3 ms·

The 1930s show the consequences of inflation, speculation and credit expansion, and then bungled government response that dragged out economic contraction which

The 1930s show the consequences of inflation, speculation and credit expansion, and then bungled government response that dragged out economic contraction which is needed to clear out malinvestment. Any common person realizes their ability to lead a dignified life is being squeezed out by monetary expansion gone amok, with those closest to the govt spigot getting the benefits and none of the costs (cantillon effect). And it brings up a good point which no one answers satisfyingly: why shouldn't the average person just enjoy price savings produced by technology?

throw0101d 2y ago
> The 1930s show the consequences of inflation, speculation and credit expansion […] The 1930s were nothing special when it comes to wild swings in prices (as the article show), speculation was not new (see canal mania, railroad mania, etc) * https://en.wikipedia.org/wiki/Canal_Mania https://en.wikipedia.org/wiki/Canal_Mania * https://en.wikipedia.org/wiki/Railway_Mania https://en.wikipedia.org/wiki/Railway_Mania What is special is the post-WW2 era (where there was no deflationary bust, especially after a major war), and the decades that followed (when there was no gold standard to handcuff monetary policy, and when Keynesian economics allowed for fiscal flexibility). > And it brings up a good point which no one answers satisfyingly: why shouldn't the average person just enjoy price savings produced by technology? There's a difference between deflation through innovation, and deflation through economic turmoil (e.g., mass unemployment, collapse of aggregate demand). One of my favourite examples of 'invisible deflation' that no one notices (often while they're complaining about inflation) is a 1991 Radio Shack ad: * https://www.huffpost.com/entry/radio-shack-ad_b_4612973 https://www.huffpost.com/entry/radio-shack-ad_b_4612973 * Via: https://awealthofcommonsense.com/2021/01/inflation-truthers/ https://awealthofcommonsense.com/2021/01/inflation-truthers/
- lurking15 2y ago
  You realize Canal Mania & Railway Mania happened during eras where interest was artificially low below the historical rate of 7~8%?
  - throw0101d 2y ago
    > You realize […] I realize that the two manias were forms of speculation, and that getting overly excited about things seems to just be a thing humans tend to do. * https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
    - lurking15 2y ago
      > that getting overly excited about things seems to just be a thing humans tend to do human nature is to avoid discipline when they're comfortable and set the stage for a bubble & contraction, exactly what happens with artificially low interest rates and speculations like the manias you brought up

throw0101d 2y ago

> The 1930s show the consequences of inflation, speculation and credit expansion […] The 1930s were nothing special when it comes to wild swings in prices (as the article show), speculation was not new (see canal mania, railroad mania, etc) * https://en.wikipedia.org/wiki/Canal_Mania https://en.wikipedia.org/wiki/Canal_Mania * https://en.wikipedia.org/wiki/Railway_Mania https://en.wikipedia.org/wiki/Railway_Mania What is special is the post-WW2 era (where there was no deflationary bust, especially after a major war), and the decades that followed (when there was no gold standard to handcuff monetary policy, and when Keynesian economics allowed for fiscal flexibility). > And it brings up a good point which no one answers satisfyingly: why shouldn't the average person just enjoy price savings produced by technology? There's a difference between deflation through innovation, and deflation through economic turmoil (e.g., mass unemployment, collapse of aggregate demand). One of my favourite examples of 'invisible deflation' that no one notices (often while they're complaining about inflation) is a 1991 Radio Shack ad: * https://www.huffpost.com/entry/radio-shack-ad_b_4612973 https://www.huffpost.com/entry/radio-shack-ad_b_4612973 * Via: https://awealthofcommonsense.com/2021/01/inflation-truthers/ https://awealthofcommonsense.com/2021/01/inflation-truthers/

lurking15 2y ago
You realize Canal Mania & Railway Mania happened during eras where interest was artificially low below the historical rate of 7~8%?
- throw0101d 2y ago
  > You realize […] I realize that the two manias were forms of speculation, and that getting overly excited about things seems to just be a thing humans tend to do. * https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
  - lurking15 2y ago
    > that getting overly excited about things seems to just be a thing humans tend to do human nature is to avoid discipline when they're comfortable and set the stage for a bubble & contraction, exactly what happens with artificially low interest rates and speculations like the manias you brought up