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I am specifically objecting here to the notion that the "goal of low interest rates was to force savers into riskier assets". What a given central bank is up t

I am specifically objecting here to the notion that the "goal of low interest rates was to force savers into riskier assets". What a given central bank is up to depends on the central bank. But the Fed is pretty clear about its goals. E.g.: https://www.stlouisfed.org/in-plain-english/the-fed-and-the-dual-mandate https://www.stlouisfed.org/in-plain-english/the-fed-and-the-... I agree it's true that they change interest rates as a way of influencing investment rates as they pursue their goals. But I believe they have very interest in influencing the average individual saver in any particular direction, let alone having that as a goal. And I absolutely disagree that "force" and "encourage or discourage" mean the same thing. My broad point here is that the Fed, using pretty blunt instruments, tries to keep us from both recession and inflation, but that does not "force" rich people to do anything. Those investing in startups have enough money that they have incredible agency in what they do with that money. I can believe that VCs feel compelled to invest so they can keep up their reputations and their fat checks. But if so, they are compelled by prestige and greed, not by Jerome Powell.

emodendroket 4y ago
They write here that they intend to maximize employment and yet I can easily pick up a newspaper and read them fretting that employment is too high. e.g., https://apple.news/AtzUI_uozTyOjXZhyAcUpPw https://apple.news/AtzUI_uozTyOjXZhyAcUpPw Now sure, we can say that’s just the “dual mandate” at work, since they tie this concern to inflation. But still, I wouldn’t take a public statement like this as gospel. I suppose it is true that no one person is forced to do anything, but if you create strong incentives to do one thing and disincentives to do another then I don’t think the difference is that meaningful in the aggregate.
- wpietri 4y ago
  Yes, that is exactly the dual mandate at work. Too tight a labor market causes labor price inflation, which quickly causes general price inflation, eroding the value of the higher wages and causing all sorts of other problems. None of that is proof that their goal is to "force savers into riskier assets". And I'd say the difference is absolutely meaningful, because people have moral agency. People have "incentives" to do all sorts of harmful things. But we can still expect them to make good choices, and to own it when they make bad ones. As an example, take FTX and Sam Bankman-Fried. He clearly had plenty of incentives to do what he did. That doesn't make what he did any less wrong. Indeed, morals that only applied when one had no incentive to act against them would be meaningless. It's exactly when the incentives favor harmful actions that morals most matter.
  - emodendroket 4y ago
    I can’t really agree that investing in a financially unsound business is “immoral.” I’d also point out that in that story the Fed is fretting about high employment in spite of prices beginning to stabilize, so I think maybe “Political Aspects of Full Employment” would be a more useful tract to read to understand the dynamics at work than “what the Fed does in simple English.”
    - wpietri 4y ago
      You're welcome to argue that investing one's own money badly is not immoral, just dumb. But there are other people involved here, and it's surprising to me they have escaped your notice.

emodendroket 4y ago

They write here that they intend to maximize employment and yet I can easily pick up a newspaper and read them fretting that employment is too high. e.g., https://apple.news/AtzUI_uozTyOjXZhyAcUpPw https://apple.news/AtzUI_uozTyOjXZhyAcUpPw Now sure, we can say that’s just the “dual mandate” at work, since they tie this concern to inflation. But still, I wouldn’t take a public statement like this as gospel. I suppose it is true that no one person is forced to do anything, but if you create strong incentives to do one thing and disincentives to do another then I don’t think the difference is that meaningful in the aggregate.

wpietri 4y ago
Yes, that is exactly the dual mandate at work. Too tight a labor market causes labor price inflation, which quickly causes general price inflation, eroding the value of the higher wages and causing all sorts of other problems. None of that is proof that their goal is to "force savers into riskier assets". And I'd say the difference is absolutely meaningful, because people have moral agency. People have "incentives" to do all sorts of harmful things. But we can still expect them to make good choices, and to own it when they make bad ones. As an example, take FTX and Sam Bankman-Fried. He clearly had plenty of incentives to do what he did. That doesn't make what he did any less wrong. Indeed, morals that only applied when one had no incentive to act against them would be meaningless. It's exactly when the incentives favor harmful actions that morals most matter.
- emodendroket 4y ago
  I can’t really agree that investing in a financially unsound business is “immoral.” I’d also point out that in that story the Fed is fretting about high employment in spite of prices beginning to stabilize, so I think maybe “Political Aspects of Full Employment” would be a more useful tract to read to understand the dynamics at work than “what the Fed does in simple English.”
  - wpietri 4y ago
    You're welcome to argue that investing one's own money badly is not immoral, just dumb. But there are other people involved here, and it's surprising to me they have escaped your notice.