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We need congress to stop writing blank checks. There's almost so much rate hikes can do, but this affects more than just the USA: Rate hikes will kill third wor

We need congress to stop writing blank checks. There's almost so much rate hikes can do, but this affects more than just the USA: Rate hikes will kill third world and developing nation's economies. And no, the answer isnt "mor taxes!", because one, that literally has never worked (we've raised taxes thousands of times now), but we don't tell and alcoholic to drink more water to dilute the alcohol, we tell them to stop drinking. s/alcohol/spending/

avgDev 4y ago
You provided a poor example. Less money in circulation = less spending. If we disregard that alcoholism is a sickness and will trump all other spending and make you lose every penny, then increasing taxation and removing money from people by raising rates would prevent the alcoholic from buying more booze. However, the example is silly the macro economics are much more complex with individuals and businesses spanning across many different sectors.
mindslight 4y ago
I'd say it's fantastic news that the Fed is finally being forced to do what they should have done decades ago. The real analogy to alcohol is the economy's addiction to low rates. The agglomeration, centralization, and intermediation of everything is not merely "late stage capitalism". Rather it directly follows from the decades-long policy of creating massive amounts of new money, just dumping it into the financial industry, and then writing that action off as "value neutral" while it's anything but. Given the choice between newly created money just continuing to fuel the everything bubble or spending it on specific policies, the latter is at least more deliberate in its effects. In general, higher interest rates will slow down the economy, which is a great thing for sustainable use of natural resources. If we want to conserve resources, then we need to change our time preference to not use them all as fast as possible! It's nonsensical to give lip service to global warming, and then continue pushing the economy to run as hot as possible with speculative malinvestments enabled by ZIRP. Freedom wise, long term higher rates encourage distributed ownership of capital rather than centralized financialization. For example an escooter is merely several hundred dollars, but under ZIRP it made sense for investors to (produce and) buy thousands of them to rent out, hoping to create some kind of future revenue stream. Our society is much better off if things, especially simple consumer goods, are under private ownership rather than administered by centralizing companies.
- dsfyu404ed 4y ago
  >which is a great thing for sustainable use of natural resources Also great for keeping sustainable business models from getting out-competed by a bunch of dolts with monopoly bucks. > Freedom wise, long term higher rates encourage distributed ownership of capital rather than centralized financialization. For example an escooter is merely several hundred dollars, but under ZIRP it made sense for investors to buy thousands of them to rent out, to try and create some kind of future revenue stream. Our society is much better off if things, especially consumer goods, are under private ownership rather than leased out by centralizing companies. I agree. However, many people see this as a bad thing. To continue with the scooter example, say we discover better scooter batteries but they aren't quite economically viable. With centralized ownership you can just financially penalize companies to make them switch. Even if people have to pay more they're at least not directly targeted which makes the change less politically expensive. With distributed ownership you have to enforce against more people, many of them individuals and possibly take enforcement action against them which is more laborious and expensive and runs much more risk of offending people's sensibilities and other backlash.
  - mindslight 4y ago
    I don't think the scooter battery example is particularly great. It seems like you're saying that perhaps ongoing battery use might be creating some ongoing harm where we would be better off prematurely end-of-lifing the existing ones. But either way the battery needs to be disposed of, and round trip storage efficiency is already high enough to make ongoing inefficency not much of a consideration. I'd also point out that centralization is more likely to make destructive sweeping changes. An individual could keep limping along with their old battery with only 30% capacity, just for short trips and whatnot. Whereas a company would be inclined to scrap old scooters much earlier to keep their fleet uniform and ready for the needs of any user. A better example is the automobile market, where we've already got the distributed-incentives situation. This seems to be getting handled just fine with EV subsidies and "cash for clunkers" (criticism of that program notwithstanding). Perhaps adoption is slower than we want, but there could also be more direct incentives to upgrade if they were needed, or even just higher gas taxes. Operating on the distributed model where individuals are free to judge their own situation seems better than centralizing things so that they can be changed quicker just in case the need arises.

avgDev 4y ago

You provided a poor example. Less money in circulation = less spending. If we disregard that alcoholism is a sickness and will trump all other spending and make you lose every penny, then increasing taxation and removing money from people by raising rates would prevent the alcoholic from buying more booze. However, the example is silly the macro economics are much more complex with individuals and businesses spanning across many different sectors.

mindslight 4y ago

I'd say it's fantastic news that the Fed is finally being forced to do what they should have done decades ago. The real analogy to alcohol is the economy's addiction to low rates. The agglomeration, centralization, and intermediation of everything is not merely "late stage capitalism". Rather it directly follows from the decades-long policy of creating massive amounts of new money, just dumping it into the financial industry, and then writing that action off as "value neutral" while it's anything but. Given the choice between newly created money just continuing to fuel the everything bubble or spending it on specific policies, the latter is at least more deliberate in its effects. In general, higher interest rates will slow down the economy, which is a great thing for sustainable use of natural resources. If we want to conserve resources, then we need to change our time preference to not use them all as fast as possible! It's nonsensical to give lip service to global warming, and then continue pushing the economy to run as hot as possible with speculative malinvestments enabled by ZIRP. Freedom wise, long term higher rates encourage distributed ownership of capital rather than centralized financialization. For example an escooter is merely several hundred dollars, but under ZIRP it made sense for investors to (produce and) buy thousands of them to rent out, hoping to create some kind of future revenue stream. Our society is much better off if things, especially simple consumer goods, are under private ownership rather than administered by centralizing companies.

dsfyu404ed 4y ago
>which is a great thing for sustainable use of natural resources Also great for keeping sustainable business models from getting out-competed by a bunch of dolts with monopoly bucks. > Freedom wise, long term higher rates encourage distributed ownership of capital rather than centralized financialization. For example an escooter is merely several hundred dollars, but under ZIRP it made sense for investors to buy thousands of them to rent out, to try and create some kind of future revenue stream. Our society is much better off if things, especially consumer goods, are under private ownership rather than leased out by centralizing companies. I agree. However, many people see this as a bad thing. To continue with the scooter example, say we discover better scooter batteries but they aren't quite economically viable. With centralized ownership you can just financially penalize companies to make them switch. Even if people have to pay more they're at least not directly targeted which makes the change less politically expensive. With distributed ownership you have to enforce against more people, many of them individuals and possibly take enforcement action against them which is more laborious and expensive and runs much more risk of offending people's sensibilities and other backlash.
- mindslight 4y ago
  I don't think the scooter battery example is particularly great. It seems like you're saying that perhaps ongoing battery use might be creating some ongoing harm where we would be better off prematurely end-of-lifing the existing ones. But either way the battery needs to be disposed of, and round trip storage efficiency is already high enough to make ongoing inefficency not much of a consideration. I'd also point out that centralization is more likely to make destructive sweeping changes. An individual could keep limping along with their old battery with only 30% capacity, just for short trips and whatnot. Whereas a company would be inclined to scrap old scooters much earlier to keep their fleet uniform and ready for the needs of any user. A better example is the automobile market, where we've already got the distributed-incentives situation. This seems to be getting handled just fine with EV subsidies and "cash for clunkers" (criticism of that program notwithstanding). Perhaps adoption is slower than we want, but there could also be more direct incentives to upgrade if they were needed, or even just higher gas taxes. Operating on the distributed model where individuals are free to judge their own situation seems better than centralizing things so that they can be changed quicker just in case the need arises.