2 ms·

> That's your duty in a capitalist society - to pick winners by investment. See, that, and well as your first point, are where the other person's philosophy an

> That's your duty in a capitalist society - to pick winners by investment. See, that, and well as your first point, are where the other person's philosophy and yours collide. I daresay his point is that "It should not be my defacto requirement in society to buy stonks in order to not lose the wages I have duly earned". You are saying "your obligation in society is to take the wages you earn and keep your money moving, rather than keeping it safely".

arcticbull 6y ago
So buy gold. The point is that an inflationary fiat currency offers maximum flexibility by not forcing anyone into treating it as more than a medium of exchange. The OP is demanding the creation of a new class of thing, which is designed to preserve wealth, with no risk. Ok, pitch that. But there's many reasons why that isn't a good thing. Inability to react to shocks such as a global pandemic, generational wealth consolidation and so on are all reasons its a bad idea. Many things people hate on such as wild value swings and boom/bust cycles were much worse on the gold standard. However, in a world where wages keep pace with inflation (they do) you can recreate the gold standard yourself by firing up Robinhood and buying GLD. By pegging the currency to an arbitrary asset class you're forcing me to use your asset class. By leaving it un-backed, you're free to back your personal economy with whatever asset you like. More freedom.
- jkhdigital 6y ago
  If the central bank implemented inflation targeting by simply handing out cash to everyone, I'd probably shrug. But the current system is a moral abomination and I won't be surprised when it collapses in another decade or two. Looking forward to seeing your comments on future HN economics posts as that process plays out.
  - arcticbull 6y ago
    "Moral abomination"? The fed controls interest rates. Lower interest rates are handed out to everyone. Credit card holders. Mortgage refinance. HELOC. Just who do you think is disproportionately benefitting in a way that's causing you to throw up the moral white flag? With sources please.
- chordalkeyboard 6y ago
  > The point is that an inflationary fiat currency offers maximum flexibility by not forcing anyone into treating it as more than a medium of exchange. The OP is demanding the creation of a new class of thing, which is designed to preserve wealth, with no risk. Thank you for the complement but I didn't invent banking.
  - arcticbull 6y ago
    Seemingly misunderstood it though. It was never a risk-free return. Nobody that offers you 12% APY is offering you a risk-free return :) that's a good rule to live by.
throwaway34241 6y ago
I don't think it's just a matter of philosophy - I think a major problem is that modern macroeconomics has a number of counter-intuitive properties that do make sense, but only after studying it for a while and doing thought experiments. But because the system is complex and often counter-intuitive, people often over-estimate their ability to reason it out from first principles (especially common on HN, which is full of smart people but without any particular economic focus). To give some examples of how it can be counter-intuitive (I'm not an expert, so hopefully this is all correct): Unlike a household, if you look at the economy in total everyone can't save up money at the same time (unless more money is printed). Most of what people think of as money (checking accounts etc) is bank credit that was created by people taking out loans. In fact, savings and debt are basically two sides of the same coin - savings are forgoing current consumption for the future, and debt is a promise to forgo future consumption. People can try to all save money (by reducing spending) at the same time, but since everyone saving at once isn't possible what actually happens is that reduced spending causes incomes to drop, and people have no more savings and less income. It's easy to say things like it should be easy to save, inflation should be zero, interest rates should be high, etc. But there are certain mathematical limitations to what can happen. If most people have high savings (promises for future consumption), that's basically the other side of a debt (promises to forgo future consumption). Who should hold that debt? Should the government run a big deficit? There are similar issues with inflation / interest rates etc. Unfortunately the discussion in some of the other comments here has gotten a bit heated. I'm sympathetic to how frustrating it must be to people with more formal economics training than me though - it seems like every economic discussion immediately devolves into to people (with supreme confidence) arguing against economics 101.

arcticbull 6y ago

So buy gold. The point is that an inflationary fiat currency offers maximum flexibility by not forcing anyone into treating it as more than a medium of exchange. The OP is demanding the creation of a new class of thing, which is designed to preserve wealth, with no risk. Ok, pitch that. But there's many reasons why that isn't a good thing. Inability to react to shocks such as a global pandemic, generational wealth consolidation and so on are all reasons its a bad idea. Many things people hate on such as wild value swings and boom/bust cycles were much worse on the gold standard. However, in a world where wages keep pace with inflation (they do) you can recreate the gold standard yourself by firing up Robinhood and buying GLD. By pegging the currency to an arbitrary asset class you're forcing me to use your asset class. By leaving it un-backed, you're free to back your personal economy with whatever asset you like. More freedom.

jkhdigital 6y ago
If the central bank implemented inflation targeting by simply handing out cash to everyone, I'd probably shrug. But the current system is a moral abomination and I won't be surprised when it collapses in another decade or two. Looking forward to seeing your comments on future HN economics posts as that process plays out.
- arcticbull 6y ago
  "Moral abomination"? The fed controls interest rates. Lower interest rates are handed out to everyone. Credit card holders. Mortgage refinance. HELOC. Just who do you think is disproportionately benefitting in a way that's causing you to throw up the moral white flag? With sources please.
chordalkeyboard 6y ago
> The point is that an inflationary fiat currency offers maximum flexibility by not forcing anyone into treating it as more than a medium of exchange. The OP is demanding the creation of a new class of thing, which is designed to preserve wealth, with no risk. Thank you for the complement but I didn't invent banking.
- arcticbull 6y ago
  Seemingly misunderstood it though. It was never a risk-free return. Nobody that offers you 12% APY is offering you a risk-free return :) that's a good rule to live by.

throwaway34241 6y ago

I don't think it's just a matter of philosophy - I think a major problem is that modern macroeconomics has a number of counter-intuitive properties that do make sense, but only after studying it for a while and doing thought experiments. But because the system is complex and often counter-intuitive, people often over-estimate their ability to reason it out from first principles (especially common on HN, which is full of smart people but without any particular economic focus). To give some examples of how it can be counter-intuitive (I'm not an expert, so hopefully this is all correct): Unlike a household, if you look at the economy in total everyone can't save up money at the same time (unless more money is printed). Most of what people think of as money (checking accounts etc) is bank credit that was created by people taking out loans. In fact, savings and debt are basically two sides of the same coin - savings are forgoing current consumption for the future, and debt is a promise to forgo future consumption. People can try to all save money (by reducing spending) at the same time, but since everyone saving at once isn't possible what actually happens is that reduced spending causes incomes to drop, and people have no more savings and less income. It's easy to say things like it should be easy to save, inflation should be zero, interest rates should be high, etc. But there are certain mathematical limitations to what can happen. If most people have high savings (promises for future consumption), that's basically the other side of a debt (promises to forgo future consumption). Who should hold that debt? Should the government run a big deficit? There are similar issues with inflation / interest rates etc. Unfortunately the discussion in some of the other comments here has gotten a bit heated. I'm sympathetic to how frustrating it must be to people with more formal economics training than me though - it seems like every economic discussion immediately devolves into to people (with supreme confidence) arguing against economics 101.