223 karma · joined October 7, 2015
Furthermore, this isn't a massive asset bubble, nor does it fit the description of them. What sectors are in a bubble? If they popped, would they bring the economy down with them?
Your most credible case on this would be the energy industry - "low rates allowed shady shale companies to borrow billions at ultralow rates," right? OK, so now that the price of oil has been cut ~65% (65% of your revenues, gone!), we:
1. Still have positive inflation, even when accounting for energy
2. Still have a functioning energy sector
3. Haven't experienced any kind of major economic dislocations.
I guess what I'm asking is, how is this recovery making things worse in the long run, than a total economic collapse in a nuclear age would have been?
On siphoning - from experience, there's much more of a continuum than you think. You don't have a major actor supporting banks, you have a major actor supporting the economy by attempting to set a rate that does, in fact, have to be set (it's mechanically how these things work), by somebody. All they're doing is trying to follow the natural rate of interest, which is influenced by demand and demographics more than anything (see: Global Savings Glut; Secular Stagnation Hypothesis). So if that benefits the banks, it's only a side effect of the economy not collapsing. The banks are how we, as a society, allocate resources to each other. Why do you want that wiped out, and replaced by some post-crash phantom example? An economic crash in a nuclear age might not yield the companies you're hoping for.
No, I don't need correction on who is wealthy. I'm talking about the UHNWI with net worth over $50 million, who still would be making more money if rates were higher, hence why they advocate for this.
You do wholesale buy shitty securities from rubbish banks because the alternative is worse. Please point me to an economic collapse in the modern age where people were left off better for it, or where business conditions actually improved?
Furthermore, you're not distinguishing demand-driven recessions from supply-side ones. We hadn't had a recession of this nature since the Great Depression.
If you read what Bernanke openly puts on the internet about his decision making, his legacy way more depends on:
1. Understanding and anticipating the drivers of the natural rate of interest, including demand and the effects on demand of financial system shocks
2. Keeping the Fed Funds Rate as close to their estimate of the Natural Rate as possible.
That's what his legacy depends on. If that calls for lower rates now, fine.
OK, so it sounds like this isn't really a debate anymore. This has the same coordination problem that the climate scientists "making it up" would have. If you understand how the system works, there already are checks and balances on that.
We have democratic oversight of the financial industry, as it is regulated in the way an elected government has chosen to regulate it. You're throwing out a lot of buzzwords but nothing that actually points to a solution.
For example, "an international clampdown on corporate tax avoidance." Well, that's fine, but you seem to be suggesting implicitly that there is a very clear moral case that corporations should always pay domestic taxes on income earned abroad... which most countries actually don't do. So that's why some companies invert. But is there anything morally wrong about this? I don't actually know and you probably don't either.
Also, you seem to be suggesting that stable, long-term businesses are capital constrained, which just makes it incredibly clear to me you don't actually look at data and see what those companies are doing from a capital allocation perspective. Those are the types of businesses that literally have too much cash to know what to do with, other than, you know, shore up their balance sheets after this really bad balance sheet recession we just had.
"Basel-based BIS's Committee on Payments and Market Infrastructure (CPMI), made up of central bankers from across the world, said it could challenge banks' role - but if the technology became widespread it was unclear who would then provide credit and savings facilities."
Emphasis: "but if the technology became widespread it was unclear who would then provide credit and savings facilities."
Having worked at a bank, they're interested because it could reduce the large role of simply making sure everybody's shit lines up at the end of the day between counterparties. This isn't the disruption you're dreaming of... It's not changing how capital and resources are directed and allocated throughout the economy... it's changing how those decisions get confirmed across systems.
It then goes on to say it could theoretically challenge the need for a central bank, as it's decentralized... this makes a huge, implicit assumption that a rule-based interest rate decision is desirable, which, I don't know, until we can have an actual way of knowing the natural interest rate and hand off analyzing the economy to algorithms, it may be best to leaving that to people who spend their lives devoted to that.
https://bitcoinmagazine.com/articles/fedcoin-rising-14243124...
Allowing the central banks to not be constrained by the ZLB would allow significantly better economic recoveries and would allow the economy to grow despite our poor (or total lack of) fiscal spending.
All you've really done is recite the right-wing description of what you believe has happened to "the economy."
You haven't addressed what the better alternative was. If you are going to say, "let the economy collapse" let me ask you if you think economic collapse is really such a surefire prescription (in a nuclear age on top of that). If you think "stronger firms" emerge from collapsed societies, I guess maybe, but I'd really like you to provide some examples.
Also, before going further, you haven't really identified any of the mechanisms through which things are being "siphoned." The wealthy people are actually the ones trying to get the banks to raise rates again, they want their interest income back, so if it's being siphoned off to them, it's not what their advocating for.
The whole problem with your thesis is that it rests on assumptions that some things are implicitly bad and morally wrong, as if reality is so black and white.
Many of these guys also continue to rely on their network for further opportunities and support. Their network would cut them out like gangrene, just like the old Enron titans, as to maintain their own good standing they couldn't be affiliated with somebody who clearly blew up their past company. That would be bad business, and that type of behavior would have prevented them from reaching those positions in the first place.
I can see things like blockchains improving back office settlements and clearing, sure, but... whatever?
Disrupting the actual financial system is nothing short of disrupting how society who gets what, and what gets done. This is not a technological problem you're dealing with.
Like you mentioned, the real concern here is China and India's ability to grow their power generation stack using renewables rather than fossil fuels. Whether or not some more voyages take place will be trivial compared to the impact of China/India's power generation.
edit: Just in case, if you are going to post anything about ShadowStats, or the Fed lying about numbers, there's nothing to even argue. It's hilarious that people think they get to choose their own definitions of inflation, when it's a fairly strictly defined thing. Just because your grocery bill "inflated" ≠ the economy is experiencing inflation.
Furthermore, you're making the classical economic fallacy of reasoning from a price shift. Oftentimes, from experience, commodity shipping volume increases in times of turbulence, as there are more arbitrage opportunities from the more volatile diffs between grades.
"What do you mean prices respond to supply and demand, I thought this was UBER!!!"