Hey, Chad. Perry again, from the future! I had totally forgotten about this episode. Right now I'm working on a supplement episode that deals explicitly about the control of the multi-family rental market and the exciting events happening therein. FBI raids! Declarations from the FTC and DOJ!
I would love to get you back on the show. This time, I would also like to add some order to our chaos.
I hope you still have my email. Drop a line. I'll see if I can recover your email from the last crash.
Re: inflation. Over the past 25 years there's been a clear convergence around the world towards "orthodox" monetary/economic policies of fiscal discipline and inflation targeting by independent central banks, and the countries which have pursued this most aggressively are definitely more stable, economically, than the ones which did less of it. Latin America today vs. the 1980s is an excellent example. The orthodoxy isn't always right, but neither is it catastrophically wrong. After all, unemployment is currently at historic lows across much of the planet.
Inflation is only partly mechanical and has large psychological inputs. When Jerome Powell says that he's determined to fight inflation at any cost and is raising interest rates to do so, the mechanical effect of higher rates is only part of the story. The other and probably more important part is the signaling aspect, wherein holders of dollars keep believing that inflation will stay low, that government money creation won't get out of control, and that other players won't succumb to inflationary psychology. The psychological aspect as well as the influence of uncontrollable 'transitory' factors like supply chain disruptions, etc. are all pretty well-understood by the orthodoxy, which is why the Fed waited so long to start hiking rates; they started to fear that temporary influences were giving way to a more generalized inflationary psychology.
The thing is that governments (politicians) *always* want to spend more printed or borrowed money, and they're always tempted to pursue short-term (before the next election) gain irrespective of long-term pain, so to be any use at all the economics profession needs to be conservative and systematically lean against this to a certain extent.
"...and the countries which have pursued this most aggressively are definitely more stable, economically, than the ones which did less of it. Latin America today vs. the 1980s is an excellent example."
So the countries at the epicenter of the global economic order are more stable than those at the periphery. Consider me shocked. But you’ve presented no evidence that that these “orthodox” policies are the cause. Nor have you presented evidence that "unorthodox” policies are the root cause of instability in Latin America, or anywhere else. I suspect the real causes are much more complex and varied.
"After all, unemployment is currently at historic lows across much of the planet."
Probably due, in large part, to demographic changes. Given that increasing unemployment is the *stated policy goal* of central banks, it’s rather comical to argue that they are somehow responsible for low unemployment.
"…they started to fear that temporary influences were giving way to a more generalized inflationary psychology."
Your argument, if I understand correctly, is that such policies make the investor class *feel* better, rather than that are effective at what they are designed to accomplish. In other words, they are a *placebo*. Which kind of makes my point—economists are glorified witch doctors and economics is a pseudoscience. That’s not much of an endorsement for the conventional view. Note, also, that higher wages might make them *feel* worse, so we can't have that, can we? That's what you really mean by economists being "conservative."
"The thing is that governments (politicians) *always* want to spend more printed or borrowed money, and they're always tempted to pursue short-term (before the next election) gain irrespective of long-term pain..."
Oh they “always” want to do that, do they? This is standard anti-government libertarian claptrap. It's the duty of politicians to spend money on policies which promote the general welfare. Not doing so is a dereliction of duty and a betrayal of the people who elected them. In my country, at least, we have an entire political party dedicated to *not* spending money on the general welfare and stripping back vital government services (while cutting taxes and regulations for the wealthiest citizens). Where, exactly, do they fall into your taxonomy of politicians “always” acting the way you insist they do? Nobody, including politicians, “always” asks a certain way. This is just pure ignorance.
You should also be aware that governments with sovereign currencies do not spend “borrowed” money. Not do they “print” it (use of which is a dead giveaway of libertarian beliefs). They adjust numbers up or down in spreadsheets.
And short term gain for *who*? Long term pain for *who*? Austerity policies produce short term gains for the rich and long term pain for the rest of us. We have a homelessness crisis, an education debt crisis, a medical cost crisis, an environmental crisis, among many others, which have been ongoing for decades. How much more ‘long term pain’ will be caused by *not* spending money rather than spending it appropriately?
Take your libertarian talking points elsewhere. I’m not falling for it, and neither should my readers.
Well done, Sir. I'm adding this edition to the other two on housing costs, and will be referencing all of them in my next episode.
—Perry
Hi Perry, where do these episodes happen?
AttackAdsPodcast.Blogspot.com. Expect it (barring the creek don't rise) Tuesday.
Sorry for not responding earlier, but I'll be happy to come on if you'd like. That is, if my laptop setup works--it's not the one I had before.
Hey, Chad. Perry again, from the future! I had totally forgotten about this episode. Right now I'm working on a supplement episode that deals explicitly about the control of the multi-family rental market and the exciting events happening therein. FBI raids! Declarations from the FTC and DOJ!
I would love to get you back on the show. This time, I would also like to add some order to our chaos.
I hope you still have my email. Drop a line. I'll see if I can recover your email from the last crash.
Later!
—"Perry"
Actually, I was thinking along those lines. Still have my email?
Re: inflation. Over the past 25 years there's been a clear convergence around the world towards "orthodox" monetary/economic policies of fiscal discipline and inflation targeting by independent central banks, and the countries which have pursued this most aggressively are definitely more stable, economically, than the ones which did less of it. Latin America today vs. the 1980s is an excellent example. The orthodoxy isn't always right, but neither is it catastrophically wrong. After all, unemployment is currently at historic lows across much of the planet.
Inflation is only partly mechanical and has large psychological inputs. When Jerome Powell says that he's determined to fight inflation at any cost and is raising interest rates to do so, the mechanical effect of higher rates is only part of the story. The other and probably more important part is the signaling aspect, wherein holders of dollars keep believing that inflation will stay low, that government money creation won't get out of control, and that other players won't succumb to inflationary psychology. The psychological aspect as well as the influence of uncontrollable 'transitory' factors like supply chain disruptions, etc. are all pretty well-understood by the orthodoxy, which is why the Fed waited so long to start hiking rates; they started to fear that temporary influences were giving way to a more generalized inflationary psychology.
The thing is that governments (politicians) *always* want to spend more printed or borrowed money, and they're always tempted to pursue short-term (before the next election) gain irrespective of long-term pain, so to be any use at all the economics profession needs to be conservative and systematically lean against this to a certain extent.
"...and the countries which have pursued this most aggressively are definitely more stable, economically, than the ones which did less of it. Latin America today vs. the 1980s is an excellent example."
So the countries at the epicenter of the global economic order are more stable than those at the periphery. Consider me shocked. But you’ve presented no evidence that that these “orthodox” policies are the cause. Nor have you presented evidence that "unorthodox” policies are the root cause of instability in Latin America, or anywhere else. I suspect the real causes are much more complex and varied.
"After all, unemployment is currently at historic lows across much of the planet."
Probably due, in large part, to demographic changes. Given that increasing unemployment is the *stated policy goal* of central banks, it’s rather comical to argue that they are somehow responsible for low unemployment.
"…they started to fear that temporary influences were giving way to a more generalized inflationary psychology."
Your argument, if I understand correctly, is that such policies make the investor class *feel* better, rather than that are effective at what they are designed to accomplish. In other words, they are a *placebo*. Which kind of makes my point—economists are glorified witch doctors and economics is a pseudoscience. That’s not much of an endorsement for the conventional view. Note, also, that higher wages might make them *feel* worse, so we can't have that, can we? That's what you really mean by economists being "conservative."
"The thing is that governments (politicians) *always* want to spend more printed or borrowed money, and they're always tempted to pursue short-term (before the next election) gain irrespective of long-term pain..."
Oh they “always” want to do that, do they? This is standard anti-government libertarian claptrap. It's the duty of politicians to spend money on policies which promote the general welfare. Not doing so is a dereliction of duty and a betrayal of the people who elected them. In my country, at least, we have an entire political party dedicated to *not* spending money on the general welfare and stripping back vital government services (while cutting taxes and regulations for the wealthiest citizens). Where, exactly, do they fall into your taxonomy of politicians “always” acting the way you insist they do? Nobody, including politicians, “always” asks a certain way. This is just pure ignorance.
You should also be aware that governments with sovereign currencies do not spend “borrowed” money. Not do they “print” it (use of which is a dead giveaway of libertarian beliefs). They adjust numbers up or down in spreadsheets.
And short term gain for *who*? Long term pain for *who*? Austerity policies produce short term gains for the rich and long term pain for the rest of us. We have a homelessness crisis, an education debt crisis, a medical cost crisis, an environmental crisis, among many others, which have been ongoing for decades. How much more ‘long term pain’ will be caused by *not* spending money rather than spending it appropriately?
Take your libertarian talking points elsewhere. I’m not falling for it, and neither should my readers.
"they're always tempted to pursue short-term (before the next election) gain irrespective of long-term pain"
What long-term pain are you referring to? I don't follow.