully wrong. Authorities must prove their contentions like everybody else." - Carl Sagan
    - MrMan 6y ago
      How about substitute “expertise” for authority and Sagan might not have the same sanguine sagacity
jokethrowaway 6y ago
While I agree with you on inflation, I disagree that mainstream (Keynesian) economists are in the right. I'm with Peter Schiff on this one. The crises we're getting are the price to pay for government interference in a self regulating market.
- parasubvert 6y ago
  Peter Schiff has been wrong consistently for 15+ years. Why do you think his theory explains anything?
  - unishark 6y ago
    That's rather extreme. If he always predicts gloom and doom sometimes he will be right. Especially within the last 15 years. Wasn't he predicting the last financial crash for a couple years before it happened?
    - parasubvert 6y ago
      The boy who cried wolf was eventually correct too. A broken clock is right twice a day. Etc. Peter Schiff currently believes Bitcoin is going to collapse, that anyone who buys it is a fool and charlatan, that hyperinflation is around the corner, and the only solution is a return to the gold standard. Do you agree with this? I don’t like Bitcoin (too many grifters) but even I can admit it has value as a hedge asset against systemic shocks. He just doesn’t like that it may supplant Gold.
      - unishark 6y ago
        > The boy who cried wolf was eventually correct too. A broken clock is right twice a day. Etc. Yes. That's what I said. You said he was consistently wrong for 15 years. I don't know who to believe regarding gold and bitcoin, but it doesn't help me trust your opinion when you go overboard in your criticism of Schiff.
        6y ago
swixi 6y ago
> Mainstream actually educated economists are right, not people hyperventilating about money printing. This statement is so vague, I don't know what it means. Are you implying that all "mainstream actually educated economists" (whatever those are) are all in agreement about something? What exactly are they "right" about here?
8bitsrule 6y ago
I note that the Nobel Prize in Economics was created by funding from a banker. 'Mainstream economists' have certainly not 'conferred the greatest benefit on mankind' nor has 'trickle-down' lifted all boats ... only the boats in the marina. As ye sow ...
- CRConrad 6y ago
  By a National Bank actually, Sweden's “Fed”; not any private bank or banker.

jkhdigital 6y ago

Not sure if you intended to, but despite the hand-waviness this sounds like you’re making an argument for a return to hard currency...

BenoitEssiambre 6y ago
Because I am fairly pro market but read enough mainstream economics to know that government paper retaining value more than private assets is much more of a distortion than said paper gradually losing value towards its intrinsic value of nothing. The thing is, stable money that predictably loses value is a great thing to have for the economy as it allows people to negotiate contracts and conduct business in a predictable manner. Medium of account, medium of exchange etc. Money being a store of value is an unfortunate consequence of it being a medium of exchange that often has to be mitigated. Fiat should never be widely used for saving. Money is just an IOU. When everyone's savings are IOUs, on average everybody indirectly owes everybody else their savings. Instead, savings should be tied to real stuff such as businesses, inventory, production capacity etc. not just all be pure promises. When too many people hoard pure promises and all believe that it's true wealth, bad things happens. Hard currencies while not good for conducting business since they are too unstable might be better as stores of value as they fluctuate and have negative returns when they should so tend to not crowd out other asset markets as much as government stabilized currencies do when inflation is not high enough. Just make sure the government does not try to stabilize hard currencies. That caused the great depression.
- biztos 6y ago
  I think I follow this, but isn’t owning say an index fund just another IOU, itself made up of smaller IOU’s? And isn’t that the main way normal people’s savings can be tied to “real stuff?”
  - BenoitEssiambre 6y ago
    Stocks are also IOUs on a certain level but they are not far removed from a real productive assets creating real value (the company that the stock gives you ownership of). Things can get speculative with stocks too, though usually far less than in the cryptocoin realm. If you add up all the IOUs in the economy, financial assets are cancelled by financial liabilities and what remains is real stuff which in economics is called "investment". The nomenclature can be a bit confusing because in finance they use the same word to mean the contract, the claim or the IOU not the physical asset. The equation for GDP is Consumption plus Investment (sometimes government consumption and investment and exports are broken out). Investment is not financial assets or money or bonds which all cancel out at the global level. Investment means factories built, equipment built, less tangible things like knowledge and intellectual property count too in theory but are sometimes hard to measure. It's important to have a good level of investment. Promise hoarding can crowd it out when things get too speculative. The economy can get into a bad Nash equilibrium where people are chasing IOUs instead of producing real value.
  - MrMan 6y ago
    You are only permitted to own real stuff to the extent that other people can be somehow dissuaded from taking it, and instead of working against you, can be convinced to work together and to trade instead of taking things by force. It’s all trust or the lack of it, just agreements to keep moving society forward instead of reverting to more competitive models of subsistence
- RhodoGSA 6y ago
  Great comment! Def made me think alot. Seems you can replace your entire argument with crypto. Money printer goes brrr, money gets locked in crypto, does nothing for the economy, leading to massive inequality. Crypto can be though of as "Savings" in your analogy. BTC might cause a economic meltdown if $10T gets locked in'Savings'.

natenthe 6y ago

"Mainstream actually educated economists are right, not people hyperventilating about money printing." The thesis of your post is literally a fallacious argument - the argument from authority. The textbook definition. Yes, the "experts" are always right, like the experts that ran LTCM, the hedge fund run by rocket scientists that crashed the economy (until being bailed out by the Fed) /s I would go on with more examples of fallacious "argument from authority" logic gone wrong, but I don't have the time.

BenoitEssiambre 6y ago
ouch burned... except that it isn't the thesis of my post, I just started it by hooking into your argument about education.
- natenthe 6y ago
  I didn't make an argument about education. I made a comment referencing mass financial and economic illiteracy in America. An economic theory is not right or wrong, good or bad, or otherwise based what the "educated, mainstream experts" believe. The history of human knowledge is essentially a history of paradigms (sometimes temporarily useful) being proven completely wrong, with some non-mainstream ideas being proven right. QE and mainstream economics, in my opinion, will turn out the same way, and end up causing the destruction of arguably the wealthiest nation in human history. It's only a "burn" if you actually think it's a legit argument. I was just pointing out that it is not. "One of the great commandments of science is, "Mistrust arguments from authority." ... Too many such arguments have proved too painfully wrong. Authorities must prove their contentions like everybody else." - Carl Sagan
  - MrMan 6y ago
    How about substitute “expertise” for authority and Sagan might not have the same sanguine sagacity

jokethrowaway 6y ago

While I agree with you on inflation, I disagree that mainstream (Keynesian) economists are in the right. I'm with Peter Schiff on this one. The crises we're getting are the price to pay for government interference in a self regulating market.

parasubvert 6y ago
Peter Schiff has been wrong consistently for 15+ years. Why do you think his theory explains anything?
- unishark 6y ago
  That's rather extreme. If he always predicts gloom and doom sometimes he will be right. Especially within the last 15 years. Wasn't he predicting the last financial crash for a couple years before it happened?
  - parasubvert 6y ago
    The boy who cried wolf was eventually correct too. A broken clock is right twice a day. Etc. Peter Schiff currently believes Bitcoin is going to collapse, that anyone who buys it is a fool and charlatan, that hyperinflation is around the corner, and the only solution is a return to the gold standard. Do you agree with this? I don’t like Bitcoin (too many grifters) but even I can admit it has value as a hedge asset against systemic shocks. He just doesn’t like that it may supplant Gold.
    - unishark 6y ago
      > The boy who cried wolf was eventually correct too. A broken clock is right twice a day. Etc. Yes. That's what I said. You said he was consistently wrong for 15 years. I don't know who to believe regarding gold and bitcoin, but it doesn't help me trust your opinion when you go overboard in your criticism of Schiff.
      - 6y ago

swixi 6y ago

> Mainstream actually educated economists are right, not people hyperventilating about money printing. This statement is so vague, I don't know what it means. Are you implying that all "mainstream actually educated economists" (whatever those are) are all in agreement about something? What exactly are they "right" about here?

8bitsrule 6y ago

I note that the Nobel Prize in Economics was created by funding from a banker. 'Mainstream economists' have certainly not 'conferred the greatest benefit on mankind' nor has 'trickle-down' lifted all boats ... only the boats in the marina. As ye sow ...

CRConrad 6y ago
By a National Bank actually, Sweden's “Fed”; not any private bank or banker.