5 ms·

> I've also already said I fully agree that the data we're using isn't ideal in terms of inflation. It's not a case of it being not ideal. It's the case of it

> I've also already said I fully agree that the data we're using isn't ideal in terms of inflation. It's not a case of it being not ideal. It's the case of it being an example of literally the opposite phenomenon from the one you're arguing for. Arguing that the 1950s are a good example of how deflation helps people is like arguing that Barack Obama is a good example of how Republican candidates make good presidents. > As for investment, expected value [2] is a term you do not seem familiar with. It is a risk adjusted value of expected return on something. hahahahahahaha Again, it's a basic definitional thing that EV isn't adjusted for the investor's risk tolerance (it's a probability weighted average, as your link and many better introductory economics and finance texts you should probably read will tell you.) Not only am I familiar with what expected value actually means and its use as a synonym for risk-neutral return in investment parlance, I'm also apparently the only participant in the discussion aware that 0.1% expected return isn't likely to leave enough of a risk premium[1] and (ii) investors also have to consider opportunity cost, so even in a world filled with insane risk-neutral investors who'd in principle be comfortable betting their house on a fair coin flip, they still wouldn't touch an investment at a nominal 0.1% return in a gold standard world, because the opportunity cost would be giving up much higher returns on lending the money elsewhere. Because unlike you I know that market and base interest rates are a thing and why they're relevant to the argument. And also they're not the same thing as inflation and are in fact generally inversely related[2]. Once we've got past the basic definitional stuff and the "why doesn't this hypothetical gold standard economy where you're considering investing in a productive venture for a 0.1% return have anyone else that wants to borrow your money?", I could question what sort of venture would get a 0.1% nominal return when prices of stuff it might make are going down, and only get a 0.1% nominal return in an inflationary environment where the prices of stuff it might make are going up[3]. It's easier to make more than 0.1% making stuff to sell next year when prices of everything are going to be 2% higher, and harder when prices of everything are going to be 2% lower. Again, if you don't have the basic grasp of the relevant terms you're quoting (some of them more high school than undergrad) never mind sufficient grasp to understand even an argument as simple as "risking money to earn 0.1% is not attractive when money is in short supply" have the decency to the possibility that you might not be in a position to know best about how the economy works. Also, if you don't like billionaire capital owners having too much money, maybe don't pin your hopes on the only policy prescription that hasn't trended towards the CATO institute, von Mises and Ayn Rand's[4] arguments in favour of letting billionaires keep more of their money since the 1950s... [1]in any economy except, ironically, an economy with lots of money printing (seriously, go learn about QE. Hint: it's printing lots of money because printing lots of money is a way to get people interested in investing when interest rates are very low) [2]and also why, and covering the relevant transmission mechanisms might take half a semester of undergrad macro, but even understanding that money isn't cheap to borrow when its in short supply would get you there. [3]I mean, when I say wonder, I actually know that the most likely way of achieving that with actual goods and services is if it's an inferior good with negative income elasticity. I'm just not sure why anybody would want to base economic policy on incentivising the production of inferior goods with negative income elasticities, even if such a policy were feasible. [4]weird how it's all these extremely rabidly pro-billionaire personalities and organizations and none of the pro-worker organizations that want the gold standard back, considering your conviction that it will be good for workers and bad for billionaires.

somenameforme 3mo ago
In the 40s the inflation was, in and of itself, liminal and driven by short-term actions in response to WW2, similar to what happened during the Civil War, WW1, and other such eras. The funny money took off as policy much later. It has very little to do with the current era of the routine 'printing' of trillions of dollars as a normal policy, let alone with a wealth of systems adapted to exploit that to this maximal. This is why the 40s, in terms of outcomes, looked more like previous eras then the current. In investing, you seem to be trying to derive variance from expected value, which is impossible. And risk is not the same thing as variance. It's entirely possible for an investment with a 0.1% EV to have a lower variance than one with a 15% EV. The obvious example there would be hedges against black swans, contrasted against a government bond from a stable country. In any case, this argument also works against you. Because the point is that anything with a real expected return of "x" in an inflationary system has a real return of e.g. "x+5" (or whatever the exact delta happens to be) in a non-inflationary system. You cannot, in good faith, try to argue that is a bad thing. Whatever 'x' happens to be, whether 0.1 or 50, it's going to be better in a non-inflationary system. --- As for social equalities, you likely missed the above note. I'll simply quote it here: "Somebody else just submitted this [1]. The Fed just released a paper showing (or at least affirming) that the labor share of income in the US is at its lowest post-war level which is, more or less, equivalent to stating that it's at its lowest level ever. They're likely just using data starting at the 40s for the same reason I am. But the really interesting thing? Go open their graphs and look where the inflection point is. It's, again, the funny money." [1] - https://news.ycombinator.com/item?id=48734234 https://news.ycombinator.com/item?id=48734234
- notahacker 3mo ago
  > In investing, you seem to be trying to derive variance from expected value, which is impossible. And risk is not the same thing as variance. It's funny, because two posts ago you wrote the words "expected value is a term you do not seem familiar with. It is a risk adjusted value of expected return on something". So you're really only arguing against yourself here But variance is, in fact a way for investors to assess risk (again, if you had an adult-level of understanding of the subject matter or even a modicum of self awareness you wouldn't keep contesting definitions for no reason). And since investors care about risk adjusted returns, they do not think an expected 0.1% nominal return on productive activity is attractive, least of all in a deflationary environment. (Sure, you can't directly derive variance from expected return, but you don't need to do that to rule out ludicrous scenarios like a sub 10 basis point risk premium on investing in productive activity whilst prices fall, which means you don't invest at 0.1%) > It's entirely possible for an investment with a 0.1% EV to have a lower variance than one with a 15% EV. Sure. It is however entirely impossible for a productive venture with a 0.1% EV to have an attractive risk adjusted return under deflation. Nobody with an adult level understanding of finance would make this argument, let alone still be trying to defend it by arguing against their own attempted gotcha multiple posts later. Because they understand basics like "deflation causes debt to be more expensive" (remember a week ago when you wrote that, apparently without understanding what it means), and 0.1% is not a high return on risky activity when debt is expensive. And also, they understand that the risk-adjusted return will be negative, particularly as risks to commercial activity increase under deflation caused by monetary policy intentionally starving the economy of capital). > Because the point is that anything with a real expected return of "x" in an inflationary system has a real return of e.g. "x+5" (or whatever the exact delta happens to be) in a non-inflationary system Again, this is just an assertion that only somebody with no understanding of basic stuff like how inflation/deflation affects sales prices and interest rates would make. It is very easy to argue that the price somebody has to pay a wealthier person to borrow money being x+5 rather than x is a bad thing, if you believe that it is better for economies to reward people that make stuff rather than people that have stuff. The actual point was that it's harder to make a positive money return producing stuff to sell when next year's price is y-2 rather than y+2, and in those circumstances also easy to make a small real return doing nothing or a big real return lending to cover short term debts instead. Again, I'm sorry you don't understand this, but it's really, really not possible to contest the fact that deflation does not incentivise investment if you understand supply and demand to high school level (never mind the actual nuances of interest rates and transmission mechanisms). I guess I can look forward to you eventually accepting that it doesn't whilst attempting to attribute your current position to me in five days time. If only you could trade some of your unmatched reserves of persistence for a little actual knowledge... (you could, for example,read a book instead of doubling down on being wrong by Googling more economic terms to insinuate I'm missing whilst not even being able to define them without making mistakes) > But the really interesting thing? Go open their graphs and look where the inflection point is. It's, again, the funny money The really interesting thing is that you've actually managed to find an economic chart without an inflection point to make argument about inflection points, which is quite an achievement! The trend line over the period displayed appears to be a noisy concave function with the noise attributable to economic cycles. Although if you put a gun to my head any asked me to point to what looks most like an inflection point in this graph without an actual inflection point, I'd probably point to the steepening of the downslope of the curve around the millennium which doesn't seem to have much to do with leaving the gold standard or inflation being high.... Watching you pretend to understand the subject matter: https://www.youtube.com/watch?v=2WZLJpMOxS4 https://www.youtube.com/watch?v=2WZLJpMOxS4

somenameforme 3mo ago

In the 40s the inflation was, in and of itself, liminal and driven by short-term actions in response to WW2, similar to what happened during the Civil War, WW1, and other such eras. The funny money took off as policy much later. It has very little to do with the current era of the routine 'printing' of trillions of dollars as a normal policy, let alone with a wealth of systems adapted to exploit that to this maximal. This is why the 40s, in terms of outcomes, looked more like previous eras then the current. In investing, you seem to be trying to derive variance from expected value, which is impossible. And risk is not the same thing as variance. It's entirely possible for an investment with a 0.1% EV to have a lower variance than one with a 15% EV. The obvious example there would be hedges against black swans, contrasted against a government bond from a stable country. In any case, this argument also works against you. Because the point is that anything with a real expected return of "x" in an inflationary system has a real return of e.g. "x+5" (or whatever the exact delta happens to be) in a non-inflationary system. You cannot, in good faith, try to argue that is a bad thing. Whatever 'x' happens to be, whether 0.1 or 50, it's going to be better in a non-inflationary system. --- As for social equalities, you likely missed the above note. I'll simply quote it here: "Somebody else just submitted this [1]. The Fed just released a paper showing (or at least affirming) that the labor share of income in the US is at its lowest post-war level which is, more or less, equivalent to stating that it's at its lowest level ever. They're likely just using data starting at the 40s for the same reason I am. But the really interesting thing? Go open their graphs and look where the inflection point is. It's, again, the funny money." [1] - https://news.ycombinator.com/item?id=48734234 https://news.ycombinator.com/item?id=48734234

notahacker 3mo ago
> In investing, you seem to be trying to derive variance from expected value, which is impossible. And risk is not the same thing as variance. It's funny, because two posts ago you wrote the words "expected value is a term you do not seem familiar with. It is a risk adjusted value of expected return on something". So you're really only arguing against yourself here But variance is, in fact a way for investors to assess risk (again, if you had an adult-level of understanding of the subject matter or even a modicum of self awareness you wouldn't keep contesting definitions for no reason). And since investors care about risk adjusted returns, they do not think an expected 0.1% nominal return on productive activity is attractive, least of all in a deflationary environment. (Sure, you can't directly derive variance from expected return, but you don't need to do that to rule out ludicrous scenarios like a sub 10 basis point risk premium on investing in productive activity whilst prices fall, which means you don't invest at 0.1%) > It's entirely possible for an investment with a 0.1% EV to have a lower variance than one with a 15% EV. Sure. It is however entirely impossible for a productive venture with a 0.1% EV to have an attractive risk adjusted return under deflation. Nobody with an adult level understanding of finance would make this argument, let alone still be trying to defend it by arguing against their own attempted gotcha multiple posts later. Because they understand basics like "deflation causes debt to be more expensive" (remember a week ago when you wrote that, apparently without understanding what it means), and 0.1% is not a high return on risky activity when debt is expensive. And also, they understand that the risk-adjusted return will be negative, particularly as risks to commercial activity increase under deflation caused by monetary policy intentionally starving the economy of capital). > Because the point is that anything with a real expected return of "x" in an inflationary system has a real return of e.g. "x+5" (or whatever the exact delta happens to be) in a non-inflationary system Again, this is just an assertion that only somebody with no understanding of basic stuff like how inflation/deflation affects sales prices and interest rates would make. It is very easy to argue that the price somebody has to pay a wealthier person to borrow money being x+5 rather than x is a bad thing, if you believe that it is better for economies to reward people that make stuff rather than people that have stuff. The actual point was that it's harder to make a positive money return producing stuff to sell when next year's price is y-2 rather than y+2, and in those circumstances also easy to make a small real return doing nothing or a big real return lending to cover short term debts instead. Again, I'm sorry you don't understand this, but it's really, really not possible to contest the fact that deflation does not incentivise investment if you understand supply and demand to high school level (never mind the actual nuances of interest rates and transmission mechanisms). I guess I can look forward to you eventually accepting that it doesn't whilst attempting to attribute your current position to me in five days time. If only you could trade some of your unmatched reserves of persistence for a little actual knowledge... (you could, for example,read a book instead of doubling down on being wrong by Googling more economic terms to insinuate I'm missing whilst not even being able to define them without making mistakes) > But the really interesting thing? Go open their graphs and look where the inflection point is. It's, again, the funny money The really interesting thing is that you've actually managed to find an economic chart without an inflection point to make argument about inflection points, which is quite an achievement! The trend line over the period displayed appears to be a noisy concave function with the noise attributable to economic cycles. Although if you put a gun to my head any asked me to point to what looks most like an inflection point in this graph without an actual inflection point, I'd probably point to the steepening of the downslope of the curve around the millennium which doesn't seem to have much to do with leaving the gold standard or inflation being high.... Watching you pretend to understand the subject matter: https://www.youtube.com/watch?v=2WZLJpMOxS4 https://www.youtube.com/watch?v=2WZLJpMOxS4