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Comment by lordnacho | Hacker News Reader

Whether or not this is the start is not so important, but remember it's been a while since the last one, and it's a common thing to occur in the economy, or any other ecological system.

It's also something that has an important role. Investors at some point need to decide which businesses are viable, which are not. Workers need to consider career changes. Corporate entities need to consider which projects are worthwhile. All those kinds of decisions are put to the test when not everything can be given a long horizon.

Finally, there is a twist this time. We've been running a financial experiment with few parallels over the last decade or so.

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"but remember it's been a while since the last one, and it's a common thing to occur in the economy, or any other ecological system"

The general term for this is 'business cycle' [1]

[1] https://www.investopedia.com/terms/b/businesscycle.asp

These considerations are requisite only in a capitalist system. In other economic models it is not a given that ”[i]nvestors...need to decide which businesses are viable... Workers need to consider career changes." In fact, the division between investors on the one hand and workers in the other is a large part of this problem. If we socialized gains and privatized losses (in the sense of never bailing out those agents that got themselves into bad situations), these cycles would at worst be much less severe and frequent.

>If we socialized gains and privatized losses (in the sense of never bailing out those agents that got themselves into bad situations), these cycles would at worst be much less severe and frequent.

You should look at the severity and frequency of economic cycles around the world throughout history and I bet you'd reconsider this position. Often times they lead to the collapse of entire nations or worse, war.

Is that worth it to teach an overleveraged business a lesson? Remember, "businesses" don't make these decisions in a vacuum; they are run by and consist of people. People win and people lose in every cycle (just not always the same or most deserving groups).

If we socialized gains and privatized losses, there'd be less severe cycles because there'd be less economy to have cycles on.

Banks tend to have savings from everybody. If they're dumb and they lose that money, a lot of people will lose their lives' savings.

There needs to be more and better control to avoid the "dumb banks" issue, but this problem seems to be a hard one. As in: we don't even have the basic science to solve this problem.

The problem is private banks, state run banks can pull all sorts of crazy tricks. Look up how the Bank of France lends the country of France money, which makes them much more self sufficient than the US and its sale of bonds instead. No matter what anyone tells you, the fed is not a central bank. It is much less powerful and cannot protect the economy as well as a true one.

This is the exact opposite of how things are. Due to the constraints of the monetary union, the Bank of France is not a true central bank (the ECB is) and does not have the ability to print money or otherwise set monetary policy. It absolutely cannot indefinitely finance the deficit spending.

The Fed, on the other hand, is a classic central bank and it can print money to finance the federal deficit. I think you're misinterpreting the supposed "independence" of the fed - it remains a government institution that is largely independent operationally (https://en.wikipedia.org/wiki/Independent_agencies_of_the_Un...), but it's not a private institution. In other words, it's not independent the way a private bank is; it's independent the way FTC is.

>In other economic models it is not a given

Yes, because they tend to go straight down the tube because when you socialize gains and privatize losses people don't do more than the minimum they can get away with.

Imagine if you distributed gains according to contribution. In our system capital is disproportionately rewarded.

IMO, carried interest should be rewarded less than labor.

I mean really, if you're just sitting there drawing interest on great grandpa's labor's capital, why is that better than getting up and going to work everyday?

Flipping the argument around: if the labour capital you earn today will be worth just as much as if you earn it tomorrow, why go the extra mile now, when you may just as well postpone it?

That's not a valid flip, because: inflation.

You are aware that just makes my point even stronger, right? Thanks to inflation, the labour capital I earn today is worth even less than the same capital earned tomorrow.

Inflation is by design. Currency derives from current, meaning: to flow. Currency is not meant to be a store of value. We don't want people to horde currency.

Bitcoin just misses the point of being a currency all together.

> Imagine if you distributed gains according to contribution.

Dividing that cake is harder than you think. The whole point of working together is to get more than people can get individually, so how do you come up with a formula?

Just want to take a moment to go give a tip of the hat to all down voters and those assuming I haven't spent any time researching/thinking about/discussing this topic. Alternatively, thanks for letting me know how I'd probably have a different opinion if I only read xyz...

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