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You're welcome! What now? Well, economics isn't really that complex. Rule 1. Don't print money - it distorts the natural flow of information and incentives th

by nvm0n2 3y ago

You're welcome! What now? Well, economics isn't really that complex. Rule 1. Don't print money - it distorts the natural flow of information and incentives through the market, leading to misallocations. Rule 2. Get rid of fractional reserve banking. It's an unnatural privilege that other companies would be forbidden from engaging in (it's considered fraud if you don't have a banking license). This forces all interest bearing investment to take place through funds that expose their actual risks and liquidity constraints to investors. When it's possible to save money risk free because banks can't loan it out and there's no monetary inflation, the moral hazard evaporates and you can allow funds to collapse if they make persistently bad investments. There is no longer any need for bank bailouts. Recessions can still happen in such a world, because mass hysteria and utopian thinking is a part of human nature. There's no law you can pass to stop people getting over-excited about dotComs or AI startups. You just have to let people work out the true value of these things themselves.

naveen99 3y ago
I like your analysis elsewhere. But you can’t avoid misallocations always. Some risk has to be taken by everyone. Even the private markets miscalculate roi. You also can’t avoid debt (printing money). At the simplest, you can tell yourself you will postpone your own retirement to take the risk of misallocating resources yourself, for a gamble.
- nvm0n2 3y ago
  That's true, but market misallocations do eventually correct (recessions). Government mandated misallocations can go on for decades without anything to naturally check them. I'm not sure what you mean in your second paragraph. Keeping the monetary base stable is eminently possible.
  - naveen99 3y ago
    You can owe yourself (your future self) money. You can keep energy in reserve or burn at a greater than sustainable rate (give a 110% in nba speak).

by nvm0n2 3y ago

naveen99 3y ago

I like your analysis elsewhere. But you can’t avoid misallocations always. Some risk has to be taken by everyone. Even the private markets miscalculate roi. You also can’t avoid debt (printing money). At the simplest, you can tell yourself you will postpone your own retirement to take the risk of misallocating resources yourself, for a gamble.

nvm0n2 3y ago
That's true, but market misallocations do eventually correct (recessions). Government mandated misallocations can go on for decades without anything to naturally check them. I'm not sure what you mean in your second paragraph. Keeping the monetary base stable is eminently possible.
- naveen99 3y ago
  You can owe yourself (your future self) money. You can keep energy in reserve or burn at a greater than sustainable rate (give a 110% in nba speak).