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On September 28 2014 03:47 bookwyrm wrote:Show nested quote +On September 28 2014 03:28 JonnyBNoHo wrote:On September 28 2014 03:19 bookwyrm wrote:
QE is debasing the currency. we don't have metallic money with fineness, we have fiat currency whose value is based on the price you pay for pulling arbitrary amounts of it out of the future. If you don't understand this, you are the one who doesn't understand monetary policy If I'm reading you correctly that's a feature, not a bug. See above. I understand the idea. I KNOW that they are doing it intentionally. I don't need you to explain to me in baby terms the narrative that I am explicitly critiquing. I understand what the Standard Official Narrative is. It's a fantasy. But really, I can't talk to you, it ruins my digestion.
You're critique is inconsistent. Their intention is to reduce bubbles and you're complaining about how they're trying to engineer new bubbles to create growth.
It's also important to differentiate between types of growth. Stimulus isn't supposed to get you new long-term growth, it's just supposed to help in the short-run. e.g. find a use for excess capacity, not create new capacity.
Your critique seems to be the opposite though, as if they're going to stimulate new capacity creation which will lead to a bust, because the creation was driven by artificial and ultimately unsustainable means.
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go read paul krugman's essay dude. He explicitly says that we need to create a bubble so that we can have full employment. it's madness.
There is no "short-run." There is only the new normal. That's what you just refuse to understand
the entire thing is fucked. Monetary stimulus won't help. Fiscal austerity won't help. Fiscal stimulus is the same clusterfucked special interest central planned crony capitalism. The entire thing needs rethinking, the old paradigm just doesn't apply. What is an economy FOR??
We need to deleverage our society and drastically reduce the overall amount of debt. Start with the assumption that you are going to have sound money and go from there. Debasing the currency never leads to stable solutions to anything. But if you have sound money you have to eliminate the debtor class.
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On September 28 2014 03:47 bookwyrm wrote:Show nested quote +On September 28 2014 03:23 kwizach wrote:On September 28 2014 03:19 bookwyrm wrote:
QE is debasing the currency. we don't have metallic money with fineness, we have fiat currency whose value is based on the price you pay for pulling arbitrary amounts of it out of the future. If you don't understand this, you are the one who doesn't understand monetary policy How has QE debased the currency? Have you taken a look at inflation levels for the last few years? there's no objective measure for what is "inflation." Inflation in what? how do you measure it? Furthermore, inflationary signals do not enter the economy evenly. The price of food is up, there are massive asset bubbles in both real estate and equities. That's inflation. None of it is doing anything to solve the socio-economic problems of our society. We're told to just keep believing until we achieve something mythical called "escape velocity" (that's some fifties style sci-fi mythology there - rocketships away! into the future!)... but it won't happen. It's just a game to see how long everyone can keep believing. Because les non-dupes errent.
Still no explanation of how QE is supposedly debasing the currency, I see.
Like JonnyBNoHo wrote, there are various measures of inflation; they're certainly not perfect, but they're more than good enough to analyze general trends, and there has certainly not been the kind of super-inflationary trend people like you predicted would accompany the different rounds of QE - quite the opposite, in fact. But yeah, I suppose you'd rather go with your gut feeling than with facts.
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How is QE possibly NOT debasing the currency? You seriously think that you can just infinitely pursue easy money with no threat to the integrity of the currency? that's such insanity.
Dedollarization is underway. When the crisis hits it will hit all at once. The event of 2008 is NOT OVER. Nothing's over till the fat lady sings man, we are still in the thick of it. It's far too early to start counting your inflationary eggs. What we are doing is DANGEROUS
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On September 28 2014 04:11 bookwyrm wrote:
go read paul krugman's essay dude. He explicitly says that we need to create a bubble so that we can have full employment. it's madness.
And again, a complete misunderstanding of Krugman's point - I love it. He's not saying we need to create a bubble. He's saying that we may have reached a situation where it will in the future be difficult to get close to full employment unless employment is buoyed by bubbles. That's not a positive thing.
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On September 28 2014 04:17 kwizach wrote:Show nested quote +On September 28 2014 04:11 bookwyrm wrote:
go read paul krugman's essay dude. He explicitly says that we need to create a bubble so that we can have full employment. it's madness. And again, a complete misunderstanding of Krugman's point - I love it. He's not saying we need to create a bubble. He's saying that we may have reached a situation where it will in the future be difficult to get close to full employment unless employment is buoyed by bubbles. That's not a positive thing.
I get that. What he doesn't do is take his analysis to its full conclusion - which is a reductio ad absurdum of our entire economic system. If we have indeed reached such a sitution, then it is time to rethink everything about how our economy works - something Krugman is unwilling to do. He just thinks we need to vote for Obama and have easy money. Build some pyramids maybe.
The real conclusion of his analysis is that we need to reconsider what is "full employment" and why that is a desirable thing from a social perspective and what the alternative might be. Intentionally blowing bubbles is unacceptable, therefore we must fully grasp the other horn of the dilemma - accepting that there will never again be "full employment" in the sense in which we have become accustomed to this. Krugman is simply not willing to follow his own reasoning
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Cayman Islands24199 Posts
On September 28 2014 04:16 bookwyrm wrote:
How is QE possibly NOT debasing the currency? You seriously think that you can just infinitely pursue easy money with no threat to the integrity of the currency? that's such insanity.
Dedollarization is underway. When the crisis hits it will hit all at once. The event of 2008 is NOT OVER. Nothing's over till the fat lady sings man, we are still in the thick of it. It's far too early to start counting your inflationary eggs. What we are doing is DANGEROUS
by debasing the currency i assume you mean 'money out of nowhere' against non-increasing assets. but, this is not QE. QE is balance sheet neutral because when the fed buys some papers from a commercial bank or something there's a counterbalance account created. it affects the interest rate and whatnot fluidity measures but it is different from just dumping money into the streets of manhattan.
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On September 28 2014 04:11 bookwyrm wrote:
go read paul krugman's essay dude. He explicitly says that we need to create a bubble so that we can have full employment. it's madness.
There is no "short-run." There is only the new normal. That's what you just refuse to understand
the entire thing is fucked. Monetary stimulus won't help. Fiscal austerity won't help. Fiscal stimulus is the same clusterfucked special interest central planned crony capitalism. The entire thing needs rethinking, the old paradigm just doesn't apply. What is an economy FOR??
We need to deleverage our society and drastically reduce the overall amount of debt. Start with the assumption that you are going to have sound money and go from there. Debasing the currency never leads to stable solutions to anything. But if you have sound money you have to eliminate the debtor class.
An economic "bubble" is easily one of the least well defined term in economics. What separates a "bubble" from a normal boom / bust is largely public perception.
Whenever you expand the economic horizon it's going to be messy. Railroads were once a bubble. Does that mean railroads are worthless? Of course not. Does it suck that we over-built? Absolutely, but it's much better that we over-built than if we had never built at all.
Also, 'bubble' doesn't mean inevitable horrid bust. There was nothing special about the housing bubble that it had to end with a crisis. Had things played out differently, it could have ended with a minor recession and a re-balance to other sectors.
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On September 28 2014 04:16 bookwyrm wrote:
How is QE possibly NOT debasing the currency? You seriously think that you can just infinitely pursue easy money with no threat to the integrity of the currency? that's such insanity.
Dedollarization is underway. When the crisis hits it will hit all at once. The event of 2008 is NOT OVER. Nothing's over till the fat lady sings man, we are still in the thick of it. It's far too early to start counting your inflationary eggs. What we are doing is DANGEROUS
How is it debasing the currency, when inflation levels have remained low for the past few years? I suggest you read the chapter "Inflation: The Phantom Menace" in Krugman's book End This Depression Now! - it should help clear your misconceptions about these issues and help you understand why we did not see inflation rise with the rounds of QE.
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On September 28 2014 04:23 oneofthem wrote:Show nested quote +On September 28 2014 04:16 bookwyrm wrote:
How is QE possibly NOT debasing the currency? You seriously think that you can just infinitely pursue easy money with no threat to the integrity of the currency? that's such insanity.
Dedollarization is underway. When the crisis hits it will hit all at once. The event of 2008 is NOT OVER. Nothing's over till the fat lady sings man, we are still in the thick of it. It's far too early to start counting your inflationary eggs. What we are doing is DANGEROUS by debasing the currency i assume you mean 'money out of nowhere' against non-increasing assets. but, this is not QE. QE is balance sheet neutral because when the fed buys some papers from a commercial bank or something there's a counterbalance account created. it affects the interest rate and whatnot fluidity measures but it is different from just dumping money into the streets of manhattan.
you're the only one here whose opinion I really respect
can you explain what is meant by counterbalance effect. The way I understand it QE is the Fed printing money to buy commercial paper (The fed has also been doing other stuff, like buying mortgages and even trading directly in equities futures). That's just running the presses in order to artificially increase the demand for commercial paper and thereby decrease yields. The inflationary signal enters the system in a different way (mostly to the benefit of banks as opposed to the indebted class, which is why the elites REALLY fear inflation) but it's still pure inflation. The only difference is that the inflation doesn't do the one thing that inflation is actually good for, which is inflating away the debts of the peons.
it's just printing free money for people to gamble with.
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Cayman Islands24199 Posts
let's say you are a bank with an account of balance at the fed. the fed gives you 20 in credit which you can then lend out and stuff, but deducts the same 20 from your assets/credit at the same fed computer accounting place. it's not printing money with no backing, the backing is in the balance sheet expansion.
what creates inflation is when the banks themselves alter their lending behavior, instead of using the free (in terms of price) money to do non real economy bank stuff.
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On September 28 2014 04:41 bookwyrm wrote:Show nested quote +On September 28 2014 04:23 oneofthem wrote:On September 28 2014 04:16 bookwyrm wrote:
How is QE possibly NOT debasing the currency? You seriously think that you can just infinitely pursue easy money with no threat to the integrity of the currency? that's such insanity.
Dedollarization is underway. When the crisis hits it will hit all at once. The event of 2008 is NOT OVER. Nothing's over till the fat lady sings man, we are still in the thick of it. It's far too early to start counting your inflationary eggs. What we are doing is DANGEROUS by debasing the currency i assume you mean 'money out of nowhere' against non-increasing assets. but, this is not QE. QE is balance sheet neutral because when the fed buys some papers from a commercial bank or something there's a counterbalance account created. it affects the interest rate and whatnot fluidity measures but it is different from just dumping money into the streets of manhattan. you're the only one here whose opinion I really respect can you explain what is meant by counterbalance effect. The way I understand it QE is the Fed printing money to buy commercial paper (The fed has also been doing other stuff, like buying mortgages and even trading directly in equities futures). That's just running the presses in order to artificially increase the demand for commercial paper and thereby decrease yields. The inflationary signal enters the system in a different way (mostly to the benefit of banks as opposed to the indebted class, which is why the elites REALLY fear inflation) but it's still pure inflation. The only difference is that the inflation doesn't do the one thing that inflation is actually good for, which is inflating away the debts of the peons. it's just printing free money for people to gamble with.
When the Fed raises rates the opposite happens and the printed money goes away.
And as I said in another post, because of the way that fractional reserve banking works, the private sector can also create / destroy new money. Much of the new money creation that the Fed has done has been offset by the private sector. On net there hasn't been much new money creation.
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On September 28 2014 04:55 oneofthem wrote:
let's say you are a bank with an account of balance at the fed. the fed gives you 20 in credit which you can then lend out and stuff, but deducts the same 20 from your assets/credit at the same fed computer accounting place. it's not printing money with no backing, the backing is in the balance sheet expansion.
what creates inflation is when the banks themselves alter their lending behavior, instead of using the free (in terms of price) money to do non real economy bank stuff.
which is what the entire point of the policy is. So the argument that it's not producing inflation means that it's not doing the thing that it is supposed to do in the first place (make banks lend more). So if that's true why are we doing it? Just so banks can do "non real economy bank stuff" (i.e. gamble on stuff like carry trades and the like).
Of course, actually the reason we are doing it is to inflate the paper worth of the asset owning classes so they don't realize what's going on and they think Mr. Obama is just doing a great job with "the economy"...
if I say "free debt" instead of "free money" will that make you happier? That's what you mean when you say "there is no free money because it is backed by balance sheet expansion." But our economy doesn't actually have money - our money is just debt. You can't go on expanding the amount of debt indefinitely - there's a limit to how big the balance sheet of the Fed can get before confidence in the system collapses.
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On September 28 2014 05:19 bookwyrm wrote:Show nested quote +On September 28 2014 04:55 oneofthem wrote:
let's say you are a bank with an account of balance at the fed. the fed gives you 20 in credit which you can then lend out and stuff, but deducts the same 20 from your assets/credit at the same fed computer accounting place. it's not printing money with no backing, the backing is in the balance sheet expansion.
what creates inflation is when the banks themselves alter their lending behavior, instead of using the free (in terms of price) money to do non real economy bank stuff. which is what the entire point of the policy is. So the argument that it's not producing inflation means that it's not doing the thing that it is supposed to do in the first place (make banks lend more). So if that's true why are we doing it? Just so banks can do "non real economy bank stuff" (i.e. gamble on stuff like carry trades and the like). Of course, actually the reason we are doing it is to inflate the paper worth of the asset owning classes so they don't realize what's going on and they think Mr. Obama is just doing a great job with "the economy"... if I say "free debt" instead of "free money" will that make you happier? That's what you mean when you say "there is no free money because it is backed by balance sheet expansion." But our economy doesn't actually have money - our money is just debt. You can't go on expanding the amount of debt indefinitely - there's a limit to how big the balance sheet of the Fed can get before confidence in the system collapses.
Some money is debt, but some money is just money and there's a spectrum betwixt. Largely we've been moving away from the debt money toward the money money. You seem to be complaining about the opposite though.
As for the asset owning class it's as you say - it's just inflationary and so this will ultimately be to their detriment.
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pretty sure all of our money is just debt. the only way money would be something other than debt is if money were a commodity. but our money is not a commodity. I'm not complaining either way, that's just the way it is
On September 28 2014 04:57 JonnyBNoHo wrote:
When the Fed raises rates the opposite happens and the printed money goes away.
but what if the circumstances under which such an action would be politically feasible never occur? (this is Krugman's argument - yes I understand what he is saying, thanks kids - he just doesn't take his own argument far enough) Then you're fucked. That's what happens when you think you can solve your problems in the present by making promises about the future, then when those promises don't come true you make even more promises to make up for it - eventually your house of cards collapses.
the only way we can solve our problems is by making real, substantive changes in the way our economy operates, and in the cultural assumptions we make about what an economy is for and who it is supposed to benefit. You can't do it just by pumping more debt into the system. The engine is broken and flooding it with gas is just going to make it worse
the revitalization of Left economic thinking needs to begin by throwing Mr. Keynes on the ash heap of history where he belongs. Let's have a Left economic programme based on sound money and free markets - since neither of those things exists in our society, I'd say that's a pretty fucking subversive set of things to believe in.
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Cayman Islands24199 Posts
bro if you mean money is an instrument of debt accounting, ok. but surely you are not going to argue for soem sort of gold standard or bartering with actual goods?
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On September 28 2014 05:50 bookwyrm wrote:
pretty sure all of our money is just debt. the only way money would be something other than debt is if money were a commodity. but our money is not a commodity. I'm not complaining either way, that's just the way it is
Well that's not an unreasonable way to view it. You could put gold as the ultimate currency, and so dollars are just a promise to pay gold or something or something similar along those lines. Personally, I think that's a bit extreme, but something along those lines isn't unreasonable.
Show nested quote +On September 28 2014 04:57 JonnyBNoHo wrote:
When the Fed raises rates the opposite happens and the printed money goes away. but what if the circumstances under which such an action would be politically feasible never occur? (this is Krugman's argument - yes I understand what he is saying, thanks kids - he just doesn't take his own argument far enough) Then you're fucked. That's what happens when you think you can solve your problems in the present by making promises about the future, then when those promises don't come true you make even more promises to make up for it - eventually your house of cards collapses. the only way we can solve our problems is by making real, substantive changes in the way our economy operates, and in the cultural assumptions we make about what an economy is for and who it is supposed to benefit. You can't do it just by pumping more debt into the system. The engine is broken and flooding it with gas is just going to make it worse the revitalization of Left economic thinking needs to begin by throwing Mr. Keynes on the ash heap of history where he belongs. Let's have a Left economic programme based on sound money and free markets - since neither of those things exists in our society, I'd say that's a pretty fucking subversive set of things to believe in.
Yeah I suppose you could find yourself in a situation where you are stuck. The difficulty is options. If you allow the economy to languish too long you can find yourself stuck too. Workers lose skills, equipment falls apart, you experience a deflationary spiral, etc.
As for promises about the future, that's how a lot of private enterprise works. You guess that organizing capital and resources in a certain way will unlock value and economic growth, but real life doesn't always pan out the way you expect and yet the debts always come due.
Really there's no easy answer.
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On September 28 2014 06:11 oneofthem wrote:
bro if you mean money is an instrument of debt accounting, ok. but surely you are not going to argue for soem sort of gold standard or bartering with actual goods?
On September 28 2014 05:50 bookwyrm wrote:
I'm not complaining either way, that's just the way it is
I actually think that gold itself is a form of debt - the reason gold has value is that it is owed to the gods (you are under a divine commandment to stack up the gold in the temple). this is probably going to be a bit too literary theoretical for y'alll though and it is just a point of philosophical interest and not relevant to the current point which is that QE is a death train to oblivion and we are all being sold down the river by our idiot technocrats
On September 28 2014 06:24 JonnyBNoHo wrote:
Really there's no easy answer.
this coming from the king of easy answers, for whom there are no real problems that exist in the world. My entire point is that there is no easy answer, the facile faith in the restorative powers of balance sheet trickery is the easiest answer of them all
The non-easy answer is rethinking everything from the ground up. literally. let's think about dirt.
On September 28 2014 06:24 JonnyBNoHo wrote:
As for promises about the future, that's how a lot of private enterprise works. You guess that organizing capital and resources in a certain way will unlock value and economic growth, but real life doesn't always pan out the way you expect and yet the debts always come due..
I just love the way in which you restate my problems, under the impression that you are providing some sort of meaningful response
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On September 28 2014 05:50 bookwyrm wrote:
pretty sure all of our money is just debt. the only way money would be something other than debt is if money were a commodity. but our money is not a commodity. I'm not complaining either way, that's just the way it is
In what way is our money debt? Do you mean it in a really abstract way? Like money is the thing you hold instead of the thing you dont know you want yet because you don't know what the thing you want is yet? Because what is remarkable about a fiat currency is that it isn't a debt at all, nor is it a commodity, it is only money.
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On September 28 2014 06:35 Crushinator wrote:Show nested quote +On September 28 2014 05:50 bookwyrm wrote:
pretty sure all of our money is just debt. the only way money would be something other than debt is if money were a commodity. but our money is not a commodity. I'm not complaining either way, that's just the way it is
In what way is our money debt? Do you mean it in a really abstract way? Like money is the thing you hold instead of the thing you dont know you want yet because you don't know what the thing you want is yet? Because what is remarkable about a fiat currency is that it isn't a debt at all, nor is it a commodity, it is only money.
Fiat currency is debt (on my view, gold coins are also debt, see above, but that's a tangent). It means the US economy owes you one unit of production. I mean it in a completely literal way. this is not even a controversial thing that I am saying
recommend this book http://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
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