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> Central bank is to increase interest rates until unemployment rate increases I might be old fashioned, but last time I checked, government's job was not to

> Central bank is to increase interest rates until unemployment rate increases I might be old fashioned, but last time I checked, government's job was not to drive down living standards. Maybe their job is to ensure that a resource-show like rising energy prices does not hit, by majing economy rsillient and relying on diverse suppliers

redeeman 3y ago
> I might be old fashioned, but last time I checked, government's job was not to drive down living standards. thats because you have been reading the government marketing materials instead of looking at what they do
dghlsakjg 3y ago
They didn't say government. They said Central Banks, which in most places are semi-disconnected from elected government since you don't really want anyone playing politics with Central Bank policy. Central Banks are generally tasked with setting one single, but very powerful, variable: interest rates. There's thought to be a pretty strong causal relationship between interest rates and unemployment. The central bank absolutely knows that jacking up interest rates will, in the short term, drive down living standards. The trade-off is that it will also drive down inflation, which causes much bigger drops in living standards in the long term. ... Or so the theory goes.
- revelio 3y ago
  In practice central bankers are unelected politicians. Their mandates are set by politicians, they aren't actually bankers in the normal sense of the term, and what they do is attempt to plan the economy in service of politically set goals. If central bankers were really independent of politics then they would of course have refused to print any money to fund COVID measures like lockdowns on the grounds that they are responsible solely for inflation and employment, so if governments wanted to do that they'd have to pass emergency taxes. Obviously no central banker said that. They were all immediately on board with letting politicians do whatever they wanted.
  - nabla9 3y ago
    > Their mandates are set by politicians. You say as it's a bad thing. The mandate is public and set by politicians selected by people. This "it's all bad" because politics stuff is jut nihilism.
    - revelio 3y ago
      I didn't intend for it to be read as either good or bad. Actually I think it's a good thing. Government employees should not see themselves as independent of politicians.
nabla9 3y ago
You can get 100% employment only if wages are too small. That's really bad for living standards. There is so called "Natural level of unemployment" and NAIRU (Non Accelerating Inflation Rate of Unemployment) typically between 3% and 5%.

redeeman 3y ago

> I might be old fashioned, but last time I checked, government's job was not to drive down living standards. thats because you have been reading the government marketing materials instead of looking at what they do

dghlsakjg 3y ago

They didn't say government. They said Central Banks, which in most places are semi-disconnected from elected government since you don't really want anyone playing politics with Central Bank policy. Central Banks are generally tasked with setting one single, but very powerful, variable: interest rates. There's thought to be a pretty strong causal relationship between interest rates and unemployment. The central bank absolutely knows that jacking up interest rates will, in the short term, drive down living standards. The trade-off is that it will also drive down inflation, which causes much bigger drops in living standards in the long term. ... Or so the theory goes.

revelio 3y ago
In practice central bankers are unelected politicians. Their mandates are set by politicians, they aren't actually bankers in the normal sense of the term, and what they do is attempt to plan the economy in service of politically set goals. If central bankers were really independent of politics then they would of course have refused to print any money to fund COVID measures like lockdowns on the grounds that they are responsible solely for inflation and employment, so if governments wanted to do that they'd have to pass emergency taxes. Obviously no central banker said that. They were all immediately on board with letting politicians do whatever they wanted.
- nabla9 3y ago
  > Their mandates are set by politicians. You say as it's a bad thing. The mandate is public and set by politicians selected by people. This "it's all bad" because politics stuff is jut nihilism.
  - revelio 3y ago
    I didn't intend for it to be read as either good or bad. Actually I think it's a good thing. Government employees should not see themselves as independent of politicians.

nabla9 3y ago

You can get 100% employment only if wages are too small. That's really bad for living standards. There is so called "Natural level of unemployment" and NAIRU (Non Accelerating Inflation Rate of Unemployment) typically between 3% and 5%.