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Comment by koyanisqatsi | Hacker News Reader

I would like to know how Powell is doing this. How exactly does the chair of the federal reserve "destroy" capitalism?

He kept the interest rate low for too long[1]. That left capitalists to their own devices, which has a tendency to cause problems. "Destroying capitalism" is a bit of a stretch even for that, though.

[1] But it's not that simple. Powell left rates low until there was evidence that rates should rise. But that always comes too late, after the correct time to raise rates. On the other hand, if you raise rates before the evidence that you need to, you can kill a recovery - a recovery from 2008 that we were waiting for over a decade for it to really catch fire.

Powell tried to raise rates a few years ago but the markets tanked and everyone criticized him, including the President. People didn’t want the market bubble to end.

TINA

https://www.investopedia.com/terms/t/tina-there-no-alternati...

> “Doing great with China and other Trade Deals. The only problem we have is Jay Powell and the Fed. He’s like a golfer who can’t putt, has no touch. Big U.S. growth if he does the right thing, BIG CUT - but don’t count on him!” Trump wrote on Twitter.

That would not really have been viable, considering the political climate. The previous administration was busy pumping steroids into the economy. Picture inflating a balloon. Rates were at 1.75 and pressure was to cut them to 1.5%. Different times…

[1]https://www.reuters.com/article/us-usa-fed-trump/trump-heaps...

[2] https://brrr.money/

It's utterly amazing how flagrantly these posh-dole recipients will shamelessly gaslight us. The sine qua non of capitalism is that it's distributed. What has destroyed and continues to destroy capitalism is the Fed keeping interest rates ridiculously low, going on (at least) three decades now. All of those artifically-cheap "loans" are newly created money being given to the financial industry and handwaved away as "value neutral", while it's anything but. The real estate bubble, the stock market bubble, the auto loan bubble, the college bubble. Everywhere individuals are priced out of transacting directly and banks have stepped in to financialize our lives - it's all been fostered by these central-planning puppet masters, giving us a Potemkin village of "growth" while the real distributed economy gets more hollowed out as its wealth is sucked into the cancerous financial industry with much ultimately wasted on make-work jobs.

And then to have the gall to say that rates going up ever so slightly is "destroying capitalism" ? If you want to know where the blind populist rage driving support for burn it all down candidates comes from, it's right here. If you want to know why "young people" are rejecting "late stage capitalism", it's right here. Heads they win, tails you lose.

How is capitalism distributed if the federal government is the only entity with the authority to print money?

The same way capitalism can be considered distributed even though the government is the only entity with the authority to tax. The government could ramp tax rates up to 95% and then redistribute the proceeds as it sees fit. But to the extent it does not, then we get a more distributed outcome.

Specifically about the structure of capitalism, capital should remain distributed a certain amount, so that many different competing entities have the resources to enact their own decisions. The extreme end of capital being centralized would be called authoritarianism, with ultimate ownership of everything vesting in the state.

So then an even distribution of money is "distributed capitalism" by your definitions, correct?

Do you have a larger point, or are you just trying to play some game of Internet Gotcha?

It matters how the distribution was arrived at. If it happened as the result of decentralized market activity, say market optimization versus marginal utility, great. If it was gathered up by the government and then redistributed, that is obviously the result of centralization.

Just trying to figure out how exactly an even distribution of money is not distributed capitalism as you defined it. So sounds like if the market magically made everyone equally rich (or poor) you would consider that distributed capitalism but if it was done through taxation then you wouldn't. Did I get that right?

An even distribution of money (and I presume you mean assets, too) would imply a decentralization of purchasing power. But if it were arrived at through taxation and redistribution, then the overall economic power would still be centrally administered. Such a scheme would intrinsically require a bunch of laws to regulate what "even" means, who is in scope, what can be saved, incentivize performing transactions despite "evening out", etc. That's all centralized structure.

Conversely, if the financial industry had grown into the centralized behemoth it has become without trillions in government handouts, then it would make sense to say that decentralized capitalism only ever exists as temporary stage and is ultimately doomed as the big players collect all the chips. This is the conclusion a lot of people have come to about "late stage capitalism", but I'd say they're ignoring the trillions in government subsidies that feed the centralized structure.

FWIW in the context of your profile, I think slowing financial industry subsidies (first step, raising interest rates) would go a long way towards reducing natural resource usage. Monetary policy certainly isn't going to stop anyone from dumping plastic into the ocean, but it would cause less throwaway plastic crap to be produced in the first place.

I'm agnostic to how exactly the biosphere is restored but I'm certain that it can not be done through market and capital dynamics no matter how clever or distributed the scheme. Money tends to cause ideological brain damage and those past a certain age with such damage are unable to imagine any kind of future without it.

I agree with your second sentence wholeheartedly [0]. Running with that, wouldn't it be better to be less forced into market dynamics? Or at least less oppressive ones? To me, that is what capital being distributed means. Say you own your own home outright, rather than renting it from a bank. That gives you a certain kind of freedom where you're not trying to make a huge mortgage every month (or at least not nearly as much, you're still paying the town rent every quarter), so you can spend less time earning wages from the financial system, and direct your efforts to non-system-legible endeavors - for example your restoring the biosphere outside of profit motives. It's the financialization of everything that drives the lifestyle inflation ratchet - since most of one's income is mandatory to service debt, one might as well have nicer things, right? Whereas without that stress, the incentive to keep earning more at the expense of accomplishing meaningful things just isn't there.

[0] With the caveat that I also see the opposite side of the coin about the utility of market signals. Both critiques are valid.

“destroying faith in capitalism ”

I’d say that’s quite a bit different than “destroying capitalism “

I also want to know how he's doing that as well. I'd like to know how anyone can destroy faith in an ideology like capitalism.

By undermining the value of unit of account for capital via inflation, so that capital may no longer be kept or lent or borrowed, and barter and force of arms replace money as means of exchange.

How exactly is it being undermined if it's still being used as the main unit of accounting? Is there some new political movement I'm not aware of that is trying to replace the US dollar with something else or is inflation of the US dollar sufficient to destroy people's faith in capitalism?

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