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People don't call out government competency nearly enough. Remember the Silicon Valley/First Republic catastrophe a few months ago? Contagion was fully containe

• zeroonetwothree 3y ago
  You mean the same government that caused inflation in the first place? To be fair it was different parts of the government, but the comparison sure doesn’t favor the elected officials.
  • b112 3y ago
    The government caused covid, and supply chain issues, which led to this? If so, which government was in power for the start and height of covid?
• wing-_-nuts 3y ago
  Just like IT, government never gets kudos when things run smoothly, but catches all of the blame when shit hits the fan.
  • mxuribe 3y ago
    Exactly this! And, the same could be said for other "entities" or "infrastructure", that, when things are fine no kudos; or worse, complaints asking "Why do we have X?", but then whining when something is not in place. :-)
    • tootie 3y ago
      If you're a football fan, the offensive line only gets called out when they screw up even though they're probably the most critical function of an offense.
• pohl 3y ago
  That is absolutely true. It's crickets when things go right.
• MattGaiser 3y ago
  In general, competency is ignored and failures get highlighted. Why in organizations without rewards for big wins, the correct course of action is often to do nothing because the penalty for failure is always there.
• loeg 3y ago
  > Biden did everything in his power correctly Not exactly -- it was left to the judiciary to end the unconstitutional and inflationary student loan repayment pause. Otherwise, yes, pretty good state of affairs by the executive.
  • tekla 3y ago
    That is how the separation of powers works?
  • ajross 3y ago
    An argument for federal student loans being a significant driver of inflation all on their own is pretty strained. I'd want to see numbers. But regardless, this isn't even true on issues of fact. Federal student loans are still in forbearance, and will be until October.
    • somenameforme 3y ago
      As an aside here, it's not the federal loans that are an issue, but the federal protections against all student loan dismissal that's the problem. It gives lenders a major incentive for reckless lending. Lenders aren't as motivated to ensure the success of those they lend to, because in the worst case scenario they have essentially have a lien on people themselves. And the later it's called in, the higher the cost will be. In a world without these protections the interests of student loan lenders and students would be strongly aligned. And the greater restraint in lending would also likely drive down education costs, as well as help push students from poor families more towards majors that can help them become successful adults - a push those students might not otherwise get from their families or even school councilors. As for where the now literally trillions of dollars of lending is having an impact on inflation, it'd depend on what that money was doing beforehand and what it would have done if not lent. Inflation comes down to monetary velocity, which is largely (though not inherently) driven by monetary supply. If trillions of dollars in student loans are increasing these factors then it will drive inflation, the only question being to what degree.
      • 3y ago
• kneebonian 3y ago
  Many people feel the opposite of you that the Silicon Valley first republic fiasco ended up with those who chose to risk more than the rules said they would (FDIC insured amount) got bailed out for their poor decisions and risk taking, while many ordinary people are increasingly feeling that the system is stacked against them and because of the huge inflation (that they don't see matching the government figures because the government is playing funny with the numbers) is putting them financially back. I'm not saying your wrong, but there are a lot of people who see it differently, and I also don't think that "the smooth running of the financial system" is the most important responsibility of the government.
  • xadhominemx 3y ago
    Some people wouldn’t mind if the economy is plunged into recession if it means some rich people get theirs. These misanthropes pop up during every financial or possible financial crisis.
    • ModernMech 3y ago
      I mean, yeah, but they only serve as a response to the “let them eat cake” class, who always ends up getting their way in the end. The real misanthropes are the ones who keep the status quo primed for the next financial catastrophe by not fixing anything when things are good, because financial catastrophes are profitable for them.
      • xadhominemx 3y ago
        > The real misanthropes are the ones who keep the status quo primed for the next financial catastrophe by not fixing anything when things are good, because financial catastrophes are profitable for them. Who are these people? This describes a small number of people and they are not in power.
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• kshahkshah 3y ago
  That’s a nice viewpoint and I’m happy for the outcome. The cynic (sometimes me) would say we just maintained the status quo and managed to stave off a wider collapse due to a society fundamentally built on unsustainable growth.
  • JumpCrisscross 3y ago
    > managed to stave off a wider collapse due to a society fundamentally built on unsustainable growth So your policy position is pining for catastrophe?
    • kshahkshah 3y ago
      No and I don’t think that is a fair interpretation of what I wrote given the caveat I provided from the onset.
    • haswell 3y ago
      The premise that market expectations about growth are unsustainable does not equate to wishing for catastrophe. Upon successfully mitigating a forest fire, the conclusion that conditions are ripe for more forest fires does not equate to wishing for more forest fires.
      • JumpCrisscross 3y ago
        > premise that market expectations about growth are unsustainable Fair enough. Rising rates make a stable state more viable. In a very real sense, that's what rates are: patience in terms of money. We're conditioned to thinking of all markets like tech, but most businesses happily chug along growing alongside the economy while spitting out wages and profits. Amidst all of that, the carbon and material intensity of advanced economies keeps falling, alongside their birth rates. Fundamentally, I don't see what's forcing unsustainaibilty to the point of necessitating collapse.
  • HDThoreaun 3y ago
    Maintaining the status quo after most people locked down for over a year is an incredible success.
• xadhominemx 3y ago
  Execution so far has been good - on a real basis, the US economy is on pre-covid trend despite lockdowns, inflation, a war in Europe, etc. If the Fed actually navigates us into a soft landing, it will probably be the greatest achievement in the history of modern economic management (maybe along with the Marshall Plan)
  • tootie 3y ago
    Employment-population ratio is now higher than pre-pandemic. For prime age population, it's now less than 1 point below the all-time high in 2000. And the silicon valley layoffs seem to have run their course. https://fred.stlouisfed.org/graph/?g=16Q9S https://fred.stlouisfed.org/graph/?g=16Q9S
    • xadhominemx 3y ago
      Still need to work CPI below 2.5% probably. But looking more promising.
• mberning 3y ago
  Let's not oversell it. They appear to have reined in several problems of their own creation/exacerbation. Hopefully it sticks. I sure hope it does.
• nightski 3y ago
  Government yes. But this has nothing to do with politics. The more I study the economy the less effect I see the president or congress having much direct effect on the economy (good or bad). The Fed sure, but not so much elected officials.
  • JumpCrisscross 3y ago
    > more I study the economy the less effect I see the president or congress having much direct effect on the economy Biden kept Powell and resisted calls to politicize the Fed. Contrast that with e.g. Latin America. It's absolutely credible to comment favorably on the American political system in this one respect.
  • ericmay 3y ago
    I'm not sure I'd disagree, but I think that's actually an interesting feature of government when it's not going overboard with bad policies things tend to be "sane" and the system just functions. Once we get idealogues or charlatans or just outright corrupt people in positions of power, you'll find out very quickly that politics has a lot to do with the economy as it comes crashing down all around us. That being said, the president and Congress do have some levers to pull to effect the economy. That can be anything from bad transportation policy (like the overbearing federal highway system) which lowers entrepreneurship and increases death rates and obesity (less fit workers, fewer businesses, etc.) to seemingly good policy like the Inflation Reduction Act which is building and repairing infrastructure, etc. While most assumed nothing would come of it, the hostage taking of the debt ceiling specifically whenever a Democrat is president is another way in which Congress can have a direct effect on the economy.
  • pixl97 3y ago
    Feds have a nearly immediate effect, elected officials have a much slower effect and only from working together.
• mywittyname 3y ago
  Sure, it's great that they cleaned up the SVB mess quickly and decisively. But it was also irresponsible for the Fed to raise rates so quickly that it put massive banks in danger of insolvency. They understand how bond pricing works, and they understand that banks are heavily invested in t-bills. SVB was a predictable situation that could have been prevented through slower rate increases. Since we don't live in the timeline where rate increases were less aggressive, we don't know exactly how the economy would have reacted. But seeing as inflation was largely attributed to lack of supply and buyers' willingness to pay higher prices (see: corporate profits rising), I think it's safe to think inflation would have come under control if rates hikes were less aggressive.
  • codyb 3y ago
    Seems like the vast majority of banks avoided this situation, regional or national, so... maybe it's on the banks at some point?
    • xen2xen1 3y ago
      I mostly agree, but there were lots of signs the fed ignored and waited too long, and had to do large and sudden hikes. It could have all been less abrupt. They still have done a very good job so far, and it could have been very different.
      • dragonwriter 3y ago
        > but there were lots of signs the fed ignored and waited too long, and had to do large and sudden hikes. It could have all been less abrupt. I disagree. Yes, there were inflation signs that they didn’t act on, but that’s because the exceptionally sharp and deep recession being over and securely so in unprecedented time wasn’t clear except in retrospect. Fed policy isn’t driven by a unitary mandate.
    • ericd 3y ago
      I think this is largely because the Fed quickly set up a massive facility to save the others? Looks like its usage has passed $100B so far: https://twitter.com/LynAldenContact/status/1666944000626925568 https://twitter.com/LynAldenContact/status/16669440006269255...
• xscott 3y ago
  I'd give them more credit for digging us out of the hole, but I think having the Fed rate near 0% for so long created most of problems in the first place. That started well before the current or previous administration. (I know we're supposed to make a distinction between the Fed and the Gov, but I don't really) Your point on FDIC is well taken though. That worked as intended and maintains my faith in the banking system.
  • dragonwriter 3y ago
    > I'd give them more credit for digging us out of the hole, but I think having the Fed rate near 0% for so long created most of problems in the first place If by “problems” you mean the strong rapid recovery from the sharpest recession in quite a while, yes, Fed policy (and rare strong fiscal policy response) contributed to that, but, so that’s actually a good thing.
    • xscott 3y ago
      Things don't have to be just STOP!!! or just GO!!! Hindsight is 20/20, but a little more moderation along the way might have been a good thing. And yeah, recovering from a recession is good, but the crazy positive stock market growth after recovering, in a country that isn't really growing it's production or population, should tell you that a comeuppance was on the horizon. btw: That "If by X you mean Y" type of statement... It's snarky and sarcastic. I wish people could just talk without being jerks.
      • dragonwriter 3y ago
        Btw: using “btw” to point out an obvious and obviously intentional feature of the lost you are responding to is snarky and sarcastic, which is hypocritical in a plea against snarky sarcasm.
        • xscott 3y ago
          I see. Please don't reply to me again in the future, and I won't reply to you. You are not the kind of person I want to talk to.
• abeppu 3y ago
  yes but ... - wasn't the instability for banks also partly caused by the sharp changes in interest rates, and perhaps for that reason should have been predicted rather than just reacted to? - didn't we also learn that not only were these banks not required to participate in stress-testing, but that the recent stress tests hadn't exercised the kind of scenario that the Fed has been creating? - it seems like a substantial portion of inflation was triggered by excessively generous government programs like PPP which gave a bunch of money to businesses that weren't even impacted - reaction to inflation was kinda late, and Powell gave repeated claims that it was transitory So ... is cleaning up messes (or preventing the spread of messes) that government created a sign of competence in government?
  • ceejayoz 3y ago
    Should the goal be "no bank ever fails", though?
    • riffraff 3y ago
      But these banks didn't fail enough, >250k depositors should have been part of the bail in but they were not, and the banks were treated as systemically important even tho they were not held to the systemically important bank requirements before. FDIC/FED/Treasury perhaps did the best thing now, but it's still because of a previous mistake.
  • ModernMech 3y ago
    > is cleaning up messes (or preventing the spread of messes) that government created a sign of competence in government? Without irony, yes. Ideally we would like governments not to create messes. But we can’t prevent that, and even if we could, messes will be created by other entities and other governments. Case in point, you mention the PPP loans, which were signed into law by a previous administration. Today with a new administration and a new situation, it doesn’t make sense to complain too hard about that. We should point it out the next time PPP-like loans are suggested, but we shouldn’t chide the current government for cleaning up a mess of its own making, because that’s really not what happened here. So yes, governments that are good at cleaning up messes are competent governments. Ideally they should also be good at not making messes, but the us government is an incredibly large entity, so messes are going to happen.
• benjaminwootton 3y ago
  Way too early for that victory lap. It takes 6-12 months for interest rate rises to hit the economy apparently. There is a long way to run yet before anyone knows if it was the right strategy. I also think avoiding the gyrations in the first place might have been a better outcome.