Comment by EGreg | Hacker News Reader

Comment by EGreg | Hacker News Reader

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They always attack Chinese "ghost cities" and Chinese "real estate bubble / Evergrand" and Chinese "central planning" ...

But in fact, USDT and Binance are kicking while USDC and US Banks are starting to wobble. And it has to do with the irresponsibility of the central planners HERE in the USA (the Fed raising interest rates from 0.38% to 5% in a year!)

https://www.investing.com/news/cryptocurrency-news/binance-c...

Seriously, my theory is (different from the Austrians) that the Fed creates the problems and depressions mostly by raising interest rates. Instead, keep them at zero and let the market figure things out. I am fine with printing money as long as you raise taxes to remove it from the system. Raising interest rates is far worse and a depression is far worse than any inflation.

https://www.bostonglobe.com/2022/09/21/opinion/fed-wants-you...

Well, I guess somehow the reputation of USA of being an "economically free" country versus China lets them get away with central planning and soon the CBDCs and the national IDs for everyone. Not that I like that in China either!

If you raise taxes enough, you can actually reduce inflation and solve the problem. But which country has the legal structure in place to raise taxes essentially every few months, on demand? Even if they did, almost no companies are ready to handle tax rates that change by the month.

When there's no meaningful limit on government spending inflation is a tax.

>"far worse than any inflation."

In 1923 the exchange rate has reached 1 trillion DM for 1USD. We all know how it had ended.

Nearly every hyperinflation example (there are very few, in fact) has something additional to that stuff.

In the case of Weimar Germany, there was the little matter of THE VERSAILLES TREATY that required them to endlessly pay war reparations and punitive payments in gold. Britain told France to cut it out, but France was mad enough at the Germans that they continued. This led to the rise of the Nazis and WW2.

https://www.history.com/news/treaty-of-versailles-world-war-...

You should read more economic viewpoints, such as Walter Mosler on hyperinflations:

https://moslereconomics.com/wp-content/uploads/2020/11/Weima...

Oh, and meanwhile there was a "free money miracle" going on in nearby Austria, and clearly did not lead to hyperinflation, quite the opposite: everyone paid off their taxes due to the demurrage of the free money... keep in mind this was while all around them there was a growing depression... even Mises institute grudgingly agrees!

https://mises.org/library/free-money-miracle

>"but France was mad enough at the Germans that they continued. This led to the rise of the Nazis and WW2."

Oh I know that. My argument was rather pedantic.

Now since you've mentioned it I wonder if the situation with Russia might to the same outcome eventually.

Warren* Mosler, one of yhe founders of Modern Monetary Theory. Lead author was Phil Armstrong, and he did a great discussiom of the paper on the MMT podcast.

Rather, he is Modern Monetary Theory. MMT doesn't have an actual theory of the economy; it uses the standard model and just has a different vibe. So it's just whatever he and Stephanie Kelton feel like saying at the time.

The most notable different policy prescription (job guarantee) is odd because it's originally a right-wing program they just decided is left-wing.

Just because they don't completely redefine economic models from the start doesn't mean MMT isn't a theory. They clearly have different ideas about how policy should be implemented and what will happen.

Their description of how government issued currency, coercion, and tax act as a tool to capture services from the economy (as opposed to filling up a treasury for the government to spend) is extremely underrated in mainstream economics.

> right-wing program they just decided is left-wing.

Why would MMT be limited to traditionally left/right boundaries?

> Just because they don't completely redefine economic models from the start doesn't mean MMT isn't a theory.

Yes it does, it makes it not an economic theory but a political one.

> Their description of how government issued currency, coercion, and tax act as a tool to capture services from the economy (as opposed to filling up a treasury for the government to spend) is extremely underrated in mainstream economics.

It is Abba Lerner's functional finance and it essentially only applies to the US federal government, as noone else is big enough. But they also like to extend it to "banks don't lend out deposits", which isn't true. And the idea that you can raise taxes to control inflation doesn't appear to be true either.

> Why would MMT be limited to traditionally left/right boundaries?

Cuz they're only trying to sell it to left-wing politicians.

There are many more economists building on MMT than just them, at many institutions globally.

Describing the job guarantee/transition job as equivalent to "workfare" reveals a fundamental misunderstanding of the JG. Two ways in which it differs significantly (but not the only ways):

1/ it pays a living wage / socially inclusive wage, unlike most current (un)employment insurance programs

2/ it is non-coercive. You have the promise of that job, not a mandate to perform it. Other social programs remain available for those unable for for a variety of reasons.

> 1/ it pays a living wage / socially inclusive wage, unlike most current (un)employment insurance programs

No, it pays minimum wage. (Mosler calls it "non-disruptive wage" because it's not enough to compete with other jobs.) The trick is the marketing just assumes minimum wage will be raised, so they quote that number instead. And of course it never gets raised and you can never be promoted.

> 2/ it is non-coercive. You have the promise of that job, not a mandate to perform it. Other social programs remain available for those unable for for a variety of reasons.

It's coercive to regular workers because their boss can fire them at any point, safe in the knowledge they'll get a minimum wage job the next day.

Note that professional historians are not united on the Treaty of Versailles being too onerous and a cause of Ww2, though that's certainly the conventional vaguely-heard-about-it impression.

https://en.wikipedia.org/wiki/Treaty_of_Versailles#Historica...

Okay? It was definitely the leading cause regardless of what some modern day historian is trying to convince us of.

For a more Austrian viewpoint that is very well sourced and quite compelling imo I'd recommend this series of videos:

https://www.youtube.com/watch?v=YygQ0Wq0wDA

It argues quite convincingly that war reparations had almost nothing to do with the hyperinflation and that the seeds were sown way before ww1 and then watered during WW1 when germany essentially became a command economy and finally harvested by the first Weimar government's managment.

Gresham's law: "Bad money drives out good [money]"

https://en.wikipedia.org/wiki/Gresham%27s_law

all countries have their flaws. Evergrand basically defaulted on their loans and was the equivalent of SVB for real-estate in china even the AUM were similar. The real-estate market is probably the most important market in china especially for the wealthy.also the market should be able to adjust to any rate not only 0 if it’s truly free.

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