|
Read the rules in the OP before posting, please.In order to ensure that this thread continues to meet TL standards and follows the proper guidelines, we will be enforcing the rules in the OP more strictly. Be sure to give them a re-read to refresh your memory! The vast majority of you are contributing in a healthy way, keep it up! NOTE: When providing a source, explain why you feel it is relevant and what purpose it adds to the discussion if it's not obvious. Also take note that unsubstantiated tweets/posts meant only to rekindle old arguments can result in a mod action. |
On September 19 2013 05:36 sam!zdat wrote:
remember how you were just talking about asset prices being inflated on paper? Isn't that a bubble?
my impression was that QE transfers cash to the balance sheets of banks, which they then hold because real interest rates are less than zero, so they make money by sitting on the cash. Or something. What the fuck do I know I'm an english major.
I'm still pretty sure that QE is free money for pigs anyway. Why else would the stock market be soaring and the rich getting richer than they've ever been while my generation still has no jobs and never will? Economy improving my ass. Fuck you obama, why don't you go work part time making fucking lattes all day with shit benefits like half the college educated people I know? Job creation my left testicle, the only jobs being created are corporate wage slave service industry bullshit. If we gotta print money lets use it to build some fucking infrastructure and hire teachers not just hand it over to banksters and all wise innovating geniuses and hope they will be nice enough to put it to some good use. Fuck the private sector where's my revolution
I don't think it's a bubble because I don't see what the bubble danger is. The bubble danger would be that people stop saving due to rates of return being too low. Right now the Fed wants people to either save less or put more savings to actual productive work. So if we are in a bubble the fallout will be what we want to happen.
The stock market isn't 'soaring' much more than the general economy. US nominal GDP is higher than pre-crisis. US stock market is higher than pre-crisis.
|
they're not putting their money into productive things. They are putting it into new york real estate
QE is nothing but keynesianism, except it's keynesianism where you just cross your fingers and hope the private sector will do stuff out of the goodness of their hearts despite the fact that it's a crisis of overaccumulation in the first place and the problem is that there aren't any good investments. So it doesn't work. It's the only thing that could possibly be stupider than keynesianism, privatized keynesianism.
we're boned
|
I'm not going to pretend to know that much economics, but discounting keynesianism and quantitative easing out of hand seems really bizarre and weird to me.
I'll just go with Krugman:
Plutocrats and Printing Presses
First, as Joe Wiesenthal and Mike Konczal both point out, the actual politics is utterly the reverse of what’s being claimed. Quantitative easing isn’t being imposed on an unwitting populace by financiers and rentiers; it’s being undertaken, to the extent that it is, over howls of protest from the financial industry. I mean, where are the editorials in the WSJ demanding that the Fed raise its inflation target?
Beyond that, let’s talk about the economics.
The naive (or deliberately misleading) version of Fed policy is the claim that Ben Bernanke is “giving money” to the banks. What it actually does, of course, is buy stuff, usually short-term government debt but nowadays sometimes other stuff. It’s not a gift.
To claim that it’s effectively a gift you have to claim that the prices the Fed is paying are artificially high, or equivalently that interest rates are being pushed artificially low. And you do in fact see assertions to that effect all the time. But if you think about it for even a minute, that claim is truly bizarre.
I mean, what is the un-artificial, or if you prefer, “natural” rate of interest? As it turns out, there is actually a standard definition of the natural rate of interest, coming from Wicksell, and it’s basically defined on a PPE basis (that’s for proof of the pudding is in the eating). Roughly, the natural rate of interest is the rate that would lead to stable inflation at more or less full employment.
And we have low inflation with high unemployment, strongly suggesting that the natural rate of interest is below current levels, and that the key problem is the zero lower bound which keeps us from getting there. Under these circumstances, expansionary Fed policy isn’t some kind of giveway to the banks, it’s just an effort to give the economy what it needs.
Furthermore, Fed efforts to do this probably tend on average to hurt, not help, bankers. Banks are largely in the business of borrowing short and lending long; anything that compresses the spread between short rates and long rates is likely to be bad for their profits. And the things the Fed is trying to do are in fact largely about compressing that spread, either by persuading investors that it will keep short rates at zero for a longer time or by going out and buying long-term assets. These are actions you would expect to make bankers angry, not happy — and that’s what has actually happened.
Finally, how is expansionary monetary policy supposed to hurt the 99 percent? Think of all the people living on fixed incomes, we’re told. But who are these people? I know the picture: retirees living on the interest on their bank account and their fixed pension check — and there are no doubt some people fitting that description. But there aren’t many of them.
The typical retired American these days relies largely on Social Security — which is indexed against inflation. He or she may get some interest income from bank deposits, but not much: ordinary Americans have fewer financial assets than the elite can easily imagine.And as for pensions: yes, some people have defined-benefit pension plans that aren’t indexed for inflation. But that’s a dwindling minority — and the effect of, say, 1 or 2 percent higher inflation isn’t going to be enormous even for this minority.
Sam, you seem to be in complete disagreement with this. But Krugman's right about that first point. The bankers and financiers are against quantitative easing, so politically it's a bit strange to think of this as just another way that the rich screw the poor.
|
because if you print a bunch of money and it doesn't do anything that is going to fuck with your currency down the road right? And it's not doing anything because it's not creating jobs, which is what we need. And it can't create jobs because the new economy doesn't need people, so no matter how much gas you give it it's just not going to do that.
he talks about trying to lower interest rates to their 'natural' rate which is below zero. That's what QE does is let you lower rates below zero. Which I'm pretty sure means we are loading up banks balance sheets with money and then paying them to hold it, because that's what negative interest rates mean.
can someone explain the mechanism by which QE inflates stock prices
edit: I don't understand how this plays out in the conflict between various factions of capital. Certainly what happened today was not what the banks wanted, but it was what equities and bonds wanted? Idk
edit: how can buying something be not a gift if you print the money with which to buy it out of thin air? It's not a gift to the person from whom you bought it maybe but it's a gift to the market in general, right?
edit: ok so QE raises prices but lowers yields of financial assets. So the traders don't like it because it means there is less room between those things for them to maneuver and flip things and they are not just 'chasing beta' or whatever, they are trying to take advantage of mispricing and when there is less room there are smaller amounts of mispricing to exploit. But it inflates the financial markets IN GENERAL because you are artificially increasing demand for these securities by printing money to buy them. So the traders don't like it because the government is essentially competing with them and increasing demand for the things they also want to buy. Right?
edit: but the problem is that all this money that is being printed wis not being used to expand the economy and reate jobs, for reasons which are not cyclical but structural and historical (if it were cyclical the money would create jobs). The money is being used to buy second homes in the hamptons and sit on banks balance sheets enjoying negative real interest rates
|
so the theory is that the crisis happened because of mean old greedy bankers and some little problem in regulation, which now we fixed, so now we need he banks to start lending again so we can expand the economy and create jobs. But in reality the reason the banks were doing all this ponzi speculation stuff was because we have a crisis of overaccumulation and there was nothing real for them to invest in and so expansion went into finance not real economy (like arrighi talks about). So we think that now we fixed this little subprime thing if the banks lend again it will be great, but the reason for the shenanigans was that honest lending simply wasn't worth it. So now we print money and they just sit on it because the problem has to do with the mode of production not the business cycle
|
A little inflation could be a good thing, and for that I support Krugman's point. But sam is truly hitting the nail when he says that "the new economy doesn't need people". It is even more true if the fed continue to give free capital by pushing the interest rate so low : what's the point of paying men if capital is so cheap that you can buy a machine or two for the price of a worker ?
Stiglitz actually mentionned that a year ago, when he argued that with such low interest rates, we might see a jobless recovery.
|
On September 19 2013 07:50 WhiteDog wrote:
A little inflation could be a good thing, and for that I support Krugman's point. But sam is truly hitting the nail when he says that "the new economy doesn't need people". It is even more true if the fed continue to give free capital by pushing the interest rate so low : what's the point of paying men if capital is so cheap that you can buy a machine or two for the price of a worker ?
Stiglitz actually mentionned that a year ago, when he argued that with such low interest rates, we might see a jobless recovery.
Er... haven't people been saying that since like 1920?
|
yes, and it's been true since then. What do you think WW2 was about? Good vs evil?
the point of keynesianism (war=keynesianism) is to restart the business cycle (also soldiers die and soak up labor). And you can invent new needs and desires in order to open up new industries to combat the rising organic composition of apital and soak up new labor (cf previous discussion of advertising). But it's a constant crisis (edit: keynesianism is like a way to 'surf' the crisis and use debt to generate growth to pay off the debt, but as every surfer knows sooner or later every wave breaks)! It can't go on forever. We're reaching the limits (and like I say we are not even trying proper keynesianism this time just QE which is privatized faith-based keynesiansim)
edit: I bet you think the 1920s was a long time ago
|
On September 19 2013 08:16 sam!zdat wrote:
yes, and it's been true since then. What do you think WW2 was about? Good vs evil?
the point of keynesianism (war=keynesianism) is to restart the business cycle (also soldiers die and soak up labor). And you can invent new needs and desires in order to open up new industries to combat the rising organic composition of apital and soak up new labor (cf previous discussion of advertising). But it's a constant crisis (edit: keynesianism is like a way to 'surf' the crisis and use debt to generate growth to pay off the debt, but as every surfer knows sooner or later every wave breaks)! It can't go on forever. We're reaching the limits (and like I say we are not even trying proper keynesianism this time just QE which is privatized faith-based keynesiansim)
edit: I bet you think the 1920s was a long time ago
That's a really bizarre notion of keynesianism. It doesn't have to use war, it can use public works and stuff.
I have no idea why you think we're still using keynesianism anyway. We really haven't been using it since the 1980s. Friedman was hailed as a hero for predicting "stagflation" and ever since then we've had "trickle down" and "supply side" and blah blah blah. Hence the whole "deficit spending during good times" with Bush and "AUSTERITY NOW!" with Obama this last decade.
And the whole point is that it actually can go on forever if you don't do crazy austerity and such (which is always bad anyway). You pay down debt during good times. And people say "oh we never do that" is actually totally wrong. We do that when sensible people are in charge.
Actually, wait. You've railed against Keynesianism, Free Market, and Austrian School. Do you just think economics is all bullshit or what?
|
Cayman Islands24199 Posts
QE is monetary rather than fiscal keynesianism. the channels through which it pumps are the banks, and for the rela economy it is supposed to work at the interest rate and inflation expectation level. so yea, kind of relying on the market heavily. (some of the ideas that are argued to be true for QE, such as whether it can go on forever without causing inflation, are really self fulfilling prophesies, because it operates on the expectation level)
it is as sam says, the jobless recovery cannot be solved by any kind of keynesian pumping. it requires dealing with the technology replacement of workers, and management increasingly reluctant to commit to full time workers given the labor market the way it is. some people (e.g. krugman) thinks that this labor market lax can be tightened by fiscal stimulus to cover up the lack in aggregate demand, which is pointed to as the reason for the lack of labor demand. i don't think it's taht simple. because managemnet has gotten smarter, and it's accepted good practice to have at least the non-creative parts of your company be as flexible as possible.
the creative parts, that is very small, so not much employment from that.
|
doublereed I mean war is a kind of key- not that all key- is war. And QE is an absurd sort of key- pretending not to be, as oot says above
I'm a marxist remember? So of course I think austrians neoliberals and keynesians are all wrong. By definition basically. This should not be surprising.
|
On September 19 2013 08:51 oneofthem wrote:
QE is monetary rather than fiscal keynesianism. the channels through which it pumps are the banks, and for the rela economy it is supposed to work at the interest rate and inflation expectation level. so yea, kind of relying on the market heavily.
it is as sam says, the jobless recovery cannot be solved by any kind of keynesian pumping. it requires dealing with the technology replacement of workers, and management increasingly reluctant to commit to full time workers given the labor market the way it is. some people (i.e. krugman) thinks that this labor market lax can be tightened by fiscal stimulus to cover up the lack in aggregate demand, which is pointed to as the reason for the lack of labor demand. i don't think it's taht simple. it's just another cycle of ducking long term commitments, because managemnet has gotten smarter.
I don't think Krugman ever suggested there isn't better things we can do, like fiscal things. Just because it's not as effective as it "should" be doesn't mean it's not effective at all. Fiscal things are obviously politically impossible at this point.
But the threat of doing "too much quantitative easing" or whatever is really minor right now.
It's nonsensical to blame the jobless recovery on quantitative easing. If anything, it looks like QE does some very minor good things and that's about it. It's just not going to have that much of an effect in the long run.
I'm a marxist remember? So of course I think austrians neoliberals and keynesians are all wrong. By definition basically. This should not be surprising.
What monetary policy would you want?
|
doublereed is an example of why I'm no longer a democrat
edit @above: the problem is we are trying to fix with monetary policy a problem which cannot be fixed with monetary policy. Do you read a single word I write?
edit @below: yes thank you
|
Cayman Islands24199 Posts
i don't think sam ever blamed QE for causing jobless recovery, rather, he just said it is powerless to act against that, and obscures the real problem through making certain people happy and ignoring others.
|
On September 19 2013 09:00 sam!zdat wrote:
doublereed is an example of why I'm no longer a democrat
Hey now. Just a few posts ago you were being pretty hyperbolic about QE about how it's just another way for the rich to screw the poor. Then I posted and you may have learned some stuff about how things work. Let's not talk shit quite yet, eh?
|
On September 19 2013 04:58 {CC}StealthBlue wrote:Show nested quote +At a packed public hearing of the U.S. Senate Judiciary Committee on Wednesday, Sen. Rand Paul (R-Ky.) compared the war on drugs to the racist policies of the Jim Crow era.
"If I told you that one out of three African-American males is forbidden by law from voting, you might think I was talking about Jim Crow 50 years ago," Paul said. "Yet today, a third of African-American males are still prevented from voting because of the war on drugs."
"The majority of illegal drug users and dealers nationwide are white," he said, "but three-fourths of all people in prison for drug offenses are African American or Latino."
Paul was arguing against mandatory minimum sentencing laws, which require judges and prosecutors to impose severe penalties against those convicted of low-level drug crimes.
A growing number of conservatives have criticized such laws in recent years. At the hearing, Marc Levin, the policy director of the Right on Crime Initiative at the Texas Public Policy Foundation, a conservative group that advocates for prison reforms, noted that Texas has reduced its prison population and crime rate while expanding its use of recidivism-reducing programs and other alternatives to incarceration.
Brett Tolman, a former federal prosecutor in Utah, testified that the threat of long mandatory minimum sentences has not led to the identification of high-level leaders of drug organizations by low-level offenders. "Kingpins are smarter than that," he explained. "They insulate themselves so the 'mules' and street-corner dealers either do not know who they are or do not have enough information to lead to their discovery, let alone prosecution."
Paul and Sen. Patrick Leahy (D-Vt.) are the authors of the Justice Safety Valve Act of 2013, which would allow judges to deliver sentences that deviate from the mandatory minimums in certain cases. Source
Mandatory minimum sentences often amount to cruel and unusual punishment in violation of the 8th amendment, while the scheme that requires them is thoroughly racist.
|
edit @above: the problem is we are trying to fix with monetary policy a problem which cannot be fixed with monetary policy. Do you read a single word I write?
Well my response to that is simply that's the best we can do with the current political climate.
I mean jesus, it sounds like you don't hate QE at all. You want to talk about actually fixing things but because QE is actually something being done, it's something that you can rail against.
|
you think keynesianism can go on forever, just so long as we have these mythical reasonable people. That's a cue for shit talking
but seriously. The things you say are basically the reasons I can't vote democratic. Don't take it personal you mostlly echo party line
|
On September 19 2013 09:05 DoubleReed wrote:Show nested quote +edit @above: the problem is we are trying to fix with monetary policy a problem which cannot be fixed with monetary policy. Do you read a single word I write? Well my response to that is simply that's the best we can do with the current political climate.
yep, and that's why we're fucked and better start making plans for what the fuck we're gonna do when the revolution comes, because the best we can do is just not even close son. We are fucked, and I mean fucked
|
On September 19 2013 09:05 sam!zdat wrote:
you think keynesianism can go on forever, just so long as we have these mythical reasonable people. That's a cue for shit talking
but seriously. The things you say are basically the reasons I can't vote democratic. Don't take it personal you mostlly echo party line
I'm echoing Krugman, not the party line.
I was under the impression that the "reasonable people" is a Chicago School thing. Krugman is saltwater.
|
|
|
|
|
|
EPT
