I'm not saying HN and other platforms should censor (/ take action) either. It's just a thought I have on this subject, and I don't know if there is a solution.
If I were to change my course of action, I'd use that since it happened way earlier.
There's no reason for them to not act like this. Unless a pile of startups are standing around throwing more money at engineers and loudly attracting google's talent away.
“ The Best Time To Start A Business Is During A Downturn”
I found the post you linked to overly verbose as these bloggers often are. They make lists and sections and go on tangents on what could be a 300-500 word essay. I think he could have excluded the backstory and just focused on how important it is that your partner be onboard the FIRE/extreme frugality lifestyle. So I think it’s poorly written and not an enjoyable article. However, it’s a pretty damn important message and difficult to talk about until someone prominent that is serving as a poster child for the FIRE niche like MMM goes through it publicly.
He's kicking someone else when they are down, but that seems to be petty revenge in retribution for perceived attacks.
Why does his intent matter unless you think the data is being skewed or misrepresented? Seems like a fairly objective factual post to me (but I didn’t run the numbers myself).
I would appreciate if data observations like this always included the script so people could easily (and quickly) verify the results, but that’s just a personal knit pick.
Because the data can be cherry-picked, intentionally or un-intentionally, similar to https://xkcd.com/882/
If you believe a trend exists (or just want to find evidence for it for other reasons) and you keep looking for statistical evidence of it, you're going to find it.
Of course results can be skewed. Seems unlikely in this case, but it's easy enough to verify. I mean if I was going to criticize the data, I'd probably just verify it myself first, and then question intent. Thinking about it, I could verify post counts for a hand full of these pretty easily using the dev console. No one even questioned the data though, it was more along the lines of; what's the hidden agenda...
I agree this can be a self fulfilling prophecy. A lot of larger tech companies were announcing hiring freezes or restructuring months ago to get ahead of the downturn.
But I also think we could restate the quote above in ways that are actually true. For example, a lot of these posts are startups and monetary policy is slowing or shrinking the money available for VC. It makes sense that we see slower hiring. The past few years have probably been above historical VC funding levels anyways, so we may be returning to a more historical level for the next few years (or who knows?).
Alternately, I think a lot of companies are using the spector of a recession as cover for reducing unproductive or unnecessary headcount.
Over-hiring is an issue that's difficult to correct. If you do a round of layoffs, the perception is that you're in financial duress. This can affect investor and consumer confidence.
It's also difficult to explain to the public and to employees "oops, mia culpa! We asked you to upend your life to take a job with us, but our bad, we don't really need you."
I see it as similar to the way a lot of businesses implemented cost-cutting measures during covid that they had very much wanted to do, but couldn't because of the worry that they'd lose a competitive edge. Many of these measures had nothing to do with public safety and everything to do with cost cutting.
On the other hand, there are actual fundamentals like economy-wide inflation, employment numbers, GDP growth, supply/demand curves, etc., and it's important as an operator to have information about how the economy actually is, and more importantly how it's changing. I think the benefit of a post like this is much less tenuous; it provides insight into how the broader market conditions are panning out in our specific corner of the economy.
So yes, every measurement perturbs the system under measurement. In some cases that can be substantial. But in this case I don't think it is so.
The current stated goal of the Federal Reserve is to raise the unemployment rate from 3.7% to a target of 4.4%.
What you are remarking on as possibly a self-fulfilling prophecy is instead the result of official policy achieving its goal.
Pretty sure a recession is two quarters of negative growth. Rationalization hamster wheels notwithstanding.
https://www.nber.org/research/data/us-business-cycle-expansi...
https://www.amazon.com/Civilization-Capitalism-15th-18th-Cen...
https://www.amazon.com/Wheels-Commerce-Civilization-Capitali...
https://www.amazon.com/Perspective-World-Civilization-Capita...
I strongly recommend these books.
If you're interest is more about the classical Western period, I recommend:
https://www.amazon.com/Ancient-Economy-Sather-Classical-Lect...
The term is used to describe economic conditions in various countries.
The NBER is not part of the designation.
Indeed, it would be impossible for an economist to observe that Egypt, for instance, was in a recession as the NBER issues no opinions on the Egyptian economy.
No, conditioning the definition of a recession on the NBER was a silly political stunt by the current admin. Don’t go along with these redefinitions… it’s silly and illogical.
Historically, here in the US we haven't used the Egyptian definition of recession when talking about the US economy, so what you think about their definition is irrelevant.
That isn't to say that we're not currently in a recession, but economists don't know yet, and neither do you.
Not sure if that’s a good or bad thing.
And also all the inflation and recession action going on.
So it's likely a combination of the two.
https://www.africanews.com/2022/06/28/zimbabwes-key-interest...
Why am I being downvoted? All this is is a data point showing that rising interest rates don't have to bring down inflation.
The currency in Zimbabwe is so unreliable that barter has become the principal way of saving and storing wealth.
Zimbabwe has “cow banks.” You take your cash salary, and give it to the cow bank. The cow bank uses the cash to buy a cow.
The cow is put into a pen. You can make surprise visits to ensure the cows are alive, healthy, and not being “shared” with other customers.
Interest rates are based on the fertility rates of cattle, not central bank policies.
More like owning a pet horse.
If you own oil or soy futures, you can go get the product if you like (to everyone's inconvenience). This is not far off.
That does have some relevance to the US because the federal government can borrow+spend way more than a small country with a bad credit score - but since the interest rates they borrow at are coupled to the Fed rate, rising rates should in theory slow that down.
Furthermore, most money in the USA isn't even reserves, but rather bank deposits. Theoretically bank deposits are supposedly somehow constrained by reserves, but that hasn't really been true for well over a decade. Raising rates doesn't directly impair banks ability to originate as many new loans and corresponding deposits as they care to. Conceivably, higher rates could reduce the demand for loans from credit-worthy borrowers, or even reduce the pool of credit-worthy borrowers directly, but I'm not sure it doesn't end up being a wash after accounting for inflation.
Personally I suspect most of the effects that we do see are related to hysteresis rather than a fundamental transmission mechanism from interest rates. That is to say, the shocking effects we see from rate increases aren't due to a fundamental change, but rather a lag while market participants to catch up with the new rules of the game.
Another important factor is the prestige media using all of its persuasive powers to convince market participants that Fed actions will result in a downturn. There certainly is a large psychological component to economic activity.
The public is “data structure” illiterate. They’re educated with spoken traditions coupled to vague imagery of hierarchical power structures of history and the work place. I am not sure it’s intentional, more of a Duning-Kruger thing.
As usual any sustained shift in the appropriation of agency is up to the public. Science shows us how to build things, but no theory states “we must build rockets to nowhere.” But “keep your hands off muh capitalism click clack” gets in the way of sincere discussion of fully automated logistics.
Protectionism of spoken tradition in human memory is not going away anytime soon. It’s innate to our biology.
No no no no no. It means that Congress created the Fed, and Congress can destroy the Fed. Congress can also change its charter.
But Congress is capable of creating and destroying independent agencies.
“I buy that car and fill it with gas. You drive it.”
Lower wages, lower job mobility, asset deflation, consumable inflation -- YAY!
...
The real problem isn't any particular position, velocity, nor even acceleration. Those can all be planned for. It's the 4th time-derivative, jerk, that messes us up.
We are intervening to make the economy smaller than if we didn't intervene. I think that qualifies as "shrinking" even if the growth is what is shrinking and not the overall economy.
Depends on what time scale we're thinking about. True in the short-term, but I think the long-term expectation is that growth will be more stable, and therefore greater, with this short-term intervention.
> I think that qualifies as "shrinking"
Yes, and no. Yes, in that oh-so-important technical, relative sense. No, in that it's not the best choice of words.
Literally nothing can be planned for. Compare the Fed dot plots at any given meeting since 2008 with actual rates a year, or three years hence. Look at the BoE and BoJ flail wildly around right now, absolutely shocked by the consequences of their own actions less than a year ago.
These people have arguably a worse predictive ability than the canonical South Park Chicken ritual.
Central Banking is the only industry I know of in which you can be catastrophically wrong, always, and retain job security. Great gig, if you can swing it.
Inflation does have the risk of getting out of hand and being even harder to control. The risk analysis is that whatever pain increasing the rates would cause it pales in comparison to having hyperinflation.
As far as the lack of a pushback: My guess is a combination of apathy and the fact that it doesn't affect the average person quite as much as inflation.
The only party that can act right now is the Fed, and the only move the Fed has in increasing interest rates.
Price control doesn't fly in any economic system. Putting a legal floor or ceiling on the price anything doesn't affect what it actually costs to produce it.
The explicit goal of expanding the money supply in 2009 was to drive inflation in order to combat deflation. It didn't work. We ended up with a decade+ long period of low/no inflation.
Even today, the USD is growing stronger relative to other currencies. So in spite of this continued money supply expansion, Americans are experiencing inflation the least of anyone in the developed world.
I think Powell jacking up the fed funds rate is going to have a much larger effect than some random HN post.
that's not really how it works though, and it should absolutely not be a concern (it's quite common to get a sort of tech-industry tunnel vision while discounting the bigger picture or regional focuses.)
I've always argued that downturns are a natural part of every business cycle and perhaps instead of trying to avoid them, we plan for their inevitable occurrence.
"maybe it won't be a recession. maybe it will be. what i can tell you for sure is that it will be the first of its kind in real-time, full surround, three dimensional, quintophonic social media stereo."
economics is the study of population behavior. remember that.
So, no, there is no solution. To avoid crises of overproduction (including the subsequent adjustments), the planning that takes place within the capitalist firm has to be extended to the global network of production.
The difference in goods is a mere quantitative difference. (Amazon sells literally everything.) Still, the amount and diversity of crap managed by Amazon is much greater than that of North Korea (comparing net sales vs. GDP). "It seems that there is simply too much in an economy for one entity to wholly plan" has to be tongue-in-cheek if it's not simply a mindless mantra. It's a staggering ideological contradiction whose poles the Hacker News crowd must oscillate between. On one hand, we're on the cusp of generalized artificial intelligence, and on the other we can't figure out the linear algebra needed to maintain a input-output table that changes over time.
But the difference in competition is a qualitative difference. The laws that determine the "competition" between teams at Amazon are different (opposite, even) than the laws of competition between capitalist firms. This is an empirical question. We can certainly imagine Amazons teams undercutting each other's "prices" in order to maximize private "profit," leading to a centralization and concentration of "capital" in the hands of a "monopolistic" team, but this simply does not happen in practice. The categories of intra-firm operation are totally different than those of inter-firm operation.
This also happens with inflation. It is probably because people start acting differently. The hypothesis is that if people are preparing for a recession then demand goes down, which pushes prices up, which is identical to inflation. Obviously this model is far too simplistic but it is still interesting.
There's also the matter that people treat econ 101 as facts but the truth of the matter is economics is really fuzzy and there are no hard rules and there are always (ALWAYS) exceptions. Even what I said can happen or can not. I was just pointing out that it ,,can'' happen. It's all very statistical. But you may notice that the real world very much does not follow anywhere near the econ 101 models. It's like doing physics where everything is a spherical cow. Truth of the matter is that if we actually understood economics we wouldn't run into situations like this. It isn't like economies benefit from major downturns and inflation. It'd be like knowingly shooting yourself in the foot. Over and over again.
[0] https://www.investopedia.com/ask/answers/033115/how-does-law...
As to your first: if people expect prices to increase tomorrow, they don't save today; they spend today, to lock in value prior to inflation. And even if people actually did as you claim and saved funds today despite their expectations of higher prices tomorrow, guess what: seller's can't eat expectations. They need actual sales. And in your scenario, the people aren't buying.
This makes no sense at all. even the inverse makes no sense, if people preparing for a recession stopped buying goods, prices would go go down not up, which obviously would not cause inflation. This idiocy of saying that inflation comes from the people, and not from monetary policy, is depressing. It guarantees that governments will keep having a free pass to print as much colored paper as they want.
Revenue is the area of the rectangle "price times volume". (Profit is "revenue minus costs".) Businesses want to maximize the area of that rectangle.
If a business thinks they can keep the area of that rectangle the same by increasing the price dimension, that will cause buyers to react by shrinking the volume dimension. That might yield the same effective area for the rectangle, but then also might not.
This isn’t some insidious campaign to crash the economy by showing that the economy is finally cooling off. Getting inflation under control is good long term but it will be painful.