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>Furthermore, I take issue with the emphasis on "property damage" as property is fairly meaningless when you fear for your live or live paycheck-to-paycheck. America has an unhealthy obsession with "property damage" as if it should be the driver for any sort of discussion on societal issues, when in fact, it should not be.

Ah right, so the ends justify the means. It is OK to vandalise and destroy a small business if you feel bad and frustrated, but only if you share the corporate-approved politically correct opinion. Do you not see where this road ends?

Completely ridiculous. If a major corporation in concordance with other entities bans speech that does toe the party line - that is quite literally fascism and something straight out of 1984.

BLM and their like was burning down cities for months with support from these same corporates, and that is suddenly OK and not morally questionable because orange man bad? I'm not defending the Trumpers who stormed the capitol, but the double standards are extremely blatant.

I think companies who are operating in spaces that may be targeted for wrongthink (pornography, arms dealers, even crypto to an extent) should seriously consider contingency plans (avoid vendor/platform lock-in, have a backup progressive web app in case your app gets booted etc.) in the event the leftist/SJW/mainstream media mob targets them and kicks them off large platforms (including infrastructure - AWS/GCP/Azure is NOT safe).

Collateral is the wrong term, apologies for that - what I mean is that expanded bank reserves can be used to back an expansion of credit from the bank in question.

>The central bank have not power to stimulate the economy in this situation, that's the reason central bankers are pushing the governments to spend directly.

Sounds very political for a supposedly independent central banking system!

This system is a disgrace and is governed by unelected technocrats who are able to yield a crazy amount of power over the economy without ever being subject to inquiries from the public, all in the interest of experimenting on the population with highly questionable economic models.

In my opinion we would never have been in this situation in the first place were it not for the artificial credit growth and consequent boom caused by central bankers.

Yes: http://www.shadowstats.com/alternate_data/inflation-charts

This site calculates CPI using the old way of calculating it, and according to that method the inflation rate is closer to 10%.

It cannot be repaid, ever, because the interest exceeds the amount of money that is currently in existence, which means they will always have to borrow more money (which is created out of thin air) to service the debt.

>The Fed has doubled (!) the number of assets on its balance sheet by creating new monetary instruments and using some of them to purchase financial assets like treasuries and mortgage backed bonds. In fact, the Fed has created more new monetary assets during the past five months than in 2008-2009, during the worst of the global financial crisis.

This is printing money and it is not inaccurate to say that they have created U.S. Dollars out of thin air to finance their asset-purchases and "lending" (a debt that will never be paid off) to the U.S. government.

Because they are pocketing the difference by arbitraging between the government (who issue the treasuries) and the Fed (who is the ultimate buyer) since the Fed cannot buy treasuries directly from the government. It's just a complicated way for the government to print money and hand it out and in this case banks are able to act as the middleman and earn money on the spread.

It's a disgraceful system that is extremely morally questionable.

They are, the argument that the poster above you put forward is such a tired argument and I really do not understand why people are trying to hide the fact that the Fed is actually creating money out of thin air and buying assets from banks for it. The Fed doesn't technically "print" the Federal Reserve Notes, but for all intents and purposes it is legitimately money that is being created, only digitally. You are entirely correct in your assessment that they are manipulating the market by being an agent with unlimited amounts of cash and can therefore provide options for banks that they otherwise wouldn't have in a free market.

Also bank reserves can be used as collateral for further loans, just because you don't lend out the actual reserves doesn't mean more money isn't being created, it's just done in a roundabout fashion.

I hope I'm not the only one that finds this completely ridiculous. What right does the U.S. Federal Government have to prosecute people who aren't even operating within their jurisdiction? This is nothing but imperialism and a captured government trying to shut down competitors to U.S.-based regulated exchanges from more crypto-friendly countries.

I should qualify that I think the idea of private banks is perfectly fine. I agree that what we have right now is a quasi-governmental centrally planned banking system and that should definitely be dealt with as it was government (through guaranteed mortgages) that largely encouraged the conditions that lead to 2008.

> A free market was the only possible market when society did not have the tools to organize and control resource allocation on the scale its possible today, due to advances in technology and expansion in education. We have better tools today, and we as a society can choose other methods for resource allocation that are now accessible.

Many have thought like you, some have even tried to architect society into something like you are describing, and fortunately those that did failed so spectacularly that they are remembered in the history books with names like the Soviet Union, Venezuela, Cuba, and maoist China. They all failed because centrally planned societies, either done through envisioned high-tech computerised/AI systems or through at-the-time high-tech 5-year plans like the Soviet Union, all suffer from the knowledge problem. It is simply impossible for someone to know everything about an economy to be able to plan it efficiently.

Perhaps a more tangible argument for the tech-crowd on HN is the lack of understanding that non-engineer managers in some companies have for the software development process and the disastrous results that follow. Now imagine having a Politburo dictating what every little work group in a country should do from software engineers to janitorial staff and you can see where this leads.

>But we discovered automobiles, trains and all that shebang.

Ironically things that were discovered and developed in the 1800s, the times of almost unrestricted capitalism and market price discovery.

>The free market in my country has produced two banks that provide banking to 80% of the population (6M people).

I don't want to assume where you are from, but almost every developed country has incredibly complex, expensive, and insurmountable bank licensing procedures which make it impossible for startups to compete. That is not a free market, it is a crony capitalist market which shields incumbents.

>Yes, we've had sustained economic growth and wealth generation to a magnitude never seen before in the history of the world (although not equitable, but that's a different policy problem).

There are many ways I'd like to rebut this, but instead I'll just ask for who and how? Technology has improved that is for sure as it is a incredibly deflationary, but what else has improved in your eyes? The vast majority in the U.S. and some parts of Europe while nominally earning more than what they did in the 1960's are in my opinion worse off than before. Minimum wage used to be 40-50 dollars inflation adjusted, and one lower middle-class salary could support an entire family and provide material comforts. I don't see much of that happening now as I and many others believe inflation has completely ravaged the middle-class in the West and is making it increasingly difficult to get ahead.

>What does it mean that its not "natural"? There is nothing "natural" about the "free market"; its a way we decide to organize resource allocation. There are other ways to do so. Central banks have prevented catastrophic economic failures in the past few decades. I think I like this system better than one which results in "natural" destruction of economy and livelihoods like what happened in the Great Depression.

We didn't "choose" to have a free market. A free market is simply the voluntary and spontaneous interaction between free individuals, nothing more, and is entirely natural. Central planning and using coercion to force market outcomes, on the other hand, is definitely not natural.

It is often taught that we have avoided a scenario like the Great Depression almost exclusively due to the enactment of a central bank, but this is outright false and is borderline malicious historical revisionism (in fact many economists, including some at the Fed, believe that the Fed was actually the cause of the credit bubble during the 1920's which eventually burst in 1929). We had periodic recessions before the Fed, but they almost always resolved themselves quite quickly and wasn't near the impact that recessions have today.

Ask yourself this, why is it that recessions seem to get worse and worse and more importantly affect everyone and not just localised sectors in an economy? 2008 was definitely worse than 2001, and the current covid recession is arguably worse than 2008 due to how overleveraged everyone is (a direct consequence of Fed monetary policy).

Hah, now that is something I'd like to see. I don't have my hopes up though because elitist central bankers don't like to be transparent or be subject to public scrutiny - all documents from the Swedish Riksbank in my country are classified with absolute secrecy (same level as military secrets) and cannot be inspected even by members of parliament as that may threaten "monetary stability". This is in a country where everyone's tax returns are public by default.

It is not sustainable when we have an unsustainable and quite frankly insane monetary policy which is being pushed by central bankers. In a sane world credit provision would be decentralised and provided by local banks who are close to the borrower rather than people sitting 1,000 kilometres away. Remember: the most important role of banking is not the provision of payment services (although that is important too), it is to intermediate between savers and borrowers (which is almost always done better in a decentralised system).

Indeed the current centralised banking model is quite recent and only started to creep in after the enactment of the Federal Reserve (and the consequent central planning of money and credit) and dramatically accelerated after the end of the gold standard in 1971 and the decoupling of money from sane fundamentals. It's not a coincidence that what followed was extreme consolidation of banks and the quasi-neofeudalism that we see today with large corporates who are able to get credit from large multinational banks which they are close to and then with that money price out small businesses and drive them to bankruptcy.

What has been happening for the past 40 years is not natural, and what banks are doing now is almost entirely driven by central banks and not some natural order resulting from the free market (which throughout history has always selected a decentralised banking system with thousands of small local banks). In my opinion we need to protect what little we have left instead of just yielding to the central planners at the Fed, the ECB etc.

This is an obvious trojan horse for totalitarian central planning. Easier to enact negative interest rate policy when everyone is holding an account at the Fed and no one can take out their money since cash is either banned or made severely inaccessible (like in some EU countries).

In my opinion private banks are perfectly fine, the problem isn't the idea of independent banks, the problem is government and central banks subsidising losers by bail-outs and the "lender of last resort" mandate while also enacting enormous regulatory barriers that make it impossible for new banks/financial institutions to compete with incumbents.

You can't really say this without the followers of the Church of Musk attacking you for going against the saviour of the human race, but this is why I think there is something very fishy going on with Tesla and Elon Musk who also has a tendency to blame short-traders for any negative press (of which there is a lot, some of it extremely unsettling).

Wait until you hear about how we Swedes feel when we hit the 50%-55% income tax bracket (not counting payroll tax of 30%!).

FOMC minutes are published, but not other meetings which are arguably more important, including the meetings of the Board.

https://www.federalreserve.gov/aboutthefed/boardmeetings/mee...

"Effective March 15, 2020, the meeting was closed to public observation by Order of the Board of Governors1 because the matters fall under exemption(s) 9(A)(i) of the Government in the Sunshine Act (5 U.S.C. Section 552b(c)), and it was determined that the public interest did not require opening the meeting."

This seems to be the case for almost all of their meetings.

>Please, this isn’t Soviet Russia, economists disagree about practically everything, so the whole argument that the profession has a serious groupthink problem is unconvincing to me.

They disagree on a lot of things, that is true, but the one thing they all seem to agree upon (except for Austrian economists) is that the economy can be effectively modelled and that effective policy prescriptions can be derived from said statistical models. It is a supremely complex system and it is the pretence of knowledge (in the words of Hayek) to believe that you can use monetary policy to command it, much less policies based upon empirical models which are as you say constantly bickered and debated about.

Furthermore, the Fed is not exceedingly transparent - audits of its operations and its meeting minutes are classified and are not open to public review, as is the case with most central banks in the world. I know because I've tried to ask for copies of open market operation details from my central bank (the Swedish Riksbank) but was denied as they are classified by law (which is incredibly unusual for a society where other government agencies publish everything, including income tax returns).

"Well, unquestionably, housing prices are up quite a bit; I think it's important to note that fundamentals are also very strong. We've got a growing economy, jobs, incomes. We've got very low mortgage rates. We've got demographics supporting housing growth. We've got restricted supply in some places. So it's certainly understandable that prices would go up some. I don't know whether prices are exactly where they should be, but I think it's fair to say that much of what's happened is supported by the strength of the economy." - Ben Bernanke, Chairman of the Fed, in 2005.

https://mises.org/library/ben-bernanke-was-incredibly-uncann...

What I don't understand is how people find it very difficult to admit that economists can be wrong sometimes and that their word is not gospel.

>Sorry, but it's at this point in the thread that I realize that talking to tech bros on hacker news about monetary policy is actually the seventh circle of hell. Glhf.

Appealing to the authority of mainstream economists in a perpetual state of groupthink is not an argument. It is this kind of hostile and borderline elitist attitude that scares away people from discussing monetary policy and makes it seem more complex than what it really is, and I don't think that is productive at all. Ironically it is the same kind of elitism that caused the collapse of the planned economies of the 20th century (which grade-school students learn about today), despite being comprised of supposed "experts" in economic affairs who should never be questioned.

The fact that it has been going on for decades doesn't make the point less valid. This kind of monetary intervention is compounding in nature, and it can be clearly seen as how each financial crash over the past 2-3 decades has been worse than the one before.

The harsh modern monetary reality where most Americans live paycheck-to-paycheck and have zero job security or savings is enslavement in all but linguistic accuracy.

This has been going on since started inflating our money supply (since when we went off the gold standard in 1971 at least), and the economic degeneration won't stop unless we stop the inflation of our money supply too.

>When the Fed expands their balance sheet, what they're doing is replacing private-sector assets with liquid cash. Given that the stimulus is appropriate for the economy, this is all fine. It's not anything that future generations have to "pay back." And it's not going to cause a collapse of the dollar.

This is simply not true. The Fed is buying assets at a premium (otherwise counterparties wouldn't sell the assets to the Fed) and is effectively injecting money into the economy. This is a bailout as the Fed is making a liquid market (that otherwise would not exist) for assets, saving the balance sheets of firms. Future generations pay this back not through taxes but through inflation.

Whether or not the U.S. dollar will collapse or not is another topic, but what can be said is that it is not sustainable to continue bailing out irresponsible businesses like banks and others when they do not exercise good business practices like prudence, not being overleveraged, or having a buffer in case of lost revenue. The only way this ends is either a depression the scales of which we've never seen in history before (which would liquidate and clear out bad businesses), or a hyperinflationary collapse of the U.S. dollar whereby more and more money is injected to prop everything up. I'm betting on the latter as the former is too politically inconvenient.

I've said it before, and I'll say it again. Central banking is the greatest scam in the history of mankind that cartelises the banking sector, gives them the privilege of access to the printing press, and is the root cause of the boom-and-bust cycle. It has managed to convince people (particularly mainstream economists) that its institution is necessary for "financial stability" but what it really does is absolves banks from any form of financial responsibility as they will always be able to receive a bailout if they act irresponsibly, allowing them to always make a profit regardless of risk. This is not free market capitalism but a system that enriches those closer to the central bank (and who get freshly-printed money first before inflation hits the rest of the economy) and punishes those who are relatively further away like manufacturing workers and salary earners. This is the reason why salaries at SV startups (bankrolled by VCs and soaring stock prices leading to valuable RSUs) are so high, and why wealth inequality has notably increased dramatically since we went off the gold standard in 1971[1].

I believe this topic is among the most important things we need to discuss and is arguably more important than climate change (what else is driving consumerism and throw-away-culture but inflation?), but economists have overcomplicated things and made it inaccessible to the average person when it really is so simple that a five-year old can understand it: printing money enriches the few who have access to the printing press at the expense of the many.

End central banking and the economy will be stronger, more resilient, fairer, and will reward those who create real value rather than the well-connected.

[1] http://wtfhappenedin1971.com

This may not be the most popular opinion, but Satoshi Nakamoto invented Bitcoin precisely because he wanted to separate money and state. The main purpose of crypto has always been to be hard money in the age of the internet and institutionalised money printing.

I doubt that the VC boom would have ever reached the heights it has without easy money policies and quantitative easing from global central banks. You would likely still have homeless people, but you would certainly have far less rich people.

>Bank regulation is open to be criticized. But it's far from "nil".

Bank regulation is political and is regularly criticised, I'll give you that. However, the Federal Reserve and central banking is borderline immune to any form of criticism from the electorate partly due to a lack of understanding but also due to the widespread perception that central banking is somehow a necessity in a well-functioning economy and that its operation and development should remain firmly in the domain of "experts" like economists and others. I blame out-of-control scientism in economics for this one.

>Money was originally printed by private parties, then by banks, and most-recently by central banks.

Apologies, I phrased my sentence badly. It was more of a figure of speech rather than a historical account.