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> Wouldn't this force people already worried about the future to buy into less abstract stores of value like houses? It forces people to spend/invest money pri
by clienthunter 13y ago
> Wouldn't this force people already worried about the future to buy into less abstract stores of value like houses?
It forces people to spend/invest money primarily, which keeps the economy growing, prevents job losses etc. Houses are one form of investment, but they're no less tangible than many others from the point of view of your average investor.
> But we use this newly created money to buy assets which the market had no interest in buying inflating their price and funding contractors at the expense of everyone else.
This is not about magicking up new demand, it's about restoring the previous demand before the fear set in. Inflation is a reality, yes, but it's not inherently a bad thing - in these situations there's an acceptable level where the benefits outweigh the costs.
> But unlike market investors, there's no worry about ROI. Building these large infrastructure projects may pay off but theres no downside and they could just end up making a few people very rich.
It barely matters if they pay off at all, the end product in this kind of capital expenditure is much less important than the process of doing it. Making a few people rich is the usual outcome of high-value expenditure, why would that be any less true in a recession? It's a nothingness on the scale of rescuing a flailing economy.
> I thought the gold standard was abandoned because Nixon refused to convert France's dollar holdings back to gold in 1971.
I'm not a historian. It's certainly why we don't go back to it, and why not a single country on the planet uses a fixed monetary system anymore.
- grinnbearit 13y agoThe problem isn't investment in houses, its the monetization of houses. Unlike gold or bitcoin with finite supply, demand for houses creates a corresponding increase in supply which is a waste of resources which could have gone elsewhere. If inflation is particularly bad you could end up with Chinese ghost cities. Lowering the difficulty of exams so that previous scores are reached again sounds like curing the symptom to me. How are the benefits outweighing the costs? > Making a few people rich is the usual outcome of high-value expenditure Its high value expenditure with newly created wealth taken from the savings of everybody else. It matters a great deal if it doesn't pay off.
- clienthunter 13y agoThe benefits outweigh the costs because the alternative is a depression - and that's a really bad thing, people die etc. Also this isn't a symptom of a problem needing cured, it's more a symptom of the human condition. > Its high value expenditure with newly created wealth taken from the savings of everybody else. It's either savings or new wealth, it can't be both. > It matters a great deal if it doesn't pay off. I'm not sure you'd be of that opinion in a depression.
- grinnbearit 13y ago> - and that's a really bad thing, people die etc. I'm all for saving people, lets call it charity though and not investment. > It's either savings or new wealth, it can't be both. True, I meant currency, its new currency taken from the savings of everybody else > I'm not sure you'd be of that opinion in a depression. Hypothetically if we used a global hard money system, like bitcoin, and the government was so sure that spending now would boost the economy in the future. I see no problem in them taking a loan and building some highways. They would have to pay it back though...
- clienthunter 13y agoInvestment is the act undertaken. Call the outcome what you will. > True, I meant currency, its new currency taken from the savings of everybody else New currency is new currency. It comes from nowhere. It devalues all existing currency, not just savings. > I see no problem in them taking a loan and building some highways. These projects are typically undertaken with debt. New currency is generally introduced in the bond market.