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I'm kind of inclined to agree. We want to avoid structural damage: Lost jobs, bankrupt businesses, lost mortgages, and so on. Structural damage leads to loss o

by blagie 4y ago

I'm kind of inclined to agree. We want to avoid structural damage: Lost jobs, bankrupt businesses, lost mortgages, and so on. Structural damage leads to loss of real productivity, and real harm to people's lives. The only way I knew to get through COVID shutdowns was to devalue currency by about as much as we've done. I didn't mind the short-term money printing, and I expected inflation to result. The inflation is painful, but the alternative is much more painful. My income buys less than it did two years ago, but I'm thankful I have a job. I was even more thankful when jobs were easy to come by. If my employer went under or I lost my job, I'd be profoundly unhappy. The right approach now would be to accept a dollar is worth less than it was before, and to give an honest estimate of how much less. Aggressively trying to control inflation by raising interest rates is a lost cause, and will do a lot of real harm. The outcome here seems to be that rather than mitigating the harm of COVID shutdowns, we've delayed them, and did a lot more harm along the way.

caeril 4y ago
> We want to avoid structural damage: Lost jobs, bankrupt businesses Completely incorrect. If the jobs and businesses in question existed only due to speculative excess, they shouldn't exist. Easy money generates what David Graeber would call "Bullshit Jobs", that contribute anywhere from zero to negative real value production. We want these businesses liquidated and the employees out on the street, to pursue work that actually contributes to society. The trick is to somehow limit the collateral damage to businesses that do produce real value. I don't think that's a problem that's been solved.
rsync 4y ago
"We want to avoid structural damage: Lost jobs, bankrupt businesses, lost mortgages, and so on." I disagree - I think what we need is a constant, low, background level of structural damage - which includes lost jobs and especially bankrupt businesses. I grow increasingly fond of the forest fire / controlled burns analogy: We have come to realize that preventing, or extinguishing, every wildland fire causes a dangerous level of fuels to slowly build up, eventually erupting in an unstoppable conflagration that destroys much more than the sum of the fuel overload. Preventing recessions and keeping business firms afloat that would otherwise fail without easy loan rollover - that's the financial equivalent of refusing to maintain fuel loads with controlled burns. Eventually the dead fuels (zombie business firms) will overwhelm all firefighting efforts (QE ? Negative interest rates ?) and will take down a much larger portion of the economy than otherwise would have failed along the way ...
naijaboiler 4y ago
Spoken very fairly. For a central banker, it's either high inflation or high unemployment. Strangely enough, they prefer the latter. Inflation affects everybody mildly, a recession affects the unlucky few that lose their jobs very badly

by blagie 4y ago

caeril 4y ago

> We want to avoid structural damage: Lost jobs, bankrupt businesses Completely incorrect. If the jobs and businesses in question existed only due to speculative excess, they shouldn't exist. Easy money generates what David Graeber would call "Bullshit Jobs", that contribute anywhere from zero to negative real value production. We want these businesses liquidated and the employees out on the street, to pursue work that actually contributes to society. The trick is to somehow limit the collateral damage to businesses that do produce real value. I don't think that's a problem that's been solved.

rsync 4y ago

"We want to avoid structural damage: Lost jobs, bankrupt businesses, lost mortgages, and so on." I disagree - I think what we need is a constant, low, background level of structural damage - which includes lost jobs and especially bankrupt businesses. I grow increasingly fond of the forest fire / controlled burns analogy: We have come to realize that preventing, or extinguishing, every wildland fire causes a dangerous level of fuels to slowly build up, eventually erupting in an unstoppable conflagration that destroys much more than the sum of the fuel overload. Preventing recessions and keeping business firms afloat that would otherwise fail without easy loan rollover - that's the financial equivalent of refusing to maintain fuel loads with controlled burns. Eventually the dead fuels (zombie business firms) will overwhelm all firefighting efforts (QE ? Negative interest rates ?) and will take down a much larger portion of the economy than otherwise would have failed along the way ...

naijaboiler 4y ago

Spoken very fairly. For a central banker, it's either high inflation or high unemployment. Strangely enough, they prefer the latter. Inflation affects everybody mildly, a recession affects the unlucky few that lose their jobs very badly