4 ms·

> This could be considered a good thing. Lower wages, lower job mobility, asset deflation, consumable inflation -- YAY! ...

slg 4y ago
It is still wild to me that this is the approach we are taking, things are getting too expensive so let's shrink the economy. That can't be the best solution. We are throwing the baby out with the bathwater.
- xapata 4y ago
  Not shrink. Slow the growth of. Decelerate is different from stop. The real problem isn't any particular position, velocity, nor even acceleration. Those can all be planned for. It's the 4th time-derivative, jerk, that messes us up.
  - slg 4y ago
    That is a semantic debate on whether we cross an axis on a graph and we won't know whether that will happen until after the fact. We are intervening to make the economy smaller than if we didn't intervene. I think that qualifies as "shrinking" even if the growth is what is shrinking and not the overall economy.
    - xapata 4y ago
      > We are intervening to make the economy smaller than if we didn't intervene. Depends on what time scale we're thinking about. True in the short-term, but I think the long-term expectation is that growth will be more stable, and therefore greater, with this short-term intervention. > I think that qualifies as "shrinking" Yes, and no. Yes, in that oh-so-important technical, relative sense. No, in that it's not the best choice of words.
  - caeril 4y ago
    > Those can all be planned for. Literally nothing can be planned for. Compare the Fed dot plots at any given meeting since 2008 with actual rates a year, or three years hence. Look at the BoE and BoJ flail wildly around right now, absolutely shocked by the consequences of their own actions less than a year ago. These people have arguably a worse predictive ability than the canonical South Park Chicken ritual. Central Banking is the only industry I know of in which you can be catastrophically wrong, always, and retain job security. Great gig, if you can swing it.
- pbz 4y ago
  It's the only way we know of to stop greed/fomo running rampant. Folks need to be put in a time-out to cool off and force them to reprioritize. We like to think of the market as this calculated and rational entity. It's far from that, in fact it's closer to the opposite of that. The other option is to do price control, but that won't fly in capitalism.
  - slg 4y ago
    There are other levers that can be pulled. Taxes are one example that could be much more targeted at the specific sources of the "greed/fomo running rampant". We instead chose to take it out on everyone.
    - pbz 4y ago
      I'd put taxation in the same bucket as price control because for this to be effective the taxes would need to be on the rich (in effect to drain liquidity) and that's as likely as price control.
      - slg 4y ago
        I don't disagree with the unlikely nature of new taxes on the rich. That was basically my original point. It is wild that we decided that we would rather go into a recession than tax the rich and I don't understand why there is seemingly no public pushback against this.
        pbz 4y ago
        There's historic precedence that increasing rates controls inflation. Yes, it's a very blunt and crude instrument. However, when you know this tool works, trying another tool is too risky to experiment with (in case it fails). Inflation does have the risk of getting out of hand and being even harder to control. The risk analysis is that whatever pain increasing the rates would cause it pales in comparison to having hyperinflation. As far as the lack of a pushback: My guess is a combination of apathy and the fact that it doesn't affect the average person quite as much as inflation.
- fundad 4y ago
  The interest rate hikes serve to squash the glimmer of worker power that has the ownership class so worried.
deleted 4y ago
[deleted]
NaturalPhallacy 4y ago
Not to mention the greatest wealth transfer in history from the poor to the rich: https://www.newsweek.com/were-living-through-greatest-transfer-wealth-middle-class-elites-history-opinion-1641614 https://www.newsweek.com/were-living-through-greatest-transf...
- speakfreely 4y ago
  Inflation is dumping rocket fuel on that fire. There's a reason that they're fighting inflation with disregard for other consequences: the resulting inequality of continued unchecked inflation is a legitimate threat to the stability of our social system.
speakfreely 4y ago
Asset deflation is a good thing for wage earners. Inflation is the worst possible thing for anyone who works for their money, as it means the wealth of the people who own assets (think 8-9 figure business portfolios, not a single residence) is skyrocketing away from the middle class in both relative and absolute terms.

slg 4y ago

It is still wild to me that this is the approach we are taking, things are getting too expensive so let's shrink the economy. That can't be the best solution. We are throwing the baby out with the bathwater.

xapata 4y ago
Not shrink. Slow the growth of. Decelerate is different from stop. The real problem isn't any particular position, velocity, nor even acceleration. Those can all be planned for. It's the 4th time-derivative, jerk, that messes us up.
- slg 4y ago
  That is a semantic debate on whether we cross an axis on a graph and we won't know whether that will happen until after the fact. We are intervening to make the economy smaller than if we didn't intervene. I think that qualifies as "shrinking" even if the growth is what is shrinking and not the overall economy.
  - xapata 4y ago
    > We are intervening to make the economy smaller than if we didn't intervene. Depends on what time scale we're thinking about. True in the short-term, but I think the long-term expectation is that growth will be more stable, and therefore greater, with this short-term intervention. > I think that qualifies as "shrinking" Yes, and no. Yes, in that oh-so-important technical, relative sense. No, in that it's not the best choice of words.
- caeril 4y ago
  > Those can all be planned for. Literally nothing can be planned for. Compare the Fed dot plots at any given meeting since 2008 with actual rates a year, or three years hence. Look at the BoE and BoJ flail wildly around right now, absolutely shocked by the consequences of their own actions less than a year ago. These people have arguably a worse predictive ability than the canonical South Park Chicken ritual. Central Banking is the only industry I know of in which you can be catastrophically wrong, always, and retain job security. Great gig, if you can swing it.
pbz 4y ago
It's the only way we know of to stop greed/fomo running rampant. Folks need to be put in a time-out to cool off and force them to reprioritize. We like to think of the market as this calculated and rational entity. It's far from that, in fact it's closer to the opposite of that. The other option is to do price control, but that won't fly in capitalism.
- slg 4y ago
  There are other levers that can be pulled. Taxes are one example that could be much more targeted at the specific sources of the "greed/fomo running rampant". We instead chose to take it out on everyone.
  - pbz 4y ago
    I'd put taxation in the same bucket as price control because for this to be effective the taxes would need to be on the rich (in effect to drain liquidity) and that's as likely as price control.
    - slg 4y ago
      I don't disagree with the unlikely nature of new taxes on the rich. That was basically my original point. It is wild that we decided that we would rather go into a recession than tax the rich and I don't understand why there is seemingly no public pushback against this.
      - pbz 4y ago
        There's historic precedence that increasing rates controls inflation. Yes, it's a very blunt and crude instrument. However, when you know this tool works, trying another tool is too risky to experiment with (in case it fails). Inflation does have the risk of getting out of hand and being even harder to control. The risk analysis is that whatever pain increasing the rates would cause it pales in comparison to having hyperinflation. As far as the lack of a pushback: My guess is a combination of apathy and the fact that it doesn't affect the average person quite as much as inflation.
fundad 4y ago
The interest rate hikes serve to squash the glimmer of worker power that has the ownership class so worried.

deleted 4y ago

[deleted]

NaturalPhallacy 4y ago

Not to mention the greatest wealth transfer in history from the poor to the rich: https://www.newsweek.com/were-living-through-greatest-transfer-wealth-middle-class-elites-history-opinion-1641614 https://www.newsweek.com/were-living-through-greatest-transf...

speakfreely 4y ago
Inflation is dumping rocket fuel on that fire. There's a reason that they're fighting inflation with disregard for other consequences: the resulting inequality of continued unchecked inflation is a legitimate threat to the stability of our social system.

speakfreely 4y ago

Asset deflation is a good thing for wage earners. Inflation is the worst possible thing for anyone who works for their money, as it means the wealth of the people who own assets (think 8-9 figure business portfolios, not a single residence) is skyrocketing away from the middle class in both relative and absolute terms.