If money supply is fixed but economy is growing (say, over next 10 years we get a billion more people who consume same products as we do) prices drop. Which leads to nasty effects like people delaying spending, hiring dropping (why hire someone at $15 an hour when you can wait a few months and hire someone at $14, given that they'd work for you for at least a few years) and etc. That's partially why Fed targets positive inflation. The larger part of the world's economists are scared of deflation a lot more than inflation for a good reason.
Agree with Fed smacking rates down as chief reason for asset price inflation. Although rates are even lower in Europe and Japan and Eurostoxx 50 is below its 2000 level while Nikkei is below its 1991 level. So there are other variables driving S&P craziness. It is a weird dynamic that should reverse over next few years as Dems increase fiscal spending and boomers keep retiring. Not sure why main suggestion for fighting inflation that's affecting a narrow part of the economy (US asset prices) is causing widespread deflation that can break the entire world's economy.
"why hire someone at $15 an hour when you can wait a few months and hire someone at $14, given that they'd work for you for at least a few years"
Because otherwise my business makes no money for the next few months. At a certain point, you can't put off buying a car anymore to wait for this year's model to be cheaper...because you need a car to get places.
"So there are other variables driving S&P craziness"
There's actually an interesting argument I've heard made that it's actually just the *perception* that the increases on the Fed's balance sheet is bullish for stocks, because there isn't a whole lot of evidence that the money actually ends up there. I think the argument to the contrary is a little more compelling, but there might be a reality in which both factors actually contribute.
"boomers keep retiring"
It's interesting to think about to whom they will actually sell off their assets when they go on fixed income. Maybe we really do just become Japan and the CB ends up owning the majority share of everything.
“Because otherwise my business makes no money for the next few months. At a certain point, you can't put off buying a car anymore to wait for this year's model to be cheaper...because you need a car to get places.”
Agreed, but overall economic activity will be slowing down due to reduced demand as you get some benefit from waiting. This is not saying that you would wait for infinite time and make no purchases of anything.
There’s a reason why no one stayed on the gold standard for too long - the slow (but still positive) expansion of the monetary base kept spanking economies into painful deflationary crises. In fact you can find a lot of conspiracies with language similar to the one used in Fed conspiracies used for elites (sometimes even Jews I think) keeping the working man on the gold standard to control his wages towards the end of the 19th century.
Why are stable wages bad if the quality of good purchased for said wages is increasing? If anything, it creates a much truer sense of people’s place in the economic ladder. Maybe people don’t want that?
Yeah, there are well-worn reasons we got where we are that are not countered by the post: depressions and "smoothing the business cycle," the awkwardness of lowering someone's wage.
Some of this may be addressed but not directly. For example "no one needs to gamble to preserve capital" may smooth the business cycle since low-information or highly-predictable investors make runs and bubbles so having less of them eases this problem.
I don't have the background. But I do feel like there are probably some "in the long run we're all dead" counterpoints to this in terms of how the system reacts to shocks.
besides the acknowledged difficulties (switching cost: retirement system currently depends on air-dropping money on the rich and will have to go back to ordinary pensions, [other stuff]. "deserves" problems: will financialization technicians get paid even more insane amounts under pure-alpha system?), I feel like most of the recent flourishes were developed to adjust the dynamic characteristics of economic systems which were not discussed, so there's a Chesterton's Fence question about that.
To address your point of "Not sure why main suggestion for fighting inflation that's affecting a narrow part of the economy (US asset prices) is causing widespread deflation that can break the entire world's economy."
His overall point is not just “US asset prices”, but ending maturity-transformation or as he puts it here having financial intermediaries “match the duration and currency of their assets and liabilities.” Banks that don’t match the duration of their loans, the most important word here, are subject to bank runs. If the Government didn’t have the ability to bail out banks because of a fixed money supply it would end that problem. He is trying to fix the “boom-bust” cycle (certainly not a narrow part of the economy). It is explained in greater detail here: https://mises.org/wire/austrian-business-cycle-theory-explained. “You must save to invest, don’t use the printing press” https://www.youtube.com/watch?v=d0nERTFo-Sk
If you understand this point thoroughly, you would be more careful with: “The larger part of the world's economists” line of thinking. As they are often bunk. Here is a rebuttal to the deflation argument: https://mises.org/wire/real-meaning-deflation. You have to remember that inflation is diverting money away from real wealth generators, a powerful business onto itself. One so powerful that it is basically hopeless to end. Here you are in the depths of the internet far away from reading Paul Krugman, and still not getting it. I’m only saying this because it illustrates his other point about how impossible it is to fight this beast.
Curtis if you read your comments I am desperate for some mission to help.
Just read one of your links. Are modern austrians into Islamic finance? Seems any credit expansion doesn't sit well with them. If you lend without fractional reserve banking, you have negative expected value as positive interest at constant money supply would mean enough loans would default to make up for extra cash from interest (but you also would have to pay for frictions, labour, etc)
They are incompatible with Austrians and with what Curtis is saying. One can earn interest in their money.
If you match the loans both qualitatively and quantitatively the supply of long term loans dry up creating a natural interest yield curve. The expected value would become positive as the interest rate would go up. It is a humble bug in our financial system, that no one evil is behind. It is just a difficult problem to fix. If you set this plan into motion the housing market would collapse, as home values would go down dramatically. The unpopularity of this plan is why I think he is suggesting buying everyone out at current market prices. Seems reasonable to me.
If you sell a derivative expiring in 3 years to a yield-chasing client you have to go to your bank's treasury and ask for a funding bond maturing in 3 years.
And if anything mainstream economists are currently worried about banks not lending enough with all that cash Fed is giving them. As massive monetary expansion doesn't reach the real economy since banks are too risk-averse to lend during the biggest crisis in decades. This means banks are helping things be relatively more deflationary with their conservatism, you should like them!
Conventional Macro says that deflation is bad because prices DONT fall, or that nominal prices, like wages, are "sticky." When the real value of money increases, prices should fall in order to accommodate the increased value of dollars. When wages DONT fall, unemployment occurs because the real cost to the employer has increased for a given wage.
You are ignoring the malice the elites bear the commons.
You are ignoring that they don't patronize us-they hate us.
Moreover they fear us and so reasonably enough want us weak, or dead.
We're they not so intrinsically weak and cowardly and we potentially dangerous: dead already.
I notice that Arizona joins NY in this Aktion T4 COVID Euthanasia for the elderly now, we'll see this sort of thing accelerate unless we get regime change.
Because the regime does not want to change.
As for the proposal you mistake feature for bug, let me fix: "The advantage of this design is that it hides systemic losses under the carpet of seignorage."
If you can't kill them directly you can always starve them, this is nothing new.
The PMC for sure has a burning hatred for poor, parochial whites. Why else would every liberal policy over 50 years, from anti resource development activism to globalization of supply chain, "accidentally" completely fuck over the parochialites? I've always imagined it was because, as the rural parts of the country tend to be 10-15 years behind the trend, they act like a black mirror for the urbanites. Like a distressing embarrassing photo of yourself from the 80's with a bad mullet. The urbanos hate the ruralinos because they see in themselves the truth of who they used to be and who they really are now.
Are you Sure Mr/Ms/Mx Den? The advantage of this design is that it hides systemic losses under the carpet of seignorage.
What's the problem here? Unless you're not an elite.
This is like that phrase conflict of interests when the interests are clearly aligned along with incentives. To crib from our host there really is no such thing as conflict of interest unless you believe in right and wrong....and no nihilist can.
Yes. Explains the aristocratic "oppressed peoples, allies, and white oppressors" moral narrative. Because "we" special people are not clerical nobles, not really. Just humble "allies" of the poor and oppressed.
My line is that the current Reign of Woke Terror arises out of the failure of the left's moral narrative and its programs. People tend to amp it up in the face of failure.
But on finance, my line is that inflationary finance is a response to the deflations after the Napoleonic Wars, the US Civil War, and WWI, that resulted in serious unrest. Workers hated the wage cuts, and debtors hated the debt trap. So now we inflate forever and everyone is happy except Curtis.
You make a good point in that inflation was caused by serious unrest. The problem goes back further than the wars, however. In a barter economy, governments must acquire resources by physically taking them, often causing revolutions and serious unrest. After the advent of currency governments have the ability to create counterfeit money. There was a point in time where governments would dilute physical gold to sustain itself. With inflation governments can appropriate resources sly and more unnoticed, causing less unrest. From Rothbard "And now we see why governments are inherently inflationary: because inflation is a powerful and subtle means for government acquisition of the public's resources, a painless and all the more dangerous form of taxation." https://mises.org/library/what-has-government-done-our-money/html/p/80. I think Curtis is not unhappy about the situation, but detached
I thought "PMC" was some kind of an insult, so I googled "urban dictionary PMC". It... wasn't an insult, but UD delivered. It truly is the only dictionary that matters
Jesus Christ I like this guy and feel he’s brilliant but sometimes I come away truly feeling like everything I just read went over my damn head. Can anyone Retard-ify this stuff for me? Haha
😆 Same thought has definitely occurred to me. I like to think I’m keeping up enough to not lose sight of him but finance is really just about the most confusing shit to me in the world and he was in the deep end almost instantly. I Wikipedia’d about 5 or 6 things and then just gave up 😆
Would reading a book like Human Action help to understand Curtis when he talks about economics or would I be better off just googling concepts like alpha and beta?
With all due respect to the chap Btn1135, I would say obtaining sufficient undestanding of real Austrian economics (viz. Mises) should help with understanding Yarvin's musings overall, but especially when concerning 'literary economics'.
'Human Action' might be too heavy of a read, but a selection of chapters, from that or any other of Mises's books, would convey the main idea quite well. Or some of the Rothbard books conerning economics: "Man, Economy, and State" for full treatise, or my personal favourite when it comes to explaining money shenanigans, "The Mystery of Banking".
Some of the best posts in the old blog - which had the 'Austrian perspective' in its tagline - were dealing with the problems of maturity transformation as a generalisation of fractional reserve banking.
Hell, I would say being comfortable enough with Mises's 'praxeological' approach to anything sociological could only help with appreciating Yarvin's writings.
Sure. But if he’s just looking for quick definitions and doesn’t know “alpha” and “beta”. Id start on Google. But, yes, with complex economics— especially related to the Austrian school— I wouldn’t just “google it”.
Welcome, new “post-leftists”!!!
Don’t worry. We don’t understand half of this stuff either.
This article is solid gold/BTC. I feel like I understand your blogs on a deeper level after reading Burnham.
Fancy running into you here. Good work on YT so far.
If money supply is fixed but economy is growing (say, over next 10 years we get a billion more people who consume same products as we do) prices drop. Which leads to nasty effects like people delaying spending, hiring dropping (why hire someone at $15 an hour when you can wait a few months and hire someone at $14, given that they'd work for you for at least a few years) and etc. That's partially why Fed targets positive inflation. The larger part of the world's economists are scared of deflation a lot more than inflation for a good reason.
Agree with Fed smacking rates down as chief reason for asset price inflation. Although rates are even lower in Europe and Japan and Eurostoxx 50 is below its 2000 level while Nikkei is below its 1991 level. So there are other variables driving S&P craziness. It is a weird dynamic that should reverse over next few years as Dems increase fiscal spending and boomers keep retiring. Not sure why main suggestion for fighting inflation that's affecting a narrow part of the economy (US asset prices) is causing widespread deflation that can break the entire world's economy.
"why hire someone at $15 an hour when you can wait a few months and hire someone at $14, given that they'd work for you for at least a few years"
Because otherwise my business makes no money for the next few months. At a certain point, you can't put off buying a car anymore to wait for this year's model to be cheaper...because you need a car to get places.
"So there are other variables driving S&P craziness"
There's actually an interesting argument I've heard made that it's actually just the *perception* that the increases on the Fed's balance sheet is bullish for stocks, because there isn't a whole lot of evidence that the money actually ends up there. I think the argument to the contrary is a little more compelling, but there might be a reality in which both factors actually contribute.
"boomers keep retiring"
It's interesting to think about to whom they will actually sell off their assets when they go on fixed income. Maybe we really do just become Japan and the CB ends up owning the majority share of everything.
The Japanese elites don't hate the Japanese.
The American elites do hate the Americans, or at least the bottom 85%.
Ergo, we don't want to be owned any more than we are.
“Because otherwise my business makes no money for the next few months. At a certain point, you can't put off buying a car anymore to wait for this year's model to be cheaper...because you need a car to get places.”
Agreed, but overall economic activity will be slowing down due to reduced demand as you get some benefit from waiting. This is not saying that you would wait for infinite time and make no purchases of anything.
There’s a reason why no one stayed on the gold standard for too long - the slow (but still positive) expansion of the monetary base kept spanking economies into painful deflationary crises. In fact you can find a lot of conspiracies with language similar to the one used in Fed conspiracies used for elites (sometimes even Jews I think) keeping the working man on the gold standard to control his wages towards the end of the 19th century.
Why are stable wages bad if the quality of good purchased for said wages is increasing? If anything, it creates a much truer sense of people’s place in the economic ladder. Maybe people don’t want that?
“ Agreed, but overall economic activity will be slowing down due to reduced demand as you get some benefit from waiting.”
That’s called saving. It would train people’s time-preference.
Also
Why is fast growth good per se? Is it good, net of everything? Do you know that it is?
Yeah, there are well-worn reasons we got where we are that are not countered by the post: depressions and "smoothing the business cycle," the awkwardness of lowering someone's wage.
Some of this may be addressed but not directly. For example "no one needs to gamble to preserve capital" may smooth the business cycle since low-information or highly-predictable investors make runs and bubbles so having less of them eases this problem.
I don't have the background. But I do feel like there are probably some "in the long run we're all dead" counterpoints to this in terms of how the system reacts to shocks.
besides the acknowledged difficulties (switching cost: retirement system currently depends on air-dropping money on the rich and will have to go back to ordinary pensions, [other stuff]. "deserves" problems: will financialization technicians get paid even more insane amounts under pure-alpha system?), I feel like most of the recent flourishes were developed to adjust the dynamic characteristics of economic systems which were not discussed, so there's a Chesterton's Fence question about that.
To address your point of "Not sure why main suggestion for fighting inflation that's affecting a narrow part of the economy (US asset prices) is causing widespread deflation that can break the entire world's economy."
His overall point is not just “US asset prices”, but ending maturity-transformation or as he puts it here having financial intermediaries “match the duration and currency of their assets and liabilities.” Banks that don’t match the duration of their loans, the most important word here, are subject to bank runs. If the Government didn’t have the ability to bail out banks because of a fixed money supply it would end that problem. He is trying to fix the “boom-bust” cycle (certainly not a narrow part of the economy). It is explained in greater detail here: https://mises.org/wire/austrian-business-cycle-theory-explained. “You must save to invest, don’t use the printing press” https://www.youtube.com/watch?v=d0nERTFo-Sk
If you understand this point thoroughly, you would be more careful with: “The larger part of the world's economists” line of thinking. As they are often bunk. Here is a rebuttal to the deflation argument: https://mises.org/wire/real-meaning-deflation. You have to remember that inflation is diverting money away from real wealth generators, a powerful business onto itself. One so powerful that it is basically hopeless to end. Here you are in the depths of the internet far away from reading Paul Krugman, and still not getting it. I’m only saying this because it illustrates his other point about how impossible it is to fight this beast.
Curtis if you read your comments I am desperate for some mission to help.
Just read one of your links. Are modern austrians into Islamic finance? Seems any credit expansion doesn't sit well with them. If you lend without fractional reserve banking, you have negative expected value as positive interest at constant money supply would mean enough loans would default to make up for extra cash from interest (but you also would have to pay for frictions, labour, etc)
They are incompatible with Austrians and with what Curtis is saying. One can earn interest in their money.
If you match the loans both qualitatively and quantitatively the supply of long term loans dry up creating a natural interest yield curve. The expected value would become positive as the interest rate would go up. It is a humble bug in our financial system, that no one evil is behind. It is just a difficult problem to fix. If you set this plan into motion the housing market would collapse, as home values would go down dramatically. The unpopularity of this plan is why I think he is suggesting buying everyone out at current market prices. Seems reasonable to me.
https://www.nickbostrom.com/fable/dragon.html
Banks are kind of already doing that. Check out:
https://en.wikipedia.org/wiki/Asset_and_liability_management
If you sell a derivative expiring in 3 years to a yield-chasing client you have to go to your bank's treasury and ask for a funding bond maturing in 3 years.
And if anything mainstream economists are currently worried about banks not lending enough with all that cash Fed is giving them. As massive monetary expansion doesn't reach the real economy since banks are too risk-averse to lend during the biggest crisis in decades. This means banks are helping things be relatively more deflationary with their conservatism, you should like them!
This is not quite correct.
Conventional Macro says that deflation is bad because prices DONT fall, or that nominal prices, like wages, are "sticky." When the real value of money increases, prices should fall in order to accommodate the increased value of dollars. When wages DONT fall, unemployment occurs because the real cost to the employer has increased for a given wage.
Politics is power. Poor people who are hungry but not starving are ideal subjects. It is reset, for the benefit of the Great.
Sir Yarvin,
MALICE. You cannot it seems accept Malice.
You are ignoring the malice the elites bear the commons.
You are ignoring that they don't patronize us-they hate us.
Moreover they fear us and so reasonably enough want us weak, or dead.
We're they not so intrinsically weak and cowardly and we potentially dangerous: dead already.
I notice that Arizona joins NY in this Aktion T4 COVID Euthanasia for the elderly now, we'll see this sort of thing accelerate unless we get regime change.
Because the regime does not want to change.
As for the proposal you mistake feature for bug, let me fix: "The advantage of this design is that it hides systemic losses under the carpet of seignorage."
If you can't kill them directly you can always starve them, this is nothing new.
MALICE. Malice is the core of our elites.
He’s been on Malice’s show like twice dude, wym
The PMC for sure has a burning hatred for poor, parochial whites. Why else would every liberal policy over 50 years, from anti resource development activism to globalization of supply chain, "accidentally" completely fuck over the parochialites? I've always imagined it was because, as the rural parts of the country tend to be 10-15 years behind the trend, they act like a black mirror for the urbanites. Like a distressing embarrassing photo of yourself from the 80's with a bad mullet. The urbanos hate the ruralinos because they see in themselves the truth of who they used to be and who they really are now.
*80 years
*140 years
I've tried explaining variations of both of these concepts to people but my reddit tier IQ level and my autistic level of articulation always fail me
Are you Sure Mr/Ms/Mx Den? The advantage of this design is that it hides systemic losses under the carpet of seignorage.
What's the problem here? Unless you're not an elite.
This is like that phrase conflict of interests when the interests are clearly aligned along with incentives. To crib from our host there really is no such thing as conflict of interest unless you believe in right and wrong....and no nihilist can.
Yes. Explains the aristocratic "oppressed peoples, allies, and white oppressors" moral narrative. Because "we" special people are not clerical nobles, not really. Just humble "allies" of the poor and oppressed.
My line is that the current Reign of Woke Terror arises out of the failure of the left's moral narrative and its programs. People tend to amp it up in the face of failure.
But on finance, my line is that inflationary finance is a response to the deflations after the Napoleonic Wars, the US Civil War, and WWI, that resulted in serious unrest. Workers hated the wage cuts, and debtors hated the debt trap. So now we inflate forever and everyone is happy except Curtis.
You make a good point in that inflation was caused by serious unrest. The problem goes back further than the wars, however. In a barter economy, governments must acquire resources by physically taking them, often causing revolutions and serious unrest. After the advent of currency governments have the ability to create counterfeit money. There was a point in time where governments would dilute physical gold to sustain itself. With inflation governments can appropriate resources sly and more unnoticed, causing less unrest. From Rothbard "And now we see why governments are inherently inflationary: because inflation is a powerful and subtle means for government acquisition of the public's resources, a painless and all the more dangerous form of taxation." https://mises.org/library/what-has-government-done-our-money/html/p/80. I think Curtis is not unhappy about the situation, but detached
Outstanding. I keep re-reading this. Almost on par with "How Dawkins got Pwned".
Bro, got a fuckin genuine lol out of me when the lol hyperlinked to double entry bookkeeping wiki
Heroin-steroids are only a problem when you run out of them, dawg!
Reading these poasts while concurrently reading Dostoevsky’s “Demons” is an interesting experience.
I thought "PMC" was some kind of an insult, so I googled "urban dictionary PMC". It... wasn't an insult, but UD delivered. It truly is the only dictionary that matters
You don’t understand monetary policy. Which is fine, most people don’t. Low long-term real interest rates are a demographic phenomenon.
Jesus Christ I like this guy and feel he’s brilliant but sometimes I come away truly feeling like everything I just read went over my damn head. Can anyone Retard-ify this stuff for me? Haha
Curtis is indeed brilliant, but sometimes I feel like he is insecure about his intelligence because of how often he flaunts it.
😆 Same thought has definitely occurred to me. I like to think I’m keeping up enough to not lose sight of him but finance is really just about the most confusing shit to me in the world and he was in the deep end almost instantly. I Wikipedia’d about 5 or 6 things and then just gave up 😆
Would reading a book like Human Action help to understand Curtis when he talks about economics or would I be better off just googling concepts like alpha and beta?
With all due respect to the chap Btn1135, I would say obtaining sufficient undestanding of real Austrian economics (viz. Mises) should help with understanding Yarvin's musings overall, but especially when concerning 'literary economics'.
'Human Action' might be too heavy of a read, but a selection of chapters, from that or any other of Mises's books, would convey the main idea quite well. Or some of the Rothbard books conerning economics: "Man, Economy, and State" for full treatise, or my personal favourite when it comes to explaining money shenanigans, "The Mystery of Banking".
Some of the best posts in the old blog - which had the 'Austrian perspective' in its tagline - were dealing with the problems of maturity transformation as a generalisation of fractional reserve banking.
Hell, I would say being comfortable enough with Mises's 'praxeological' approach to anything sociological could only help with appreciating Yarvin's writings.
Sure. But if he’s just looking for quick definitions and doesn’t know “alpha” and “beta”. Id start on Google. But, yes, with complex economics— especially related to the Austrian school— I wouldn’t just “google it”.
Thanks guys
Just google alpha and beta. Both related to evaluate performance/volatility related to a benchmark.