[HN Gopher] Does QE Cause Wealth Inequality?
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Does QE Cause Wealth Inequality?
Author : paulsb
Score : 183 points
Date : 2021-11-16 17:04 UTC (5 hours ago)
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| hammock wrote:
| Lyn Alden always has great analysis.
| lancemurdock wrote:
| She is the best. Her premium membership is worth it.
| endymi0n wrote:
| TIL that ,,The Federal Reserve [...] is an institution that is
| mostly privately owned by banks"
|
| Maybe my view is too European on that, but are Americans aware
| their federal money supervision system is run by banks and how
| can they possibly be okay with that?
| drewvolpe wrote:
| It's owned by banks but run by government appointees. Most
| Americans who watch the news and follow finance understand it's
| a public-private hybrid structure. As Lyn notes, this isn't
| unusual. Many national banks are not owned by the government,
| including Swiss National Bank.
| Ancapistani wrote:
| > Maybe my view is too European on that, but are Americans
| aware their federal money supervision system is run by banks
| [...]
|
| Honestly, most Americans aren't even aware that monetary policy
| is a "thing".
|
| > and how can they possibly be okay with that?
|
| I'd argue that we aren't. The US Constitution explicitly gives
| Congress the power to "coin Money".
|
| The current reading of that phrase is that it only applies to
| metallic coins, not paper money. Congress then set up the legal
| structure around the Federal Reserve Bank system - and it's
| more complicated than "privately owned banks" in practice, due
| to the blurring of the lines between "public" and "private",
| and the prescribed structure of the Fed that is at least
| partially under direct Congressional oversight.
|
| I'll also point out that the US has had multiple monetary
| systems since its inception, and the Federal Reserve System has
| only existed for about a century.
| nverno wrote:
| > I'd argue that we aren't
|
| It's been a hot-button issue since it was created. If it's
| characterized as a system run by a bunch of bankers with
| greedy fingers on the tap, it sounds terrible- if it's a
| system to stabilize the economy, or any number of its other
| arguably beneficial purposes, it mightn't sound so bad.
|
| All of this things can be true, but without deep knowledge of
| the system (does anyone really understand all of the
| interactions?), it's hard to weigh the tradeoffs and so easy
| to jump to conclusions. I appreciate the desire for the
| relative simplicity of things like the gold standard.
|
| Just reading this article has made me reconsider my opinions
| on the matter (I was pretty certain QE was a primary mover
| driver of wealth centralization going in). My intuition tells
| me there is a lot of misleading correlation here, given how
| interlinked all these systems are.
| kardamon wrote:
| No one knows until they actually investigate it. Calling it the
| "Federal Reserve" implies that it's part of the government,
| sort of like the "US Chamber of Commerce".
|
| Allowing a private entity to be in charge of our currency (and
| collect interest) is absurd.
| fdgsdfogijq wrote:
| How have people not caught onto this yet?
|
| When the Fed prints money, its a guaranteed bet that assets go
| up. The rich use their wealth and huge amounts of leverage via
| financial instruments to generate massive returns. This has been
| going on for a long time. Literally all you need to do is throw
| your whole bank account into call options. Working a 200k-300k a
| year job is almost a waste of time with how much money they are
| printing. This is how the wealthy see it, your small paycheck
| (yes 300k a year is small) is a joke within the context of
| financial leverage.
|
| Just to reiterate, you are better off risking everything in
| financial markets and sitting at home watching those assets very
| closely than you are working.
| jliptzin wrote:
| Throwing your whole bank account into call options would be an
| extremely risky thing to do. But that doesn't invalidate your
| point that capital accumulation of wealthy people generally far
| outweighs any amount of money they would make from their labor.
| It doesn't have to be call options though, with enough wealth
| even interest from T-bills would dwarf a $300k salary.
| fdgsdfogijq wrote:
| You are still missing the point. With QE, the call options
| are far less risky than they look. It has been this way for
| over a decade. People somehow cant get it into their heads,
| when the fed prints money, assets go up. Capitalists are
| having an all you can eat buffet while everyone else thinks
| the only thing they can do is put 3k into the SPY every
| month. Its a joke
| jliptzin wrote:
| I don't think I am missing the point. If you had gone all
| in on call options in Feb 2020 you'd have lost 100% of your
| money (depending on expiration)
| whimsicalism wrote:
| Yes, in "normal times" of the past decade, when you invest
| in call options, you are basically being compensated for
| discounting the risk of a crash at any particular moment.
|
| But there's no free lunch - the risk you are taking is
| being priced in, but sometimes the actually risky thing
| does happen.
|
| This line you keep repeating about "only the lower classes"
| xyz while the "true rich" have some deep wisdom is belied
| by the fact that rich people become not-so-rich trading
| options every day.
|
| It's straight out of the "this one trick _they_ don 't want
| you to know about" advertising playbook.
| ddorian43 wrote:
| Yep. Source: I'm long TQQQ.
| 0xcafecafe wrote:
| Same. It is hilarious that it is more of an index like
| investment at this point.
| nly wrote:
| When the tide turns you'll get fucked fast following this
| strategy
| nprz wrote:
| Why buy call options? Why not just buy and hold equities?
| Der_Einzige wrote:
| Yeah, that's kind of my thought here too. It honestly feels
| like the only reliable way to make huge stacks of money with
| calls/puts is knowing stuff that ought to qualify you as an
| "inside trader".
| pcbro141 wrote:
| I bought AMD Jan 2023 $90 options for $13 earlier in the year
| when AMD was trading ~$80. So the breakeven price is $103 by
| Jan 2023 which I found not very risky looking at the
| accelerating EPS growth.
|
| Look how much I'm up by buying close to the money options
| instead of buying shares at $80:
| https://i.imgur.com/vYHl1LY.png
| fdgsdfogijq wrote:
| Why settle for 20% returns when you can get 500% returns?
| Only the lower classes are so risk averse. The rich
| understand that QE essentially strips risk from the markets
| short_sells_poo wrote:
| You can do the same with levered ETFs or futures, if you
| want to be levered to the hilt, at least do it with
| instruments where you don't run the risk of ending up
| losing everything even if the equities go up.
| ed25519FUUU wrote:
| Because call options are a form of financial leverage, which
| is how the rich are getting much richer as the fed prints
| money
| short_sells_poo wrote:
| Call options are a rubbish way to do this, please don't
| spread this misinformation. If you want leverage, just buy
| the futures.
|
| If you are thinking about punting your entire income into
| options on single stocks, and don't know what you are
| doing, just stop right there. You can easily lose
| everything even in a bull market.
| [deleted]
| ehvatum wrote:
| This has been depressingly true for my small manufacturing
| business. Manufacturing revenue is respectable and profitable,
| but our free money from trading with surplus cash has us
| absolutely swimming in money.
|
| Of course, it's really easy for us to borrow money at negative
| cost. We're basically making stuff because it's fun.
| sleepysysadmin wrote:
| Dont disagree with what you said, but why does the system work
| like that? It happened when we went off the gold standard. The
| banks now operate in imaginary terms. The reality is that since
| it's now imaginary, taxation doesnt exist. It can't exist, in
| fact the government must now give you money/services in excess
| of the taxation.
|
| If you aren't rich, you have a net negative taxation. The only
| people who pay taxes are the people who dont pay taxes, they
| can pass on the taxation cost to others. It's also why there
| will be a constant anti-taxation pressure. Why the rich will
| always be getting a tax cut. The not-rich already dont pay
| taxes or at least receive more than they pay. The only people
| who can receive cuts are the rich.
|
| The problem is that to avoid taxation, you put your investments
| into inflationary immune things. Real-estate, markets, bitcoin.
| Inflation is what pays for everything. Nobody is paying or even
| balancing budgets anymore. The only limit there will be
| inflation keeping the percentages in check. Jeff Bezos or Elon
| Musk arent billionaires, they simply have significant debt
| holding inflationary immune.
| short_sells_poo wrote:
| Call options are a bad move to participate in equity upside,
| unless you are working on single stocks. There's little upside
| convexity at the index level. This is doubly true for someone
| who doesn't know how options work. You can easily end up out of
| the money with your entire option punt and lose everything even
| though equities go up (just not enough for your bet).
| Furthermore, the last couple of years the underlying indices
| realized better risk adjusted returns than almost any option
| strategy could hope for. If you want leverage, you can just buy
| the futures.
| fdgsdfogijq wrote:
| Probably you are correct. But that illustrates my point even
| more, I have made absurd amounts of cash by believing in the
| power of QE and the FED. Its not rocket science, its just
| accept that the fear mongering of "you are too dumb to use
| leverage" is false. But I will say, I have had huge returns
| on QQQ calls. Its working just fine for me to buy LEAPs
| 10-20% out of the money.
| short_sells_poo wrote:
| You can certainly make a lot of money on options, but the
| behavior may be non-obvious to someone who doesn't have
| experience with them. If you buy a 10% OOM call and the
| market stays flat, you end up losing the entire investment
| even though the underlying hasn't moved. Do you know how
| does that 10% relate to the current implied or realized
| volatilities, are you actually buying the optimal strikes
| or have just gotten lucky? If this was just a fraction of
| your portfolio, then it's no harm done, but if you
| repeatedly punt your entire portfolio into OOM options, you
| are running a serious tail risk of being completely wiped
| out even if the market goes up!
|
| Options absolutely are rocket science. The actual pricing
| is anything but obvious and requires undergraduate level
| math. More advanced models require graduate level math and
| focused study. Yes, making money on stocks is easier than
| ever, but please for the love of God at least use something
| like levered ETFs or futures and don't bet the entire farm.
| The bubble is going to pop. Inflation is picking up, and
| the moment central banks step off the gas pedal (which they
| will have to), there's going to be a de-leveraging. Retail
| will almost always end up holding the bag one way or
| another.
|
| You can generally get 2-3x leverage with futures or ETFs as
| well and they are a linear instrument with obvious payoff
| characteristics. Informed players absolutely know and track
| the amount of flows that these super leveraged retail
| traders are injecting. Make no mistake, you are being
| monitored and trades are being done in anticipation of the
| flows you'll generate. And once the bubble pops and you are
| forced to liquidate, you are going to be liquidating at a
| really bad price.
| fdgsdfogijq wrote:
| Again, I understand the risks. I about 25xed my starting
| principal from bottom in march 2020. My approach is to
| put all of my eggs in one basket and then watch the
| basket closely. While your post is rational, I can only
| say that OOM call buying continues to work out extremely
| well. And thats the point, it goes against every
| reasonable investing rule, but works extremely well. In
| some ways it is the truly rational decision to combat
| wage debasement (precipitated by asset inflation and fed
| money printing). The typical profile of what is too risky
| (OOM call buying), simply no longer applies when there is
| a FED backstop. People need to understand this, as surely
| many wealthy people and traders in NYC do.
|
| During the last FED meeting, when they double downed on
| transitory inflation, it was a heavily dovish outlook.
| Right then and there I went all in, and made a massive
| profit. The markets continue to hang on their every word,
| theres no reason to overthink it, when the FED speaks
| dovishly, believe them and buy calls.
| Iolaum wrote:
| Can you elaborate on how one can use call options to make a
| 200K/year job a 'waste of time'?
| AnotherGoodName wrote:
| Borrow the maximum you can and invest it. There's very little
| interest to pay on loans right now and has been for about 13
| years now. In the meantime assets have skyrocketed in value.
| Unless there's a change in policy and a crash is allowed it
| won't change. Put all the money into old fashion shares and
| housing. No need to risk it on options or anything like that.
|
| Hindsight shows the stock market has more than doubled in
| 10years and interest has been at <3% for even small players
| in that time. Those who borrowed after the 2008 crash needn't
| work today. Now this is of course hindsight. But the
| conditions that allowed this to continue for 13 years are
| still ongoing which is a cause for alarm.
| pedrosorio wrote:
| > Borrow the maximum you can and invest it
|
| > Unless there's a change in policy and a crash is allowed
| it won't change.
|
| And if a crash is allowed, declare bankruptcy, unable to
| get a mortgage in the foreseeable future and go back to
| work (with the same income, if you can), right?
| AnotherGoodName wrote:
| I acknowledge the risk and the hindsight. My belief is
| that with so many playing this game and a precedent of
| too big to fail any hint at a correction will be met with
| even more QE to counteract it at this point.
|
| It's a gamble on policy and could go wrong but it does
| have some thought put into it.
| fdgsdfogijq wrote:
| The fed keeps printing money and inflating assets. You can
| generate 200k a year much easier by "risking" it in the
| markets. You are wasting your life for a pittance that can be
| made easily in the markets. This is how rich people think,
| its only the lower classes that somehow think they are being
| paid a fair wage
| pram wrote:
| I dunno about that. Even if you could make consistent
| gains, most people probably don't have the disposition to
| trade options long term. It's extraordinarily stressful and
| definitely a ticket to an early grave. A 200k IT job is a
| lot easier lol
| [deleted]
| whimsicalism wrote:
| The wage of the average professional worker cannot be made
| "easily" in the markets by someone with the wealth of the
| average professional worker.
|
| There are a lot of people trying to spread the idea that
| making tons of money off of the stock market is "easy." My
| guess is that this is in part encouraged by the market
| makers. Lots of dumb people who think they can get rich off
| of options make for good arbitrage opportunities.
| jason-phillips wrote:
| I believe he's referring to the widely recognized truism
| where money printer go brrrrr and stonks only go up.
| acd wrote:
| Qe causes all asset prices to rize in value. That include home
| loans which also expand. Most people loan to these home. Stock
| assets rize in price. Yet again higher proportion of these assets
| tends to be owned by richer classes.
| azth wrote:
| Is this a surprise to anyone? It's simple logic/cause-and-effect.
| The sooner we move away from fiat money and interest based
| finance, the better.
| dantheman wrote:
| YES
| WalterBright wrote:
| This reminds me of when after WW2 ended in Germany, the old
| German Mark was repudiated and became worthless. It was replaced
| with the new Mark, and every German was given the same number of
| new Marks to jump start the economy.
|
| Within a week, the people who had money before the repudiation
| had money again, and the people who didn't didn't.
| hammock wrote:
| Anywhere to read more about this?
| WalterBright wrote:
| I heard it from people who lived through it. They're all dead
| now. Wish I had a better reference.
| coolspot wrote:
| It is well known that in the future, it won't matter how many
| factories (or other hard assets) your nation has.
|
| To succeed, a nation will have citizens that know all TikTok
| dances by heart and their metaverse avatars own most of the
| legendary NFT items.
|
| Hence I am confident that the US is on the right path!
| jseban wrote:
| I keep reading between the lines that the fiscal policies are
| incentivising and prioritising innovation and higher education
| and knowledge work, and getting rid of manual labor by automation
| or outsourcing. Seems like a good thing, the way she is phrasing
| it is like a conspiracy by the "elite" that just decided to
| sabotage a prosperous large working class for no particular
| reason. Technological advancement must play a big part in this.
| analyte123 wrote:
| You are reading incorrectly. Her argument is that the fiscal
| policies are disincentivizing _all_ labor, which indirectly
| incentivizes industries that have less dependency on labor,
| whether skilled or unskilled. She also does not phrase it as a
| conspiracy to sabotage the working class for no reason, she
| claims that this is a side effect of maintaining USD as the
| global reserve currency, a system which benefits some people
| and afflicts others.
| mk81 wrote:
| Yes.
|
| Anymore questions?
| ralusek wrote:
| If you increase the amount of USD, the USD cost of anything that
| _isn 't_ USD goes up. So, a lot of the market gains, housing
| gains, crypto gains, etc, are at least in some part to do with
| all of these countries increasing their money supplies. So
| anybody that has wealth kept in anything other than the inflating
| currencies is going to win, and anybody who either has savings
| only in fiat or is paid primarily in fiat is going to lose out.
|
| So, yes, of course it causes wealth inequality. The rich can
| afford to bail on a currency while it balloons.
| theonlybutlet wrote:
| This is the interesting thing, and the whole premise of MMT
| (Modern Monetary Theory), the currency being the reserve
| currency is not prone to devaluation relative to other
| currencies which allows them to keep printing USD and in effect
| exporting their inflation, all until someday something replaces
| the currency as a reserve. The inequality comes from this
| excess cash in the market with nowhere productive to be spent
| on, people merely invest it in the assets they were already
| going to invest in, driving up asset prices (creating asset
| bubbles).
| jollybean wrote:
| The USA is quite different than anywhere else in that:
|
| 1) Vast social inequality from issues arising from the ex-slave
| population and undocumented migrants, which creates a big 'long
| tail' of social malaise, cost, and limited productivity.
|
| and 2) On the high-end, the US has a lot of truly exceptional
| talent doing truly world-leading things and having a truly global
| impact, or in other words, they are in some ways 'earning' very
| high returns.
|
| Imagine if Germany were the size of the US: no historical ethnic
| issues, and more institutional conglomerates instead of newer,
| cutting edge companies (i.e. more BMW's not more Ubers and
| AirBnBs').
|
| What would that look like, even with the Seignurage of currency
| etc?
|
| I think inequality would be a lot less.
|
| I think the author makes some great points, but they just don't
| overcome the fundamentally different situation that the US is in
| vis-a-vis everyone else.
| rndmind wrote:
| Quantitative Easing will continue on until all the boomers are
| happily retired. Give it another 3-6 years, then the Fed is going
| to "get religion" and you will want to hold hard assets. Until
| then... its stocks and crypto on a moon mission.
| theonlybutlet wrote:
| Why do you say 3-6 years, I'm curious?
| rndmind wrote:
| I'm actually borrowing that from a podcast I listened to, [ a
| really good listen here, yewtu.be/watch?v=YyprUlzIpog he
| mentions this point at 20 minutes 10 seconds ... ]
|
| He surmises that the government will encourage the FED to
| preserve QE until the baby-boomers are finally set and
| retired. Then the FED will 'get religion' and taper down
| havkd wrote:
| Wow, how unbelievably antisemitic.
| [deleted]
| 88913527 wrote:
| When many people have few assets, and few people have many, and
| you cause the value of assets to go up, the nominal gap between
| two is larger, but the relative amounts are the same. This is
| basic math. Suppose we have two individuals who experience 25%
| growth due to QE:
|
| Person A: $1,000 * 25% growth = $1,250
|
| Person B: $1,000,000 * 25% growth = $1,250,000
|
| Originally, the wealth gap between A and B was 1000:1. It remains
| 1000:1 after the asset appreciation. However, because wage income
| has long been stagnant, it becomes increasingly difficult for the
| poorer person to play catch up, because labor income can't scale
| in the way capital can. Both the proportional change and real
| change are worth considering when it comes to setting public
| policy.
| certnlyuncertn wrote:
| Your scenario is missing the very common case where people have
| exactly zero assets. If you take that (common) case into
| consideration it is very clear that both the nominal gap and
| the relative gap increases.
| kranke155 wrote:
| Thomas Picketty - didn't he show returns on assets far outgain
| salary growth ?
| bhupy wrote:
| That was his thesis, but it's since been questioned/refuted:
|
| https://www.imf.org/external/pubs/ft/wp/2016/wp16160.pdf
|
| > Using a sample of 19 advanced economies spanning over 30
| years, I find no empirical evidence that dynamics move in the
| way Piketty suggests. Results are robust to several
| alternative estimates of r-g.
|
| https://www.economist.com/briefing/2019/11/28/economists-
| are...
|
| http://davidsplinter.com/AutenSplinter-
| Tax_Data_and_Inequali...
|
| > Top income share estimates based only on individual tax
| returns, such as Piketty and Saez (2003), are biased by tax-
| base changes, major social changes, and missing income
| sources. Addressing these issues requires numerous
| assumptions, especially for broadening income beyond that
| reported on tax returns. This paper shows the effects of
| adjusting for technical tax issues and the sensitivity to
| alternative assumptions for distributing missing income
| sources. Our results suggest that top income shares are lower
| than other tax-based estimates, and since the early 1960s,
| increasing government transfers and tax progressivity
| resulted in little change in after-tax top income shares.
| kranke155 wrote:
| I am not familiar with any complete refutation of his work.
| Some questions here and there
| throw0101a wrote:
| Piketty on Goes's IMF paper:
|
| > _Piketty 's response[55] noted, however, that Goes used
| measures of income inequality rather than wealth
| inequality, and inappropriately took the interest rate on
| sovereign debt as his index of the rate of return on
| capital, which makes his results not commensurate with
| those of Piketty's study._
|
| * https://en.wikipedia.org/wiki/Capital_in_the_Twenty-
| First_Ce...
|
| [55] FR: https://www.lesechos.fr/2016/09/thomas-piketty-
| repond-a-letu...
| bhupy wrote:
| Yeah the Auten-Splinter research is the most contemporary
| critique, relative to the 2014 IMF paper, and is the one
| that's most widely accepted now. Piketty, Saez, et al
| have yet to really address anything there.
| iovrthoughtthis wrote:
| as is traditional in brief economic analysis, time is not
| accounted for here.
| nly wrote:
| Compounding returns makes growth exponential. When you look at
| it that way the rich guy is just further up the curve, but
| you're on the same trajectory.
|
| In your simple example (25% returns annualised) he's only 31
| years ahead!
|
| Don't you just feel better now?
| 88913527 wrote:
| Let's do the math for compounding returns. Suppose 7% growth
| for 30 years, same Person A and B:
|
| $1000 * (1.07 ^ 30) = 7,612.25
|
| $1,000,000 * (1.07 ^ 30) = 7,612,255.04
|
| Proportionally, It's still 1000:1. So we see compounding
| doesn't change the relative difference. But now we're getting
| to absolute gap that's simply uncoverable by wage income,
| unless you can land in the professional management class,
| which effectively sets its own wages (board members voting
| for compensation packages for one another).
| notahacker wrote:
| If wages also go up by 7% then the absolute gap definitely
| is uncoverable by wage income.
|
| Sure, they often don't but the reason they don't has little
| to do with QE. After all, the entire point of QE and
| monetary stimulus in general is central banks are concerned
| that not enough jobs are being created and real wage cuts
| and layoffs will result. And in that scenario where credit
| is expensive and businesses are looking at layoffs, our
| wealthy investor is still getting 7% returns, just from
| offering expensive short term credit to struggling
| businesses rather than seeing the long term shareholder
| value of thriving businesses rise. But the worker is even
| further from catching them up, because they're struggling
| to find a job.
| [deleted]
| wonderwonder wrote:
| This is 100% correct, however for the person with less
| money they are going to be spending a much larger
| percentage of their funds each month than the richer one.
| So in reality the richer person will accelerate ahead and
| the ratio will get worse for the poor person every year.
| nly wrote:
| Sure, they'll always be ahead, but 1000x as wealth sounds
| pretty impossible compared to 'a lifetime or so of compound
| returns'.
|
| Most people only need to build a $2-3M pot to be
| financially independent, be able to stop working, and still
| live better than most working Americans, which is the
| biggest quality of life improvement there is in acquiring
| wealth.
|
| The utility of wealth falls off a cliff pretty quickly.
| Replacing a $200K/yr salary from passive income in
| perpetuity with a good level of certainty would require a
| pot of $6-7M
|
| At 7% (above inflation), most people still need to spend 30
| years saving 30% of their salary before they can reach a
| level (30x) that can replace it. 15% over 40 years also
| works.
| keymone wrote:
| now account for $500 cost of living. or $100, which is
| lower than almost anywhere in the world. A will be broke
| while B won't even notice.
| pureliquidhw wrote:
| This is the real issue. Excess cash poured into and
| competing for assets. Having 90% of your money available
| to invest vs 10% creates a massive difference in real
| outcomes.
| tomp wrote:
| Until next month, when person A has $0 compounding at 25%, and
| person B has $1 249 000 compounding at 25% (a.k.a. cost of
| living).
| bhupy wrote:
| That's the logical hypothesis, but the article we're commenting
| on seems to show that it's more complicated.
|
| FTA:
|
| "The logical case for why the Fed's activities cause wealth
| concentration is that low interest rates and high levels of QE
| tend to boost asset prices, such as stocks and real estate,
| which are primarily owned by the wealthy. By making homes and
| stocks more expensive and unaffordable, it widens the wealth
| gap between those who owned those assets before the Fed began
| its QE vs those who were not yet significant asset holders when
| this occurred. There are other more nuanced arguments, but
| let's start with that one, because that's the main one.
|
| If that's the case, and QE is indeed a powerful force for
| wealth concentration, we should see that the nations that have
| the lowest interest rates and that have performed the most QE
| relative to their GDP, have the highest levels of wealth
| inequality, right?
|
| In reality, we find the opposite.
|
| ...
|
| The regions that did the most QE relative to their GDP, and
| that have had lower interest rates for longer, have less wealth
| inequality, not more, as measured by the ratio of the mean
| wealth divided by the median wealth.
|
| If the prior theory was true, we should have seen the opposite.
| More of a correlation, rather than an inverse correlation.
|
| ...
|
| I'm not making the argument that QE reduces wealth
| concentration, because that's not the case either. Instead the
| point is, it's complicated. QE and interest rates by themselves
| are significantly uncorrelated (or even inversely correlated)
| variables vs how much wealth concentration a country has, when
| comparing between countries.
|
| That is an uncommon view, but that's simply how the math works
| out. Clearly we need to look at the nuances."
| whimsicalism wrote:
| It seems like many people in this thread are missing that
| poor people are often underwater in debt, so lower rates help
| them.
|
| There is a reason most of the farmer uprisings in the early
| US were over wanting _more_ inflation rather than
| deflationary policy that made the value of their debt
| payments higher.
| ruined wrote:
| poor people don't get lower rates. they get payday loans
| and 19% credit cards, or a tent.
|
| inflation is "good" for debts if your budget is otherwise
| balanced and your income rises apace, but if either is not
| the case inflation will only depress purchasing power.
|
| historical farmer revolts were interested in higher
| inflation because they had land, a real asset, and sold
| crops, real commodities, that provided appropriate income.
| modern poor people generally have zero assets.
| whimsicalism wrote:
| > poor people don't get lower rates. they get payday
| loans and 19% credit cards, or a tent.
|
| Rates are relative, looser money absolutely translates to
| lower rates, even for poor people. Claiming otherwise is
| (social) science denial.
|
| > modern poor people generally have zero assets.
|
| Poor and lower class people are often deeply in debt.
| Many poor people will even have homes with very large
| mortgages outstanding, and without a route to paying it
| down. The median black person in Boston, for instance,
| (not to conflate race and poverty, it is just an
| illustrative statistic that comes to mind) has $8 to
| their name. That does not mean they literally only have
| $8 in a wallet somewhere, but it does mean half of those
| people are underwater in debt. This is before you even
| start looking at mortgages. I'm assuming that is not
| unique to Boston.
|
| That is actually very analogous to the situation we are
| finding ourselves in. Tighter policy would increase the
| real value of the payments that poor people have to make
| on their homes, etc.
| Ericson2314 wrote:
| Poor people don't have mortgages. In a non-shit city they
| shouldn't even have cars (a depreciating asset won't do
| them any good).
|
| Pay check to pay check can mean literally that. Money
| comes in, money goes out. There is no buffer. UDP not TCP
| life :D.
| Ericson2314 wrote:
| Farmers needed loans to get them between harvests, and
| those were also quite usurious. The land was in relative
| abundance (even with the "end of the frontier"), so it's
| not like it was the sort of anchoring asset that middle
| class home-ownership today is crocked up to be.
|
| But you are right that poor assets or debts are not
| enough to explain how interests rates are supposed to
| help or hurt them. The idea is very roughly that lower
| interest rates unlock investment which causes them to
| have jobs.
|
| The traditional first approximation is regular people
| live entirely off income and have no meaningful assets or
| debts, and rich people don't work and just have assets
| and debts, live off profits/dividends, or even just loans
| with their appreciating assets as collateral. It is
| "class as calculus" as I wrote more about in another
| comment.
| xxpor wrote:
| >they get payday loans and 19% credit cards, or a tent.
|
| The rates for those are still lower than they otherwise
| would be.
| ruined wrote:
| payday loan APR is generally around 300% to 700%. this is
| not a rate set by a market, it is the claw of a predator,
| useful only to deal a killing blow.
| xxpor wrote:
| A lot of states have capped those rates relative to
| prime.
| ruined wrote:
| which simply reinforces the idea that it's not a market.
| credit cards, too, are generally capped.
|
| the rate always maxes out the legislated cap. so it's not
| really dependent.
| Ericson2314 wrote:
| Yes the market power is also one sided, capping the rate
| also doesn't really help without guaranteeing more access
| to credit.
|
| The best thing is:
|
| a) UBI, just hand out a tiny bit of money to make poor
| people more liquid, because _liquidity kills, not
| insolvency_
|
| b) postal banking, because even shittier than a payday
| loan is high fee check cashing without a pretense of
| debt!
|
| Poor people hopefully at the point can save up a
| paychecks worth of buffer in their bank account, and
| don't need postal bank loans to replay payday loans.
| whimsicalism wrote:
| Rates are set by a market.
|
| It's interesting how even as formal christianity is in
| decline, the moral constructs that it popularized
| (distaste for usury, protestant emphasis on liberty over
| well-being) morph into new forms.
| wussboy wrote:
| Maybe the more meaningful question is, "Why are poor people
| often in debt?" And how would we address that?
| ahallock wrote:
| Debt isn't always bad. It's a powerful tool (leverage),
| and bankruptcy shouldn't have a stigma.
|
| We need people to be financially educated. We teach
| calculus in schools but very little on finance. Perhaps
| that's changed since I was in high school, but for me, it
| was non-existent.
| Ericson2314 wrote:
| Debt should be for doing interesting things. Like if you
| are expanding your business. It shouldn't be needed in
| the steady state. Poor people don't do interesting
| "events" economically be definition! Truly, to be poor is
| "stuff happens to you", not "you happen to stuff". The
| vast majority of people should not need loans.
|
| If we want people to be more "creative" we should achieve
| that with firstly with more leisure team for hobbies. No
| faux-entrepreneurship hustle culture. No trying to
| "acculture the poor" with extrinsic rewards, when rich
| kids have the luxury of not having the intrinsic rewards
| beaten out of them. Let people have hobbies. Let people
| involve their neighbors and pool their UBIs for the
| bigger-scale ones. Let no one need debt to survive.
|
| We should go "common core" on calculus. The essence to
| understanding economics right is stocks vs flows, and
| even if people never learn "this method of solving
| integrals, they should be able to see a graphed function,
| and draw it's rough derivative and integral. It's an
| essential skill. They should also know how to ride bikes
| and kinesthetically learn this stuff on hills. It is an
| essential toolkit of thinking, no symbols or formalism
| needed or wanted.
| gruez wrote:
| > It seems like many people in this thread are missing that
| poor people are often underwater in debt, so lower rates
| help them.
|
| ...only if inflation rates are on the way up (ie. higher
| than expected). on the way down (ie. inflation is lower
| than expected), they lose out.
| andrewdubinsky wrote:
| It's pretty simple to understand.
|
| If I have a money printing machine, the first people to gain will
| be my friends. The second group will be my friends' friends.
|
| They will go around buying up all the stuff worth having. Pretty
| soon those items will go up in value. A lot. Anyone outside my
| circle of friends will quickly find these items very expensive.
|
| Boom. Asset Bubbles.
| [deleted]
| anm89 wrote:
| For anyone who is a fan of Lyn, I highly recommend you follow her
| friend Luke Gromen.
|
| He's been doing some excellent analysis over the last few months
| and is one of the few people producing this kind of content who
| can match Lyn's depth and breadth.
|
| One podcast I liked: https://m.youtube.com/watch?v=csf4fdV-EOQ
| waynecochran wrote:
| I hate acronyms that are not spelled out right at the beginning.
| Just sayin'
| [deleted]
| Mikeb85 wrote:
| QE has been a topic of mainstream news for a good decade now.
| Just sayin'.
| waynecochran wrote:
| TMBT but FWIT TLA's WHW and EHW but JK.
| indodima wrote:
| All in all, this is mostly a question of policy (not in terms of
| typical market regulation through interest rates, money supply
| etc.) and not only market mechanisms. Individuals with a high
| "wealth concentration" have a lot more power to pursue their
| goals ("gain [more] wealth [concentration], forgetting all but
| self"). Not only economic power, but -most importantly- power to
| enforce their interests politically. Most western country
| (especially the US) policies of the last decades pretend to do
| something for citizens with a low "wealth concentration", but in
| the end just favor the rich. Analyzing this trend only in
| economic terms and closing ones eyes (ears and mouth) regarding
| systematic political manipulation is hypocritical.
| hammock wrote:
| Did you read the article? The entire thesis is that monetary
| policy (what you call "market regulation through interest
| rates, money supply etc") is not the primary driver of
| inequality, but rather it's fiscal policy (what you call
| political interests).
| justinzollars wrote:
| It really feels like we are at the end of the road and the Fed is
| damned if they end QE (deflation and market crash) and dammed if
| they don't (very high inflation). Ray Dalio does a great job
| describing the end of the the "long-term debt cycle" and
| differentiates it from a typical "business cycle" that we are all
| familiar with [1]. The scary thing he describes is the end of a
| fiat money system, which will resemble a bank run, but for goods
| and services rather than for dollars.
|
| [1] https://www.linkedin.com/pulse/money-credit-debt-ray-dalio
| realce wrote:
| Pair this with the reduction of ownership of ANY real
| assets/goods in the general population.
|
| I can't trade my Netflix account for food. I cannot lease my
| Spotify account to someone for income. I rent my house.
|
| I think when you get down to the nitty-gritty, most people
| actually "own" some furniture, some clothes, and a car. If a
| crisis actually struck, what goods or services could you
| actually leverage to survive off of?
| anarticle wrote:
| A run on goods is demand gone wild, aka hyperinflation.
| Ericson2314 wrote:
| The thing is we want less stupid speculation and asset bubbles
| _and_ yet the economy is running far below potential, with the
| "tight labor markets" right now just a glimpse of how it was
| before (and probably a fleeting one if the inflation class
| warriers have their way like in the 1970s).
|
| To fix both problems --- because we need to stop just making
| ourselves poorer and less coordinated with prudish neoliberalism
| --- we should probably try to get experimental with monetary
| policy. Having the Fed tweak a UBI instead might help.
|
| Remember, the way that capitalism is _supposed_ to work is that
| demand validates investment. Easy credit from banks to big
| institutions with poor consumers is stupid because too many
| investments still look bad! Hand out cash, and then businesses
| can chase the people 's demand, rather than trying to create the
| demand all weird post-modernly.
|
| No more throwing easy money at startups waiting for them to
| finally be profittable 10 years later. Yes more making the
| poorest better off and letting the resulting supply-chain
| bottlenecks show where investment is actually needed. If there's
| no current bottleneck, you aren't trying hard enough!
| dageshi wrote:
| I'm still yet to understand how a lot of relatively poorly paid
| work that probably still needs to be done, gets done under UBI.
|
| UBI leads to people not doing particular jobs because sitting
| at home on UBI with less but enough money is preferable. Which
| means those jobs have to pay more, which leads to inflation
| which leads to UBI raising to keep up with inflation... repeat?
| WalterSear wrote:
| UBI isn't unemployment. Less desirable jobs won't need to pay
| more: income will be in addition to UBI.
|
| The only jobs that will need to raise their wages are those
| that were exploitative to begin with: the ones that rely on
| people not even having the resources to seek better work.
| bennofs wrote:
| I am no economist but couldn't it be that raising pay in few
| sectors does not cause inflation? I would think that depends
| on what the people receiving more money spend it on. If they
| only spend it on things where we have no bottleneck and there
| is still excess capacity, how would that create inflation?
| Inflation should only happen if the increased paycheck is
| used to compete for scarce resources/products. So I think
| predicting inflation requires a more detailed analysis,
| especially you need to have a cycle of increased prices and
| pay.
| dragonwriter wrote:
| > I'm still yet to understand how a lot of relatively poorly
| paid work that probably still needs to be done, gets done
| under UBI.
|
| UBI does not exist in a vacuum, it replaces means-tested
| welfare programs which reduce benefits for additional work.
| It may also replace or reduce minimum wage, UBI proponents
| disagree rather strongly over whether it should do this; very
| broadly those most Left UBI supporters stend to oppose
| displacing minimum wage and Right Libertarian UBI supporters
| tend to support it doing so, but that's not exactly accurate
| (for instance, I'm a left-leaning UBI supporter, and I
| support it displacing minimum wage on about a $2000/yr
| offsets $1/hr of ideal minimum wage basis, so that an early
| stage, immature UBI would not completely replace minimum
| wage, but a mature livable UBI would.)
|
| By replacing means tested welfare it reduces worker
| disincentives to low-paying work, and by reducing/eliminating
| minimum wage, if it does that, it reduces barriers to work
| which might be mutually beneficial to employer and employee
| but not viable given minimum wage.
|
| _Enabling_ work that status quo welfare systems inhibit is a
| major argument for UBI.
|
| If particular work genuinely _needs_ to get done, inflation
| will _necessarily_ drive the real value of UBI down while
| demand drives the real compensation for the work specific
| work up until the combination causes a sufficiently large
| number of people to be motivated to do the work in question.
| The work for which that is not true does not, almost by
| definition, _need_ to be done.
| Ericson2314 wrote:
| > I'm still yet to understand how a lot of relatively poorly
| paid work that probably still needs to be done, gets done
| under UBI.
|
| To flip it around, right now we keep a huge number of people
| so immerserated they will do all sorts of bullshit for a
| little wage. Is _that_ a solution?
|
| My personal belief is that there is huge _potential_
| technical progress, but it is stuck in the research phase and
| cannot get to development because with so much weak cheap
| labor, there is no reason to automate. But with UBI, and
| people able to say "no, fire me I don't care", that will
| shift, and suddenly those investments will become valid. I am
| very excited for that as a programmer.
|
| To restate, Andrew Yang and his ilk have it dead backwards:
| It's not UBI because unemployment apocalypse, it's
| unemployment utopia because UBI.
|
| However, say I am dead wrong, and technology doesn't pick up
| the ball. We might have to cut back on certain luxuries that
| are no longer affordable. We might also need to "ration"
| certain un-fun jobs with like a chore rotation --- think
| civilian 3 years guaranteed service. But this seems good.
| This is the type of stuff that keeps society honest and fair,
| and I think will rebuild ties between humans.
|
| Besides these 2 options, the 3rd view is society needs to
| exploit certain people, hereditary for maximal learned
| helplessness, to function, and there is no alternative. You
| _can_ believe that, but you better be honest to yourself if
| you do.
| groby_b wrote:
| It won't. It's only poorly paid because there's a power
| imbalance - the tradeoff is "do shit work for shit money, or
| starve to death".
|
| UBI removes the "or else clause". Which will fundamentally
| shift how we pay for work - instead of overvaluing rare
| skills, we will value willingness to do the work that needs
| to get done.
|
| It doesn't necessarily lead to inflation because UBI doesn't
| automatically mean _all_ jobs will pay more. There 's a
| likelihood that many BS jobs will go away - i.e. nobody will
| want to be a bagging clerk in supermarkets, because you
| couldn't pay enough to make it worth people's effort without
| exceeding (vastly) the return that having bagging clerks
| produces.
|
| You'll still have people cleaning sewage lines, because
| civilization literally rests on that. It'll be a well-paid
| job suddenly.
|
| That's as intended, as far as I'm concerned.
| lostgame wrote:
| I haven't seen a baggage clerk in years here in Canada.
|
| Probably just an extra person to pay, tbh - and there's
| also starting to be quite a few self-checkouts, with some
| places like Dollarama having entirely self-checkout
| operations.
|
| We're going to see a lot of these jobs just replaced with
| machines, and reasonably so - which is also why UBI is
| going to be increasingly necessary as the years pass.
| tenebrisalietum wrote:
| If I get $1000 a month from UBI, and I have a minimum wage
| job, I'm still working. Because now I will have even more
| money! But I might be more likely to quit my job for factors
| other than money - e.g. I'm going to be less likely to take
| shit from a bad manager. Maybe this means bad managers will
| start to get fired?
|
| People will want to work, but when UBI exists then people can
| shop around for better jobs. If the jobs disappear, so what.
| A lot of people talk about fast food jobs, but honestly this
| disappearing would be a net benefit to society. If UBI means
| people have to cook for themselves, and can now, why is that
| bad?
|
| Overall, maybe if we have UBI then a lot of "crappy jobs" can
| simply become part of the gig economy, which would be far
| less exploitative if it didn't trap people into being the
| sole source of income. Imagine if shifts at Walmart,
| restaurants, etc. had Uber-style apps. Need extra money? Go
| work a few, or work as many as you want. Don't want to? Fine,
| stay home or do whatever.
| [deleted]
| adventured wrote:
| UBI doesn't work under any circumstances. And you don't need
| it besides. The better managed welfare states of Europe such
| as Austria, Germany, Finland or Sweden, have already figured
| out how to operate relatively good systems. No UBI needed.
|
| The approach that will work in the US is a system of income
| crediting targeted at lower wage workers. And that will still
| push up their cost of living, for housing and lower priced
| used vehicles in particular (which will result in the left
| attempting aggressive rent controls in cities, which will
| largely backfire).
|
| It's irrational to give everyone a universal basic income.
| Scale a wage credit for poorer workers and reduce it as you
| go up the income brackets. Instead of earning $10/hr, it's
| $15/hr with the credit; instead of $12/hr, it's $16/hr;
| instead of $15, it's $18/hr. Make the floor $15; shift the
| federal minimum wage up to $10. Spend the time and money
| necessary to research what setup - what bracketing - will
| work best for the present US economy, and then fix it to be
| adjusted every few years.
|
| It will also put pressure on wages above those workers. It'll
| ripple through the pay scales. People just beyond the cutoff
| will be the most unhappy.
|
| * why not shift the minimum wage up to $15? Because if a
| worker's labor isn't worth $15/hr, they have no place in the
| labor force. If you use a credit system, their labor may be
| worth $7-$10/hr, and they can be subsidized up to eg $15/hr
| or whatever makes sense. A high minimum wage is regressive by
| comparison, it chops people off at the knees if their labor
| value isn't high enough.
| theluketaylor wrote:
| The best way to achieve that is a negative income tax. If
| you earn below a certain income you get a payment (not just
| no tax). That makes it reasonably easy to avoid the
| "welfare cliff" as you create smaller brackets and slowly
| move from negative to positive tax rates, likely with a
| reasonably large band where you neither owe taxes or get a
| payment. It would need to be combined with government
| calculating monthly or quarterly payments to avoid feast at
| tax time and famine the rest of the year.
|
| It would need to come with a strong education on tax
| brackets and a good online calculator for people to figure
| out their true income. Way too many people don't understand
| progressive taxation and think moving up a bracket means
| they pay a higher rate on all their income, not just the
| portion that falls into the higher bracket.
| dragonwriter wrote:
| > That makes it reasonably easy to avoid the "welfare
| cliff" as you create smaller brackets and slowly move
| from negative to positive tax rates
|
| NIT, in the idealized form (which is exactly a UBI +
| income tax system) always has positive marginal rates
| (its semi-realization in the US EITC does have negative
| marginal rates over some ranges, which brings back--or
| exacerbates, since EITC coexists with other welfare
| programs which also have cliffs--the welfare cliff
| effect.)
| theonlybutlet wrote:
| Why is it irrational? in a way it is creating liquidity
| (the additional funds will be spent in different ways by
| those in different socio-economic groups). Why does there
| need to be a cut-off the whole point of it being Universal
| for it to work, there should not be anyone just above the
| cut off as its in addition to their existing salary, this
| is a problem that exists in the current welfare states,
| where those earning just above cutoff earn similar to those
| on welfare.
| [deleted]
| AnotherGoodName wrote:
| For the cycle you propose the increase in inflation would
| have to be equal or greater than the increase in pay.
|
| If there's an increase in wages and the increase in inflation
| in response is lower then there's and effective wage increase
| despite the inflation. Which is simply the desired outcome.
|
| An increase in inflation that matches or outpaces an increase
| in wages should only happen if wages are 100% of the cost of
| goods/services. So the cycle you propose should be a non-
| issue.
|
| Right now i feel that we've been so scared to increase wages
| that we've simply made wages pointless altogether. Assets
| from second hand cars, to houses, to shares are all
| skyrocketing in value. I can't imagine people working for
| minimum wage and looking at the value of the house they rent
| go up by 10x more than their salary each month and thinking
| this is ok. We've been so scared of increasing wages because
| of inflation fears yet we've allowed all the QE to go into
| assets. It's led to an imbalance of wages compared to the
| cost of assets. There's a need for market correction from the
| government to get wages back in line with the value of assets
| and as long as any forced increase in wages isn't leading to
| inflation that outpaces the increase it's a perfectly
| reasonable solution to pursue.
| Ericson2314 wrote:
| The current "inflation" thing is not so much due to asset
| inflation, but due to poor people finally seeing some
| gains, and the global production capacity still recovering.
|
| Before now, there still was a large amount of QE, and yet
| little inflation or wage gains. Now, the labor market
| finally gets tight, bottom half real income goes up,
| inequality shrinks. But our global supply chains were bred
| on austerity, tuned to low demand, bean-counter efficient
| over resilient, and can't keep up.
|
| In particular, your minimum-wage protagonist has a _better
| 2020 and 2021 than 2019_.
|
| The current inflation freakout is anti-fiscal- and anti-
| monitary; it just wants to go back to 2019 and is thus
| little but evil class warfare, intentionally or not. The
| right thing to do is to keep the labor tight while finding
| some completely separate way to discipline the speculation
| in land, stocks, and crypto (in order of increasing being a
| farce).
| kelseyfrog wrote:
| > Which means those jobs have to pay more
|
| The assumption being made here is "all other things being
| equal". All other things are never equal.
| gremlinsinc wrote:
| > The Fed's role has expanded over the years, and its decisions
| often seem opaque and arbitrary. A small number of unelected
| people in a room dictate the price of money for a country of 330
| million people, and can create new reserves out of thin air, or
| destroy reserves from the system.
|
| I'd much rather there be a liquid democracy voting system where
| maybe every person w/ a degree in economics gets 1 vote, I'd
| trust 10k economics majors over 10 rich/wealthy bank owners led
| by the Rothschilds.
| steve76 wrote:
| There's no difference between fiscal and monetary today. It's
| either insiders or outsiders.
|
| You want strong people and humble leadership. You don't want weak
| people and arrogant leadership. I would rather have leaders with
| something to loose, and people lean and mean than fat and happy.
| It would be nice if people knew the basics. Why you don't burn
| down your own home. Why you don't chase celebrity or gobble up
| every drug in sight.
|
| They say war with China would be a disaster. Nuking a dozen
| cities on the west coast would be the greatest act of sobriety in
| history. 9/11 happen, and it made us a lot richer. And we don't
| have to win. We just have to keep it contained, and we have an
| entire hemisphere to do that. I would start by saying "we lost a
| sub". We know it's not the Iranians or Pakistanis who have it.
| Your allies. The people who had bin Laden live at Pakistani West
| Point. If they had it, they would have used it already and killed
| us all. We're thinking Somali pirates or the drug cartel. You did
| this. We want to demilitarize. But you and your prehistoric
| marxism and tyranny keep these horrible weapons around.
| photochemsyn wrote:
| It doesn't necessarily, but there are some issues to think about:
|
| 1) Interest rates that are low mean that middle-class savings
| accounts don't grown in size. QE requires low interest rates as I
| understand it.
|
| 2) MMT is linked to QE but guess what, an oligarchic system isn't
| going to distribute QE capital to middle class and poor people,
| it's going to go into the pockets of the ruling class.
|
| In any case, you really can't trust the corporate economists, and
| their performance before the 2008-2009 economic crash is proof of
| that. It's as bad as if the entire climate science community had
| predicted global cooling and we got global warming instead -
| clearly, the scientific community would conclude that their
| models are fundamentally flawed.
|
| This of course is why economics professors are safely enclosed in
| university business departments, so they don't have to face
| constant ridicule from real scientists.
| bradleyjg wrote:
| > QE requires low interest rates as I understand it.
|
| It's the other way around. QE lowers interest rates; that's the
| main purpose. The idea is that low interest rates force
| investment in risky ventures (since safe ones are offering low
| yields) and those risky investments on net will generate excess
| economic growth.
| cies wrote:
| > those risky investments on net will generate excess
| economic growth.
|
| Economic growth comes from increased consumer spending. Not
| from investment. We will all learn that lesson very soon.
| xxpor wrote:
| This is the most frustrating thing about the current
| situation. We finally juiced the economy in a way that
| we've created a supply side constraint for the first time
| since at least 2000! People finally feel free to quit their
| jobs and demand higher wages! Of course, if you're a media
| company owner who's friends with other billionaires, you
| don't like this. So all of the coverage has been almost
| exclusively negative. Biden isn't helping himself by
| _appearing_ to do nothing, but there 's a lot of upside
| here.
| coliveira wrote:
| That's right, the only thing PE is accomplishing is to
| inflate asset valuation, but the increase in economic
| activity is very marginal without robust consumer spending.
| adam_arthur wrote:
| It's a combination of both.
|
| Consider Rivian which just went public at ~80B valuation
| (on revenue of 0, mind you). They raised ~10B dollars
| through investor capital and can now use that to create
| factories, hire employees and so on. Further, they can
| issue more shares down the line to finance their growth.
|
| I agree that consumer demand is required to grow aggregate
| revenues/earnings, and create a stably higher economy. But
| in theory using investment capital to invest into
| productive capacity puts upwards pressure on wages, thus
| longer term consumption.
|
| However, when capital is misallocated it may not result in
| productive growth.
| bradleyjg wrote:
| That's a pretty silly thing to say in such a blanket way.
| R&D creates entire new segments of the economy.
| nybble41 wrote:
| The problem being, of course, that those risky investments
| were considered "risky" for a reason. A fair assessment, in
| the absence of forced incentives, would say they're more of a
| net liability than a net asset. Better than having your funds
| confiscated, perhaps, but otherwise not worth considering.
| When they fail (as many of them inevitably will) those failed
| investments result in waste and economic _decline_ , not
| growth. And as usual the less-sophisticated investors will
| bear the lion's share of the losses.
| hackingforfun wrote:
| I agree and think the QE from March 2020 only lead people
| to believe that stocks are safe assets. Then again if The
| Fed keeps printing, maybe it all just keeps going.
| lotsofpulp wrote:
| The QE from multiple times in previous decades should
| also work to help believe stocks are safe assets. And why
| wouldn't it? As long as USA is relatively stable compared
| to other countries, and USD is desirable relative to
| other currencies, then I think it is reasonable to
| consider low cost broad market index funds to be
| inflation protected savings accounts on a 3+ year
| investment horizon.
| bradleyjg wrote:
| I wouldn't say that people are _entitled_ to a safe
| investment option that offers a decent yield, but on the
| other hand I'm also skeptical of more than a decade of what
| was supposed to be extraordinary intervention.
| hackingforfun wrote:
| I think it would be great if cash was a safe option. I.e.
| the rates offered would be higher than inflation, so that
| the value of cash is not eroded. QE leads to people
| investing in riskier assets, treating stocks like a
| savings account, which to me does not seem right.
| nybble41 wrote:
| I also wouldn't say that anyone is _entitled_ to a safe
| investment option, but they are _entitled_ to non-
| interference--which includes the various rules and
| regulations which keep people (and especially those with
| less resources) tied to the US Dollar even as it 's
| diluted at an ever-increasing pace. And without those
| rules and regulations anything remotely like QE would be
| a quick route to economic (and political) suicide, rather
| than the slow-but-inevitable decline we see today.
| anm89 wrote:
| QE doesn't require low rates. The causality works in the other
| direction. QE suppresses rates. QE could be done at any level
| of rates, with the exception of if long duration was too low or
| even negative I which case it may become politically or
| practically infeasible
| dragonwriter wrote:
| > MMT is linked to QE
|
| No, its not. MMT rejects the fiscal/monetary dichotomy as
| fiction, and tends to prefer more targeted (traditionally
| "fiscal") stimulus, without typical fiscal constraints, because
| it views the only real constraints on "fiscal" actions as
| monetary effects; QE is blunt stimulus that respects the
| classic monetary/fiscal divide that MMT argues against.
| Ericson2314 wrote:
| The mainstream economic theory genuinely believed that handing
| out central bank securities would work just as well as, say.
| adjusting a UBI or normal fiscal policy. Yes, it's a
| suspiciously convenient idiocy --- especially because they also
| think wealthy households spend less (even if they don't think
| wealthy _bussinesses_ do something similar) --- so certainly it
| 's not something that can be completely fixed without a fight,
| but that doesn't mean all trying to "fix the policy-academic
| consensus" is useless.
|
| For example, Republican Jerome Powell is no Pinko, but under
| his watch the fed has become less closed minded about that
| "full employment" should look like. This is good, and is
| precisely because that and the pandemic checks that we are
| seeing great bottom half wage gains (in real terms too) and
| increased strikes.
|
| So yes, ultimately you can't trick "the man" with new ivory
| tower shit, but you can at least attack the straw mans and
| deflections. Maybe the best theory of change is to create new
| pandemics so they will have to print more checks to defend the
| system, and eventually, one of those strike waves will be the
| revolution :D. (Is this conservationism? I don't think so,
| because it's about the system's response to a bad thing making
| "working class lives" better not worse.)
| throw0101a wrote:
| > _The mainstream economic theory genuinely believed that
| handing out central bank securities would work just as well
| as, say. adjusting a UBI or normal fiscal policy._
|
| [citation needed]
|
| "Mainstream economic theory" states, AFAICT, that once the
| monetary side of things has done what it can, you need to
| proceed to Step 4, fiscal stimulus:
|
| > _I would summarize the Keynesian view in terms of four
| points:_
|
| > _1. Economies sometimes produce much less than they could,
| and employ many fewer workers than they should, because there
| just isn't enough spending. Such episodes can happen for a
| variety of reasons; the question is how to respond._
|
| > _2. There are normally forces that tend to push the economy
| back toward full employment. But they work slowly; a hands-
| off policy toward depressed economies means accepting a long,
| unnecessary period of pain._
|
| > _3. It is often possible to drastically shorten this period
| of pain and greatly reduce the human and financial losses by
| "printing money", using the central bank's power of currency
| creation to push interest rates down._
|
| > _4. Sometimes, however, monetary policy loses its
| effectiveness, especially when rates are close to zero. In
| that case temporary deficit spending can provide a useful
| boost. And conversely, fiscal austerity in a depressed
| economy imposes large economic losses._
|
| * http://krugman.blogs.nytimes.com/2015/09/15/keynesianism-
| exp...
|
| * https://archive.md/O67TO
|
| Can you provide a link to the "mainstream economic theory"
| that you are referring to that says otherwise?
| Ericson2314 wrote:
| Krugman is the best-sounding stuff of the mainstream. Since
| that what you brought up, I would start with
| https://www.crisesnotes.com/paul-krugman-functional-
| finance-... . Arguable Krugman is so good about not saying
| terrible stupid shit, that it might come at at cost of not
| being internally consistent or acknowledging when his views
| in fact change.
|
| Krugman at least was a "New Keynsian", which is a very
| complicated confused thing in the way the neoclassical
| parts and keynesian pieces are mashed together. I mostly
| subscribe to the Post-Keynesian stuff, which makes a lot
| more sense to me, and is more embracing of the
| weird/humanities side of Keynes.
| https://vebaccount.substack.com/p/the-post-keynesian-
| worldvi... is a good primer, and really that person's
| entire corpus is a gem of really good writing. For
| something that (at least in the last few years) is much
| more grounded, try http://jwmason.org/the-slack-wire/.
|
| Now you might say that the opposition's views of the
| mainstream is an unfair place to begin. To that, I say just
| look at the shit Larry Summers says.
| whakim wrote:
| I'm not really sure that "mainstream economic theory"
| genuinely believes or believed that monetary policy alone is
| a substitute for fiscal policy (in particular, redistribution
| via taxation - UBIs, capital endowments, equitable
| investments in education, etc.). I think instead there's a
| willingness to handwave away all the thorny details of
| taxation and outsource decision-making to non-democratic
| institutions (i.e. central banks) rather than really tackle
| these sorts of challenges head on.
| Ericson2314 wrote:
| I mean, it's hard to say what the mainstream says,
| especially cause it's the biggest, and currently in a
| collapsing concensus more empiricism until the storm passes
| phase.
|
| But I don't think adding more caviets to the bad old
| stories is going to cut it. People need narratives, and if
| you say "supply curve up, demand curve down, many astrices"
| you are biasing a certain simplification when people
| inevitably need narratives.
|
| Really what we need to do is run more big policy
| experiments at the fed. The more wild policy swings there
| are, more more politics feels alive, and better are
| empiracism is. The micro empiracism today is good but
| barely econ. (It's sort of abstract social science do a
| tiny thing and then stats.) The macro empiracism is still
| frequently quite bad, where better data would help but
| clearer trends from legit experiments would help even more.
| whakim wrote:
| > Really what we need to do is run more big policy
| experiments at the fed.
|
| I totally disagree with this. Big social policy
| involves/requires taxation, and a robust debate around
| what kind of tax regime we want to have in order to
| support those social policy objectives. The Fed can't
| collect taxes, and it doesn't involve robust debate
| because it's not democratic.
| Ericson2314 wrote:
| > it doesn't involve robust debate because it's not
| democratic.
|
| Fair.
|
| Let me step back a bit, I do agree the undemocratic fed
| is ultimately bad. But I also wouldn't want to subsume it
| to congress in today's state, because FTPT, Senate, and
| supermajorities are not democratic, and ensure no
| experiments + tiny overtone window of things where are
| actually.
|
| I like democracy, but the problem is democracy in its
| current US form (parliamentary system is better but EU
| constitution is fucked and causes similar problems) is
| best at interpolating the options that have been
| presented. If the democratizing happens with out
| expanding the "doing" overtone window, it's like 100%
| exploitation not exploration, and we are also kinda
| fucked.
|
| It's frustrating because alternative democratic methods
| would probably be great for experimentation. Highly
| ideological parliament + independent civil service +
| sortition for skepticism is an exciting potential brew.
|
| > Big social policy involves/requires taxation
|
| No it actually doesn't, because "potential output" barely
| exists and to the extent it does we are nowhere near it.
| We can print money, and if there is inflation we can fix
| bottlenecks --- like WTF why isn't the port of Los
| Angelis twice is big by now with tons of extra rail
| freight capacity?
|
| When there is no obvious benefit, and labor force
| participation is actually high (vs the headline
| unemployment rate which is widely acknowledged to be
| bullshit) _then_ , and only then, do we need to worry
| about reducing demand across the board with taxes.
| whakim wrote:
| > I like democracy, but the problem is democracy in its
| current US form (parliamentary system is better but EU
| constitution is fucked and causes similar problems) is
| best at interpolating the options that have been
| presented.
|
| I agree with you that there are some decidedly
| undemocratic elements to many "democratic" systems (such
| as the ones you've mentioned), and to be clear I wish
| that was not so. But these same democratic systems have
| historically not just expanded the overtone window, but
| exploded it: the advent of progressive taxation in the
| early 20th century; the advent of high income tax rates
| in the 1930s-1950s; the social welfare states that most
| social-democratic European governments erected in the
| 1950s-1970s (and the skeletal welfare state the United
| States erected at the same time) - just to name a few.
|
| > We can print money, and if there is inflation we can
| fix bottlenecks
|
| We can't just print money to the extent that's required
| for the really big policy changes. You want a UBI? A
| universal capital endowment? Free health care? These
| things require significant revenue to sustain year after
| year after year. I don't think that's necessarily a
| problem, there just isn't a free lunch. And the US is the
| most likely to be able to get away with it: there are
| plenty of nations that don't entirely control their
| monetary policies (EU countries, for example)
| xibalba wrote:
| > revolution
|
| Revolutions almost always result in prolonged mass violence.
| Most often of the horrific, needless, and soul shattering
| kind. A sampling of recent revolutions: the Bolshevik
| Revolution, the French Revolution, Cambodian civil war/Khmer
| Rouge takeover, Nazi takeover of Germany, Chinese Communist
| Revolution, the Cuban Revolution, etc etc.
|
| I propose a new heuristic for my fellow HN'ers: if someone
| pines for revolution, its a very good signal that they are
| poorly acquainted with history or that they are a sociopath.
| throwaway0a5e wrote:
| Yugoslavia deserves an honorable mention on your list.
| Ericson2314 wrote:
| Tito is pretty dope though as these regimes go though. ht
| tps://en.wikipedia.org/wiki/History_of_computer_hardware_
| i... is also neat.
| Ericson2314 wrote:
| Should I do a :D and /s? I obviously don't want more
| pandemics and bloody revolution --- I am sure I will be the
| one getting guillotined, for one.
|
| The best case --- if it works --- is "non-reformist reform"
| as the European social democracies were planning. Some
| Marxists think it was doomed to fail because you can't
| avoid the antagonisms. I think they were merely prudish
| about printing money (especially Germans), and if drank
| more Post-Keynsian kool-aid (and let in more immigrants
| _not_ as an underclass like in America), we would all be
| Socialist already.
| whimsicalism wrote:
| Immigrants are much more of an underclass in Europe than
| they are in America.
| Ericson2314 wrote:
| Immigrants mainly just don't exist in Europe to the same
| degree. They are _culturally_ more shat on there, but
| _materially_ better off as they get more safety net, and
| aren 't the backbone of the shitty service industry like
| here.
|
| Letting in immigrants while you are trying to reduce
| working hours is a good idea because a) moral b) you are
| trying to show off you have the best society, let people
| vote with their feat c) you still need to make
| investments so being able to have total working hours go
| up while per-capita working hours goes down is good.
| Especially if there is a tech/productivity lag where you
| don't get fully automated dank shit for a few years after
| you make labor scarce
|
| Letting in immigrants as beneath-the-table workers while
| trying to lower working hours means you get apartheid not
| utopia, so yeah, it's bad. The thing that makes America
| less bad is at least the elite likes to overwork itself
| for cultural reasons so the rat race is just as stupid
| but less unfair than it would otherwise be.
| whimsicalism wrote:
| Well, is it better to be let in and provided with
| services (what the US does) or kept out and in an
| impoverished country?
| Jensson wrote:
| Germany alone has taken in more refugees than the
| entirety of USA. USA is not immigration friendly at all
| for those who really need it.
|
| https://www.unhcr.org/refugee-statistics/
|
| Edit: Btw, I think the poster above meant the millions of
| undocumented immigrants living in USA without full
| rights.
| Ericson2314 wrote:
| Yes good thing Merkel did that. But they also are crazy
| austrians and crazy anti-nuclears.
|
| "Syrians good, Greeks bad, let's breed Neo-Nazis with
| austerity so Syrians bad soon too. Oh and more coal." Is
| that really net good?!
| whimsicalism wrote:
| Refugee is not synonymous with immigrant.
|
| The US has admitted more than 1.2 million refugees (I
| believe the number is closer to 3 million), this chart
| only counts refugees under UNHCR mandate.
| Ericson2314 wrote:
| I don't know! :)
|
| The best-of-both-worlds is what I want. The first
| decently country to let in immigrants while reducing
| working hours is going to crush everyone else with a
| strong, more technologically- and culturally-advanced
| society. I am excited to see it happen.
|
| (incidentally a very vague materialist take on why the
| soviet union sucked is it began too underdeveloped, and
| in the rush to do more work they ended up too military-
| industrial. A lot of people say "not enough consumption"
| but you ought to connect it being able to let demand
| "pull" investment rather than centrally "push"
| investment. More consumer goods or less working hours are
| somewhat equivalent once you are (post-)industrialized.)
| whimsicalism wrote:
| No comment on the GP, but many of the revolutions you are
| listing marked the end of feudalism and monarchic rule.
|
| I think it is difficult to say now that those were
| necessarily horrific and needless, without considering the
| horrors experienced daily under feudal/serf systems.
|
| Moreover, the selection of revolutions you have put
| together seems one-sided. It was revolution that gave
| people in Britain the vote, it was (at least partially)
| revolution that ended apartheid in South Africa and white
| minority rule in much of Africa writ large, etc. etc.
| xibalba wrote:
| > difficult to say now that those were necessarily
| horrific and needless
|
| The Khmer Rouge killed 1.5 to 2 million (or 25%!!!!) of
| all Cambodians. Pretty tough to argue that the deaths of
| 25% of any population is anything but needless and
| horrific, particularly when you learn about Pol Pot's
| insane and homicidal policies. Imagine if every 4th
| person you know were dead in the next 5 years because a
| guy had a plan to... make our lives better by ruining
| them indefinitely for some distant vision of Utopia.
|
| The Nazis are truly astronomical in terms of both death
| count and evil. They successfully created an actual hell
| on Earth.
|
| Stalin's regime is estimated to have killed _20 MILLION_
| of his own people. I wonder if the murdered would say,
| "Yeah, but its worth it in the end because no more
| monarchy!"
|
| Mao's derangements are estimated to have resulted in _45
| MILLION_ dead Chinese. That 's _45,000,000_. Again, I
| wonder if their surviving loved ones felt better off? Mom
| was beaten to death for being "a capitalist", but at
| least we don't have to worry about that darned monarchy
| anymore! How would you feel if your Mom was beaten to
| death? How would you feel if your brother or sister were
| summarily executed based on an accusation? What if you
| saw your child needlessly starve to death? These aren't
| just numbers. These are real human lives extinguished for
| political ends.
|
| Etc. Etc. Etc.
|
| Your logic is truly deranged. Revolutions are really,
| really, really bad for everyone, and the vulnerable,
| weak, and poor are not exempt. Most of them can usually
| just count on good old fashioned starvation in their near
| futures as the revolutionaries lurch from one disastrous
| or insane policy to the next. If they don't starve,
| there's a good chance the revolution will at some point
| purify them anyway.
|
| So, I'll point you back to my suggested heuristic.
| whimsicalism wrote:
| > Stalin's regime is estimated to have killed 20 MILLION
| of his own people. I wonder if the murdered would say,
| "Yeah, but its worth it in the end because no more
| monarchy!"
|
| > Mao's derangements are estimated to have resulted in 45
| MILLION dead Chinese.
|
| Both of these death estimates are primarily due to
| starvation (not murder and not the result of violent
| revolution decades earlier) and are based off of
| differential estimates of population (ie. counting
| declining births as deaths, etc.).
|
| Most importantly, they are not comparative with famine
| deaths prior to these revolutions under the feudal
| system. Integrated over time, those deaths almost
| certainly outnumber the deaths due to these events.
| Moreover, many of those who died post-revolution would
| never have even had the chance to be born in a feudal
| society given how many children died of starvation etc.
| during those times.
|
| Tens of millions of people die of easily preventable
| deaths (no water, no food, etc.) in the status quo every
| year. Those numbers were even worse under feudalism. Do
| those not get to be counted against the non-revolutionary
| status quo?
| xibalba wrote:
| > Integrated over time
|
| You buried the lede. Death per unit time is extremely
| important. And yes, huge numbers died of starvation as
| the result of revolutionary, utopian (and insane and
| nonsensical) policies. But the starvation deaths were the
| direct result of the violence and insanity. The two
| cannot be decoupled. So, I certainly would "count" them.
| I think most people would.
|
| Is there an argument about how the deaths per unit time
| went down in those countries post-revolution?
|
| > many of those who died post-revolution would never have
| even had the chance to be born
|
| I'm not ceding this point, but hypothetically, by your
| logic, these were just bonus lives whose horrible ends
| shouldn't count?
|
| > Tens of millions of people die of easily preventable
| deaths
|
| Yes, this is the default state of nature and thus
| humanity. Violent, cataclysmic revolution is almost never
| the best (or even a good) solution. There are limited
| examples of success, but what sane person would bet their
| life on it?
|
| I think, fundamentally, the problem with violent
| revolution is that its leaders are most often ideological
| zealots who are ill-equipped to lead a nation. They tend
| to think the same tools that gained them power (violence)
| will yield effective results in governance. Or, and I
| think this is a more likely explanation, they are
| probably just sociopathic, power-crazed murderers.
| Ericson2314 wrote:
| The black plague eventually broke feudalism, and if
| Manchin doesn't completely cuck us Covid-19 might
| eventually break neoliberalism.
| whimsicalism wrote:
| not in eastern europe it didn't :) feudalism was ongoing
| when the february revolution occurred.
| Ericson2314 wrote:
| Yes that was not suspicious material. We'll see if there
| is a revolution in the freed up land of the next world
| war's peripheral looser, whether they are more
| appropriately developed.
| whakim wrote:
| There are plenty of examples of _economic_ revolution that
| were totally bloodless. For example, over a period of 10
| years in the early 1900s, Sweden transformed itself from
| one of the most explicitly censitarian regimes that history
| has known (people who owned more property _literally had
| their vote counted more times_ ) into one of the most
| social-democratic regimes in Europe.
| dragonwriter wrote:
| > The mainstream economic theory genuinely believed that
| handing out central bank securities would work just as well
| as, say. adjusting a UBI or normal fiscal policy.
|
| No, it didn't.
|
| Mainstream economic theory (or even the major heterodox
| theories) has never held that monetary policy is a sufficient
| substitute for fiscal policy in general, and mainstream
| economists in the US (of all stripes, though they differ on
| _what_ fiscal policy should be) are always complaining about
| Congress not taking what they see to be appropriate fiscal
| action and leaving the economy to the Fed and monetary
| policy.
| Ericson2314 wrote:
| The mainstream in the last 10 years is down with more
| fiscal spending in the form of investment, but that is
| still supply side. They are not down with "aggregate demand
| being structurally low, even between recessions".
|
| Also the theory has not kept up. A lot of people spout
| decent ideas and do decent empiracle stuff, but the theory
| is not reformed and opposed to those conclusions so they
| just ignore it.
|
| Really, the crazy Chicago people to their credit were
| always more honest about what the mainstream theory
| actually said. The saltwater people were rather two-faced
| in making sure they sounded less rediculous but not having
| an epicycle-free theory underpinning their more reasonable
| suggestions.
| AnimalMuppet wrote:
| > Interest rates that are low mean that middle-class savings
| accounts don't grown in size.
|
| So far as I recall, interest rates on savings accounts have
| _never_ been greater than inflation. That is, the money stored
| in a savings account would not grow in real terms. That 's true
| with or without QE.
| spamizbad wrote:
| I don't understand how higher interest rates on savings
| accounts would meaningfully impact the middle class.
|
| The median savings account balance is just $5,300[1]. And the
| thing about savings accounts is that they generally do get
| spent down periodically - they typically aren't used to
| continuously squirrel away cash for decades, so you're not
| compounding interest over the long term. You might save for 5
| years and then do a big spend-down to purchase a car, a house,
| home repair, medical emergency, etc.
|
| So, if the savings interest rate is a paltry 1%, that's just
| $35. But if it were 5%, it's $265 -- Except now you're paying
| 1-2 points more on a mortgage, student, and/or car loan. The
| median household debt is something like $59,000: roughly 10x
| the amount in savings.
|
| So, you make $230 more in savings interest at the cost of
| thousands of additional interest payments.
|
| Reducing QE and making debt more expensive seems to benefit a
| very narrow group of individuals who have the means to store
| large amounts of cash in safe liquid assets and don't carry
| significant debts relative to their income. Everyone else is
| worse off.
|
| [1]https://advisorsmith.com/data/average-savings-account-
| balanc...
| RussianCow wrote:
| > Except now you're paying 1-2 points more on a mortgage,
| student, and/or car loan.
|
| When interest rates go down, house prices tend to climb
| proportionately as more people take advantage of the lower
| mortgage rates. The same goes for cars to a lesser degree. So
| unless you buy a house at the very beginning of an interest
| rate transition (before the market has settled), the rate
| won't have as drastic an effect on your monthly payment as
| you're making it seem. You can also refinance later if you
| buy when rates are high, but you can't lower your principal.
|
| Also, interest rates affect other types of investments that
| people carry, such as retirement accounts.
|
| I don't know what the cumulative effect of all of this is,
| though, so I won't claim that your overall point is
| incorrect.
| notahacker wrote:
| The house price rise adversely affects only the people
| buying their first home over the period interest rates are
| unusually low, which is obviously a small proportion of
| homeowners. If you've already paid your principal, it's
| unchanged, but the value of your asset has increased _and_
| monthly payments have gone down for those on variable rate
| mortgages.
|
| Even if you're a first time buyer affected by the price
| rise, you're better off with a high monthly payment to own
| a higher value house than a high monthly payment to
| transfer more interest to people who are wealthier than
| you.
| [deleted]
| Clubber wrote:
| You get what you incentivize. We are currently incentivizing
| debt over savings, so that's what we get.
|
| When I was in college, the bank would give something like
| 6-7% on savings. If I had a million dollars in the bank I
| could comfortably live off that interest for life. Now if I
| put a million dollars in the bank, I lose wealth due to
| inflation, so I'm incentivized to put it in a fund or
| something now, which is a lot riskier than bank interest.
| whimsicalism wrote:
| > Now if I put a million dollars in the bank, I lose wealth
| due to inflation, so I'm incentivized to put it in a fund
| or something now, which is a lot riskier than bank
| interest.
|
| Yes, people investing in productive enterprise is actually
| _better_ for real output, prices, and generally overall
| welfare.
| Clubber wrote:
| It's certainly good for the shareholders to have more
| money in the market, I'm not sure about the others. I
| know I'd much rather have a solid 6-7% interest return
| than a flaky market return.
| whimsicalism wrote:
| > I know I'd much rather have a solid 6-7% interest
| return than a flaky market return.
|
| And college debt holders, mortgage holders, generally
| impoverished people would rather have lower rates on the
| debt that they have.
|
| They'd also rather have jobs, which again comes with more
| investment.
|
| They'd also like to have a higher quality of life, again
| which comes with more investment in
| capital/production/real output.
| Clubber wrote:
| >generally impoverished people would rather have lower
| rates on the debt that they have.
|
| Generally impoverished people aren't granted lower rates
| because of the credit system. They typically pay usury
| rates. Only people with existing assets / collateral get
| low rates.
|
| >They'd also rather have jobs, which again comes with
| more investment.
|
| Generally impoverished people have shit jobs, that's why
| they are generally impoverished. Also, investment leads
| to automation and offshoring which actually lowers jobs.
|
| >They'd also like to have a higher quality of life, again
| which comes with more investment in
| capital/production/real output.
|
| If investment in capital/production/real output helps
| impoverished people, it's very little. It generally helps
| already wealthy people.
|
| You're looking at stuff from a textbook macroeconomic
| position. In the realistic / microeconomic world, things
| aren't as you are portraying them.
| whimsicalism wrote:
| 1. If you get higher interest rate returns, how do you
| think that is being paid for if poor people aren't
| getting higher rates?
|
| 2. Unexpectedly lower interest rates increase employer
| competition in the labor market, raising wages. This is
| well studied.
|
| 3. The quality of life of a poor person in the US is
| unimaginably better than that of someone ranked
| relatively the same 100 years ago. That is due to
| investment.
|
| Denying those massive quality life improvements is
| absurd, although increasingly popular in our out-of-touch
| political climate.
| Clubber wrote:
| >1. If you get higher interest rate returns, how do you
| think that is being paid for if poor people aren't
| getting higher rates?
|
| Loans to business, home loans, etc. Education loans
| really weren't a big thing because education used to be
| subsidized. Also, poor people aren't the only source of
| ROI on loans. They're quite lucrative though because they
| seldom are able to pay the principal and are an endless
| source of interest payments.
|
| 2. Unexpectedly lower interest rates increase employer
| competition in the labor market, raising wages. This is
| well studied.
|
| Yet wages have been largely stagnant for 40 years, how do
| you account for that? Got links?
|
| https://www.epi.org/publication/charting-wage-stagnation/
|
| 3. The quality of life of a poor person in the US is
| unimaginably better than that of someone ranked
| relatively the same 100 years ago.
|
| I'm interested in how you are measuring this. Got any
| links? How about the quality of life from someone 40
| years ago before neoliberalism?
|
| >Denying those massive quality life improvements is
| absurd
|
| Which quality of life improvements are you referring to?
| Are you being intentionally vague? I mean we can buy
| cheap plastic crap from China, but that's at the expense
| of US manufacturing jobs, isn't it? Food certainly isn't
| cheaper. Healthcare and housing isn't either. So yes, if
| you believe buying cheap disposable stuff from overseas
| is a massive quality of life improvement, then ok. Take a
| stroll down middle America and tell me how good they have
| it. I know lots of towns with boarded up main streets
| because all the manufacturing went overseas. That's where
| the investment went.
|
| Again, you're quoting macroeconomic theory when
| microeconomic conditions on the ground subvert any gains
| in macroeconomic theory.
|
| How does investment drive up wages when labor investment
| is say 90% overseas or automation?
| whimsicalism wrote:
| Not going to keep responding to someone who is skeptical
| of the claim that life for the average person is better
| in 2019 than it was in 1919. Our starting points are so
| off that I don't think we could have a productive
| conversation.
|
| Take care, believe what you want I guess.
| salawat wrote:
| I'd be interested though. While you say priors are off,
| I'd be very interested in quantifying how off if the two
| of you wouldn't mind indulging a fool's curiosity.
|
| Like I've met people who could actually give a convincing
| argument that cars haven't necessarily been the
| unambiguous tradeoff many believe them to be throw knock
| on effects in infrastructure and planning.
|
| However, there is also the qualitative look at things as
| well. Numbers in absolute magnitude we're lower back
| then, so maybe there's something psychological at work
| with the larger numbers. There was also a smaller
| population, lower hanging fruit, the attraction of some
| level of unknown.
|
| The thing I find most interesting in these disengagements
| is that they always occur right before people come to
| terms with "oh, I have to actually lay out my priors."
| Which is generally, in my experience, where the root of
| every fundamental misunderstanding is to be found.
| baremetal wrote:
| people certainly seem to be eating better and less
| sedentary in 2019. oh wait..
| Burnafter186 wrote:
| What do you think banks do with your money, exactly?
| whimsicalism wrote:
| Loan it out? What is your real question? I would rather
| not play Plato to your Socrates in a comment thread.
| PeterisP wrote:
| The point is that your money gets invested in productive
| enterprise in any case, no matter if it's done through
| equity financing or credit financing; so if you take out
| money from your savings account and buy shares then that
| does not really change the total amount of investment in
| the economy.
| whimsicalism wrote:
| Yes, both of those are increased with lower rates. My
| point remains exactly the same.
| cies wrote:
| Consumers buying is what drives production. Not
| investment.
|
| > better [...] prices, and generally overall welfare.
|
| How does investment do that? Plenty examples of the
| opposite can be found. I find those claims baseless.
| whimsicalism wrote:
| Investment and low rates drives wages which drives
| consumption.
|
| Investment also shifts aggregate supply to the right,
| which causes more output.
| RussianCow wrote:
| > Investment and low rates drives wages which drives
| consumption.
|
| I know this is Economics 101, but is there any evidence
| that this actually happens in practice?
| criddell wrote:
| The Treasury sells savings bonds that are at 7.12% right
| now. It's not the same thing as a savings account and you
| can't put a million dollars in, but you can still get a
| good interest rate on smaller amounts.
| gruez wrote:
| >The Treasury sells savings bonds that are at 7.12% right
| now.
|
| source? yields top out at 2.05% right now.
| https://www.treasury.gov/resource-center/data-chart-
| center/i...
| criddell wrote:
| https://treasurydirect.gov/indiv/research/indepth/ibonds/
| res...
| hackingforfun wrote:
| This is good to know. I wasn't aware of this website.
| However, you can't live off of 7.12% on a limit of $10k
| electronic bonds.
|
| I do wish savings accounts still had high interest rates
| and there wasn't so much incentive to invest in riskier
| assets like stocks.
| bigwavedave wrote:
| "For the first six months you own it, the Series I bond
| we sell from November 2021 through April 2022 earns
| interest at an annual rate of 7.12 percent. A new rate
| will be set every six months based on this bond's fixed
| rate (0.00 percent) and on inflation."
|
| As someone who's never bought bonds before, how do I know
| the 7.12% won't change after the 6 months of the locked
| rate to the 0.00% and whatever pittance they decide to
| toss my way in an attempt to account for inflation?
|
| Sincere question, I don't know anything about anything.
| criddell wrote:
| 7.12% is about as low as it's been:
|
| https://treasurydirect.gov/indiv/research/indepth/ibonds/
| res...
| spamizbad wrote:
| Okay, but now you're talking about using monetary policy to
| change American culture away from consumption and more
| towards saving. I'm not sure such change is politically
| sustainable.
| sokoloff wrote:
| Was there ever a time where a savings account of $1M both
| provided a livable income over many decades and didn't lose
| value to inflation?
|
| What were inflation rates while savings rates were 6-7%?
| Clubber wrote:
| Sure, say I had $1M in the bank in 1996, it would yield
| ~$70K which would provide a comfortable living situation
| both then and today. Inflation was around 2-3%, which is
| generally the target.
|
| >lose value to inflation
|
| Inflation always erodes money of course, so there was
| never a time when that didn't happen when there was
| inflation.
| [deleted]
| lkbm wrote:
| The question is whether the inflation exceeds interest.
| With index funds it generally doesn't, but I'm not sure
| about a savings account. Right now inflation easily beats
| a high interest savings account, but I'm not sure about
| 1996.
| Ericson2314 wrote:
| I rarely see this spelled out, but in the more modern
| thinking, the working class are "creatures of flows", and the
| capitalist class are "creatures of stocks": i.e. the latter
| has meaningful assets, but the former subsists on wages.
|
| Obviously this is just an approximation, but "class is
| calculus" is a very useful mental model.
|
| By that ones, yes, the vast majority of people have
| negligible liquid savings. So the interest rate doesn't
| directly matter. Yet, the rich also "own the means of
| production" --- i.e. real assets, which also doesn't get
| inflated away. So it doesn't obviously matter for them. So
| what _does_ it effect?
|
| The essential original Keynesian insight (what most of the
| factions since might agree on), is that since the point of
| owning things in Capitalism as money, even if you aren't
| _holding_ cash, the interest rate effects how easy it is to
| invest, but also what investments are productive w.r.t doing
| nothing. This spooky shit is what is supposed to give
| monetary policy it 's power.
|
| The differences in opinion in those factions come down to
| whether there is always enough to invest in, and access to
| credit is the limiting factor, or not. The Post-Keysnians
| would say relying on monetary policy alone is stupid, because
| (to distill in a parable) if no one can buy your stuff, it
| doesn't matter how cheap the factor is it's not worth it.
| That's when directly employing people (jobs guarantee) or
| handing out helicopter money can make a difference --- it's
| "root" demand, not some spooky shit effecting supply.
|
| Back to the calculus stuff, an interesting idea is
| https://en.wikipedia.org/wiki/Demurrage. This is "inflation
| for stocks not flows". In short, we want money at rest to go
| bad, so rich people and instutions are forced to spend and we
| don't grind to a halt via the paradox of thrift. But we don't
| want people's wages to inflate away, because they certainly
| cannot bargain hard enough to get enough raise to keep up.
| Demurrage is wonderfully hamfisted in trying to do the former
| but not the latter --- money at rest becomes less money,
| money flows retain their purchasing power.
| njarboe wrote:
| Money at rest is not taxed (yet, in the US) and money that
| flows is. The state is going to promote the flow of money
| because it means more money flows to them.
| Ericson2314 wrote:
| What? The state can print all the money it wants. There
| are plenty of corrupt politicians but let me tell you
| that does not create more desire to pull in money sheesh.
|
| This money-sucker beaurocracy stuff makes for more sense
| with e.g. CIA selling drugs rumors than taxation. This
| isn't some bullion-based monarchy we live in.
| CuriousSkeptic wrote:
| So a monthly redistribution of, say, 10% of the money
| supply as public dividend would take care of that no?
| Ericson2314 wrote:
| > money supply
|
| Be careful this is a dangerous notion: with today's form
| of fiat concurrency there is net 0 money!
|
| > redistribution
|
| Likewise the "re" is sketchy. The state can pull money
| in, and take it out. Keeping those balanced because metal
| bullion skeuomorphisms is confusing. Our insistence that
| all money is debt is "double entry accounting fetishism"
| and also needlessly confusing.
|
| Distribution is good. "re" implies some sort of 0 sum,
| when the fact that the nominal need not be zero sum, and
| the future us uncertain and full of possibilities, and
| this is the true beauty of Capitalism we should embrace
| even as we are sanguine about all the terrible parts.
|
| The methodology in https://www.gc.cuny.edu/CUNY_GC/media/
| LISCenter/pkrugman/ler... is much better. The state can
| print money. The state can destroy money. The state can
| issue securities. The state should not subscribe to any
| theory a priori, but simply do the simplest thing the
| achieve agreed-upon goals, and avoid agreed-upon bad
| things. Theory can be developed afresh, and with far
| better empiricism, by basing it on actual experiments of
| the state trying out different levers and seeing what
| happens.
|
| Only a wealth of practical experience will overcome the
| highly politicized disputes. We will never achieve
| consensus while tiny gamut of the policy space is
| explored.
|
| -------
|
| That is my long-winded way of saying I (think I agree)
| agree, but please find a different way to say it :).
| CuriousSkeptic wrote:
| Yeah, with money supply I actually was thunking of some
| vague future approach rather than the current setup. Be
| that some crypto thing, or the intriguing Sovereign
| Money[1] proposal.
|
| And as for redistribution, I suppose just "printing"
| money into peoples account would more or less have the
| intended effect as well. I do suspect a 10% inflation
| rate would lead to simple logistics costs as the nominal
| amounts kept changing.
|
| But yes, if only more policy was evidence based...
|
| [1]
| https://assets.kpmg/content/dam/kpmg/is/pdf/2016/09/KPMG-
| Mon...
| lend000 wrote:
| An important takeaway from the wealth inequality chart: every
| time that wealth inequality has substantially decreased in recent
| history was during a recession.
|
| Staving off recessions at all costs for political reasons is a
| horrible policy. Market cycles are natural; we don't live in a
| perfect world. Market forces clearing out the
| inefficiencies/rebalancing power in the economy is better for
| long term capital allocation in society than socializing losses
| or printing money to rescue stock indices.
| boringg wrote:
| Very Joseph Schumpeter of you [creative destruction]. He seems
| to have lost his influence over the controllers of the various
| central banks since 2008 financial crises.
| TAForObvReasons wrote:
| It's analogous to the forest fires. Recessions, like smaller
| forest fires, help clear out the dead weight. New entities are
| able to grow in the wake. By aggressively staving off
| recessions, the smaller fires are suppressed but it leaves an
| ever-increasing mass of dead weight ("zombie companies"),
| eventually leading to an uncontrollable fire
| creato wrote:
| I agree that maybe allowing market downturns to occur is
| probably a good thing.
|
| That said, an equally reasonable interpretation of your
| observation is that maybe inequality is not itself a problem.
| More inequality doesn't necessarily mean that the poor are
| worse off than they would be with less inequality.
|
| I wonder if we are collectively making a mistake to treat stock
| ownership as wealth. Stock prices going down reduces wealth
| inequality, but does that actually help anyone?
| lend000 wrote:
| The problem is that people who became temporarily wealthy but
| would have lost wealth through misallocation of capital are
| allowed to keep their wealth and repeat their misallocations
| instead of allowing new, potentially better capital
| allocators access to large opportunity (low asset prices).
| whimsicalism wrote:
| Regardless of what you treat it is, inequality of ownership
| of the major enterprises in the US is worth addressing.
|
| I do think the US needs substantial reform of how ownership
| and corporate governance currently works in our system.
| whimsicalism wrote:
| Is inequality the base thing we care about? Or is it only an
| instrumental way of accessing overall welfare, which is the
| thing we actually care about?
|
| If the latter is true, it seems like causing recessions in
| order to reduce inequality is at least somewhat akin to to
| cutting off the nose to spite the face.
| jimbokun wrote:
| I thought this chart captured the modern economic angst really
| well:
|
| https://www.lynalden.com/wp-content/uploads/dollar-crisis-in...
|
| Concretely shows how one income used to be able to easily cover
| a family's expenses.
|
| And how today a one income family is worse off today than 40
| years ago in absolute terms.
|
| And how the biggest family cost increase is healthcare,
| followed by college.
|
| Things that have all been discussed in depth, but clarifying to
| see them on one simple chart.
| Ericson2314 wrote:
| It's massively taken off during the lost previous 10 years
| horrible recovery. Read https://www.employamerica.org/ or
| Roosevelt interest stuff for why it's essential to have tight
| labor markets solve these problems --- more essential than
| ending all speculation.
|
| The fact that the last 10 years were exceptionally weak labor
| markets and yet lots of speculation shows that the two are less
| coupled than people might think. There it was bad, but that
| doesn't mean the decoupling can't also work for good. The
| solution is:
|
| 1. Bboost demand enough so labor markets are tight -- and today
| "inflation" is not a problem but rather the result of trying to
| run a shitty poor-repair material economy that has gotten too
| use to low demand and cheap later. Whenever there is a
| recession, boot UBI, or run a job guarantee doing all that feel
| good low-intensity stuff. It's not like we are low on work to
| be done with global warming!
|
| 2. With the business cycle now constrained to merely be a
| speculation cycle (real people get fed regardless), think of
| new creative ways to go after that. For example, when there is
| too much speculation, limit financial assets as collatoral for
| loans. No more bitcoins as collateral for loans to pay for the
| the mining electricity in times like this. But maybe shit like
| that is OK in other times.
| AnimalMuppet wrote:
| Well... the people who have a job and lose it in a recession
| (and many do) really don't care whether overall wealth
| inequality is going down. They're being destroyed financially;
| they don't care that the rich are also taking damage.
| notahacker wrote:
| This. The 20% haircut to the value of the companies' equity
| is a paper difference to their wealthy majority shareholders.
| But the 10% of staff they lay off have no income at all, and
| the remaining staff don't exactly feel better off because
| their bosses are poorer either. Levelling down isn't any sort
| of solution to wealth inequality.
| lend000 wrote:
| If there were no other options besides asset stimulus and
| doing nothing, I may agree with you. But we can do other
| things (like UBI) that improve equality of opportunity,
| provide a safety net, and are probably net positive to the
| overall value of the economy in the long run (compared to
| the modern bailout/asset inflation economy, anyway).
| wallacoloo wrote:
| But during a _labor shortage_ , that's largely moot.
| Whatever staff gets fired, if they're remotely competent,
| can walk down the street and get a job at a _better
| performing company_ with ease.
| notahacker wrote:
| Sure, but you're replying to a comment about policy for
| recessions, not for when the job market's looking great
| for everyone, so it's bringing up _labor shortages_ that
| 's moot. People weren't walking down the street to get
| jobs at any sort of company _with ease_ in 2008, or in
| the middle of lockdown.
| worik wrote:
| Well duh!
|
| Print lots of money
|
| Give it to people who have lots of money (banks)
|
| The rich get richer.
|
| What is so hard to understand about that?
|
| The powers that be decided that an increase in wealth disparity
| was a price worth paying to keep economic activity happening
| (that and inflation, interest rates could well balloon over the
| next decade).
|
| An alternative was to print lots of money and give it to poor
| people. That would still have cause inflation, but improved
| wealth disparities.
|
| But the powers that be do not have that sort of power.
| dehrmann wrote:
| > The rich get richer.
|
| It depends on if assets appreciate disproportionally more than
| wages. Remember that poor people have few assets, so they're
| not getting left behind any more than if there weren't QE. Also
| remember that the benchmark is actually if there weren't QE.
| Suppose covid caused a depression because of a lack of Fed
| intervention. How would people have fared, then?
|
| I have opinion on this either way. My point is that it's
| complicated and hard to say.
| worik wrote:
| Really? Wages are spent so to not depreciate.
|
| Those that use debt to buy assets, hence face interest costs,
| could suffer terribly if interest rates outpace the value of
| their assets. An asset price crash would burn then badly (as
| happened in London property market, if memory serves, in the
| 1990s)
| iso1631 wrote:
| Mortgages in the UK aren't like in the US, even now it's
| rare to have more than a 5 year fix, meaning you buy a
| property and, if interest rates go up, and prices crash,
| you're left on the "standard variable rate" 5 years later,
| paying 10-15%, leading to repossessions (especially if it
| happens now after 13 years of 2% mortgages), further
| dropping prices.
|
| You can't even remortgage onto a new fix if you're unlucky
| because the crash wipes out your equity, and you owe more
| than the property is worth, and in the UK you can't even
| simply hand the keys back.
|
| London average prices went from PS80k for an average house
| price in Jan 1990 and did drop, to PS65k by 1992, down 18%.
| It had recovered to PS80k by 1996, and reached PS128k by
| December 1999.
|
| Prices continued to increase until 2008 when they reached a
| high of PS298k in October 2007, before dropping back to
| PS245k, another 18% drop. Prices had recovered to their
| 2007 peak 5 years later, by April 2012, then continued to
| inflate up PS487k in August 2017, where they've been
| relatively flat, only increasing 8% in the last 4 years.
|
| Over that 27 year period house prices increased an average
| 6.5% per year, with most of that 'value' going to those who
| leveraged their equity and bought properties to rent out in
| the late 90s and early 00s. That house price inflation
| wasn't driven from QE though, but from increased ability
| for people to pay (partly lower interest rates, but mainly
| because of increased amount of household budget being
| available to pay rent as more and more families have two
| full time working professionals, and younger people live in
| more and more crowded house shares)
| worik wrote:
| I was ten years out by memory!
|
| Thanks for that
| worik wrote:
| It is reasonable to assert that current asset inflation
| is due to concentration of wealth generally and COVID
| stimulation specifically.
|
| Generally as the rich get richer they run out of
| consumption opportunities and must put money somewhere.
| They buy assets and drive up the prices.
|
| Here (Aotearoa) COVID stimulation was not given to banks,
| but consumption opportunities for anybody with money have
| decreased, hence asset inflation.
|
| We can expect a "correction" if history is anything to go
| by. It could be a crash (like 1929 or 2008) more likely
| stagnation in prices and inflation in other sectors (as
| in the 1970s and 1990s here)
|
| Prediction is hard. Especially of the future
| Aunche wrote:
| It's so sad to see people blame one of the few parts of
| government still managed by competent people. Blaming the Federal
| Reserve for things like inflation or wealth inequality is like
| blaming a cardiac surgeon on side effects of a triple bypass
| operation. The fault doesn't lie on the expert who needs to
| resort to increasingly aggressive interventions to maintain some
| semblance of stability. It lies on the patient to can't help but
| endlessly gobble pork.
|
| The real "money printing" occurs when Congress decides to fund
| trillions in spending on debt. The Fed flipping a switch to
| convert that debt into digital dollars is just something their
| job obligates them to do. Unlike the government, the private
| sector can't decide to borrow as much as it likes without
| impunity. With the government swallowing up a large fraction of
| the liquidity, in a world without QE, interest rates would
| skyrocket and the private sector would fall into a downward
| spiral and we would head straight to another Great Depression.
| ardme wrote:
| Well isn't the issue here that The Fed enables the reckless
| behavior of congress by sterilizing the deficits?
|
| Yes the root cause is the politicians spending tons of money to
| get re-elected and running up deficits but they shouldn't be
| able to get away with it and keep kicking the can down the
| road.
|
| To your last point - of course it's obvious that interest rates
| are suppressed and if they were allowed to rise it would cause
| a depression. But if they were not there would be less mal-
| investment and the zombie companies propped up by debt would
| soon collapse. It's not that this wouldn't cause pain in the
| short term but that you can't just eliminate reality and it's
| going to happen sooner or later. The longer you delay the worse
| the ultimate recession might be.
| analyte123 wrote:
| Read the article! This is discussed in detail, in addition to
| the effects of USD being a global reserve currency. Most of the
| commenters here appear to have not read the article.
| trutannus wrote:
| The author took way too long to introduce what the abbreviation
| QE in this context means. It's only in the 5th paragraph. It's
| generally not a great idea to use an unclear acronym in the
| title. If you really must, at least do the reader the curtesy of
| defining it up front, rather than making them dig for it. To
| someone who's non-American and likely does not keep an eye on the
| FED, QE isn't likely going to be they way they've seen the idea
| expressed. You can know what Quantitative Easing is without
| immediately recognizing QE out of context in a title.
| hammock wrote:
| If you don't already understand what QE in this context is, it
| is unlikely you will be able to fully understand the rest of
| this article.
| trutannus wrote:
| You can know what Quantitative Easing is without immediately
| recognizing QE out of context in a title.
| dragonwriter wrote:
| > If you don't already understand what QE in this context is
|
| The title arguably is not sufficient to make completely clear
| what context is being referenced. (Combined with the source
| it might be, for those familiar with the source, but that's
| beside the point _on HN_.)
|
| I mean "Does Queen Elizabeth cause wealth inequality" is a
| perfectly valid question, too.
| trutannus wrote:
| This is my point exactly. The term QE means so many things.
| Even a person who knows what Quantitative Easing is, might
| not catch that it means that. My first assumption was that
| this was some sort of equity investment like Private
| Equity, often called _PE_.
| pwnmonkey wrote:
| "quantitative easing" for those who are curious.
| dragonwriter wrote:
| > the FED
|
| "Fed" ( _Fed_ eral Reserve), not "FED".
| hammock wrote:
| FED (in all caps) is a common way to refer to the Federal
| Reserve, as is the Fed. Don't ask me why.
| dragonwriter wrote:
| IME its common in two groups of people:
|
| 1. American anti-Fed conspiracy theorists, and
|
| 2. Non-Americans who see the #1 without understanding the
| nature and assume its a standard US usage.
| trutannus wrote:
| My personal exposure is a python method from a quant
| library called get_FED()
| [deleted]
| vishnugupta wrote:
| Those who typically visit Lyn Alden's blog and follow her news
| letter (as well as her target audience) already know what QE
| stands for.
|
| Besides, now a days with fed so much in the news I suspect it's
| becoming widely known which is a good thing.
| trutannus wrote:
| Yes, that makes sense for those in the US, but the FED does
| not really factor into the thinking of, for instance, a
| German. The argument of "if you read the blog you know what
| it means" somewhat falls flat when the link is posted on HN
| for people who don't already read the blog to see.
| Quantitative Easing isn't just an American thing, and plenty
| of Germans might know it as Quantitative Easing, but have
| never seen it called QE for various reasons (it's QL in
| German for sake of example).
| [deleted]
| jasode wrote:
| _> The argument of "if you read the blog you know what it
| means" somewhat falls flat when the link is posted on HN
| for people who don't already read the blog to see._
|
| I don't understand your complaint here. The author (Lyn
| Alden) is not the person who posted it here on HN.
|
| In any case, she's an American writing about USA policy
| where her audience already knows what "QE" is. Seems
| unreasonable that she should predict that a German on HN
| would be irritated by it.
| trutannus wrote:
| You're right, I wasn't making a point about the author,
| just how the comment I was replying to didn't make sense
| given the context. I might have replied to the wrong
| comment. There was one which was saying something to the
| effect of "you would know what it means if you can
| understand the article".
|
| My core point is you can know what Quantitative Easing is
| while still not immediately recognizing QE as its
| abbreviation. For example, I thought this was going to be
| about some sort of Qsomething Equity, since I've seen PE
| to mean Private Equity.
| ffggvv wrote:
| pretty sure if you follow their blog then you're pre-supposed
| to already have an interest in finance. and therefore should
| know the basic concept of QE. It's like expecting a programming
| blog to explain a for loop.
|
| not sure its the authors fault it got posted here
| trutannus wrote:
| I think you can know what Quantitative Easing is, without
| realizing what QE means. Even advanced research journals read
| by scientists only will do something like this: Quantitative
| Easing (QE) in the opening. For the point that she had no
| idea it would be posted here, you're correct, but stuff like
| this does not help pick up new readers. My first thought was
| this was going to be about some sort of equity investment
| system, like Private Equity, also called _PE_.
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