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The overall takeaway is that there is no free lunch. Many countries in Latin America went that way. Namely Venezuela and more recently Argentina. Chile could b

The overall takeaway is that there is no free lunch. Many countries in Latin America went that way. Namely Venezuela and more recently Argentina. Chile could be the next in the way. When politicians say that 3 trillion dollar bills cost zero they should pay a political cost for this absolutely dangerous lie. Unfortunately they get away with this insanity. The idea that you can take 3 trillion dollars in goods and services without producing anything in return without impact is ridiculous and frankly childish. It's as if these people lost touch with reality and forgot that it takes time, effort and resources to produce anything of value.

scsilver 5y ago
You can cancel debts of the past and borrow for the future. If you happen to unlock a new level of productivity by doing so, you could possibly get your lunch for free based on the future productivity catching up to your spending.
- hurhevdg 5y ago
  It still won’t be free for at least two reasons: 1. By the time you must repay the debt you will need to curb your consumption to less than the future production’s capacity. 2. During the initial borrowing phase you will increase consumption relative to other participants, curtailing their utility.
- xyzzyz 5y ago
  "Debt" means that someone deferred their consumption in the past, and gave their claim on production to you, so that you will repay them with increased claim on production in future. What you propose here amounts to the following: renege on the past claim to past debtors, and tell them that not only you won't give them extra production, but in fact the claim on production that they voluntarily decided to defer and give to you, is now gone forever. At the same time, since you cannot actually borrow resources from the future, any more than you can irrigate your plants today with next month's rain, what your "borrowing for the future" means is that you'll ask people to voluntarily defer their consumption, and instead pass on their claim on production to you, with you promising them to repay them with an increased claim on production in future. Let's hope that your new debtors don't feel discouraged by you just reneging on that promise to others, and believe that this time it will be different!
- gruez 5y ago
  >You can cancel debts of the past and borrow for the future who's going to lend you money "for the future" if you've just shown that you will arbitrarily "cancel debts of the past"?
  - scsilver 5y ago
    The fed is effectively doing this right now with low interest rates. Diluting old debts (pay off early 2000s mortgage with modern wages) and cheapening the cost of new ones, (borrow at 4% when inflation is running around 5%). We all buy into it for one reason or another but the ultimate thing underpinning this dynamic is that capital trusts the US the most amongst all other debtors.
    - syshum 5y ago
      The winds are shifting on that... The fed actions are a large part of why. It is extremely arrogant to believe that the world will continue to allow the USD to be manipulated by the fed with no action by other nations. It is a denial of history, combined with a Normalcy bias that have people falsely believing the USD will always be king
      - scsilver 5y ago
        Personally I would love to see other nations and organizations get to the level of trust the US has with creditors. Alternatives are being sought, but the the same time, I'm not seeing any particular institution taking the lead.
gizmo686 5y ago
Or, the economy is a very complicated system, and you can get emergent behavior that is counter-intuitive given the micro behaviour. In particular, most recessions in the modern economy are caused by a demand disruption. It is not that we lost our ability to produce stuff, we had to stop producing stuff because we couldn't consume it faster. This (normally) isn't caused because people want to consume less, but rather because they had reduced ability to acquire goods (generally because they have less money than they previously did). That is to say, it is not a problem about our ability to produce goods, or even consume goods. It is a problem with our ability to allocate goods. At a high level, this really is a problem that you should be able to just through money at. Decide who you want the surplus goods to go to and throw money at them until consumption matches productive capacity. Of course, reality has a lot of pesky details to work out since, as I mentioned, the economy is incredibly complicated. This is not to say that you can just inject unlimited money into the economy without causing any issues. But the effects of injecting money into the economy are dependent on how they are injected. Other ways of injecting money into the economy might increase productive capacity, which would have a deflationary effect that may act as a counter balance to the inflationary one. Other ones may quarantine the money in a part of the economy where they have minimal effect on the rest of the economy. For instance, if the treasury department sells bonds on the open market, the federal reserves prints money to buy those bonds, then the treasury department uses that money to pay interest on bonds held by the federal reserve; did anything really happen? Ultimatly, economics is too complicated to try and solve from first principles. You need your thinking to be backed by empirical evidence. Prior to Covid, the Fed was trying to cause inflation by dumping money into the economy, but discovered that the economy simply doesn't work that way. Edit: It is also worth noting that Covid caused an economic shock that is significantly different from the typical shocks we have experience with. If your approach to economics is rooted on empirical evidence, then you would expect to perform worse in such a situation, because you simply do not have as relevent of data to inform you decision making. It is also worth noting that, unlike most economic crises, Covid was not primarily a breakdown in our ability to allocate goods. It looked like it was going to be, but that Governments did what this post suggests and injected money directly to people who lost their fiscal ability to consume.
- savant_penguin 5y ago
platz 5y ago
the supply of money in an economy has nothing to do with how long it takes to do something.
- adamc 5y ago
  True, but if you want to buy something of value, those things do take effort. Pumping in more money doesn't create value.
  - snek_case 5y ago
    In fact it does the opposite, it dilutes the existing value.
- newbamboo 5y ago
  Seems unlikely to me that money supply and its relation to credit/debt would have no impact on productivity. Maybe that’s not what you’re saying?
quadrangle 5y ago
Better to just say that you can't make free lunches out of money. The standard can't-eat-money point. There ARE such things as free lunches, and the "no free lunch" quip is a meme that serves as propaganda for the idea that everything in life should have a price (and if it doesn't, it means the price is hidden). That's just not true. Some things in life are abundant and need no pricing and have nothing hidden. https://ia902809.us.archive.org/2/items/NinasAdventuresFree/NA_1995_1_31_InventionOfWork.png https://ia902809.us.archive.org/2/items/NinasAdventuresFree/...
- iratewizard 5y ago
  Free and abundant has a cost too. The time it takes to sort through the free and abundant in order to find what you need. The time to learn that free thing and find it isn't a good fit. The backdrop to life is a complex resource management game and you're constantly spending the one thing you can't buy back.
  - quadrangle 5y ago
    Look the world I live in, my reality is one where sorting through stuff is indeed a HUGE problem, but it's not caused strictly by things being free and abundant. We have tons of examples of noise and bulk that needs curation that is the cause of people working to make yet more stuff when its not needed. People flood the market with junk trying to capture some of the value. There are tons of duplicate apps or websites each trying to get their money or attention-to-ads. But the greatest free-and-abundant stuff like Wikipedia with no limits and restrictions — that has the capacity to reduce the trends of people making duplicate stuff. I mean, there's lots of examples of excessive production which takes more to sort through which is caused by things being locked-down. Whereas if the best stuff were just free, there would be less incentive for anyone to make and market duplicate products. But I agree with your "complex resource management game" framing, I'm just saying that free and abundant is not the problem. One problem is that we aren't just having the best free and abundant stuff so that we can stop all the noise and duplication.
- leereeves 5y ago
  > https://ia902809.us.archive.org/2/items/NinasAdventuresFree/NA_1995_1_31_InventionOfWork.png https://ia902809.us.archive.org/2/items/NinasAdventuresFree/... "Food is a manifestation of our local fertility goddess"? Here in the real world, food is produced by work. A lot of work - growing, transporting, preparing, and selling food accounts for about 10% of American employment.
kkfx 5y ago
IMVHO many countries haven't learned a thing: a country must be as much independent as possible. Witch means, since we do not eat oil, having oil might be good, selling it might bring richness but you can't develop only oil, you MUST use produced richness to incentive all the others production you need from food to housing to defense, health etc. Having naturals resources in general it's the same. A State must satisfy it's own basic needs inside it's own borders or it's already doomed. Anything else should be treated as a nice surplus to get more local things. Autarchy alone is not easy to sustain of course, but tending to it is, and must be done.
- deleted 5y ago
  [deleted]
stevebmark 5y ago
Interesting mentioning Latin America and Chile here, Friedman was a big fan of Pinochet in Chile, as Pinochet implemented Friedman's ideas by torturing, killing, and disappearing thousands, all under the guise of of stopping inflation.
- newacount 5y ago
  [flagged]
- drno123 5y ago
  I think we need to separate Pinochet’s dictatorship from Pinochet’s economic policies. Economic growth of Chile (and as a result of that, improved living conditions for its citizens) are the result of Pinochet’s economic policies. He could have implemented those without killing his political opponents.
  - stevebmark 5y ago
    Dictatorship and suppression of democracy, and Friedman's free market economic policies, are inextricably linked. Pinochet could not have implemented his free market ideas without oppression, because there will always be more poor people than rich, and poor people will always vote for worker protections, price controls, stable jobs and housing. This is openly part of Friedman's plan: His policies are best implemented when a country is in a time of crisis, when the population is worn down and can't resist. The increase in poverty, slums, and the country's stadium turned into a torture center, don't feel like improved living conditions to me, nor worth the price of stopping inflation (which Pinochet did).
    - drno123 5y ago
      To be honest, I do not see any difference in torture done by Castro’s leftists from the torture done by Pinochet’s “rightists”. At least after Pinochet Chile was left a prosperous country, while under Castro, people were risking their lives while to get away from Cuba into US.
ransom1538 5y ago
I think it is more evil than that. You can print 100 billion of your currency and hand it to your crony friends. Boom they are all multi-billionares now. Everyone else (not your friends) gets screwed immediately. It's stealing but it looks like it isn't. That is why gold is critical (or some other unit not easy to create).
beaconstudios 5y ago
Democratic socialism isn't based on "free lunch", that's neither the argument forwarded nor a good argument against it. To take the example I'm most familiar with (Allende's Chile), the point was to put the value produced by the economy in the hands of the workers and to run the economy democratically. If anybody's trying to get a free lunch, it's rentiers who extract profit from other people's labour. The reason Allende's Chile collapsed was due to US intervention - first, putting them under economic sanction, then funding far-right resistance groups and protests, then eventually just saying "fuck it" and backing a military coup. Nothing to do with free lunches or inflation.
- int_19h 5y ago
  Democratic socialism of statist variety inevitably needs to centralize economic decision making, since otherwise the market "interferes". I can't think of any country that has ever tried it with good results. (Democratic socialism doesn't have to be of the statist variety, of course, but that's a whole separate conversation that has little to do with Allende.)
  - beaconstudios 5y ago
    I can think of two examples that worked fairly well: Allende and Morales. It's debatable to what degree they were democratic socialism or social democracy (given they both exist on a fairly ambiguous spectrum) but both nationalised various industries and promoted social justice and growth of cooperatives. I suppose you could say there's central economic decision making in the form of regulation and nationalisation, but this contrasts with the kind of economic planning that's been proven to be disastrous in Marxist-Leninist countries. Hopefully Gabriel Boric will prove to be another successful example.
disambiguation 5y ago
Yes, but the more explicit take away is at 9:18 "There has never in history been an inflation that was not accompanied by a rapid increase in the quantity of money. There has never in history been a rapid increase in the quantity of money without an inflation."
ephbit 5y ago
> The idea that you can take 3 trillion dollars in goods and services without producing anything in return without impact is ridiculous and frankly childish. It's as if these people lost touch with reality and forgot that it takes time, effort and resources to produce anything of value. Lost touch with reality? Not at all. Yes, limitlessly printing money is flawed politics. But they're 100 % aware of what they're doing. It's pretty simple. Printing money is just the currently most popular (amoung politicians) way of governments to make sure they can finance their budgets. Budgeting - deciding what to spend money on - is one of the most important ways in which governments implement their election programmes. There's different ways in which governments can finance new/increased/additional expenses: 1. raise taxes 2. cut other spending 3. take on more debt Taking on more debt - aka printing money - is just the option that leads to (currently) the lowest level of opposition amoung citizens. So it's everything but surprising that politicians choose this way ... as I wrote, they know exactly what and why they're doing it.

scsilver 5y ago

You can cancel debts of the past and borrow for the future. If you happen to unlock a new level of productivity by doing so, you could possibly get your lunch for free based on the future productivity catching up to your spending.

hurhevdg 5y ago
It still won’t be free for at least two reasons: 1. By the time you must repay the debt you will need to curb your consumption to less than the future production’s capacity. 2. During the initial borrowing phase you will increase consumption relative to other participants, curtailing their utility.
xyzzyz 5y ago
"Debt" means that someone deferred their consumption in the past, and gave their claim on production to you, so that you will repay them with increased claim on production in future. What you propose here amounts to the following: renege on the past claim to past debtors, and tell them that not only you won't give them extra production, but in fact the claim on production that they voluntarily decided to defer and give to you, is now gone forever. At the same time, since you cannot actually borrow resources from the future, any more than you can irrigate your plants today with next month's rain, what your "borrowing for the future" means is that you'll ask people to voluntarily defer their consumption, and instead pass on their claim on production to you, with you promising them to repay them with an increased claim on production in future. Let's hope that your new debtors don't feel discouraged by you just reneging on that promise to others, and believe that this time it will be different!
gruez 5y ago
>You can cancel debts of the past and borrow for the future who's going to lend you money "for the future" if you've just shown that you will arbitrarily "cancel debts of the past"?
- scsilver 5y ago
  The fed is effectively doing this right now with low interest rates. Diluting old debts (pay off early 2000s mortgage with modern wages) and cheapening the cost of new ones, (borrow at 4% when inflation is running around 5%). We all buy into it for one reason or another but the ultimate thing underpinning this dynamic is that capital trusts the US the most amongst all other debtors.
  - syshum 5y ago
    The winds are shifting on that... The fed actions are a large part of why. It is extremely arrogant to believe that the world will continue to allow the USD to be manipulated by the fed with no action by other nations. It is a denial of history, combined with a Normalcy bias that have people falsely believing the USD will always be king
    - scsilver 5y ago
      Personally I would love to see other nations and organizations get to the level of trust the US has with creditors. Alternatives are being sought, but the the same time, I'm not seeing any particular institution taking the lead.

gizmo686 5y ago

Or, the economy is a very complicated system, and you can get emergent behavior that is counter-intuitive given the micro behaviour. In particular, most recessions in the modern economy are caused by a demand disruption. It is not that we lost our ability to produce stuff, we had to stop producing stuff because we couldn't consume it faster. This (normally) isn't caused because people want to consume less, but rather because they had reduced ability to acquire goods (generally because they have less money than they previously did). That is to say, it is not a problem about our ability to produce goods, or even consume goods. It is a problem with our ability to allocate goods. At a high level, this really is a problem that you should be able to just through money at. Decide who you want the surplus goods to go to and throw money at them until consumption matches productive capacity. Of course, reality has a lot of pesky details to work out since, as I mentioned, the economy is incredibly complicated. This is not to say that you can just inject unlimited money into the economy without causing any issues. But the effects of injecting money into the economy are dependent on how they are injected. Other ways of injecting money into the economy might increase productive capacity, which would have a deflationary effect that may act as a counter balance to the inflationary one. Other ones may quarantine the money in a part of the economy where they have minimal effect on the rest of the economy. For instance, if the treasury department sells bonds on the open market, the federal reserves prints money to buy those bonds, then the treasury department uses that money to pay interest on bonds held by the federal reserve; did anything really happen? Ultimatly, economics is too complicated to try and solve from first principles. You need your thinking to be backed by empirical evidence. Prior to Covid, the Fed was trying to cause inflation by dumping money into the economy, but discovered that the economy simply doesn't work that way. Edit: It is also worth noting that Covid caused an economic shock that is significantly different from the typical shocks we have experience with. If your approach to economics is rooted on empirical evidence, then you would expect to perform worse in such a situation, because you simply do not have as relevent of data to inform you decision making. It is also worth noting that, unlike most economic crises, Covid was not primarily a breakdown in our ability to allocate goods. It looked like it was going to be, but that Governments did what this post suggests and injected money directly to people who lost their fiscal ability to consume.

savant_penguin 5y ago

platz 5y ago

the supply of money in an economy has nothing to do with how long it takes to do something.

adamc 5y ago
True, but if you want to buy something of value, those things do take effort. Pumping in more money doesn't create value.
- snek_case 5y ago
  In fact it does the opposite, it dilutes the existing value.
newbamboo 5y ago
Seems unlikely to me that money supply and its relation to credit/debt would have no impact on productivity. Maybe that’s not what you’re saying?

quadrangle 5y ago

Better to just say that you can't make free lunches out of money. The standard can't-eat-money point. There ARE such things as free lunches, and the "no free lunch" quip is a meme that serves as propaganda for the idea that everything in life should have a price (and if it doesn't, it means the price is hidden). That's just not true. Some things in life are abundant and need no pricing and have nothing hidden. https://ia902809.us.archive.org/2/items/NinasAdventuresFree/NA_1995_1_31_InventionOfWork.png https://ia902809.us.archive.org/2/items/NinasAdventuresFree/...

iratewizard 5y ago
Free and abundant has a cost too. The time it takes to sort through the free and abundant in order to find what you need. The time to learn that free thing and find it isn't a good fit. The backdrop to life is a complex resource management game and you're constantly spending the one thing you can't buy back.
- quadrangle 5y ago
  Look the world I live in, my reality is one where sorting through stuff is indeed a HUGE problem, but it's not caused strictly by things being free and abundant. We have tons of examples of noise and bulk that needs curation that is the cause of people working to make yet more stuff when its not needed. People flood the market with junk trying to capture some of the value. There are tons of duplicate apps or websites each trying to get their money or attention-to-ads. But the greatest free-and-abundant stuff like Wikipedia with no limits and restrictions — that has the capacity to reduce the trends of people making duplicate stuff. I mean, there's lots of examples of excessive production which takes more to sort through which is caused by things being locked-down. Whereas if the best stuff were just free, there would be less incentive for anyone to make and market duplicate products. But I agree with your "complex resource management game" framing, I'm just saying that free and abundant is not the problem. One problem is that we aren't just having the best free and abundant stuff so that we can stop all the noise and duplication.
leereeves 5y ago
> https://ia902809.us.archive.org/2/items/NinasAdventuresFree/NA_1995_1_31_InventionOfWork.png https://ia902809.us.archive.org/2/items/NinasAdventuresFree/... "Food is a manifestation of our local fertility goddess"? Here in the real world, food is produced by work. A lot of work - growing, transporting, preparing, and selling food accounts for about 10% of American employment.

kkfx 5y ago

IMVHO many countries haven't learned a thing: a country must be as much independent as possible. Witch means, since we do not eat oil, having oil might be good, selling it might bring richness but you can't develop only oil, you MUST use produced richness to incentive all the others production you need from food to housing to defense, health etc. Having naturals resources in general it's the same. A State must satisfy it's own basic needs inside it's own borders or it's already doomed. Anything else should be treated as a nice surplus to get more local things. Autarchy alone is not easy to sustain of course, but tending to it is, and must be done.

deleted 5y ago
[deleted]

stevebmark 5y ago

Interesting mentioning Latin America and Chile here, Friedman was a big fan of Pinochet in Chile, as Pinochet implemented Friedman's ideas by torturing, killing, and disappearing thousands, all under the guise of of stopping inflation.

newacount 5y ago
[flagged]
drno123 5y ago
I think we need to separate Pinochet’s dictatorship from Pinochet’s economic policies. Economic growth of Chile (and as a result of that, improved living conditions for its citizens) are the result of Pinochet’s economic policies. He could have implemented those without killing his political opponents.
- stevebmark 5y ago
  Dictatorship and suppression of democracy, and Friedman's free market economic policies, are inextricably linked. Pinochet could not have implemented his free market ideas without oppression, because there will always be more poor people than rich, and poor people will always vote for worker protections, price controls, stable jobs and housing. This is openly part of Friedman's plan: His policies are best implemented when a country is in a time of crisis, when the population is worn down and can't resist. The increase in poverty, slums, and the country's stadium turned into a torture center, don't feel like improved living conditions to me, nor worth the price of stopping inflation (which Pinochet did).
  - drno123 5y ago
    To be honest, I do not see any difference in torture done by Castro’s leftists from the torture done by Pinochet’s “rightists”. At least after Pinochet Chile was left a prosperous country, while under Castro, people were risking their lives while to get away from Cuba into US.

ransom1538 5y ago

I think it is more evil than that. You can print 100 billion of your currency and hand it to your crony friends. Boom they are all multi-billionares now. Everyone else (not your friends) gets screwed immediately. It's stealing but it looks like it isn't. That is why gold is critical (or some other unit not easy to create).

beaconstudios 5y ago

Democratic socialism isn't based on "free lunch", that's neither the argument forwarded nor a good argument against it. To take the example I'm most familiar with (Allende's Chile), the point was to put the value produced by the economy in the hands of the workers and to run the economy democratically. If anybody's trying to get a free lunch, it's rentiers who extract profit from other people's labour. The reason Allende's Chile collapsed was due to US intervention - first, putting them under economic sanction, then funding far-right resistance groups and protests, then eventually just saying "fuck it" and backing a military coup. Nothing to do with free lunches or inflation.

int_19h 5y ago
Democratic socialism of statist variety inevitably needs to centralize economic decision making, since otherwise the market "interferes". I can't think of any country that has ever tried it with good results. (Democratic socialism doesn't have to be of the statist variety, of course, but that's a whole separate conversation that has little to do with Allende.)
- beaconstudios 5y ago
  I can think of two examples that worked fairly well: Allende and Morales. It's debatable to what degree they were democratic socialism or social democracy (given they both exist on a fairly ambiguous spectrum) but both nationalised various industries and promoted social justice and growth of cooperatives. I suppose you could say there's central economic decision making in the form of regulation and nationalisation, but this contrasts with the kind of economic planning that's been proven to be disastrous in Marxist-Leninist countries. Hopefully Gabriel Boric will prove to be another successful example.

disambiguation 5y ago

Yes, but the more explicit take away is at 9:18 "There has never in history been an inflation that was not accompanied by a rapid increase in the quantity of money. There has never in history been a rapid increase in the quantity of money without an inflation."

ephbit 5y ago

> The idea that you can take 3 trillion dollars in goods and services without producing anything in return without impact is ridiculous and frankly childish. It's as if these people lost touch with reality and forgot that it takes time, effort and resources to produce anything of value. Lost touch with reality? Not at all. Yes, limitlessly printing money is flawed politics. But they're 100 % aware of what they're doing. It's pretty simple. Printing money is just the currently most popular (amoung politicians) way of governments to make sure they can finance their budgets. Budgeting - deciding what to spend money on - is one of the most important ways in which governments implement their election programmes. There's different ways in which governments can finance new/increased/additional expenses: 1. raise taxes 2. cut other spending 3. take on more debt Taking on more debt - aka printing money - is just the option that leads to (currently) the lowest level of opposition amoung citizens. So it's everything but surprising that politicians choose this way ... as I wrote, they know exactly what and why they're doing it.