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I can see you subscribe to modern monetary theory and believe that central bankers and their ability to freely print money without limit are essential to a func

by lowkey 5y ago

I can see you subscribe to modern monetary theory and believe that central bankers and their ability to freely print money without limit are essential to a functioning modern economy. Further, I see that you don’t share my concerns about increasing inflation. In your eyes, if economists can predict inflation we don’t actually need to prevent or stop inflation. In my mind inflation is theft by central powers, stealing the most from those with the least leverage (aka the poor and middle class). A 2% annual rate of inflation over a 40 year career will steal 40% of the purchasing power of the wage-earner. We are currently experiencing 6.4% inflation based on official data.

throw0101a 5y ago
> I can see you subscribe to modern monetary theory Nope. I generally lean more towards Krugman (whose not too hot on MMT): * https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wo... > Further, I see that you don’t share my concerns about increasing inflation. I've been hearing people yammer on about inflation for a while now (at least 2009). The constant droning on about it is becoming like background tinnitus. It's not that it doesn't matter when it gets "too high", but given the modern secular stagnation we've been seeing in the developed world, little growth and deflation seems like a higher probability. Japan has had a bank rate of <1% since April 1995 and has printed money and… nothing. > In your eyes, if economists can predict inflation we don’t actually need to prevent or stop inflation. In my eyes economists see inflation in the context of the time that is (or is not) occurring. They can work towards preventing it, stopping it, encouraging it, or letting it run for a while depending on the situation. Annualized inflation was -0.36 in 2009, was that a good thing? * https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA If they can predict inflation then it implies they have a decent understanding of what various policies are doing / will do. It allows them to tailor those policies towards various objectives: the current objective could be that they want to get people employed again, and as the unemployment number decreases (or the participation rate increases) they can scale back the program(s). At least in the US, remember that the central bank has a dual mandate: * https://twitter.com/ritholtz/status/1468924345703706631 https://twitter.com/ritholtz/status/1468924345703706631 > In my mind inflation is theft by central powers, stealing the most from those with the least leverage (aka the poor and middle class). Contra: > Inflation redistributes from creditors to debtors — not exactly a burden on the bottom half of the income distribution 2/ * https://twitter.com/paulkrugman/status/1469728251643838467 https://twitter.com/paulkrugman/status/1469728251643838467 A good portion of people have debt, the largest portion of which is often their mortgage. > A 2% annual rate of inflation over a 40 year career will steal 40% of the purchasing power of the wage-earner. Assuming that wages don't rise. Fight for inflation-indexed minimum wage (at state and federal levels), and fight for unions. Having 0 or negative inflation (deflation) is worse from the reading I've done (see 1930s). > We are currently experiencing 6.4% inflation based on official data. And we'll see what it is over the next year. I'll go with the prediction of a spike over the course of 12-18 months (probably ending late-2022): * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in...
- lowkey 5y ago
  The Krugman article you linked is behind a paywall so I couldn’t read it. I did, however find this other article on his take on MMM [1]. Per the article, Krugman’s take is that most other economists aren’t pro-MMM enough for his taste. He thinks we should be even further to the left on MMM. Is that your position also? Do you also support Krugman’s position that the internet would never be more valuable to society than the fax machine? [2] I have no doubt you concur with his repeatedly articulated position that Bitcoin is also worthless? Perhaps as worthless as the internet vs the illustrious fax machine? As for the rest of your comments, I’ll summarize them as follows: 1. Inflation is not a problem as long as economists can predict it because, reasons. 2. Inflation isn’t really a problem for regular people because they can just go and get an over-sized mortgage at an interest rate below inflation and get free money without consequence. 3. Inflation will be over soon, which ignores the trillions in new money recently injected into the economy, and people maybe won’t notice or won’t mind the new higher prices for things as prices magically stabilize in 12-18 months? - despite the fact that the money printer isn’t likely to stop printing money in that timeframe. [1] https://www.businessinsider.com/paul-krugman-modern-monetary-theory-inflation-stimulus-federal-reserve-policy-2021-5 https://www.businessinsider.com/paul-krugman-modern-monetary... [2] https://www.businessinsider.com/paul-krugman-responds-to-internet-quote-2013-12 https://www.businessinsider.com/paul-krugman-responds-to-int...

by lowkey 5y ago

throw0101a 5y ago

> I can see you subscribe to modern monetary theory Nope. I generally lean more towards Krugman (whose not too hot on MMT): * https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wo... > Further, I see that you don’t share my concerns about increasing inflation. I've been hearing people yammer on about inflation for a while now (at least 2009). The constant droning on about it is becoming like background tinnitus. It's not that it doesn't matter when it gets "too high", but given the modern secular stagnation we've been seeing in the developed world, little growth and deflation seems like a higher probability. Japan has had a bank rate of <1% since April 1995 and has printed money and… nothing. > In your eyes, if economists can predict inflation we don’t actually need to prevent or stop inflation. In my eyes economists see inflation in the context of the time that is (or is not) occurring. They can work towards preventing it, stopping it, encouraging it, or letting it run for a while depending on the situation. Annualized inflation was -0.36 in 2009, was that a good thing? * https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA If they can predict inflation then it implies they have a decent understanding of what various policies are doing / will do. It allows them to tailor those policies towards various objectives: the current objective could be that they want to get people employed again, and as the unemployment number decreases (or the participation rate increases) they can scale back the program(s). At least in the US, remember that the central bank has a dual mandate: * https://twitter.com/ritholtz/status/1468924345703706631 https://twitter.com/ritholtz/status/1468924345703706631 > In my mind inflation is theft by central powers, stealing the most from those with the least leverage (aka the poor and middle class). Contra: > Inflation redistributes from creditors to debtors — not exactly a burden on the bottom half of the income distribution 2/ * https://twitter.com/paulkrugman/status/1469728251643838467 https://twitter.com/paulkrugman/status/1469728251643838467 A good portion of people have debt, the largest portion of which is often their mortgage. > A 2% annual rate of inflation over a 40 year career will steal 40% of the purchasing power of the wage-earner. Assuming that wages don't rise. Fight for inflation-indexed minimum wage (at state and federal levels), and fight for unions. Having 0 or negative inflation (deflation) is worse from the reading I've done (see 1930s). > We are currently experiencing 6.4% inflation based on official data. And we'll see what it is over the next year. I'll go with the prediction of a spike over the course of 12-18 months (probably ending late-2022): * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in...

lowkey 5y ago
The Krugman article you linked is behind a paywall so I couldn’t read it. I did, however find this other article on his take on MMM [1]. Per the article, Krugman’s take is that most other economists aren’t pro-MMM enough for his taste. He thinks we should be even further to the left on MMM. Is that your position also? Do you also support Krugman’s position that the internet would never be more valuable to society than the fax machine? [2] I have no doubt you concur with his repeatedly articulated position that Bitcoin is also worthless? Perhaps as worthless as the internet vs the illustrious fax machine? As for the rest of your comments, I’ll summarize them as follows: 1. Inflation is not a problem as long as economists can predict it because, reasons. 2. Inflation isn’t really a problem for regular people because they can just go and get an over-sized mortgage at an interest rate below inflation and get free money without consequence. 3. Inflation will be over soon, which ignores the trillions in new money recently injected into the economy, and people maybe won’t notice or won’t mind the new higher prices for things as prices magically stabilize in 12-18 months? - despite the fact that the money printer isn’t likely to stop printing money in that timeframe. [1] https://www.businessinsider.com/paul-krugman-modern-monetary-theory-inflation-stimulus-federal-reserve-policy-2021-5 https://www.businessinsider.com/paul-krugman-modern-monetary... [2] https://www.businessinsider.com/paul-krugman-responds-to-internet-quote-2013-12 https://www.businessinsider.com/paul-krugman-responds-to-int...