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Ok but during a crisis what's the alternative? The alternative now is to disconnect the systems from the possibility of contagion, but the nature of crisis is

Ok but during a crisis what's the alternative? The alternative now is to disconnect the systems from the possibility of contagion, but the nature of crisis is essentially an acknowledgment of a failure to achieve in those efforts. So what then, really?

Qahlel 6y ago
Less government intervention: Let them fail. System can only fix itself, if we let the flaws fall.
- kristopolous 6y ago
  When has such a policy actually worked? Do you have any clean historical examples at a large scale? Panic of 1873 is the closest I know of and it didn't go very well I'm not taking a stand. It's just that macroeconomics is hard and counterintuitive, especially when we're dealing with something large enough to have currency implications
- TeMPOraL 6y ago
  That's assuming the system can fix itself, which generally isn't true :). If a boiler in your bathroom maneuvers itself into a runaway positive feedback loop, it won't fix itself. It will explode, sending superheated water and shards of steel and plastic across your house. The smoldering remains of the PID controller that drove the failure won't recollect themselves and reweld the shredded tank. A system that fails can be fixed by the system in which the failing one is contained. That same outer system can also work to prevent the inner system from failing in the first place. (And sure, in the analogy, the "outer system" is the homeowner that can buy a new boiler. But wouldn't it be better to make sure the original boiler can't move out of its control envelope? Then the homeowner wouldn't have a bathroom to renovate and a pet to bury, after it caught a flying pressure valve in the eye.)
Negitivefrags 6y ago
The alturnative is letting things fail. It causes a lot of pain in the short term with people losing their jobs and general economic fallout. This causes a lot of suffering. But on the other hand, the rich will lose more, and during the rebuilding a different set of people will gain the upper hand and end up on top. It's hard to get the political will to actually allow what needs to happen to fix wealth inequality.
- kristopolous 6y ago
  When it's been done lots more than that happens! Currency collapses, bank defaults, asset freeze-ups, international trade stoppage because of debt/credit changes, strikes and work stoppages, demand collapses. Sometimes do nothing is fine, like the video game crash of 1983. But when it's systemic and big, that strategy has collapsed entire countries
- 127 6y ago
  Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Deflation is the same thing in reverse. Makes it pretty clear why the government is fighting deflation so hard.
  - gher-shyu3i 6y ago
    Don't forget that the government on purpose disconnected the currency from precious metals (gold, etc.) in order to facilitate usurious lending, which allows the government to print money at will to pay off its debts, inflating the currency at the cost of the hard work of the citizens.
  - imtringued 6y ago
    > Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Nope, it's a wealth transfer from those who refuse to invest to those who invest and if you fail to invest you deserve it because you are not creating jobs and therefore make the lives of the poor and middle class worse. >Deflation is the same thing in reverse. No, since you are not investing your savings you are not creating jobs, you are directly responsible for causing unemployment. Please tell me, if you put cash under your mattress how is that cash supposed to employ anyone? >Makes it pretty clear why the government is fighting deflation so hard. The government is fighting deflation because it doesn't want unemployment because it doesn't want the economy to shrink because that requires the population to shrink. Do we just "cull" those useless people by killing them or sending them to Australia? Now, lets talk about the real damaging wealth transfer. Low interest rates are a wealth transfer from people who invest into safe investments (bank accounts) to people who invest into risky investments (stocks and housing). Interest rates are a function of inflation. Low inflation means low interest rates and therefore a higher wealth transfer from the poor to the rich.

Qahlel 6y ago

Less government intervention: Let them fail. System can only fix itself, if we let the flaws fall.

kristopolous 6y ago
When has such a policy actually worked? Do you have any clean historical examples at a large scale? Panic of 1873 is the closest I know of and it didn't go very well I'm not taking a stand. It's just that macroeconomics is hard and counterintuitive, especially when we're dealing with something large enough to have currency implications
TeMPOraL 6y ago
That's assuming the system can fix itself, which generally isn't true :). If a boiler in your bathroom maneuvers itself into a runaway positive feedback loop, it won't fix itself. It will explode, sending superheated water and shards of steel and plastic across your house. The smoldering remains of the PID controller that drove the failure won't recollect themselves and reweld the shredded tank. A system that fails can be fixed by the system in which the failing one is contained. That same outer system can also work to prevent the inner system from failing in the first place. (And sure, in the analogy, the "outer system" is the homeowner that can buy a new boiler. But wouldn't it be better to make sure the original boiler can't move out of its control envelope? Then the homeowner wouldn't have a bathroom to renovate and a pet to bury, after it caught a flying pressure valve in the eye.)

Negitivefrags 6y ago

The alturnative is letting things fail. It causes a lot of pain in the short term with people losing their jobs and general economic fallout. This causes a lot of suffering. But on the other hand, the rich will lose more, and during the rebuilding a different set of people will gain the upper hand and end up on top. It's hard to get the political will to actually allow what needs to happen to fix wealth inequality.

kristopolous 6y ago
When it's been done lots more than that happens! Currency collapses, bank defaults, asset freeze-ups, international trade stoppage because of debt/credit changes, strikes and work stoppages, demand collapses. Sometimes do nothing is fine, like the video game crash of 1983. But when it's systemic and big, that strategy has collapsed entire countries
127 6y ago
Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Deflation is the same thing in reverse. Makes it pretty clear why the government is fighting deflation so hard.
- gher-shyu3i 6y ago
  Don't forget that the government on purpose disconnected the currency from precious metals (gold, etc.) in order to facilitate usurious lending, which allows the government to print money at will to pay off its debts, inflating the currency at the cost of the hard work of the citizens.
- imtringued 6y ago
  > Inflation is wealth transfer from those who hold government fiat (the poor and the middle class) to those who hold assets (the rich). Nope, it's a wealth transfer from those who refuse to invest to those who invest and if you fail to invest you deserve it because you are not creating jobs and therefore make the lives of the poor and middle class worse. >Deflation is the same thing in reverse. No, since you are not investing your savings you are not creating jobs, you are directly responsible for causing unemployment. Please tell me, if you put cash under your mattress how is that cash supposed to employ anyone? >Makes it pretty clear why the government is fighting deflation so hard. The government is fighting deflation because it doesn't want unemployment because it doesn't want the economy to shrink because that requires the population to shrink. Do we just "cull" those useless people by killing them or sending them to Australia? Now, lets talk about the real damaging wealth transfer. Low interest rates are a wealth transfer from people who invest into safe investments (bank accounts) to people who invest into risky investments (stocks and housing). Interest rates are a function of inflation. Low inflation means low interest rates and therefore a higher wealth transfer from the poor to the rich.