3 ms·

Right I don't dispute any of that. However, you're just making the last guy's point about semantics. I'm no socialist, but I think a common interpretation of t

by boppo1 5y ago

Right I don't dispute any of that. However, you're just making the last guy's point about semantics. I'm no socialist, but I think a common interpretation of the american dream (or prosperity in general, really) is that a hard, reasonably intelligent & frugal worker can one day employ what they've earned to enable others to to meaningful work. I.E. they can own a small but meaningful part of the economy above and beyond what they require for sustenance. Common investments have ballooned disproportionately to the value of goods and services they provide to society. The companies aren't making the world that much better, but the people who own them are reaping rewards as if they are. There's no real price discovery anymore. Don't low interest that stimulate the economy fundamentally mean keeping inefficient businesses afloat? The classes that rely on wages and salary are getting priced out of financial mobility. I'm not super familiar with programs outside the US, but our dual mandate of 'stable prices and max employment' seems to translate to 'keep the poors working as hard as they can, and make sure the basic feed (market basket of goods) is cheap'. Stuff like housing, cars, health care, and higher education (stuff that really matters) either isn't in the market basket or seems to under-measure an average person's lived reality. Tons of people have heard of the 'burrito index'. Seeking alpha is mostly trash, but even a quick glance-over of this guy's graphs is telling: https://seekingalpha.com/amp/article/4419060-dollars-purchasing-power-drops-sharply-to-record-low-lot-worse-cpi-shows https://seekingalpha.com/amp/article/4419060-dollars-purchas...

dragonwriter 5y ago
> Right I don't dispute any of that. However, you're just making the last guy's point about semantics. No, I’m making the point that if “ a redefinition of the basic structure of inflation as to whether it includes any assets or not renders discussion meaningless because it invites semantics argument, then the “last guy” is wrong that is the effect of the 1983 change to exclude homeownership costs, because that ship had already sailed in 1953 when changes were made to include them in the first place. > I'm no socialist, but I think a common interpretation of the american dream (or prosperity in general, really) is that a hard, reasonably intelligent & frugal worker can one day employ what they've earned to enable others to to meaningful work. I.E. they can own a small but meaningful part of the economy above and beyond what they require for sustenance. Like, why is the “I’m no socialist” disclaimer even there when you go on to articulate exactly the standard, capitalist interpretation of the “American dream”: if I spend enough time on the treadmill of wage labor, I get to become a microcapitalist. It's like saying “I’m no secularist, but I think people should be obliged to follow the Ten Commandments on pain of death”; the lead-in disclaimer is unnecessary. Were you a socialist, you’d think people were entitled to a share of control ab initio as a worker, as a matter of right, not as a reward for slaving away at wage labor for a sufficient time for which they would sacrifice accumulated surplus wages, and that your entire statement was silly. (I know, I checked with a socialist.) In any case, that has nothing to do with cost of living. > The classes that rely on wages and salary are getting priced out of financial mobility. To the extent that's true, it's a problem of fiscal not monetary policy. Monetary policy (at least, the levers Congress has chosen to provide the Fed to address it) is a too blunt instrument to be used effectively to control that well, that's the domain of the much wider array of economic tools that remain in Congress’ sole control, like the whole of taxing and spending policy. > I'm not super familiar with programs outside the US, but our dual mandate of 'stable prices and max employment' seems to translate to 'keep the poors working as hard as they can, and make sure the basic feed (market basket of goods) is cheap'. No, it doesn't really do either of those. OTOH, the first part is the effect of a whole lot of downward relative tax burden shifts over the last four decades. > Stuff like housing, cars, health care, and higher education (stuff that really matters) either isn't in the market basket All of that in, in fact, in the market basket. (Used cars have actually been the largest component, IIRC, of the recent aggregate inflation increase.) > or seems to under-measure an average person's lived reality Claims about what things subjectively seem to do relative to subjective impressions are...slippery, at best. But the concrete effects you blame on inflation have much more clear policy sources, that are neither inflation nor monetary policy. >
- boppo1 5y ago
  Huh, you seem to know a lot more than me. Can you elaborate on the relationship between interest rate interventions and price discovery?
  - imtringued 5y ago
    People can withold money from the economy and then install the equivalent of a toll booth where they charge a fee to anyone who wants the money known as interest. As long as these people to get to abuse their power they will force interest rates to be above zero, this is effectively an interest rate intervention. When these people get paid interest they will repeat the process which means there is an insufficient supply of money in the real economy to repay loans forcing people to borrow to service their interest payments. This means debts grow faster than the economy. When people eventually spend the money the value of the economy gets adjusted upwards .e.g. prices rise via inflation. Alternatively inflation stays low forever. There is an excess of savings hitting a limited number of investments that can only earn negative yields. By simply not investing people can isolate themselves from these losses which should be impossible ( cough deposit insurance). This forces interest rates into negative territory.
    - boppo1 5y ago
      > withold money from the economy How? Where do you park more than 250k to keep it outside the economy?
      - ac29 5y ago
        If the $250k is a reference to the FDIC limit, remember that is for a single account. There are products like Fidelity's Cash Management account that spread deposits to multiple sub accounts with pass through insurance and can FDIC insure much more than $250k.
imtringued 5y ago
The only "natural" interest rate is zero when saving and investment balance each other out.
- boppo1 5y ago
  I though savings = investment?

by boppo1 5y ago

dragonwriter 5y ago

> Right I don't dispute any of that. However, you're just making the last guy's point about semantics. No, I’m making the point that if “ a redefinition of the basic structure of inflation as to whether it includes any assets or not renders discussion meaningless because it invites semantics argument, then the “last guy” is wrong that is the effect of the 1983 change to exclude homeownership costs, because that ship had already sailed in 1953 when changes were made to include them in the first place. > I'm no socialist, but I think a common interpretation of the american dream (or prosperity in general, really) is that a hard, reasonably intelligent & frugal worker can one day employ what they've earned to enable others to to meaningful work. I.E. they can own a small but meaningful part of the economy above and beyond what they require for sustenance. Like, why is the “I’m no socialist” disclaimer even there when you go on to articulate exactly the standard, capitalist interpretation of the “American dream”: if I spend enough time on the treadmill of wage labor, I get to become a microcapitalist. It's like saying “I’m no secularist, but I think people should be obliged to follow the Ten Commandments on pain of death”; the lead-in disclaimer is unnecessary. Were you a socialist, you’d think people were entitled to a share of control ab initio as a worker, as a matter of right, not as a reward for slaving away at wage labor for a sufficient time for which they would sacrifice accumulated surplus wages, and that your entire statement was silly. (I know, I checked with a socialist.) In any case, that has nothing to do with cost of living. > The classes that rely on wages and salary are getting priced out of financial mobility. To the extent that's true, it's a problem of fiscal not monetary policy. Monetary policy (at least, the levers Congress has chosen to provide the Fed to address it) is a too blunt instrument to be used effectively to control that well, that's the domain of the much wider array of economic tools that remain in Congress’ sole control, like the whole of taxing and spending policy. > I'm not super familiar with programs outside the US, but our dual mandate of 'stable prices and max employment' seems to translate to 'keep the poors working as hard as they can, and make sure the basic feed (market basket of goods) is cheap'. No, it doesn't really do either of those. OTOH, the first part is the effect of a whole lot of downward relative tax burden shifts over the last four decades. > Stuff like housing, cars, health care, and higher education (stuff that really matters) either isn't in the market basket All of that in, in fact, in the market basket. (Used cars have actually been the largest component, IIRC, of the recent aggregate inflation increase.) > or seems to under-measure an average person's lived reality Claims about what things subjectively seem to do relative to subjective impressions are...slippery, at best. But the concrete effects you blame on inflation have much more clear policy sources, that are neither inflation nor monetary policy. >

boppo1 5y ago
Huh, you seem to know a lot more than me. Can you elaborate on the relationship between interest rate interventions and price discovery?
- imtringued 5y ago
  People can withold money from the economy and then install the equivalent of a toll booth where they charge a fee to anyone who wants the money known as interest. As long as these people to get to abuse their power they will force interest rates to be above zero, this is effectively an interest rate intervention. When these people get paid interest they will repeat the process which means there is an insufficient supply of money in the real economy to repay loans forcing people to borrow to service their interest payments. This means debts grow faster than the economy. When people eventually spend the money the value of the economy gets adjusted upwards .e.g. prices rise via inflation. Alternatively inflation stays low forever. There is an excess of savings hitting a limited number of investments that can only earn negative yields. By simply not investing people can isolate themselves from these losses which should be impossible ( cough deposit insurance). This forces interest rates into negative territory.
  - boppo1 5y ago
    > withold money from the economy How? Where do you park more than 250k to keep it outside the economy?
    - ac29 5y ago
      If the $250k is a reference to the FDIC limit, remember that is for a single account. There are products like Fidelity's Cash Management account that spread deposits to multiple sub accounts with pass through insurance and can FDIC insure much more than $250k.

imtringued 5y ago

The only "natural" interest rate is zero when saving and investment balance each other out.

boppo1 5y ago
I though savings = investment?