4 ms·

I'll mention something that most people are forgetting. The Fed was forced to cut rates to zero for a long time because fiscal policy was not stimulative enough

by fny 4y ago

I'll mention something that most people are forgetting. The Fed was forced to cut rates to zero for a long time because fiscal policy was not stimulative enough. Rates are a shitty stimulative tool. Here's Bernanke in 2012: https://www.theatlantic.com/business/archive/2012/12/ben-bernankes-secret-message-to-congress-more-stimulus-please/266594/ https://www.theatlantic.com/business/archive/2012/12/ben-ber... Low rates help people with money borrow more cheaply, accrue more wealth, and kick bankruptcy cans down the road indefinitely. It also royally screws over your average saver and pension fund who's forced to take on more and more risk for any sort of meaningful return.

nine_zeros 4y ago
> The Fed was forced to cut rates to zero for a long time because fiscal policy was not stimulative enough. It's not just fiscal stimulus but "how" the stimulus was applied. It's not like the government isn't spending enough. It is spending. Until recently, all the spending went on tax credits and military. What we need is fiscal stimulus in industries of the future. Only the current administration gets it and made it happen with the recent bill to support new energy transition. We need more fiscal stimulus in cheap production of pills, medical practitioners, hospitals, daycare services and housing. Literally just give incentives to produce more units of these.
- WalterBright 4y ago
  Government subsidy tends to attract a lot of malinvestment in order to get those dollars. For example, in Biden's bill, there's a subsidy for so-called "smart" glass that darkens when an electric current is applied. This is supposed to reduce solar input from windows by 20%. Of course, if this mattered, people would have already installed window blinds, which are cheap and easy. External eyebrows and eaves also work. "Smart" glass is an expensive solution, it's been around for 25 years, and nobody wants it.
  - mattmoose21 4y ago
    Do you have a source for the smart glass subsidy? I haven't been able to find anything that mentions it.
    - sbuttgereit 4y ago
      https://www.axios.com/2022/08/30/smart-glass https://www.axios.com/2022/08/30/smart-glass "Among the Inflation Reduction Act's little-noticed yet potentially game-changing provisions: a big incentive for "smart glass," which can make buildings significantly more energy efficient."
      - mattmoose21 4y ago
        Thanks!
    - _ea1k 4y ago
      https://www.prnewswire.com/news-releases/inflation-reduction-act-adds-dynamic-glass-to-the-investment-tax-credit-301607897.html https://www.prnewswire.com/news-releases/inflation-reduction... - It seems like it just puts it on an equal footing with other solutions. Unless there's a downside that I'm not aware of, that seems like a reasonable thing to do?
      - WalterBright 4y ago
        The downside is it is expensive, while much cheaper methods are available.
        deleted 4y ago
        [deleted]
      - mattmoose21 4y ago
        Yeah I don't see anyone taking advantage of this if they didn't also expect it to work.
  - adgjlsfhk1 4y ago
    One advantage of smart glass is you can get much better wavelength control. For example, you can reflect 90% of infrared light while letting through the visible light. This is really hard to do with a curtain.
    - WalterBright 4y ago
      If it's not worth the money for people to pay to get this feature, it is not worth paying for it with taxes. I've seen smart glass demoed at a home show 25 years ago. I thought it was way cool, until they quoted the price. It's no surprise it hasn't gotten any traction since. Oh, it also consumed electric power when in dark mode, as much as a light bulb. It's not a passive system. Window blinds, louvers, eyebrows, shades, etc., all work fine and are cheap. BTW, when I lived in Phoenix in the 1970s, people would tape aluminum foil or newspapers on the windows to cut the heat intake. The newspapers would block most of the solar heat, but would let the light through. Here in Seattle I made some reflective panels I can just stick on the windows when we have a heat wave. Plenty of light still gets in.
      - mattmoose21 4y ago
        Would this product be aimed more at businesses and high-rises? Also this seems a bit more aesthetically pleasing than the alternatives and especially newspaper.
        WalterBright 4y ago
        Just pointing out how cheap solutions can be.
        credit_guy 4y ago
        I don't know. LED light bulbs used to be very expensive. A market study 15 years ago would have found close to zero demand for them. Now they are affordable, they cut electricity bills and people do buy them. Technologies need to go over a certain threshold for demand to show up. The government can help with this.
- tuatoru 4y ago
  Oh, I think there's enough to do in "legacy" areas: roads, bridges, ports and airports, water supplies, electricity transmission grids, and so on. Also flood control measures and drought and wildfire mitigation. Your industries of the future won't operate well if the basics aren't kept up.
  - credit_guy 4y ago
    But should these be done only in times of recession? Should we hold some projects in "shovel-ready" state so we can have something to quickly spend money on when the economy starts faltering? Or should the government just do these things when they need to be done?
- fny 4y ago
  I'm the parent commenter, and I strongly disagree with the idea that stimulus should be directed by the federal government. The federal government is an extremely poor resource allocator. It knows nothing about local and personal wants and needs. In my view, funding should be dolled out to individuals and maybe local governments. That way money flows from the bottom up, not top down. The money flow is an extremely important factor: when money flows to individuals, each individual gains "votes" to allocate resources. Those votes informs how and where the economy grows at a granular level. The federal government cannot do this with any level of precision or efficiency. If higher levels of government need money to do things, they should tax for--this includes some portion of the transfer payments. I know it sounds redundant for the government to tax money they've handed out, but I think governments need to feel the pain of working to get the money in the first place. I'm also convinced you would dramatically reduce the amount of fraud and favoritism that occurs since decision making will end up being decentralized. Here's a "hot take" example. The federal government funding child care is a dumb idea. 1) Not everyone needs child care. 2) Not everyone needs child care in the way the federal government wants to provide it. 3) An entire bureaucratic apparatus needs to be developed to define what child care is, what constitutes valid child care, who can provide child care, blah, blah, blah. This will be expensive to manage and will metasticize in its own way over time. So why not just give people money to people who have young children to do whatever they want to do with it? Maybe you add some provisions to prevent people from making babies to cash in checks, but I'm assuming writ large I can trust my fellow citizen to make better decisions about their child care than whatever "governmental apparatus" we want to create to do that for them.
  - nine_zeros 4y ago
    It is exactly this thought process that is preventing good fiscal stimulus during recessions. Well intentioned thoughts like these are a good default for the government running in cruise control - when there is no financial volatility. A stimulus is only required during a recession. In each recession, we have only allowed the Fed to print more money, which hasn't turned out well. Instead of printing this money and raising asset prices, during each recession, fiscal policy should help increase the supply of things direly in need. If a recession is causing food shortages, we don't want printed money to increase demand for food. We would do much better by literally subsidizing X units of food for the next 1 year.
closeparen 4y ago
When rates rise in response to inflation, that’s not a “meaningful” return you’re getting, is it?
- de_Selby 4y ago
  The point is that having near or below 0 rates has been a terrible policy for almost everyone, just as increasing them in response to inflation is going to hit most people hard now. A problem has been kicked down the road for years, it was always going to blow up in our faces.
- fny 4y ago
  The current rate hikes are not due to inflation alone. IMO, Powell wanted to keep raising rates in 2018, but was hamstrung by Mnuchin and Trump who wanted to keep rates low and the dollar weak. The mini market panic at the time did not help. The COVID meltdown is why we went back to zero. Now he has the perfect excuse to return back things to a normal economic mode.
raincom 4y ago
Janet Yellen didn’t want to raise interest rates during the Obama time, and when she tried to raise interest rates during the Trump administration, Trump didn’t like it and didn’t renominate her. Here Janet Yellen was helping Obama by not raising interest rates; she got back to her senses when Trump came in. That’s how the politics of federal reserve is.

by fny 4y ago

nine_zeros 4y ago

> The Fed was forced to cut rates to zero for a long time because fiscal policy was not stimulative enough. It's not just fiscal stimulus but "how" the stimulus was applied. It's not like the government isn't spending enough. It is spending. Until recently, all the spending went on tax credits and military. What we need is fiscal stimulus in industries of the future. Only the current administration gets it and made it happen with the recent bill to support new energy transition. We need more fiscal stimulus in cheap production of pills, medical practitioners, hospitals, daycare services and housing. Literally just give incentives to produce more units of these.

WalterBright 4y ago
Government subsidy tends to attract a lot of malinvestment in order to get those dollars. For example, in Biden's bill, there's a subsidy for so-called "smart" glass that darkens when an electric current is applied. This is supposed to reduce solar input from windows by 20%. Of course, if this mattered, people would have already installed window blinds, which are cheap and easy. External eyebrows and eaves also work. "Smart" glass is an expensive solution, it's been around for 25 years, and nobody wants it.
- mattmoose21 4y ago
  Do you have a source for the smart glass subsidy? I haven't been able to find anything that mentions it.
  - sbuttgereit 4y ago
    https://www.axios.com/2022/08/30/smart-glass https://www.axios.com/2022/08/30/smart-glass "Among the Inflation Reduction Act's little-noticed yet potentially game-changing provisions: a big incentive for "smart glass," which can make buildings significantly more energy efficient."
    - mattmoose21 4y ago
      Thanks!
  - _ea1k 4y ago
    https://www.prnewswire.com/news-releases/inflation-reduction-act-adds-dynamic-glass-to-the-investment-tax-credit-301607897.html https://www.prnewswire.com/news-releases/inflation-reduction... - It seems like it just puts it on an equal footing with other solutions. Unless there's a downside that I'm not aware of, that seems like a reasonable thing to do?
    - WalterBright 4y ago
      The downside is it is expensive, while much cheaper methods are available.
      - deleted 4y ago
        [deleted]
    - mattmoose21 4y ago
      Yeah I don't see anyone taking advantage of this if they didn't also expect it to work.
- adgjlsfhk1 4y ago
  One advantage of smart glass is you can get much better wavelength control. For example, you can reflect 90% of infrared light while letting through the visible light. This is really hard to do with a curtain.
  - WalterBright 4y ago
    If it's not worth the money for people to pay to get this feature, it is not worth paying for it with taxes. I've seen smart glass demoed at a home show 25 years ago. I thought it was way cool, until they quoted the price. It's no surprise it hasn't gotten any traction since. Oh, it also consumed electric power when in dark mode, as much as a light bulb. It's not a passive system. Window blinds, louvers, eyebrows, shades, etc., all work fine and are cheap. BTW, when I lived in Phoenix in the 1970s, people would tape aluminum foil or newspapers on the windows to cut the heat intake. The newspapers would block most of the solar heat, but would let the light through. Here in Seattle I made some reflective panels I can just stick on the windows when we have a heat wave. Plenty of light still gets in.
    - mattmoose21 4y ago
      Would this product be aimed more at businesses and high-rises? Also this seems a bit more aesthetically pleasing than the alternatives and especially newspaper.
      - WalterBright 4y ago
        Just pointing out how cheap solutions can be.
        credit_guy 4y ago
        I don't know. LED light bulbs used to be very expensive. A market study 15 years ago would have found close to zero demand for them. Now they are affordable, they cut electricity bills and people do buy them. Technologies need to go over a certain threshold for demand to show up. The government can help with this.
tuatoru 4y ago
Oh, I think there's enough to do in "legacy" areas: roads, bridges, ports and airports, water supplies, electricity transmission grids, and so on. Also flood control measures and drought and wildfire mitigation. Your industries of the future won't operate well if the basics aren't kept up.
- credit_guy 4y ago
  But should these be done only in times of recession? Should we hold some projects in "shovel-ready" state so we can have something to quickly spend money on when the economy starts faltering? Or should the government just do these things when they need to be done?
fny 4y ago
I'm the parent commenter, and I strongly disagree with the idea that stimulus should be directed by the federal government. The federal government is an extremely poor resource allocator. It knows nothing about local and personal wants and needs. In my view, funding should be dolled out to individuals and maybe local governments. That way money flows from the bottom up, not top down. The money flow is an extremely important factor: when money flows to individuals, each individual gains "votes" to allocate resources. Those votes informs how and where the economy grows at a granular level. The federal government cannot do this with any level of precision or efficiency. If higher levels of government need money to do things, they should tax for--this includes some portion of the transfer payments. I know it sounds redundant for the government to tax money they've handed out, but I think governments need to feel the pain of working to get the money in the first place. I'm also convinced you would dramatically reduce the amount of fraud and favoritism that occurs since decision making will end up being decentralized. Here's a "hot take" example. The federal government funding child care is a dumb idea. 1) Not everyone needs child care. 2) Not everyone needs child care in the way the federal government wants to provide it. 3) An entire bureaucratic apparatus needs to be developed to define what child care is, what constitutes valid child care, who can provide child care, blah, blah, blah. This will be expensive to manage and will metasticize in its own way over time. So why not just give people money to people who have young children to do whatever they want to do with it? Maybe you add some provisions to prevent people from making babies to cash in checks, but I'm assuming writ large I can trust my fellow citizen to make better decisions about their child care than whatever "governmental apparatus" we want to create to do that for them.
- nine_zeros 4y ago
  It is exactly this thought process that is preventing good fiscal stimulus during recessions. Well intentioned thoughts like these are a good default for the government running in cruise control - when there is no financial volatility. A stimulus is only required during a recession. In each recession, we have only allowed the Fed to print more money, which hasn't turned out well. Instead of printing this money and raising asset prices, during each recession, fiscal policy should help increase the supply of things direly in need. If a recession is causing food shortages, we don't want printed money to increase demand for food. We would do much better by literally subsidizing X units of food for the next 1 year.

closeparen 4y ago

When rates rise in response to inflation, that’s not a “meaningful” return you’re getting, is it?

de_Selby 4y ago
The point is that having near or below 0 rates has been a terrible policy for almost everyone, just as increasing them in response to inflation is going to hit most people hard now. A problem has been kicked down the road for years, it was always going to blow up in our faces.
fny 4y ago
The current rate hikes are not due to inflation alone. IMO, Powell wanted to keep raising rates in 2018, but was hamstrung by Mnuchin and Trump who wanted to keep rates low and the dollar weak. The mini market panic at the time did not help. The COVID meltdown is why we went back to zero. Now he has the perfect excuse to return back things to a normal economic mode.

raincom 4y ago

Janet Yellen didn’t want to raise interest rates during the Obama time, and when she tried to raise interest rates during the Trump administration, Trump didn’t like it and didn’t renominate her. Here Janet Yellen was helping Obama by not raising interest rates; she got back to her senses when Trump came in. That’s how the politics of federal reserve is.