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Comment by bryanlarsen | Hacker News Reader

A stopped clock is right twice a day. People have been screaming about QE for 15 years and about government deficits for the last 50. So it seems fairly bloody obvious that the unique things about today's economy are caused by the blindingly obvious unique issues in today's economy like supply shocks rather than the things that are the same as they are when we didn't have problems.

The only things that have a strong correlation with recessions are rising interest rates and balanced budgets. So maybe we should stop doing the things that are known to cause recession?

Debt is money and that an economy needs money to function. And if an economy is growing, it needs more money, which means either more personal or more corporate or more government borrowing.

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Given a choice between a recession and runaway inflation, a competent central banker will choose recession any day of the week. Recession makes people’s lives miserable, but inflation blows up societies.

Can you encourage price stability without a recession? Could the central bank create a recession that made peoples’ lives less miserable if they could target their economic activity destruction instead of the benchmark rate blunt hammer?

Perhaps the problem is a steady state versus growth model economic configuration, and we also need finer grained control over stimulating or discouraging very specific economic activities.

It’s hard to imagine a more targeted control than the benchmark rate, which has a direct impact only on people who manage money for a living and people who hold adjustable rate mortgages. It just manifests as a blunt hammer because the economy is interrelated, and I’d argue that any control big enough to make a difference will encounter this.

> people who hold adjustable rate mortgages

This is the vast majority of homeowners in most countries.

Which also spills into rent costs, of course.

We need negative interest rates instead of the quantitative easing nonsense.

I don't have a problem with debt if it's spent on R&D. But we pay one person to dig ditches and another to fill them, and say "see we created two jobs!" and both guys vote for that politician.

We don’t really pay one person to dig ditches and another to fill them. Is there something more concrete and real that you’re concerned about?

We pay a food company to feed a person calories they don't need so they develop diabetes etc which we pay doctor to cure, insurance company to adjudicate and drug company to medicate. We build roads and buildings and cars designed to require excessive maintenance and then wear out early, e.g. cheap uncoated metals. We develop JavaScript frameworks, rando databases, hipster languages etc and educate/certify people in them, write millions of LOC then replace them a few years later. This is shallow innovation and it's a crazy amount of make-work.

There's an alternative, which is to ask whether something EVEN HAS A CHANCE of being relevant in 10 years. Experimentation and risk-taking is fine, hamster-wheeling and "bullshit jobs" are a waste of life and destroy the earth, for little benefit.

More absurdity:

Slap on sunscreen, then use statins to counter the high blood pressure (rather than get free exposure to the sunlight we all evolved to live under).

Have both parents in full-time employment, while kids get warehoused in daycare.

Overwork people to the point they have neither time nor inclination to cook for themselves from scratch, instead using meal kits, ready meals, takeout, restaurants.

Alienate people from their own bodies with manipulative marketing that weaponizes their insecurities against them, then patch up the self-esteem with totally unnecessary cosmetics, gyms, fashion, surgeries, etc.

All these activities fatten GDP, but which of them really represent human flourishing?

We measure the wrong things, at least in part because the right things so often cannot be measured. We need to trust in the unmeasurable, but that is antithetical to the technocrat.

> slap on sunscreen, then use statins to counter blood pressure.

I have always thought most of the sunscreen products we have today have shady ingredients by just looking at the list of endless number of chemicals. I mean why do we need 50+ chemicals in a product when just zinc oxide can do. This was confirmed when Neutrogena last year had to tee all some of their sunscreen products last year. Increasing blood pressure is a new one I haven’t heard of before.

I elided a whole lot of detail, but the claim is that exposure to sunlight is implicated not just in vitamin D production, but also in a whole raft of beneficial biochemical processes, including nitric oxide release from stores in the skin [1]. This promotes vasodilation, thereby lowering blood pressure (and indeed, all-cause mortality [2]).

The interventionist’s prescription, though, is to always wear sunscreen, to take vitamin D supplements, and to take statins to control blood pressure.

I suppose my original point was that this represents a perverse exercise in ditch digging and filling. Using one expensive product to block the sunlight we evolved under, then using yet more products to compensate for the disrupted natural functioning of our skin (which we likely don’t fully understand anyway, so the counter-interventions are a partial remedy at best).

[1]: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6830553/ [2]: https://pubmed.ncbi.nlm.nih.gov/26992108/

> There's an alternative, which is to ask whether something EVEN HAS A CHANCE of being relevant in 10 years. Experimentation and risk-taking is fine, hamster-wheeling and "bullshit jobs" are a waste of life and destroy the earth, for little benefit.

I sympathize with this sentiment, but it's impossible in practice to reliably predict what will be relevant in 10 years.

Also, I don't believe it's possible to get the signal without the noise. I've even come to believe the noise may be the generator of signal. We live in a probabilistic universe, not a deterministic one.

An architect designs a house fragile to earthquakes. Surprise! An earthquake happens, the house collapses, many deaths! Who is responsible, the earthquake or the architect?

An earthquake happens annually for decades and the house is fine. One year an earthquake and a hurricane happens and the house falls down. Do you blame the earthquake or the hurricane?

It is more like you have the option of bribing the earth quake to happen later with the same intensity, any sane person would bribe the earth quake to happen as late as possible.

Maybe too much of our money supply is derived from debt? If the economy needs fresh money printed, it may need to be delivered via actual printing and distribution.

Pre fiat, economies did have continuous injections of gold and silver mining to provide debt free money supply. Would it be wrong to QE via direct printing and government spending? At least then we may get roads, bridges, and other societal assets out of QE vs record prices for picasso’s.

Come on just introduce negative interest rates on cash. We can reduce the money supply and people can reduce their work weeks instead of accumulating savings that get eroded by inflation.

Negative interest rates would be both an inflation incentive and an direct money transfer to banks?

> Debt is money

Please excuse my economic ignorance.

In the absence of money (or debt), we are reduced to barter. I give you a donkey, you provide me with grain for a month.

But suppose you don't need a donkey? Well, you can trade it for something you do want; so the donkey is now a medium of exchange, i.e. money. Instead of carrying donkeys around, you can instead carry some token, with the legend "I promise to pay the bearer on demand one donkey". You could even stamp a donkey's head on the token.

> if an economy is growing, it needs more money

I get that. But why does that mean the government has to print money (or buy back government bonds, or whatever)? Why does the market not automatically synthesise the means of exchange that lubricate the matching of supply and demand? Is it simply because a barter economy is inefficient? But then why doesn't a barter economy automatically produce means of exchange that are efficient?

Again, I apologise for my manifest ignorance.

The notion of money is very complex and there are multiple schools of thought but here's one way to look at it:

Say you give me a donkey and I give you an "IOU - one donkey or equivalent". That IOU represents my debt to you. If my reputation is good, you could trade that IOU to someone else for say, 10 chickens, you pass my debt to them. If my reputation is really good, your town could pass my IOU around for different goods and then my IOU acts just like money.

Cash (and money) works the same way as an IOU. It's just that the owner of the debt is abstract and far removed from the holder of the cash.

I get that cash is basically an IOU. I also get that an IOU doesn't really require any token; a shake of hands is enough to establish a debt, which is the same as money.

So it seems that in an economy without money, money will arise automatically, in the form of debts that are to a greater or lesser extent formalised. So why do economies need central banks? What's wrong with that kind of "informal money"?

I have a strong suspicion that we don't; that it's governments that need central banks.

We created central banks after the organically grown system crashed spectacularly a couple of times.

This is generally the way we react to that sort of things. And even if things still sometimes break (in slightly different ways than before) these systems have allowed us enormous amounts of economic growth.

We don't need central banks as they are today. We need something like a demurrage currency, once you have that you can control the velocity of money, once the velocity of money is known, you can do price level targeting via monetarism aka no inflation or deflation.

The central bank won't have to set the interest rates anymore if the reserve requirement is something sane like 20% or 30% as banks are limited in their bank reserves and thus incentivized to choose the right interest rate for themselves. This also eliminates the need for QE.

You still need the central bank as an inter banking network by the way.

Screaming for 15-50 years.... and almost instantly all the fears come true. Citing the blink of an eye that is half a century as if it is long term proof of anything is the exact breed of short sighted egotism than got us here.

No that is just a feature of permanent money, it collapses in the end because the whole idea is insane to start with. 3% interest for two thousand years is galaxies worth of colonized planets.

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