5 ms·

Looking for specific reasons for each cycle change is disingenuous. Complex systems evolve by boom and bust dynamics. It's natural and inevitable. We can't have

Looking for specific reasons for each cycle change is disingenuous. Complex systems evolve by boom and bust dynamics. It's natural and inevitable. We can't have continuous stable development of systems because actors don't have perfect knowledge.

sprash 4y ago
The boom and bust cycles are artificial and are created entirely by the central bank. We can have continuous stable development and did have it when the gold standard was still a thing.
- benj111 4y ago
  Booms and busts existed before central banks. They existed when the gold standard was a thing. Have you heard of the 'great depression'? That happen while on the gold standard. So unless your going to no true scotsman that fact...
- mind-blight 4y ago
  The great depression happened while we had the gold standard. With banks loaning money based on the value of their ledgers, you'll end up more currency in circulation than physically exists - even with a pegged dollar and no central bank. The booms and busts occur due to speculation, over-investment, and contraction when the bottom falls out. That occurs just fine with distributed banking and loans. Did 0 percent interest contribute to our current cycle? Absolutely. But these cycles exist in any economic system with capital markets
  - sprash 4y ago
    By gold standard I actually mean no fractional reserve banking. The great depression was caused by the federal reserve. As soon as you have fractional reserve banking you allow over-leveraged debts which lead immediately to boom and bust cycles. If you want to avoid those cycles simply don't allow people to spend money they don't actually have and always settle payments as early as possible (also don't allow anybody to simply print money).
    - JumpCrisscross 4y ago
      > don't allow people to spend money they don't actually have and always settle payments as early as possible This is in practice impossible because value hand-off is not instantaneous. Someone is always at risk in a transaction, to a varying degree over time. (To say nothing of the productivity gained from the friction reduction of transaction credit.) In Malthusian terms, every child is born with future claims on unproduced food. Mandating that be settled up front requires dark decisions, ones starving cities and families have had to make.
    - dragonwriter 4y ago
      > By gold standard I actually mean no fractional reserve banking There was, AFAIK, no time in history in which a monometallic gold standard with no fractional reserve banking was the international norm, certainly no time overlapping with the capitalist econonic system and industrialization. The US before 1870 was primarily on a silver standard—and that’s true of most ofnthe West for quite some time before the US existed, and fractional reserve (or no-required-reserve) banking was the norm in the US before the gold standard, too. The gold standard was only 1870-1932, and none of that time was there no fractional reserve banking.
      - lordnacho 4y ago
        Is there any notable difference between silver, bimetallism, and gold? They're all a sort of fixed-amount-backed thing, right? I do think in general popular economics (aka LinkedIn blogs) tend to overstate the benefits of gold.
        namaria 4y ago
        "Gold standard" is just shorthand for restrictive policies that favours creditors over debtors. One implementation is using gold as the reserve money. But this is not the only way to do it, see IMF austerity rules. In that case you're just treating foreign reserves as if they were metallic treasure.
        4y ago
- JumpCrisscross 4y ago
  > boom and bust cycles are artificial and are created entirely by the central bank This is trivially, empirically, untrue, most notoriously in the free banking era [1]. These cycles are even the norm in ecologies, where they’re theorised to underpin diversity [2]. Republican Rome had endogenous boom-bust variations [3]; Malthus famously wrote about this generally [4]. [1] https://www.richmondfed.org/publications/research/econ_focus/2018/q1/economic_history https://www.richmondfed.org/publications/research/econ_focus... [2] https://www.nature.com/articles/s42003-021-02021-4 https://www.nature.com/articles/s42003-021-02021-4 [3] https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_Roman_Economic_Growth20151127-3155-1idbj5b-libre.pdf https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_... [4] https://en.m.wikipedia.org/wiki/Malthusianism https://en.m.wikipedia.org/wiki/Malthusianism
- unmole 4y ago
  > continuous stable development and did have it when the gold standard was still a thing My sides.
- dragonwriter 4y ago
  > We can have continuous stable development and did have it when the gold standard was still a thing. The gold standard in the US ran from 1870 to 1932; the Long Depression of 1873-1879, the Depression of 1882-1885, and the and the Great Depression of 1929-1933 all happened during it (overlapping its end, in the last case), as did some smaller recessions. (Prior to 1870, most of the time the US was on a silver standard, which also had plenty of downturns and some depressions, in case you wished to retreat to “metallic” from “gold”.)
mvcatsifma 4y ago
This is the correct explanation.
sfpotter 4y ago
I don’t think you mean to use the word “disingenuous” here. Typo? This word typically has a connotation of deception, and is usually applied to interactions between people. Looking for a reason for a cycle change is a totally natural and reasonable thing for someone to do.
- namaria 4y ago
  No, I mean it. Journalists and consultants peddle these explanations as some sort of management/investment science. But they know that each article they write each day to explain noise in the fluctuations of the market is bunk. If they could produce sound analysis they'd beating the market with it, not posting it online to sell ads.
  - sfpotter 4y ago
    Got it, and I completely agree! Didn’t realize this was the specific sense of your post.
  - vgatherps 4y ago
    > If they could produce sound analysis they'd beating the market with it, not posting it online to sell ads. This isn't correct - you can produce very sound analysis of past events, but to make money trading you need predictive power into future (as well as a lot of other things).
    - TeMPOraL 4y ago
      Arguably, the soundness of the analysis is in its explanatory power. If you can't use your analysis to successfully predict the future, or even past events that weren't known to you when doing the analysis, then your analysis is a) useless, and b) impossible to tell apart from random bullshit of equal predictive power. However, per GP, such useless analysis can still make the reader feel smarter, meaning you can monetize it - through paid or ad-funded publishing. In this sense, journalists are selling "analysis porn".
      - 4y ago
iot_devs 4y ago
Is there some sort of game theory that assert what you are saying? Actors with no perfect knowledge will result in bummans bust kind of cycles.
- namaria 4y ago
  I am not familiar with game theory beyond the superficial explanations from wikipedia. Can't help you there, sorry.

sprash 4y ago

The boom and bust cycles are artificial and are created entirely by the central bank. We can have continuous stable development and did have it when the gold standard was still a thing.

benj111 4y ago
Booms and busts existed before central banks. They existed when the gold standard was a thing. Have you heard of the 'great depression'? That happen while on the gold standard. So unless your going to no true scotsman that fact...
mind-blight 4y ago
The great depression happened while we had the gold standard. With banks loaning money based on the value of their ledgers, you'll end up more currency in circulation than physically exists - even with a pegged dollar and no central bank. The booms and busts occur due to speculation, over-investment, and contraction when the bottom falls out. That occurs just fine with distributed banking and loans. Did 0 percent interest contribute to our current cycle? Absolutely. But these cycles exist in any economic system with capital markets
- sprash 4y ago
  By gold standard I actually mean no fractional reserve banking. The great depression was caused by the federal reserve. As soon as you have fractional reserve banking you allow over-leveraged debts which lead immediately to boom and bust cycles. If you want to avoid those cycles simply don't allow people to spend money they don't actually have and always settle payments as early as possible (also don't allow anybody to simply print money).
  - JumpCrisscross 4y ago
    > don't allow people to spend money they don't actually have and always settle payments as early as possible This is in practice impossible because value hand-off is not instantaneous. Someone is always at risk in a transaction, to a varying degree over time. (To say nothing of the productivity gained from the friction reduction of transaction credit.) In Malthusian terms, every child is born with future claims on unproduced food. Mandating that be settled up front requires dark decisions, ones starving cities and families have had to make.
  - dragonwriter 4y ago
    > By gold standard I actually mean no fractional reserve banking There was, AFAIK, no time in history in which a monometallic gold standard with no fractional reserve banking was the international norm, certainly no time overlapping with the capitalist econonic system and industrialization. The US before 1870 was primarily on a silver standard—and that’s true of most ofnthe West for quite some time before the US existed, and fractional reserve (or no-required-reserve) banking was the norm in the US before the gold standard, too. The gold standard was only 1870-1932, and none of that time was there no fractional reserve banking.
    - lordnacho 4y ago
      Is there any notable difference between silver, bimetallism, and gold? They're all a sort of fixed-amount-backed thing, right? I do think in general popular economics (aka LinkedIn blogs) tend to overstate the benefits of gold.
      - namaria 4y ago
        "Gold standard" is just shorthand for restrictive policies that favours creditors over debtors. One implementation is using gold as the reserve money. But this is not the only way to do it, see IMF austerity rules. In that case you're just treating foreign reserves as if they were metallic treasure.
        4y ago
JumpCrisscross 4y ago
> boom and bust cycles are artificial and are created entirely by the central bank This is trivially, empirically, untrue, most notoriously in the free banking era [1]. These cycles are even the norm in ecologies, where they’re theorised to underpin diversity [2]. Republican Rome had endogenous boom-bust variations [3]; Malthus famously wrote about this generally [4]. [1] https://www.richmondfed.org/publications/research/econ_focus/2018/q1/economic_history https://www.richmondfed.org/publications/research/econ_focus... [2] https://www.nature.com/articles/s42003-021-02021-4 https://www.nature.com/articles/s42003-021-02021-4 [3] https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_Roman_Economic_Growth20151127-3155-1idbj5b-libre.pdf https://d1wqtxts1xzle7.cloudfront.net/40444914/In_Search_of_... [4] https://en.m.wikipedia.org/wiki/Malthusianism https://en.m.wikipedia.org/wiki/Malthusianism
unmole 4y ago
> continuous stable development and did have it when the gold standard was still a thing My sides.
dragonwriter 4y ago
> We can have continuous stable development and did have it when the gold standard was still a thing. The gold standard in the US ran from 1870 to 1932; the Long Depression of 1873-1879, the Depression of 1882-1885, and the and the Great Depression of 1929-1933 all happened during it (overlapping its end, in the last case), as did some smaller recessions. (Prior to 1870, most of the time the US was on a silver standard, which also had plenty of downturns and some depressions, in case you wished to retreat to “metallic” from “gold”.)

mvcatsifma 4y ago

This is the correct explanation.

sfpotter 4y ago

I don’t think you mean to use the word “disingenuous” here. Typo? This word typically has a connotation of deception, and is usually applied to interactions between people. Looking for a reason for a cycle change is a totally natural and reasonable thing for someone to do.

namaria 4y ago
No, I mean it. Journalists and consultants peddle these explanations as some sort of management/investment science. But they know that each article they write each day to explain noise in the fluctuations of the market is bunk. If they could produce sound analysis they'd beating the market with it, not posting it online to sell ads.
- sfpotter 4y ago
  Got it, and I completely agree! Didn’t realize this was the specific sense of your post.
- vgatherps 4y ago
  > If they could produce sound analysis they'd beating the market with it, not posting it online to sell ads. This isn't correct - you can produce very sound analysis of past events, but to make money trading you need predictive power into future (as well as a lot of other things).
  - TeMPOraL 4y ago
    Arguably, the soundness of the analysis is in its explanatory power. If you can't use your analysis to successfully predict the future, or even past events that weren't known to you when doing the analysis, then your analysis is a) useless, and b) impossible to tell apart from random bullshit of equal predictive power. However, per GP, such useless analysis can still make the reader feel smarter, meaning you can monetize it - through paid or ad-funded publishing. In this sense, journalists are selling "analysis porn".
    - 4y ago

iot_devs 4y ago

Is there some sort of game theory that assert what you are saying? Actors with no perfect knowledge will result in bummans bust kind of cycles.

namaria 4y ago
I am not familiar with game theory beyond the superficial explanations from wikipedia. Can't help you there, sorry.