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There is quite a lot of reason to doubt that is the case in the long run. What I think dnautics is saying is that stability is trading off short term gains for

There is quite a lot of reason to doubt that is the case in the long run. What I think dnautics is saying is that stability is trading off short term gains for long term gains. What about the stagnated real wages in the last 50 years? Is that good for the poor? What about seigniorage? Is that good for the poor? When someone says something like "undoubtedly/obviously X" or "its commen sense that X" 99% of the time they haven't put much thought into it.

kube-system 5y ago
We're not comparing equal "short term" and "long term" events though. The short term effects are much more severe in nature. And because they are severe, these "short term" economic effects end up causing long term financial impacts for the people they impact, even after the economy has recovered. Most non-high income people do not have huge rainy-day funds. If they lose their job, even for a short period of time, they will find themselves relying on debt that is a lot more expensive than 2% inflation. Stability has a high value, it is just hard to measure in dollars. > When someone says something like "undoubtedly/obviously X" or "its commen sense that X" 99% of the time they haven't put much thought into it. Or rather, it's an easy question to answer because we've seen the situation happen many times. Who suffers during economic downturns?
- billytetrud 5y ago
  We should probably define what kind of stability we're talking about before we devolve into fisticuffs. Are we talking about a "stable" economy? A stable buying power of the currency? Something else?
  - kube-system 5y ago
    I am referring to economic stability.
    - billytetrud 5y ago
      Well, in a gold-backed world, we had frequent but small bubbles that corrected inefficient economic activity relatively quickly. In a post-gold-backed world, we have less frequent but much much larger bubbles that result in devastating economic crises. Is that really the stability you want? With modern economic knowledge, technology, and techniques, a gold-backed dollar could be quite a bit more stable than it was in the 1800s, don't you agree? But we don't have to go back to gold to fix this problem. The problem is not gold or not gold. The problem is massive monetary inflation. That can be solved without going back to gold backing. What gold-backing did was create a culture that believed in a limited money supply. When we destroyed that culture, we created the problem.
      - notahacker 5y ago
        Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars or trying to fix the money supply (and float the interest rate or crash the banks)? I mean, macroeconomists have spent the majority of the last century proposing and carrying out natural experiments on different monetary policies: if they've moved from being almost universally in favour of the Gold Standard to almost universally against it, that's not evidence that what we've actually learned is how to make a Gold Standard work. And no, our post-gold standard economic crises have not been proportionally more devastating than the Great Depression, or taken as long to rectify as the Long Depression, and I don't long for that kind of "stability"
        billytetrud 5y ago
        > Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars It hasn't because its patently false. Both the gold confiscation in 1931 and cutting the cord of gold-backing in 1971 were both done as desparately rushed moves to reneg on the governments promise to uphold the value of the dollar. These weren't thoughtful reasoned well discussed actions. It had nothing to do with technology or best practices. It was a purely a politically expedient way to prevent collapse of an insolvent dollar. > macroeconomists have spent the majority of the last century proposing and carrying out natural experiments You don't run experiments in macroeconomics. Controls are impossible. And studies have so many confounding variables that any conclusions we come to are many orders of magnitude less certain than anything in the hard sciences. > our post-gold standard economic crises have not been proportionally more devastating than the Great Depression You must have misunderstood me. I never said any such thing.
- dnautics 5y ago
  > Most non-high income people do not have huge rainy-day funds. Why do you suppose that is? See, the system protects itself.
  - kube-system 5y ago
    Those same people did not have large rainy-day funds pre-1970's either. Poor people have always spent most of their money.
    - dnautics 5y ago
      You're evading the point. The savings rate has gone down since then. Today the middle class has no savings, not just the poor
      - kbenson 5y ago
        Attributing that to any one thing requires a large amount of evidence. For example, Americans spend a much larger percentage of their income on housing than they did in the past.[1] House prices vary wildly based on local because of demand and local legislation that affects how and what can be built. How much of that is because of increased housing cost, and how much of increased housing cost is because of monetary policy which is national and not local conditions, when prices vary so much by locale? If you're trying to make a case that the middle class has less savings because of reasons other than that, it seems prudent to at least explain that away. 1: https://listwithclever.com/research/home-price-v-income-historical-study/ https://listwithclever.com/research/home-price-v-income-hist...
        billytetrud 5y ago
        And the rise in housing prices is a bubble created by monetary inflation. Asset prices increase first when money is created. Houses are one of the many safe havens that people put their money into when the economy has poor investment and savings options. Monetary inflation also fuels cheap loans that inflate these assets and get people into long term debt obligations - because money is largely created by giving out loans. This is all part of the same problem.
xxpor 5y ago
There's 4 major things that happened in the 70s that affected wages, and everyone blames the one they'd like to based on their ideology. 1. Closing the gold window 2. Outsourcing of manufacturing begins in earnest (combined with weakening of unions, the Clean Air and Water Acts, etc) 3. Computers really start taking over (obviously accelerates in the 80s) 4. Women started having real careers on a large scale
- reedjosh 5y ago
  1. Closing the gold window Inflation benefits those that can leverage dollar denominated debts against inflationary hedges. Wealthy people with assets undoubtably can do this at a grand scale while the closest thing an average person can do is buy a house. 2. Outsourcing of manufacturing begins in earnest (combined with weakening of unions, the Clean Air and Water Acts, etc) Yes, and maybe slower globalization would have been better, but I personally am a free market all the way guy. 3. Computers really start taking over (obviously accelerates in the 80s) This is akin to making the `pie` that is the economy greater. It does does not explain why the wealthy gained most of the new growth of said `pie`. 4. Women started having real careers on a large scale I'm a bit torn on this as an argument. Women having careers should have increased the size of the economic `pie` and everyone should have been better off, but what seems to have happened is that competition between laborers became more intense and while the `pie` grew, the average person lost a significant portion of their share. I have yet to fully wrap my head around this one, but it seems like labor competition combined with corporate and or governmental control in a way that prevented the distribution of the increased productivity?
  - kube-system 5y ago
    > 3. Computers really start taking over (obviously accelerates in the 80s) > This is akin to making the `pie` that is the economy greater. It does does not explain why the wealthy gained most of the new growth of said `pie`. Sure it does. The productivity gains from any tool are a direct monetary benefit to those who implement it. The pie is only subsequently redistributed if other market effects coerce the original beneficiary into doing so. Record-keepers, secretaries, etc, being laid off from their job obviously have no opportunity to negotiate for higher wages as a result of that productivity gain. The only people who were in a position to negotiate were the ones who could implement these new tools. And they did: tech jobs are well paid.

kube-system 5y ago

We're not comparing equal "short term" and "long term" events though. The short term effects are much more severe in nature. And because they are severe, these "short term" economic effects end up causing long term financial impacts for the people they impact, even after the economy has recovered. Most non-high income people do not have huge rainy-day funds. If they lose their job, even for a short period of time, they will find themselves relying on debt that is a lot more expensive than 2% inflation. Stability has a high value, it is just hard to measure in dollars. > When someone says something like "undoubtedly/obviously X" or "its commen sense that X" 99% of the time they haven't put much thought into it. Or rather, it's an easy question to answer because we've seen the situation happen many times. Who suffers during economic downturns?

billytetrud 5y ago
We should probably define what kind of stability we're talking about before we devolve into fisticuffs. Are we talking about a "stable" economy? A stable buying power of the currency? Something else?
- kube-system 5y ago
  I am referring to economic stability.
  - billytetrud 5y ago
    Well, in a gold-backed world, we had frequent but small bubbles that corrected inefficient economic activity relatively quickly. In a post-gold-backed world, we have less frequent but much much larger bubbles that result in devastating economic crises. Is that really the stability you want? With modern economic knowledge, technology, and techniques, a gold-backed dollar could be quite a bit more stable than it was in the 1800s, don't you agree? But we don't have to go back to gold to fix this problem. The problem is not gold or not gold. The problem is massive monetary inflation. That can be solved without going back to gold backing. What gold-backing did was create a culture that believed in a limited money supply. When we destroyed that culture, we created the problem.
    - notahacker 5y ago
      Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars or trying to fix the money supply (and float the interest rate or crash the banks)? I mean, macroeconomists have spent the majority of the last century proposing and carrying out natural experiments on different monetary policies: if they've moved from being almost universally in favour of the Gold Standard to almost universally against it, that's not evidence that what we've actually learned is how to make a Gold Standard work. And no, our post-gold standard economic crises have not been proportionally more devastating than the Great Depression, or taken as long to rectify as the Long Depression, and I don't long for that kind of "stability"
      - billytetrud 5y ago
        > Has it not occurred to you that it's precisely the modern economic knowledge, technology and techniques that have driven us away from gold backed dollars It hasn't because its patently false. Both the gold confiscation in 1931 and cutting the cord of gold-backing in 1971 were both done as desparately rushed moves to reneg on the governments promise to uphold the value of the dollar. These weren't thoughtful reasoned well discussed actions. It had nothing to do with technology or best practices. It was a purely a politically expedient way to prevent collapse of an insolvent dollar. > macroeconomists have spent the majority of the last century proposing and carrying out natural experiments You don't run experiments in macroeconomics. Controls are impossible. And studies have so many confounding variables that any conclusions we come to are many orders of magnitude less certain than anything in the hard sciences. > our post-gold standard economic crises have not been proportionally more devastating than the Great Depression You must have misunderstood me. I never said any such thing.
dnautics 5y ago
> Most non-high income people do not have huge rainy-day funds. Why do you suppose that is? See, the system protects itself.
- kube-system 5y ago
  Those same people did not have large rainy-day funds pre-1970's either. Poor people have always spent most of their money.
  - dnautics 5y ago
    You're evading the point. The savings rate has gone down since then. Today the middle class has no savings, not just the poor
    - kbenson 5y ago
      Attributing that to any one thing requires a large amount of evidence. For example, Americans spend a much larger percentage of their income on housing than they did in the past.[1] House prices vary wildly based on local because of demand and local legislation that affects how and what can be built. How much of that is because of increased housing cost, and how much of increased housing cost is because of monetary policy which is national and not local conditions, when prices vary so much by locale? If you're trying to make a case that the middle class has less savings because of reasons other than that, it seems prudent to at least explain that away. 1: https://listwithclever.com/research/home-price-v-income-historical-study/ https://listwithclever.com/research/home-price-v-income-hist...
      - billytetrud 5y ago
        And the rise in housing prices is a bubble created by monetary inflation. Asset prices increase first when money is created. Houses are one of the many safe havens that people put their money into when the economy has poor investment and savings options. Monetary inflation also fuels cheap loans that inflate these assets and get people into long term debt obligations - because money is largely created by giving out loans. This is all part of the same problem.

xxpor 5y ago

There's 4 major things that happened in the 70s that affected wages, and everyone blames the one they'd like to based on their ideology. 1. Closing the gold window 2. Outsourcing of manufacturing begins in earnest (combined with weakening of unions, the Clean Air and Water Acts, etc) 3. Computers really start taking over (obviously accelerates in the 80s) 4. Women started having real careers on a large scale

reedjosh 5y ago
1. Closing the gold window Inflation benefits those that can leverage dollar denominated debts against inflationary hedges. Wealthy people with assets undoubtably can do this at a grand scale while the closest thing an average person can do is buy a house. 2. Outsourcing of manufacturing begins in earnest (combined with weakening of unions, the Clean Air and Water Acts, etc) Yes, and maybe slower globalization would have been better, but I personally am a free market all the way guy. 3. Computers really start taking over (obviously accelerates in the 80s) This is akin to making the `pie` that is the economy greater. It does does not explain why the wealthy gained most of the new growth of said `pie`. 4. Women started having real careers on a large scale I'm a bit torn on this as an argument. Women having careers should have increased the size of the economic `pie` and everyone should have been better off, but what seems to have happened is that competition between laborers became more intense and while the `pie` grew, the average person lost a significant portion of their share. I have yet to fully wrap my head around this one, but it seems like labor competition combined with corporate and or governmental control in a way that prevented the distribution of the increased productivity?
- kube-system 5y ago
  > 3. Computers really start taking over (obviously accelerates in the 80s) > This is akin to making the `pie` that is the economy greater. It does does not explain why the wealthy gained most of the new growth of said `pie`. Sure it does. The productivity gains from any tool are a direct monetary benefit to those who implement it. The pie is only subsequently redistributed if other market effects coerce the original beneficiary into doing so. Record-keepers, secretaries, etc, being laid off from their job obviously have no opportunity to negotiate for higher wages as a result of that productivity gain. The only people who were in a position to negotiate were the ones who could implement these new tools. And they did: tech jobs are well paid.