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> This inflation issue is entirely a making of our own shortsightedness. Yes, central banks printing money relentlessly for more than a decade has nothing to w

by sprash 4y ago

> This inflation issue is entirely a making of our own shortsightedness. Yes, central banks printing money relentlessly for more than a decade has nothing to with it. We the people are to blame!

generj 4y ago
Broadly speaking we the people cheered for and demanded cheap money. Baby steps towards raising rates (during massive boom years) were decried by the markets, by politicians (an particular an ex-President) and by the populace generally who are not well informed on what central banks do. The central banks should have raised rates anyways - but let’s not pretend like everyone wouldn’t have hated them for causing a recession or even just a slow down in growth by doing so.
- prottog 4y ago
  > let’s not pretend like everyone wouldn’t have hated them The whole point of the nominal independence of the Fed from the political process is that they would be able to take unpopular decisions that may hurt in the short term but will further their dual mandate (maximum employment and price stability) in the medium and long term. Seeing as they cannot do that, and these days are venturing further away from their mandate by assuming the mantle of fighting climate change as well as racial inequity, we might as well do away with it entirely. It's not like the financial history of this country hasn't been replete with one crisis after another even after the advent of the Fed, and one dollar at the time of the creation of the Fed is worth about $30 now, so prices have only been stable for a strange definition of price stability. (For comparison, the Swiss franc inflated about 10x in a similar time period.)
- NickC25 4y ago
  >Broadly speaking we the people cheered for and demanded cheap money. Exactly! We saw what cheap money did to rebound the economy after the 2008 crash - it created the largest bull run we've ever seen. Politicians, hoping to keep their jobs (and make sure their trading accounts grew), said "yeah, we'll keep things right as they are" because they didn't want to be the ones that caused a cool down which would in turn cost them their jobs (and insider information).
DoingIsLearning 4y ago
OK so putting the sarcasm aside can anyone with a bit of know how on monetary policy actually explain why all the media keeps pointing at Covid and fertilizers and Ukranian war rather than the QE since 2008? Is this central banks diverting attention or is the parent comment overly simplifying this?
- pm90 4y ago
  Would we have had a recession without Covid or the War? It seems pretty unlikely from what we know. Covid wrecked supply chains and the War wrecked energy + food prices. So the Fed has to step in to try and clamp on demand rather than letting the world economy grow organically to meet it.
  - cronix 4y ago
    Covid wrecked no supply chains. The overblown human reaction to it did. Oil prices were on the rise well before the Ukraine invasion.
  - NickC25 4y ago
    I have a feeling that the answer is yes - because economics is kind of cyclical. We can't have a boom without the inevitable bust, so to speak. Plus, keeping interest rates unrealistically low for over a decade just to please the highest echelons of financial power (under the bullshit guise that lower interest rates == more jobs) does nothing more than pause the natural economic cycle and, honestly, it just makes the bust that much more inevitable and dangerous.
- comte7092 4y ago
  Your hunch is correct. The constant cry of “money printing!!!!” Is an oversimplification. It’s not totally wrong mind you, but as we all know, prices are set by supply and demand. An obvious example that I think a lot of people can easily connect with is the fact that globalization has been deflationary (it’s driven prices down), and that isn’t a monetary phenomenon. As someone sympathetic to MMT, the solution in my opinion has less to do with the fed, Congress needs to tighten fiscal policy.
- 4y ago
ransom1538 4y ago
Loans. Having the central banks print cash is a great way to steal money. You just take on huge amounts of debt, pump trillions of generated cash into the system. Then the suckers (old people, working class) have their saved dollars devalued without any ability to earn interest. The corporations,rich, etc, then just watch as their debt value decreases over time [tomorrows dollars are worth less and less, and so is your debt]. The corps keep charging higher and higher prices - sucking up those sweet sweet future value dollars, while only owing yesterdays cash.

by sprash 4y ago

> This inflation issue is entirely a making of our own shortsightedness. Yes, central banks printing money relentlessly for more than a decade has nothing to with it. We the people are to blame!

generj 4y ago

Broadly speaking we the people cheered for and demanded cheap money. Baby steps towards raising rates (during massive boom years) were decried by the markets, by politicians (an particular an ex-President) and by the populace generally who are not well informed on what central banks do. The central banks should have raised rates anyways - but let’s not pretend like everyone wouldn’t have hated them for causing a recession or even just a slow down in growth by doing so.

prottog 4y ago
> let’s not pretend like everyone wouldn’t have hated them The whole point of the nominal independence of the Fed from the political process is that they would be able to take unpopular decisions that may hurt in the short term but will further their dual mandate (maximum employment and price stability) in the medium and long term. Seeing as they cannot do that, and these days are venturing further away from their mandate by assuming the mantle of fighting climate change as well as racial inequity, we might as well do away with it entirely. It's not like the financial history of this country hasn't been replete with one crisis after another even after the advent of the Fed, and one dollar at the time of the creation of the Fed is worth about $30 now, so prices have only been stable for a strange definition of price stability. (For comparison, the Swiss franc inflated about 10x in a similar time period.)
NickC25 4y ago
>Broadly speaking we the people cheered for and demanded cheap money. Exactly! We saw what cheap money did to rebound the economy after the 2008 crash - it created the largest bull run we've ever seen. Politicians, hoping to keep their jobs (and make sure their trading accounts grew), said "yeah, we'll keep things right as they are" because they didn't want to be the ones that caused a cool down which would in turn cost them their jobs (and insider information).

DoingIsLearning 4y ago

OK so putting the sarcasm aside can anyone with a bit of know how on monetary policy actually explain why all the media keeps pointing at Covid and fertilizers and Ukranian war rather than the QE since 2008? Is this central banks diverting attention or is the parent comment overly simplifying this?

pm90 4y ago
Would we have had a recession without Covid or the War? It seems pretty unlikely from what we know. Covid wrecked supply chains and the War wrecked energy + food prices. So the Fed has to step in to try and clamp on demand rather than letting the world economy grow organically to meet it.
- cronix 4y ago
  Covid wrecked no supply chains. The overblown human reaction to it did. Oil prices were on the rise well before the Ukraine invasion.
- NickC25 4y ago
  I have a feeling that the answer is yes - because economics is kind of cyclical. We can't have a boom without the inevitable bust, so to speak. Plus, keeping interest rates unrealistically low for over a decade just to please the highest echelons of financial power (under the bullshit guise that lower interest rates == more jobs) does nothing more than pause the natural economic cycle and, honestly, it just makes the bust that much more inevitable and dangerous.
comte7092 4y ago
Your hunch is correct. The constant cry of “money printing!!!!” Is an oversimplification. It’s not totally wrong mind you, but as we all know, prices are set by supply and demand. An obvious example that I think a lot of people can easily connect with is the fact that globalization has been deflationary (it’s driven prices down), and that isn’t a monetary phenomenon. As someone sympathetic to MMT, the solution in my opinion has less to do with the fed, Congress needs to tighten fiscal policy.
4y ago

ransom1538 4y ago

Loans. Having the central banks print cash is a great way to steal money. You just take on huge amounts of debt, pump trillions of generated cash into the system. Then the suckers (old people, working class) have their saved dollars devalued without any ability to earn interest. The corporations,rich, etc, then just watch as their debt value decreases over time [tomorrows dollars are worth less and less, and so is your debt]. The corps keep charging higher and higher prices - sucking up those sweet sweet future value dollars, while only owing yesterdays cash.