## The Shuffle

For discussions of culture, politics, economics, sociology, law, business and any other topic that falls under the social science remit.

Moderator: Uccisore

### Re: The Shuffle

Looking more into it, it turns out that real interest rates are negative, i.e. we save money by taking on debt. Interest rates are so low that cash loses value due to inflation faster than we accumulate interest. That won't always be the case, of course, but it is also significant.

Otto_West wrote:QE was successful? Well, depends on who you ask. If you're a bank or large corporation that enriched themselves through the program, yes it was very quite successful. For the rest of the impoverished main street working classes or people not so much.

What are you comparing against? If QE pulled us out of the recession, it was absolutely successful. If it stabilized housing prices, increased employment, secured pensions, it was good for "main street".

When you say it wasn't successful, do you mean we'd be better off without it? Do you agree that the economy has recovered from the worst part of the recession? Do you think it would have recovered more without QE? Would the economy be stronger if the government had let a dozen of the largest companies in the US just go belly up. and let even more homes go underwater?

Otto_West wrote:Basically the debt owed now there is no way to pay back or off in the next three hundred years into the future.

Source? What numbers are you using for this? Are you assuming a constant rate of growth in government spending? Borrowing? Inflation? Payoff? Show your work.

Arminius wrote:Nothing can be found there about positive or negative aspects of the gold standard. I did not say anything about it.

Arminius wrote:Then many errors occurred, for example: [...] the reversing the gold backing of the US Dollar by Richard Nixon in 1971[...]

Forgive me if I overestimated the significance of supporting the gold standard to your position, but I read this claim to be that it was wrong to get rid of the gold standard, which implies that you believe it would be better to still have a gold standard. I picked on that because it's pretty easy to show the flaws in the gold standard, so if your position also requires (either as a premise or as a consequence) the gold standard, rejecting the gold standard would be the easiest way to address it.
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Carleas
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### Re: The Shuffle

Carleas wrote:I object to the use of the word "actually" here. A house is "actually" worth whatever someone will pay for it (assuming they are reasonably well informed and rational and etc. etc. -- suffice it to say that "willing to pay" is a bit loaded). You make a similar point when you say that "value is a function of utility": value is what something is worth to someone, so the real price is what someone's willing to pay.

"Actually" means "fair" market value, what most people would pay for the house, realistically. Do you remember the 2008 housing market crash?

The prices of houses, $600,000 were shit. During the last 30 years, contractors around the country were building "McMansions" with huge square footage, in places, towns, and areas that could not afford them. The mortgages made for these houses were never intended to be paid off, because the banking system was being rewarded and paid with fees for setting it all up. That$600,000 house was worth half its value, $300,000, or less. In many cases the houses are worth nothing at all. Because nobody can afford them. Because nobody can afford them. And why can't anybody afford them, whether they are$600,000 or $300,000 ? Because the u.s. middle class disappeared, and is currently being replaced still, with minimum wage, part-time jobs, with no raises, no benefits, and no health insurance. I've been reading articles this last year about the job market. Some articles say "there's too many jobs and not enough workers". But then you look into the details. Employers have unrealistic standards, shit wages, and practically demand that average people revolve their entire lives around a shit job with shit wage. Of course people won't take the job, or, won't hold it for very long. Turn-over is a problem for both employers and employees. Most companies are stupid in this regard. And jobs in large cities are categorically different than jobs in small towns or out in the country. Therefore many of the sweeping generalizations do not apply, except a few. The rich have gotten wealthier, gutting the middle class, by digging into such markets as "the housing market" and its 2008 crash, or the tech market and "the tech bubble" in 2000. The only hope most Americans have, then, is hyper-inflation to reset all debts. And if that happened, massive system failures would occur, as again, the rich and top 1% would be the first ones to transfer all their wealth to a different currency than the u.s. dollar. And if the u.s. dollar collapsed, the country would be rolled back a century, all "progress" gone and evaporated over night. Fake wealth, propped up on the fake value of a dollar. Again, what is the real value? What if the real value of the u.s. dollar is 50% of what people trade it? What if nobody wants u.s. dollars? What if the u.s. dollar is not worth kindling your fire place? There are answers to these questions. Do foreign banks, countries, and people want u.s. dollars? With China, the answer is 'No'. China demands interest payments on their loans to the u.s. to be paid for with gold. Real currency, real value. Something more substantial. Chinese then gain double on their loan, by demanding representation of value. With gold, things are clearer. It becomes obvious who is inside and outside "the system", the markets, the governments, and the banks. Carleas wrote:So you have a couple that paid what they thought a house is worth, and no one agrees with them. They've invested their money poorly. What's the issue this scenario is meant to address? Most or all other problems in the u.s. including this "shuffling" of people migrating between u.s. states. When the economy down-turns, people quit moving and migrating. And they begin investing in their own families and kin. Because at least then, people know where their money and investments are going, rather into corporations, into banks, or into the government. Urwrongx1000 Thinker Posts: 711 Joined: Mon Jun 19, 2017 5:10 pm ### Re: The Shuffle Side-point: Facebook.com is not worth$1,000,000,000.00. It's worth 50% or less. Why? Because internet websites and such, anything dominated by marketing and advertisement, is false-value. A "commercial" is worthless. It isn't real. It isn't based on reality. These are images and propaganda, almost always, used to push people further into debt, by stimulating people to buy shit they don't need, and probably don't even want. Commercials have a net negative value in markets.

All marketing, commercial, and advertising, take that out of the market, and how much of America's "value" is lost? How much value is true versus how much is false? How much value is real versus unreal?

Are you going to take a $1,000,000.00 loan out to run a few commercials on television and the internet? To sell some shampoo, or to promote the 2017 Ford truck, which is also worth half its advertised value? Waste of money. Urwrongx1000 Thinker Posts: 711 Joined: Mon Jun 19, 2017 5:10 pm ### Re: The Shuffle Carleas wrote Would the economy be stronger if the government had let a dozen of the largest companies in the US just go belly up. and let even more homes go underwater? Yes. Corrupt companies who only care about their shareholders and upper management need to croak. I AM OFFICIALLY IN HELL! I live my philosophy, it's personal to me and people who engage where I live establish an unspoken dynamic, a relationship of sorts, with me and my philosophy. Cutting folks for sport is a reality for the poor in spirit. I myself only cut the poor in spirit on Tues., Thurs., and every other Sat. WendyDarling Heroine Posts: 6637 Joined: Sat Sep 11, 2010 8:52 am Location: Hades ### Re: The Shuffle Urwrongx1000 wrote:"Actually" means "fair" market value, what most people would pay for the house, realistically. I can accept this. What you describe afterward, though, is a case in which people bought houses at one price, and then something changed that affected the actual value of the house. A house might be worth$600k when credit is flowing, because that means more buyers who can borrow more money to buy a house. The same house is then actually worth less when the market changes, credit dries up, and fewer people are buying. What you described is an actual change in value caused by an exogenous change in the market context, which affects the liquidity of the house as an asset. The fair market value of the house changed.

Urwrongx1000 wrote:When the economy down-turns, people quit moving and migrating.

I don't think this is true. I'm under the impression that migration increased significantly during the Great Depression. Do you have a good source on this question?

WendyDarling wrote:Yes. Corrupt companies who only care about their shareholders and upper management need to croak.

That is not incompatible with the claim that a significant portion of the US economy is tied up in those companies, and that allowing them all to croak at once would also lead to the croaking of a significant portion of the US economy, which would have hurt everyone.

I basically think there's a middle ground here. I think it's possible to defend the bailouts and QE, and simultaneously think that we should have (and still should) break up any companies and industries that could put us in a position like that.
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Carleas
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### Re: The Shuffle

Carleas wrote:I don't think this is true. I'm under the impression that migration increased significantly during the Great Depression. Do you have a good source on this question?

A lot has changed since the Great Depression, obviously. Most property is bought and taken up in the u.s. now. Cheap land is rare and becoming rarer with each passing year. So the era is different and un-comparable. During the Great Depression, poor farmers were forced off their lands, and moved, because they had nothing to lose. Today's setting is completely different.

It's common sense. When people don't have much money, and limited options, they return home when desperate. The "boomerang kids" phenomenon of the Millennial generation returning to home after college with $30,000-$150,000 debts. They have nowhere to go. Now, today's current migrations maybe because of jobs. If a great job opens up across the country, then yes, that may merit a move. But that's rare, not common.

I remember during the 2010s hearing about individuals needing to commute 3 hours, one way, 3 hours back, to keep jobs. That's desperation and bad sign of times ahead.

A $100,000 salary job is becoming a gold mine, harder to find and more difficult to gain access to. The baby-boomers are hanging onto all the high salary positions, unwilling to give them up, and keep working into their 70s and 80s. The wealth is stagnating and not being passed around anymore, like all previous decades. Urwrongx1000 Thinker Posts: 711 Joined: Mon Jun 19, 2017 5:10 pm ### Re: The Shuffle That is not incompatible with the claim that a significant portion of the US economy is tied up in those companies, and that allowing them all to croak at once would also lead to the croaking of a significant portion of the US economy, which would have hurt everyone. Oh, you didn't pay$5 for a gallon of gas or pay 25% increases in all food costs due to shipping cost increases?
I AM OFFICIALLY IN HELL!

I live my philosophy, it's personal to me and people who engage where I live establish an unspoken dynamic, a relationship of sorts, with me and my philosophy.

Cutting folks for sport is a reality for the poor in spirit. I myself only cut the poor in spirit on Tues., Thurs., and every other Sat.

WendyDarling
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### Re: The Shuffle

Urwrong, I basically agree with what you said, but I also think it supports my point: a poor economy doesn't drive a lack of migration. I think the generational effects you point out are a large part of that, because in order for young adults to go back home, their parents have to well enough off that there's a home to go to.

But it's still the case that for most of these people, moving would improve their prospects of getting a job. Particularly if your local job economy sucks, it's very unlikely that you already live in the best local job market. There are certainly many places in the country where there plenty of jobs. But it's hard to move there when you don't know anything about the cities, don't have any connections to them, and have never really left home or spent much time with people from somewhere else.

WendyDarling wrote:Oh, you didn't pay $5 for a gallon of gas or pay 25% increases in all food costs due to shipping cost increases? I don't follow. Are you saying price increases are inconsistent with the claim that things would have been worse if every major bank had gone bankrupt within a year? I'm not saying there wasn't a recession, I'm saying that it was not as bad as it could have been. Do you disagree with that? User Control Panel > Board preference > Edit display options > Display signatures: No. Carleas Magister Ludi Posts: 5518 Joined: Wed Feb 02, 2005 8:10 pm Location: Washington DC, USA ### Re: The Shuffle "QE pulled us out of recession", wow. I mean really. Just wow. Value Ontologist and Nietzschean anti-leftist. “I guess you can’t cross the abyss by falling into it.” -Fixed Cross UrGod Philosopher Posts: 1790 Joined: Tue Nov 10, 2015 12:14 am Location: Void of One ### Re: The Shuffle 1) You're misquoting me (and not just because you dropped the word "the"). That was the first half of a conditional statement: "If QE pulled us out of the recession..." 2) I'm open to argument or evidence that QE wasn't an important and effective part of the response to the recession. "Just wow" is neither. User Control Panel > Board preference > Edit display options > Display signatures: No. Carleas Magister Ludi Posts: 5518 Joined: Wed Feb 02, 2005 8:10 pm Location: Washington DC, USA ### Re: The Shuffle The fact you framed it as a hypothetical doesn't change that it's the claim you're making. It just allows you to make the claim more subtly, so as to blunt the argumentative edge of the position contrary to your own. People fall for this tactic a lot, I've noticed. NPR is one of the masters of it. I notice you also did it during the discussion on Shakespeare in the Park, holding back from openly making the claim that is clearly the claim you are actually pushing. But with me, I will always go right to the actual point being made, sophistry aside. And to claim that QE 1-4 has been anything but an unmitigated disaster for the American people, but a huge win for banks and big government, is crazy. The game is rigged, and anyone who defends it either is protecting their own interest in it being rigged or is simply following the status quo narrative because that's easier than thinking against the grain. Value Ontologist and Nietzschean anti-leftist. “I guess you can’t cross the abyss by falling into it.” -Fixed Cross UrGod Philosopher Posts: 1790 Joined: Tue Nov 10, 2015 12:14 am Location: Void of One ### Re: The Shuffle I think framing a claim as a conditional is useful and valid. In this case, Otto scoffed at the idea that QE has been successful and was good for non-bankers. I asked him what he's comparing against, and then offered two conditional statements, to say, "if this is the context, then your implication that QE has been unsuccessful or bad for 'main-street' is wrong". In context, they aren't assertions, they are demonstrating that it matters what baseline we're using to evaluate a claim like "QE has not been successful". "Stabiliz[ing] housing prices" can still leave a lot of people in a shitty place, with houses worth much less than they paid for them, while still being a lot better for those people than some alternative. And it's a legitimate response to say, "I agree with the conditionals but I reject the antecedent", and it's useful because it moves the conversation to what the antecedent should be, e.g. without QE, X would be the case, and with QE, Y is the case, and therefore QE is unsuccessful. I read Otto to be saying more or less that QE didn't fix everything. I agree. I agree that the US economy isn't in an ideal state, there's a lot wrong with it, and the banking system is part of what's wrong with it, and I lean towards agreeing that QE exacerbated certain problems with the banking system (but I haven't looked into it and my belief is only weakly held). I don't see any of these claims as incompatible with the claim that QE was successful, because I understand the goal of QE to be to inject liquidity in the market in order to keep consumer interest rates low. It has done that, and even if the benefits have been unequally distributed, the result for the average American has been net positive. Can you provide evidence or argument beyond "just wow" to contradict any of that? User Control Panel > Board preference > Edit display options > Display signatures: No. Carleas Magister Ludi Posts: 5518 Joined: Wed Feb 02, 2005 8:10 pm Location: Washington DC, USA ### Re: The Shuffle Reminder: When people are suckered into a$600,000 mortgage on a $300,000 house, and after they spend 25 years paying it down by half, they still do not own the house. That's where America is at right now. The country doesn't even own its own assets. The banks do. How much actual wealth do Americans even own, as a percentage of the national debt and GDP??? What I mean, how many American assets are paid-off and not in debt? 25% maybe???????? I think I'm being generous in this estimation. Urwrongx1000 Thinker Posts: 711 Joined: Mon Jun 19, 2017 5:10 pm ### Re: The Shuffle Reminder: A college education is not an asset. It is not a real value. It is not materialized. It is not a thing. And in most cases, you cannot resell it. And why are we charging American youth to be educated in the first place? Isn't it an obligation of parents, of teachers, of professors, of society, to educate their youth for free? It's like a parent charging his or her biological child rent after 18 years, for being born. "I brought you into this world, but you owe me$500 rent per month, for 18 years."

Fucked. Up. You people are sick, and make me sick.
Urwrongx1000
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### Re: The Shuffle

You owe me $100,000 for being born. What kind of interest should we tack onto that? 25%? You owe me$125,000 for being born. Fuck you, pay me.

...doesn't sound like a "free society" to me? Just a society of fraud and selling each other out. A disloyal nation.
Urwrongx1000
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### Re: The Shuffle

Yeah Ur, it is very sickening. Leftist ideology has cancer-ravaged the morality of the west. We now use something as valuable and wonderous as education or owning your own home and land as an excuse to force permanent debt-slavery on each other. And most people don't even bat an eye, they don't even see the utter irrationality and immorality, the pure insanity, of it all. What the fuck has become of us.

Carleas, I want to have direct talks about the truths here. I don't want to merely form hypotheticals like this is an abstract academic jerk session, with no real consequences. If you believe QE is good, say so. If you believe QE is bad, say so. Then we can War the respective ideas and see which comes out on top.

And I missed if you responded to the article I posted about the Fed Reserve. We can't talk about the housing bubble or the economy or jobs and wages or even QE and debt without also taking seriously and deeply about the Fed Reserve-- what is it, how does it operate, who owns it, what are its effects.

Can you provide evidence or argument beyond "just wow" to contradict any of that?

I already did, I posted not only some of my thoughts but also an article on the Fed Reserve and QE. If you could kindly reply to the substance of that article, we might start to get somewhere.

Here it is, https://sandiegofreepress.org/2014/07/d ... int-money/
Value Ontologist and Nietzschean anti-leftist.

“I guess you can’t cross the abyss by falling into it.” -Fixed Cross

UrGod
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### Re: The Shuffle

If there is any kind of solution or hope, then I guess it is familiarity. People need to begin to bond and care about each other, at least, enough to educate and provide care for each other. If it is only a nation of back-stabbing and throwing each-other a bus, then it is not a society at all. That is anti-society, anti-social. Families are defined by their ability to both care for their own young, and educate, which is implied by "caring". It seems noxious and cancerous to me to demand debt from unborn nations, from future children.

However these are slave societies at the core. The goal is, specifically, to enslave the upcoming X amount of generations. The more generations ahead they can enslave, they will. This is not a "free" society.

Debt and freedom are antonyms.
Urwrongx1000
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Yes and that is another reason why generational debt is so dangerous. We all inherit a "debt" to the society and culture we are born into and that helps us grow up and educates us, but when that symbolic debt becomes literally $300,000 (your share of the national debt in the US, if you were born today) that is simply madness. Anyone who can't see how big government tyrannists want to enslave as many X future generations as possible, as you say, is simply not wanting to see the truth. I'm very tired of dealing with non-philosophers. People who do not want to think are the number one plague upon humanity. And then such people rise into positions of power, because power rather than truth is their god. Value Ontologist and Nietzschean anti-leftist. “I guess you can’t cross the abyss by falling into it.” -Fixed Cross UrGod Philosopher Posts: 1790 Joined: Tue Nov 10, 2015 12:14 am Location: Void of One ### Re: The Shuffle Void_X_Zero wrote:I want to have direct talks about the truths here. I don't want to merely form hypotheticals like this is an abstract academic jerk session, with no real consequences. Hypotheticals help get at which truths matter. For example, the truth of whether QE was good depends on the baseline; we have to explore the hypothetical world in which we didn't implement QE and think about how the world would have been different, in order to talk about the truth of what QE did. There's no getting around the hypotheticals. That's what I was doing when I used the hypothetical: asking Otto for what alternate reality he's comparing against when he says QE wasn't a success. If the recession is still ongoing in the alternate world, then QE was probably good, even if this world sucks. Void_X_Zero wrote:If you could kindly reply to the substance of that article, we might start to get somewhere. I will, but I have to say that I resent it a bit. I'm having a conversation with you, not the author of this article. If you understand what the article is saying, it would be better that you present the ideas yourself in a way that directly responds to what I've said so far. I think you would agree that it would not be a good faith reply for me to just send you an article that takes the opposing position. And it's not even as though this article is more authoritative than you could be: it's not a more trustworthy source than you are (if only because I've never heard of it), it's written by a non-expert like us, and, where it cites references, they are popular articles, blog posts, and shaky sources like the conspiracist "Center for Research on Globalization". That said, I'll take factual claims as hypothetical until better supported, and take the arguments as saying, "if these things are true, then we should conclude". Moving on: I agree with Lawrence's claim in paragraph 2 that the rationale for QE was to lower interest rates, and in paragraph 5 that low interest rates stimulate the economy by making it easier to buy a home or car. I disagree, however, that this is somehow harmful to consumers. Cheap credit is valuable to the borrower. When you buy a$300k dollar house, you get $300k of value from that house from day 1. If you lower the down-payment and the mortgage interest, you make it cheaper to get that value. That's a benefit to the person purchasing the home, even if they will owe money on it for the next 30 years. And that lower cost ripples through the economy. Lower interest rates on small business loans mean lower operating costs of running a small business, which means lower overhead and lower prices for consumers. If people can get a car easier, they can access a larger job market, they may spend less time commuting (depending on how they were getting around before). People who already own houses see their home value increase, meaning they can refinance at take advantage of lower rates as well. Home sales mean work for laborers. Etc. etc. Credit is valuable, so conceding that credit gets to consumers (as Lawrence does) is the same as acknowledging that QE is putting money in consumers' pockets (contrary to what Lawrence says in paragraph 4, and again in paragraph 13). Lawrence treats the financial as though it's part of a completely different economy, as opposed to a part of the same economy that the average consumer experiences and buys from and is employed by. And I'll agree that it isn't ideal, but that isn't the same as saying that it isn't effective. Lawrence concedes that it is buoying home prices. It's doing that by stabilizing the prices of mortgage backed securities, i.e. giving money to banks, but the effect is also to stabilize home prices and prevent more people from being underwater and foreclosing. Lawrence seems to acknowledge the vicious nature of the problem in paragraph 17, where he points out that decreasing consumption would be bad for everyone. If that's true, and QE is currently preventing that from happening, that seems like a concession that QE is better than the alternative for everyone, not just for bankers and the rich. It is not inconsistent to claim that this program benefits the wealthy, even that it benefits the wealthy more than it should, that in increases inequality, and yet that it is better than the alternative (because the alternative was really, really bad). Much of the article is apocalyptically speculative (e.g. paragraphs 21-26). The claim that the Fed will never remove debts from its balance sheet (paragraph 8) is unfounded, even assuming that his numbers are right. The program began as a response to a recession, it was targeted at stabilizing the market. It has been less than a decade since everything went to shit, and it's unreasonable to judge the long term future of a program based on what has been done during and immediately following a recession. An alternative prediction is that the program will continue until the economy is strong, and the Fed will continue to taper and slowly raise rates to prevent the economy from overheating, and do it gradually enough so that there is no major shock to the economy along the way. And the suggestion that a public bank, run by the people who currently run the federal government, would be better than an independent, apolitical Fed is at best uncertain. There are problems with the structure of the Fed, but so too are there problems in every branch of government, and making the central bank subject to the political whims of Congress does not seem like an obvious solution to making it a more just and equitable body. User Control Panel > Board preference > Edit display options > Display signatures: No. Carleas Magister Ludi Posts: 5518 Joined: Wed Feb 02, 2005 8:10 pm Location: Washington DC, USA ### Re: The Shuffle Handing more money and power to banks is not a wise investment in the long-run as banks are private institutions and beholden to share-holders, not the general public, and not the american people. During the 2008 housing market bubble crash, the Government should have stepped in and seized at least one major bank if not more. They sort of did, but didn't have the balls to do so at the time. Instead they worked out "deals" behind closed doors, which the general public never heard much about. And people doubt and distrust the Federal Reserve Bank, sometimes for good reason, although the average consumer doesn't understand macro-economics or the exact role of the Fed. My point is that many of the deals are not made in the interest of average joe-schmo, but rather to add a million dollar to the bank account of private share-holders. However that may very well be "the way of the world". Urwrongx1000 Thinker Posts: 711 Joined: Mon Jun 19, 2017 5:10 pm ### Re: The Shuffle Urwrongx1000 wrote:If there is any kind of solution or hope, then I guess it is familiarity. People need to begin to bond and care about each other, at least, enough to educate and provide care for each other. If it is only a nation of back-stabbing and throwing each-other a bus, then it is not a society at all. That is anti-society, anti-social. Families are defined by their ability to both care for their own young, and educate, which is implied by "caring". It seems noxious and cancerous to me to demand debt from unborn nations, from future children. However these are slave societies at the core. The goal is, specifically, to enslave the upcoming X amount of generations. The more generations ahead they can enslave, they will. This is not a "free" society. Debt and freedom are antonyms. K: it seem that you are demanding something from others that you are not demanding of yourself.... you call for caring about others.. yet your words certainly aren't about caring about others... everyone else is wrong but you....you have shown no compassion of any kind for anyone... everyone is naïve and a simpleton but not you.....your philosophy seems to be... do as I say, not as I do... and this is common in right wing types...holding everyone else accountable but not themselves....want examples, see any GOP politician like 45 or Bush jr. Ryan or McConnell or Pence....they all want to hold everyone accountable but themselves.... Look in the mirror before you accuse everyone else of being damaging.... What have you done to improve or help society? Kropotkin "Those who sacrifice liberty for security wind up with neither." "Ben Franklin" Peter Kropotkin ILP Legend Posts: 6235 Joined: Thu Apr 07, 2005 1:47 am Location: blue state ### Re: The Shuffle Carleas wrote: Void_X_Zero wrote:I want to have direct talks about the truths here. I don't want to merely form hypotheticals like this is an abstract academic jerk session, with no real consequences. Hypotheticals help get at which truths matter. For example, the truth of whether QE was good depends on the baseline; we have to explore the hypothetical world in which we didn't implement QE and think about how the world would have been different, in order to talk about the truth of what QE did. There's no getting around the hypotheticals. That's what I was doing when I used the hypothetical: asking Otto for what alternate reality he's comparing against when he says QE wasn't a success. If the recession is still ongoing in the alternate world, then QE was probably good, even if this world sucks. The recession is still ongoing. And I didn't mean we shouldn't think hypothetically. I meant that we shouldn't only think like that, without ever positing our thought to and in the real world and thus coming to real, definitive conclusions. Void_X_Zero wrote:If you could kindly reply to the substance of that article, we might start to get somewhere. I will, but I have to say that I resent it a bit. I'm having a conversation with you, not the author of this article. If you understand what the article is saying, it would be better that you present the ideas yourself in a way that directly responds to what I've said so far. I think you would agree that it would not be a good faith reply for me to just send you an article that takes the opposing position. I did offer some of my thoughts on the issue. But use of supporting text and points made by others isn't forbidden. I agree the article I posted is long; I'm not asking you to write an essay response to the article, but merely to understand what it, and I, have said on the subject and then formulate a sufficient reply with all that in mind. I would welcome if you provide supporting text or points made by others. And it's not even as though this article is more authoritative than you could be: it's not a more trustworthy source than you are (if only because I've never heard of it), it's written by a non-expert like us, and, where it cites references, they are popular articles, blog posts, and shaky sources like the conspiracist "Center for Research on Globalization". That said, I'll take factual claims as hypothetical until better supported, and take the arguments as saying, "if these things are true, then we should conclude". Moving on: I agree with Lawrence's claim in paragraph 2 that the rationale for QE was to lower interest rates, and in paragraph 5 that low interest rates stimulate the economy by making it easier to buy a home or car. I disagree, however, that this is somehow harmful to consumers. Cheap credit is valuable to the borrower. When you buy a$300k dollar house, you get $300k of value from that house from day 1. Not if the housing market is artificially inflated and the house is actually only worth$100,000. Also, cheap interest rates are only good while they are still cheap... variable rates means that when those (artificially, because propped up by massive debt-buying by the Fed) low rates go up, you get screwed. Which is exactly what happened.

Interest rates should reflect the real market reality and value of credit, just as the price of products should also reflect the real market reality and value. When the Fed or anyone else deliberately externally messes with that reality, as they are doing, you introduce error and irrationality into the system that will eventually have to be corrected for.

If you lower the down-payment and the mortgage interest, you make it cheaper to get that value. That's a benefit to the person purchasing the home, even if they will owe money on it for the next 30 years.

Not if they owe more than the actual monetary value of the house itself. In that case, they go bankrupt and get evicted. Again, which is exactly what happened.

And that lower cost ripples through the economy. Lower interest rates on small business loans mean lower operating costs of running a small business, which means lower overhead and lower prices for consumers. If people can get a car easier, they can access a larger job market, they may spend less time commuting (depending on how they were getting around before). People who already own houses see their home value increase, meaning they can refinance at take advantage of lower rates as well. Home sales mean work for laborers. Etc. etc.

Yes, lower interest rates on credit borrowing are good as you say, but only if those rates are real reflections of the markets.

Credit is valuable, so conceding that credit gets to consumers (as Lawrence does) is the same as acknowledging that QE is putting money in consumers' pockets (contrary to what Lawrence says in paragraph 4, and again in paragraph 13).

Actually it is putting debt into their pockets, not money.

Getting a loan for a house, car or credit card isn't "getting money", because you didn't gain any money at all, you have to pay it back so it equalizes out, actually since you have to pay it back with interest you end up with less money than when you started. Except of course if the assets you purchase with the debt appreciate more than the interest cost of the debt you used to buy those assets.

Lawrence treats the financial as though it's part of a completely different economy, as opposed to a part of the same economy that the average consumer experiences and buys from and is employed by.

I don't see that, because he is treating the situation more broadly than you are. You're ignoring the depreciation of housing value, and you're ignoring the eventual market corrections that must take place when interest rates are pushed artificially lower than they otherwise would be. The housing boom may have put more people in homes, but only for a while, until the market (partially) corrected and forced millions of people out of those very same homes.

And I'll agree that it isn't ideal, but that isn't the same as saying that it isn't effective. Lawrence concedes that it is buoying home prices. It's doing that by stabilizing the prices of mortgage backed securities, i.e. giving money to banks, but the effect is also to stabilize home prices and prevent more people from being underwater and foreclosing. Lawrence seems to acknowledge the vicious nature of the problem in paragraph 17, where he points out that decreasing consumption would be bad for everyone. If that's true, and QE is currently preventing that from happening, that seems like a concession that QE is better than the alternative for everyone, not just for bankers and the rich.

Consumption on perpetual debt is worse than a little less but more rational, sustainable consumption. Your logic seems to be implying that debt is the engine to prosperity and there are no limits to how much we should inject more debt into the economy and people's lives, as if there are no serious problems with that.

I don't believe the government or the Fed (the Fed isn't part of the government) should be trying to "get more people into houses" or pushing more cheap credit on people. That's another artificial manipulation introducing errors that eventually have to be painfully corrected.

If you can work hard and afford a house on the rea market then great. If not, then you get to rent and work harder to eventually afford a house. That's the way it should work.

It is not inconsistent to claim that this program benefits the wealthy, even that it benefits the wealthy more than it should, that in increases inequality, and yet that it is better than the alternative (because the alternative was really, really bad).

What alternative is that, which is so much worse?

Much of the article is apocalyptically speculative (e.g. paragraphs 21-26). The claim that the Fed will never remove debts from its balance sheet (paragraph 8) is unfounded, even assuming that his numbers are right. The program began as a response to a recession, it was targeted at stabilizing the market. It has been less than a decade since everything went to shit, and it's unreasonable to judge the long term future of a program based on what has been done during and immediately following a recession. An alternative prediction is that the program will continue until the economy is strong, and the Fed will continue to taper and slowly raise rates to prevent the economy from overheating, and do it gradually enough so that there is no major shock to the economy along the way.

The economy isn't getting stronger and isn't going to. As soon as it starts to increase a little then the Fed raises interest which pushes the economy back down again; and if the Fed ever sells its assets, even slowly over time, that will push the economy even further down. It's a vicious circle we are trapped in, because the government and the Fed didn't allow market corrections to take place for the insane policies that led to the 2007-08 crisis in the first place, those insane policies being namely artificially cheap credit and market manipulations, exactly what the Fed is still doing.

And the suggestion that a public bank, run by the people who currently run the federal government, would be better than an independent, apolitical Fed is at best uncertain. There are problems with the structure of the Fed, but so too are there problems in every branch of government, and making the central bank subject to the political whims of Congress does not seem like an obvious solution to making it a more just and equitable body.

The Fed isn't a branch of the government. It is a private corporation owned by, literally, the major private banks. Every dollar you have says "Federal Reserve note", which means it isn't US property or US treasury issued currency, it isn't owned by the American people or even just by the government in abstract, it is owned by a private corporation which in turn is owned by the banks. These are just facts.

I appreciate your response, though. Hopefully this conversation can continue.
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UrGod
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### Re: The Shuffle

I think there are psychological factors to take into account. There is simply always going to be the driving force behind capitalism, which is the desire for surplus, for increasing profit, for that upward curve that replaces capital with capital growth as the relevant commodity. Capitalism is ownership to the second, third powers. This is what makes it inaccessible to common sense, the calculus is too counterintuitive. And for this reason the higher regions are populated with very strange thinkers without much ties to the rest of the world. In this realm, really very strange laws apply. Much of what comes crashing down has been built up precisely for it to come crashing, because this is a way to secure future growth. Disaster guarantees growth. But the only rule is to get all the assets sold before the disaster strikes, meaning that all the assets are always sold in the end, so that there is an end - it is like a convoluting patient, because there is no supervision of that organ, that is not really connected to the human body so to speak, the financial institutions aren't tied to an earthly logic of value. Nor does VO offer such a logic, but this notion of the "earth-particle" might - what is at stake here is the measure of value-as-such, which is entirely fictive, but as Carleas remarks, this is not the issue, the issue is the direction in which the fiction leads human effort. So our value-as-such must be calibrated to what we consider human effort to be worth; and this is what Marx tried to do and failed, so that leaves us with the option of just giving up all this attempting to philosophically regulate capitalism.
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Fixed Cross
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### Re: The Shuffle

Sorry for the delay, there's a lot to cover.

First, a point of agreement, which will hopefully help us bridge the gap on those points where we disagree:
Void_X_Zero wrote:Interest rates should reflect the real market reality and value of credit, just as the price of products should also reflect the real market reality and value. When the Fed or anyone else deliberately externally messes with that reality, as they are doing, you introduce error and irrationality into the system that will eventually have to be corrected for.
...
I don't believe the government or the Fed (the Fed isn't part of the government) should be trying to "get more people into houses" or pushing more cheap credit on people. That's another artificial manipulation introducing errors that eventually have to be painfully corrected.

I agree with this way of thinking. It's dangerous to distort markets, and you will often end up with worse outcomes than those you're trying to avoid. I think we agree that the government directly subsidizing home loans was a big part of what got us into the recession in the first place. Where we disagree, though, is that I'd argue that where we've been messing with market pricing for a generation, we shouldn't just up and stop all at once (I think that's the idea of the "taper"). It seems like you are more willing to pull the plug.

A couple factual points (may be semantic points, we'll see):
Void_X_Zero wrote:The recession is still ongoing.

This depends on what we mean by recession, but it seems accepted that in the US the recession ended in 2009. From wiki:
Wikipedia wrote:The bottom, or trough, was reached in the second quarter of 2009 (marking the technical end of the recession, defined as at least two consecutive quarters of declining GDP).

Note that the recession is defined by reference to rate of growth, so that it ends at the bottom of the trough, i.e. the recession is over when things stop getting worse , even if they haven't gotten better yet.
Void_X_Zero wrote:The economy isn't getting stronger...

This depends on what we mean by stronger, but GDP grown has been positive since 2010 according to the World Bank. The unemployment rate has also been falling steadily since 2010 -- but see this similar chart showing fall in labor force participation rate, suggesting it might just be that people are giving up. But median household and family income are up since 2010, i.e. post-recession. I'd say improving conditions for the middle is a compelling indicator of a strengthening economy.

Void_X_Zero wrote:You're ignoring the depreciation of housing value

Zillow finds that home values have increased since the end of the recession.

When you ask what the alternative is that I mentioned, it would be the case where the trend lines in the linked charts didn't recover in the late 00s/early 10s. I think QE played a role in stabilizing the market.

Void_X_Zero wrote:The Fed isn't a branch of the government. It is a private corporation owned by, literally, the major private banks. Every dollar you have says "Federal Reserve note", which means it isn't US property or US treasury issued currency, it isn't owned by the American people or even just by the government in abstract, it is owned by a private corporation which in turn is owned by the banks. These are just facts.

I don't think that's quite right. It was created by an act of Congress, its President is appointed by the US President, as are the members of the Board of Governors. It's subject to GAO audit and certain government transparency requirements, and its structure and behavior can be changed by Congress. It isn't funded by Congress, but it's empowered by Congress, it reports to Congress, and it's subject to Congress' whims. All its earnings after expenses go to the US Treasury.

It's not a "branch of government", but it's clearly not just another company either.

Void_X_Zero wrote:Getting a loan for a house, car or credit card isn't "getting money", because you didn't gain any money at all, you have to pay it back so it equalizes out, actually since you have to pay it back with interest you end up with less money than when you started. Except of course if the assets you purchase with the debt appreciate more than the interest cost of the debt you used to buy those assets.

I think this is a core disagreement we have, but I don't think it's a matter of opinion or values so I'm not sure why we can't find common ground.

It seems clear that getting an interest-free loan is effectively "getting money", in the sense that it's getting value that can pretty readily be converted into money over the term of the loan. If that's true, then getting a loan at a below-market interest rate is also "getting money", in that the difference between the market rate and the rate charged is again convertable to money; one way to think of it is as getting a market rate loan on a portion of the money, and a no-interest loan on the rest.

This is just describing the time value of money, that money now is worth more than money in the future. Lenders charge interest because money in the future is worth less than money now, so they want more money in the future in exchange for their money now. When the government subsidizes the exchange, when it provides consumers credit so that they can get money now and pay less than market rates for the privilege, they get value. That's money in their pocket.

Which part of this is false?
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Carleas
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### Re: The Shuffle

Fixed Cross, I'm not that pessimistic. Rather, I think giving up on the idea of regulating capitalism is itself the wisest way to fix it. Capitalism does a lot of things well, and as Void notes (and I agree), interfering to correct it toward some supposed right answer is more likely to undermine it.

Regulation seems like a downstream solution to an upstream problem. If we're putting facts that we don't like into a system that processes information and allocates resources, we shouldn't be surprised that it spits out answers we don't like. Changing the system to get better answers isn't going to change the facts, those should be addressed directly to the extent possible.
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