Alternatively one might argue that what is happening is a kind of bifurcation. The wealthy and well measured get an ongoing expansion while the poor, shiftless, and unrecorded fall through the cracks at alarming rates. We didn't have homeless families in significant numbers when I grew up and now they are pervasive. That is pretty poor real performance for a best ever economy.
All of that distorts the market and makes everyone spend money they don't actually have. Eventually all of this catches up with everyone, on a country-wide scale.
So much for all that personal responsibility we used to hear so much about. Far easier to blame the government for everything.
Companies use credit to buy back stock because we deregulated that activity. It used to be that the government didn’t allow it. This point is actually a counter-point to your theory.
/s
For example, let's cherry-pick the Clean Air Act and its effects: "In addition, because air quality across the United States improved; it is estimated 205,000 premature deaths and millions of other respiratory complications were prevented which resulted in an economic savings of $50 trillion versus the $523 billion invested to meet the Clean Air Act standard."
https://en.wikipedia.org/wiki/Clean_Air_Act_(United_States)#...
Few would doubt the rise of the "working homeless" across the western world. The concept of someone having a fulltime job and still not able to afford rent is new. It is today's sharecropping imho.
And then there is the other modern phenomena: the legally mandated homeless. Every large city in the US now seems to have a bridge or overpass filled with people who are not legally allowed to live anywhere else. Stringent limitations on where certain convicts may live is also new.
Does that happen anywhere outside of San Francisco?
From the article: “Recessions are a healthy, necessary part of the economic cycle. They keep investors, businesses, and households disciplined. They remove overcapacity and make room for innovation and evolution. The US has endured 42 recessions and five depressions since the 1780s. The US economy recovered from every single one, returning to growth within an average of roughly one and a half years. That includes the 39 recessions and depressions that proceeded the establishment of the Federal Reserve in 1913, and the 20 that occurred when the US had no central bank at all. The eras of the most robust growth in American history have been punctuated by frequent recessions, not long stretches without them.”
I like the analogy of getting ansgty all at once and seeing the therapist. I probably wouldn’t characterize down-turns as money running out, though. This might be what you meant, but the money doesn’t run out per se, recessions are more like angst leading to shyness, it’s less activity rather than less money. If the money actually ran out, I imagine the chaos might be a lot bigger than we’ve ever seen.
https://asia.nikkei.com/Economy/Loose-lending-keeps-Japan-s-...
I'd agree that recessions aren't necessary in theory, under assumptions that everyone can act perfectly, but that's pretty academic.
It’s been a while since I read up on the topic, but the origins of fractional-reserve banking sound a lot like fraud that got blamed on the hard money that exposed it. (https://www.amazon.com/dp/1933550287)
At the moment the promises are high. We will see whether they can be fulfilled.
Yes. Money comes into existence ex nihilo. There are trillions of USD in existence today, but the dollar has only existed since 1792. They came into existence by the power of the government printing press. We can "run out" in the sense that we don't have sufficient dollars in circulation, which is a very severe problem, but the solution can be summarized in a simple way: have the government create more money.
And how does the government create more money? By spending it into existence.
https://www.vox.com/future-perfect/2019/4/16/18251646/modern...
The idea isn't to disable them but make them less drastic. There will always be misallocations of resources that need to be corrected.
I was looking at some other HN thread a while back and there was someone talking about how a subscription model works much better for investors because the regularity of returns worked best with expectations from the investors. And it occurred to me at that time that this electric analogy might extend to impedance matching between investor and investee...with the best matched networks operating the most efficiently. (And of course, if you can develop an investment model that matches underserved opportunities you might find a way to make some money.)
There is a social/historical commentary and a philosophical/political science discussion to be had here, but unfortunately I don't have the time right now...
It goes from "effort to haul X ammount of water Y distance by N people" to "and it just flows after this constant work".
But it's not though is it? When money itself can do the work (investing) then this whole thing sort of falls apart. A battery can't create a larger battery by itself. Also plenty of people inherit their "batteries" or find them through random chance (lotteries, sweepstakes, etc.)
This all sounds good in theory but I don't think it really holds up when examined closely.
It is the "pay it forward" method of splitting full barter trades into two time-separated half-trades. Instead of giving you a chicken for a bag of milled chicken feed, I can buy the feed for money now, and you can spend that money on a chicken later. Or on something else. It presumes that there will be a chicken to buy later, and that other people won't end up wanting the chicken more than you.
In order to accumulate value from individual work, that value has to be rolled into something durable, or it decays and is lost.
When labor produces a consumable good or service, the value exists only until the good or service is consumed. Why would anyone work on consumables? Because we live on consumables. We eat; we drink; we drive; we set thermostats; we end-user-license IP.
When labor produces a capital improvement, future labor output is multiplied. That's a permanent increase in value, provided that there is some useful purpose for that multiplied labor to work toward. The fisherman can trade fish for a net, or trolling motor, or ice-chest, and thus have more future fish to trade per unit of labor.
The stream of consumables is created by labor, multiplied by capital, and then annihilated by consumption shortly thereafter. That value can be stored for some amount of time in stockpiles and warehouses, but then entropy eats some of it, rather than making it to the consumers.
Money allows the holder to bid for some fraction of the stream of consumables. Divert a tiny stream toward your personal cup for a fraction of a second, and then drink it.
When you hold money, its value is the flow rate of the consumption stream, divided across the quantity of all money.
It's not a battery. It's a voucher for a quantity of grid power. As long as the grid operates reliably, it works the same in practice. But if you really want to store the value of your work, you need to buy goods that multiply the consumable output of your work, or stockpile consumables whose values decay more slowly over time than most.
So it's not quite that simple, especially when some people start issuing themselves claims on future production when they are not actually producing anything now, or planning on producing anything in the future.
Money behaves more like entropy.