This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet.
There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything.
Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing.
I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless.
The money can find a productive outlet, it’s just that for the last 5 years or so, speculative investments (that weren’t productive) had a much higher rate of return. Which is too bad as the productive investments like building a solar power plant really benefitted from the low interest rates that drove the non-productive speculative bubble.
non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. But that often only happens when you increase interest rates above that which productive investments like solar power plants often need. And so you get contraction as even the productive investments are starved of funding. Oh well, at least the solar power plant hasn’t lost all its value.
> non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order.
To be precise, the investors who are left holding at the end of the cycle get punished. The early investors who got out make out like robbers.
We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems. If the market was efficient, we wouldn't be complaining about it. Unfortunately, a "free market" and an efficient market (and you could argue whether infrastructure or medicine or income insurance even make sense as markets) are not the same. Most markets that have many individual consumers require regulation to be even close to efficient. Like political and financial enforcement they are too easy to manipulate and the consequences of malfeasance are substantially less than the profits to be made.
What sucks is that fiscal policy, ie government spending, is also often not very efficient. Even when rampant corruption doesn’t destroy efficiency, crushing bureaucracy or just plain incompetence will. (Is the DMV a model of efficiency?)
So you need a smart balance. And you need competent, honest people in both business AND government.
I don’t think that government necessarily is inefficient. The DMV could be a very efficient place. The fact that it isn’t should cause at least some pause for those advocating more government spending (such as myself).
And the same is true for business. Comcast is terrible. But it doesn’t HAVE to be. Rent-seeking and anti-competitive behavior makes it terrible.
People keep using the DMV as an example of government inefficiency, but my state has made it run so painlessly I don't think I've spent more than 15 minutes in an office over the last 5 years. I think government can be efficient if you put technocrats in charge of implementation rather than elected officials who are subject to the electoral whims of the uninformed masses.
The problem with the above is it weakens democratic institutions by removing the exercise of power from the people the population select to lead.
Inefficiency to me can not possibly be more clearly demonstrated than by ape pictures losing hundreds of thousands of dollars for their purchasers. But we also have examples like Uber spending cash on hand to drive competitors under without having a plan to maintain their own services without heavy subsidy.
The DMV in my state requires you make an appointment 4-6 months out right now. Walk-in appointments are unavailable or only available during a few hours a few days a week, if they happen to have staff that day. Good luck if you have your drivers license stolen.
I sold a car of mine to Carvana in October. I returned the license plate to the DMV immediately, which is how they're notified that you no longer own the vehicle, waited 7 days, then cancelled my insurance policy on that car. A month later, I got a letter from the DMV that it is a crime to not carry insurance on my vehicle and I will have to reinstate the insurance and pay a $70 fine for letting it lapse. On the car I no longer own, that was now titled in another state and resold by Carvana already.
It took 2 more months and 3 different forms to get the DMV to accept that I no longer owned the car and to stop pursuing me for this "crime".
>The DMV in my state requires you make an appointment 4-6 months out right now. Walk-in appointments are unavailable or only available during a few hours a few days a week, if they happen to have staff that day. Good luck if you have your drivers license stolen.
Sounds like your state has a big problem.
In my state (New York), appointments are generally available within a week and walk-ins are welcome, but those with appointments get priority.
I've never spent more than 30 minutes or so at a NY DMV location and most transactions are available online, including replacement of lost/stolen licenses.
In fact, I decided on Wednesday (11 May 2022) that I wanted to trade in my license for an "Enhanced Driver's License"[0] (EDL) which, among other things, will be required for domestic air travel[1] in a year or so.
That's one of the few transactions that must be done in person. I went online to book an appointment and was presented with a whole bunch of appointment times next week. I chose Thursday (19 May 2022) as it worked best with my schedule, but I could have gone on the 16th if I'd wanted.
So, no. Not all DMVs are a pain or inefficient. Want to make that better in your state? Elect people who will work for you. Just a crazy thought.
>An EDL is not required to fly domestically, which is good because only 5 states offer the option. An EDL includes the Real ID benefits which includes domestic travel, but also acts as a passport when traveling by land or sea with Canada/Mexico/some Caribbean nations.
Yep. Which is why I said:
...I wanted to trade in my license for an "Enhanced
Driver's License"[0] (EDL) which, *among other things*,
will be required for domestic air travel[1] in a year or
so.
Upon reflection, I can see how that kind of puts the cart before the horse, but it isn't really incorrect as an EDL incorporates the RealID.
I suppose I could have clarified that the EDL provides RealID and additional functionality as you describe, but I figured that "among other things" and links describing both RealID and EDL, folks could find out for themselves what "among other things" meant.
Perhaps that overestimates the reading comprehension of some folks, but I prefer to give people the benefit of the doubt and not assume they're morons.
Perhaps that's a mistake, but if so, it isn't my first and won't be my last.
I thank you for clarifying and I'm sure the morons out there will thank you for your pedantry as well.
I'd further point out that this was just a real-life example of a service which must be provided in person and not online and my experience with scheduling an appointment. It could just as easily have been any of several different services which require actually going to the DMV, but that's the one that is relevant to my life at the moment.
As such, even if I'd claimed that an EDL gets me free blowjobs at Federal buildings, I still made the point I was attempting to make.
WTF? This must be because of willful political sabotage?
The license plate should follow the car and ownership should be changed online as part of the transaction. It sounds incredibly wasteful that every time a car changes ownership the seller must hand over the plates in person to the DMV. And is there no national registry of cars or data sharing between states? Strange that a car can be registered twice.
If your drivers license is stolen you should be able to just order a new one online and have it delivered in the mail. I have been inside the building of our DMV equivalent two times. One time when I did theoretical exam to be allowed a practical driving test, and once for the driving test. I got a temporary license when I passed and the proper license in the mail the next week. This was 20 years ago.
> WTF? This must be because of willful political sabotage?
It's not sabotage, it's the fact that the government wants a leash on you. I had an experience in the past with the CA DMV where simply forgetting to "de-register" a broken, non-functional motorcycle resulted in the state levying my bank account for hundreds of dollars in registration fees. The FTB had the money debited right out of my account, no different than if someone committed wire fraud.
I have to assume that you don't live in the US. The license plate can't always follow the car: each state has its own license plate(s) and DMV and rules, etc. e.g., I got a nastygram from New York state when I moved out of state and didn't turn in my plates. OTOH, in Minnesota, they tell you to do whatever you want with them: turn them in, throw them out in the recycling, etc. Some people have license plate collections on their garage walls.
If a license is stolen, You need to go into the DMV because they'll have to take a new photo. There was a temporary exception due to COVID, but I think that's no longer available since I had to go into the office when my license expired.
>The license plate should follow the car and ownership should be changed online as part of the transaction. It sounds incredibly wasteful that every time a car changes ownership the seller must hand over the plates in person to the DMV.
There's too many personalized plates and other exceptions in the US to make that viable.
The plates go with the vehicle in California most of the time. It just gets complicated when you sell to someone out of state because you have to turn the plates in yourself. If you a used car in CA, it's not unusual for the plates to be the same plates the car had since it was first registered in the state.
We bought our last family car from enterprise and one day this family walked by while my mom was waiting for me in the store parking lot. The kid recognized our car as a rental they had on a road trip once and got excited about it. Awkward. xD
Custom plates are weird. You can either give them to the new owner or transfer them to another vehicle or return them to the DMV.
Do you know how'd it'd work for plates like ham radio ones where you CAN'T transfer them to another another person, but it'd also make no sense to turn them in? Can you keep them to use on another car eventually?
This whole "turn in the plates or we'll go after you for not having insurance" seems completely insane. I've never turned in plates and no one's cared.
Except that’s exactly how it works in many states. If you want to keep your personalized plate, you have to jump through hoops, but it defaults to go with the car in the two states I’ve lived in.
Interesting, it's actually not allowed in the 3 states I've registered a car in. In NJ, they wouldn't even allow transferring a regular plate from our old volvo (registered in my dad's name) to our new town and country (registered in my mom's), because they were owned by different people as far as the state was concerned.
That's an awful setup. More states need to get DMV mostly online. I just go to their website when I sell my car and tell them I've sold it. No sending back plates (which is good, I keep my plates when I sell a car, because I like them).
What state is this? I always thought it was illegal to drive on public roads without insurance, not simply own an uninsured vehicle. From the farm, to the drag strip to the 4x4 trail, tons of people own uninsured vehicles that are not driven on public roads.
I have bought 3 used cars and gotten 2 teenagers thru permit and drivers test and license. Never had any appointments except for the driving test, and never had any long waits. All waits were much shorter than when I transferred my out of state license to CA in 2008 or 2009. Impressively well run bureaucracy, I'd say. And this with covid precautions to work around. Much better than the several east coast states I had prior experience with.
Now I do chose the office to visit with some care, and also (as an "elite WFH software engineer") time it so that the lines are likely to be shorter, so YMMV.
You definitely can return plates in California. They just don’t ask for them as a due course for any normal processes. But, you can choose to mail them in or turn them over to the clerk.
If they’re paying the highest price (and have the greatest convenience) to buy an asset I’m selling, they’re going to be the proud new owner. Same story if Blackrock wants to bid the most on my house.
If they have a better mousetrap, good for them. If they don’t and are just overpaying for cars, well, good for me.
Almost all DMV problems are due to understaffing, not any laziness or incompetence on the part of the people who work there.
In California the DMV experience was greatly improved by having appointments, and for walk in, you get a number and at least have an idea when you'll be called, so you can sit in a waiting area, not have to stand for hours.
COVID has reduced staffing so that makes appointments harder to get.
Also, imagining that corporate offices are models of efficiency is an error.
>Also, imagining that corporate offices are models of efficiency is an error.
Absolutely!
I used to work for a Fortune 50 company (that shall remain nameless here) and was moving various groups (mostly marketing and research) away from mainframe batch processing (this was the mid 1990s) toward distributed (Unix) systems.
The inefficiency and waste were just unbelievable. The corporation had tried to move their customer service reps off IBM 3270[0] terminals which were locked in to a single application (with significant retraining required for different apps) with X terminals (what they used to call thin clients) that scraped database queries and stored them in a local database and had a unified UI across all apps.
The app was complete, the roll out team purchased ~USD$300,000,000 worth of systems and infrastructure, and then realized that it would cost USD$150,000,000/year to support/maintain the environment.
So the project was canceled, with hundreds of millions of dollars in Unix boxen and related hardware sitting in warehouses, now without a clear purpose.
When moving folks off of the mainframe, we always pushed them to use the hardware already purchased (a sunk cost). All a group needed to to was put the capital depreciation for whatever equipment they used on their budget lines.
The vendor (again who will remain nameless) priced out equipment (on purpose, I'm sure) so it was cheaper (on the budget line) than the depreciation on the equipment the corporation already owned. In every single case, these groups chose to spend real money buying new equipment rather than taking on the depreciation of the equipment already purchased.
What's more, when evangelizing these changes, I was strongly cautioned to never use the phrase "increased productivity," as that (apparently) made the heads of these groups concerned about losing head count.
tl;dr: The corporation was so fractured and inefficient that group heads would waste corporate dollars in the millions just to maintain their budget and headcount.
I'd love to hear about something like that happening at the DMV or other government office. But I won't, because if folks in the public sector pulled shit like that, they'd be hounded out of their departments.
There are a lot of ways to compare these numbers, and I think "absolute dollar amount" is not particularly enlightening among them.
On a per-project percentage basis, the parent's story wasted ~100% of the project's budget. The same number for California's unemployment fraud is less than 2% (the program totaled about $110B).
$300M was wasted in an organization that serves (completely spitballing here) maybe ~500k people among all its customer organizations?
The California government serves ~40M California residents.
In any case, government waste is likely orders of magnitude more easily uncovered than even public companies' waste. And when we find out, we can lobby for change and vote for policies that adjust the process to hopefully result in less waste.
But when Coca-Cola overpays 10x for some highly-connected contracting firm to build them some shoddy CRUD software for an internal process we'll probably never heard about it due to a combination of lack of transparency and lack of reporting interest. If we do hear about it, there is no real avenue for lobbying for the change of Coca-Cola policy.
That's not even mentioning that Coca-Cola's entire existence could be (rightfully, in my mind) considered corporate waste because their products actively harm the world, which is a claim much more difficult to apply to the DMV or the California government as a whole.
That was during an unprecedented event, when March/April/May 2000 saw millions of UI claims filed in a very short period.
Eventually it was sorted out but at considerable human cost. As of Jan 1 2021 something like 1.5 million claimants had their benefits stopped until they had shown proof of identity. It took months to get it all straightened out, especially for people who didn't have drivers licenses, for example.
My dad worked at a public university where his department would charge for services provided to other departments at the university.
At the end of the year the department's surplus went to a general fund (and I think this was also a factor in deciding future budget allocations for the department).
So everyone in his department was incentivized to buy equipment they didn't actually need so that they didn't "lose" their money.
The old, perfectly working, hardware would be put out into hallways and get thrown away in the trash.
Granted a public university is a lot different from an actual government department.
My point wasn’t to say DMV is ALWAYS inefficient but just that the DMV is a good litmus test for efficiency. Sounds like in your state, the DMV is efficient and therefore perhaps fiscal policy would be well-spent!
> People keep using the DMV as an example of government inefficiency, but my state has made it run so painlessly I don't think I've spent more than 15 minutes in an office over the last 5 years.
It's totally baffling to me when there's 'the DMV' in US films/tv, because that's just not a place (nor anything equivalent) we have to go to, whether it's 'only fifteen minutes' or more.
(Sure, when my driving licence expires in 10y, or I change address, I'll need to spend a minute or so on an online form.)
That's why 'the DMV (groan)' is the meme it is in the US: it's one of the few interactions most upper-middle class individuals have with government services.
I've had other interactions with state/local government services over the past couple years, and they've all been pretty bad. It's like anything else: there are helpful, compassionate people you occasionally speak with, but it's easy to get buried in the complexity and ridiculous inefficacy.
Federal (and state for that matter) tax returns are a good example. Something that every citizen of working age technically has to deal with are incredibly complex.
Thirty years ago in Massachusetts, if you had DMV business, you just walked in, waited half an hour, and conducted your business. And we complained about that.
i think the OP's efficiency reference isn't talking about the user's efficiency in using the service, but the cost-based efficiency; aka, how much budget the DMV has, vs how much "work" they produce.
See I wish. The DMV near me has been merged with other offices (probably in some lazy attempt to “reduce spending”) and you better make your appointment a month or two out because there won’t be any availability otherwise.
Which state? DMV is my favorite example of government because everything they do is required and everything they do is done terribly. I’ll have to revise if I meet a DMV I like.
>Which state? DMV is my favorite example of government because everything they do is required and everything they do is done terribly. I’ll have to revise if I meet a DMV I like.
Move to New York. I recommend NYC, as the food is fabulous.
I think bureaucracies do tend to suck, but I also think there are often people who stand to gain from making a bureaucracy suck.
For that reason, I suspect it's good idea to leave interpretive space for the possibility that a given bureaucracy has been intentionally hamstrung, or is Kafkaesque by design.
I suspect calling Comcast is miserable because the process is designed to exhaust and manipulate you out of quitting, for example.
I suspect it's possible to build systems that enable you to ensure an ER visit will cost $500 instead of $10000--but our insurance companies may feel like the uncertainty deters people from seeking care.
I think by the time you're saying "my system depends on the people in it being honest and competent" you've kind of already lost. Some people are competent, most aren't. Many people are honest, but some aren't. You aren't going to change that so you have to be resilient to it.
Every system works better with honest and competent people. That’s my point!
Some systems are more resilient to dishonesty and incompetence than others. I suspect a mixed system is the most resilient. But we CAN change the behavior by choosing to reward competence and honesty by who we elect, who we hire, and who we do business with.
What's with the hate for DMVs? Maybe they're bad in some US states, but in mine (Massachusetts), I really can't imagine a better-run business, private or public, that accomplishes so much with so little investment.
You can do most things online with a much better UX than most commercial websites. No crappy ads or pop-ups. Plus when you do need to go in, you book a time slot at a DMV center online.
Recently I had to bring my daughter for a driving license to the one in Brockton, MA. When you go in, they give you a token number. The currently processing token number is shown on a huge LED display on the wall. Hundreds of customers are in there, many of them don't speak much English, etc., but things move pretty smoothly and fast. Very efficient.
The DMV outsourced it's service in some areas. Service improved. So it's possible to benefit from the benefits of public spending and private efficiencies. It's a pretty common method for governments to spend money.
I wonder if the DMV is a bit of a special case, not necessarily a good example of government bureaucracy. The customers are almost universally resentful, because they are paying the government money to let them drive. They're angry because it's slow, and it's slow because the process requires bringing in third-party paperwork (e.g. insurance, sales receipt, dealer paperwork, whatever) and there's a lot of opportunities to get it wrong. So it often involves more than one trip.
If I had to deal with customers at the DMV, I think I'd be grouchy too.
Another reason to try and get as much of it online as possible, which I think is most of it nowadays.
I know people reactively complain about Comcast, but in my area they do a great job. It's not cheap due to lack of competition, but no complaints about service.
Their prices are high and punitive to existing customers. Their customer service is laughably bad.
One of my requirements of a retirement destination is municipal broadband. No BS, just a fair price for a service that's actually treated like a utility.
This is due to tax policies reducing the revenue pool. This makes it easier to judge individual divisions of the total because there are necessarily fewer outlets, and since it's a smaller pool there's more reason to fight.
The idle rich who can't find anywhere worthwhile to play with their nearly-free money (until recently ZIRPish) are a bug in the system. Oh, but lets pretend we are captains of industry by saturating the world with sure-failures. "I wEnT tO GsB!"
And government is absolutely inefficient, which is a good thing actually. Despite the efforts of conservatives, government still has to account for many many corner cases and special needs. Ask any Agile TDD aficionado how this affects velocity.
I don’t think the government being inefficient is good. It gives ammo to those who are ideologically opposed to government doing things. We should strive to improve government efficiency, especially those of us who think the government should be taking on more tasks.
Ideological opposition to extensive government is because government is inefficient. See the Laffer Curve. Actual demonstrated inefficiency is the proof, not the justification.
You see the moral hazard of electing people to run government who have a vested interest in being proven right about government being inefficient, don’t you?
I am fine with people who are realistic about government being inefficient, but I insist that they nonetheless try their very best to improve that efficiency (fully considered efficiency, not just making life worse for government workers or people seeking government services). The problem is when you elect people who have an interest in making sure the government is inefficient because then they can use that as justification to enact their ideological goals of cutting government services.
When you buy/sell crypto - money changes hands. That money wasn't really "allocated" to crypto, beyond miner fees, just redistributed. That cash still exists.
The resources being allocated are graphics cards, human time, and electricity AFAICT.
The power usage of crypto is relatively small compared to other active human endeavors. It's power usage doesn't approach other arbitrary value stores like gold and government backed fiat markets. Could it go somewhere else? Yeah - but could we reasonably produce enough to offset it in a positive sum game - definitely. As long as renewables are cost efficient (read: truly competitive with non-renewables) and are net-zero on emissions this misallocation of resources would be allocated to renewable power production in an efficient market.
Graphics cards being misallocated... I'm not sure saying markets are inefficient because a financial market is outbidding video gamers is a compelling argument. Scientific use of graphics cards seems like a small part of the market, but I may be mistaken here.5
Those other endeavors scale significantly more efficiently and are a necessity.
Gold is a requirement for industrial purposes, for jewellry, for chemical processes for medication.
Visa/Mastercard perform many hundred of thousand transactions per second.
BTC is limited to 350k per day, and consumes the equivalent CO2 impact as Austria. It can't and won't ever scale, which leaves it open to market manipulation and centralization as transactions move off-chain.
It's not a small amount of energy wasted, and there are significantly more valuable uses for that energy, such as aluminum production or water desalination.
That might be true but 46.64% of gold demand is for "investment", and a further 8.58% is for "central banks". In other words, most gold produced is hoarded and not used for anything productive. If you're against bitcoin because you think it's a non-productive use of energy, you should also be against investment/central bank use of gold.
Even if hoarded at the moment, energy spent mining the gold was not lost. Gold can be sold tomorrow for its practical uses. Energy powering Bitcoin transactions is gone. (Like the the energy powering bank servers)
A quick trip to Wikipedia's bitcoin page yields[1], which, among other comparisons, compares bitcoin's consumed energy to countries. At 145.9 TWh yearly, it's less than Egypt and Poland and greater than Ukraine and Norway. This is up from the 2021 estimates[2] of 121 TWh yearly, larger than the countries of Argentina and Netherlands.
Bitcoin is intentionally wasteful, and I say this as a technical admirer. Its genius is the extremely simple idea of making writes to a distributed database so unimaginably harder than reads, so that untrusted network peers behave themselves and don't invalidate the state of the shared ledger. The network literally just asks you to spend your time counting to N at the top of your lungs so you don't cheat, if that's not waste then I don't know what is waste.
This 'waste' is necessary when you don't trust your peers, you're buying trust with it, cold hard trust, as rock solid as P != NP. But look at the sheer hype crypto has amassed since 2017 and tell me with a straight face that all those "applications" need trustless distributed peers. NFTs literally store the actual data of the token on centralized servers that can go down or go wild with your data at any moment they goddamn please, the NFT on the blockchain is merely a thin reference.
The ideal path for distributed trustless blockchains would have been as a small niche, an "elite shock trooper" technique when distributed trust among trustless peers is absolutely necessary. Ideally, miners would understand the simple fact that it's of no use to keep bringing better and better silicon to the arena, as the network swallows all in its big mouth anyway, and the network would then grow naturally so that it's approximately the power of NETWORK_SIZE * CURRENT_PC_POWER at any current year, instead of a never ending race to the bottom of sacrificing more and more silicon to the God Of The Hash.
Alas, from the crooked timber of humanity no straight thing was ever made.
IIRC, the energy use for crypto as a whole is on par with the energy use of the fiat currency system, if not higher. I don't know how gold mining ranks, but it may be well below crypto mining in energy use or well above. Mining energy use depends a lot on asset price, and gold prices are comparatively low (compared to other asset classes).
Silicon and other electronic parts also get dumped into this market, when the capacity used to build those devices could be used for other things.
I meant total energy spend for both systems. Despite the transaction volume being minuscule, crypto likely burns a similar amount of energy to the energy consumption of the global finance industry today.
A good reference to compare bitcoin to gold mining (and other human endeavors like brewing tea): https://ccaf.io/cbeci/index
Gold mining and bitcoin are currently roughly on-par. But gold's energy usage isn't just mining. It's the entire supply chain from Cash 4 Gold stores, long term storage, smelting/recycling, etc. I don't have a good reference for the total cost of gold.
Oh, that is only for bitcoin mining. Is there a source for the entire crypto ecosystem since you want to compare bitcoin mining to the entire gold supply chain? I would suspect that if you include shipment and storage, you are still under bitcoin mining for the entire gold supply chain.
However, the point still stands. Datacenters in the US use total energy less than 2 bitcoins. How many of those datacenters are moving fiat around? Way less than half?
Things like brewing tea and heating houses take a ton of energy. Moving money around doesn't!
Crypto is a huge waste, and that site does not suggest otherwise.
> Most markets that have many individual consumers require regulation to be even close to efficient.
That is not true from what I see (modulo contract enforcement and policing of anti-social elements). There are many examples of smoothly functioning markets. With my economics geek hat on the things required for a market include:
* All participants must have choice, be able to enter and leave in the medium term.
* There must be clear information available about the properties of the goods and/or services
* There must be clear information about the prices.
The first condition (choice) can be rough on suppliers. The "choice" for a coffee shop is closing or bankruptcy. But for the supplier of electricity from a hydroelectric dam the choice is different. There are no clear boundaries.
For the consumer they can substitute potatoes for kumera but there is no substitute for food. Everybody must eat.
So: Reticulated water and electricity are bad things for markets. Vegetables (except during famine) and entertainment services are good
The government has heavy handed regulations distorting the market and spent the last years creating money out of thin air and killing small businesses.
The government propping the market up during the pandemic kept alive the myth that the market is always growing but also caused a terrible inflation.
Now that the market is going back to reality the government can't just print more money again - or inflation will kill the entire country.
The incoming crash will hopefully pop some of the bubbles the government created in the last 20 years. But it will be painful.
>"We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems"
I'm trying to follow this but not understanding it. What do you mean by " Only when "the market" gets its cut". A you referring to public/private partnerships here or pork barrel politics? Something else entirely?
We don't need solar, wind, nuclear, hydro, water reclamation, on shore chip foundries, manufacturing, battery chargers, non-crumbling bridges, manufacturing, paved raids, public transit, or working airports. We need more crud apps and adtech! More stock options and stock buybacks!
You're being sarcastic, but we probably don't need that stuff either. We're eventually going to run out of resources to make all that at some point (we're already starting to run out of sand[1], which we use in modern cement, for glass, and for the silicon in computer chips, for an example -- and before anyone goes 'deserts are full of sand!' they are, but it's the wrong type to make these things).
Probably should start putting some energy into getting ready for pre-industrial age living again.
Ah yes, that old study/book "The Limits to Growth" from 1972. How it haunts me still. Along with the first IPCC report I read 10 years ago. I do wonder what the future (present) holds. Of course, you're right about running out of sand. I hope our standard of living doesn't fall that much. In my lifetime. As was said by everyone for a century.
I believe we reached peak earth in the last two years. It's not just sand or food but also the logistics - people say it's the pandemic stupid or it's obviously the war - but these are all just catalysts.
Too many people just want too much shit. 7 billion people are really not that many - but 7 billion people who wants to live like Westerners that's a big problem.
All the while we are still living in the age of exploitation. We can build marvelous things now but our recycling is still stuck somewhere in the medieval ages...
This whole party can only last if the recycling of an iPhone becomes as financially sexy as building one...
What's wrong with CRUD apps? They may be boring to develop, but they tend to be the most useful.
Every single one of those industries uses multiple CRUD apps in the course of their business operations. The database is one of the most important technologies of our civilization.
I used to enjoy MMOs too. I stopped playing and took up gardening of all things :). I'm still not sure what the economic value of web2 is yet, but if you find out I'll attend your showHN.
Also, arguably the most socially productive outlets would have been public goods, like major infrastructure investments and public education and health initiatives. But that's evidently politically untenable.
Central bank intervention herded all investors into equities which obviously contributed to the post-2008 bull market, but also distorts price discovery.
But hey, at least the Fed hasn't started buying equities too, like the BOJ.
This was a really interesting thread. I see what you guys are talking about all around me, the mis-used liquidity or whatever you want to call it. I don't know anything about finance, so I don't know how to respond to the people, but I feel like saying all the time, "Hey you know someday you're gonna need that money."
Why can't we have preferential interest rates for certain class of projects (infrastructure, renewables) and those types of projects to be backed/insured by government. Like in some countries the first home loan is is backed by the government.
> Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing.
I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless
Jesus yes. Economists treat all spending like it is equal in value. Stupidity.
One thing I've been a long-time advocate for is States setting up their own banks akin to that of North Dakota's. If for no other reason than to have a way to leverage national monetary policy for regional aims, so that when the Federal government rushes to the aid of Wall Street (e.g. by flooding it with cheap liquidity) there's a way for State governments to more directly interact with those mechanisms themselves for their benefit.
I strongly suspect significant challenges in setting up effective and responsive governance and incentive structures to keep such things from not becoming their own instruments of abuse, but ever since watching 2008 unfold it's bothered me how easy it is to leave States twisting in the wind while the balance sheets of financial institutions are made whole by feeding at the Fed liquidity trough.
One of the basic premises of "States rights", as it were, is that it's supposed to offer lots of little "laboratories of democracy", but as it stands right now there's no good way to actually finance those laboratories to invest in ambitious things. So, what we mostly end up with instead is only the downside of using "States rights" in the only way that it's cheap to do so, which is usually by restricting or denying things. It's much harder to get the upside of investing in things without all the latitude that the Federal government enjoys financially.
Indeed, and since it is a privately owned entity [1] with a figurehead appointed by a politician to give the illusion of public accountability, the Fed has very little incentive to do anything but enrich its shareholders: private banks.
"Liberal Democracy" is all theatre, all the time. It is a plutocracy with an extremely advanced propaganda arm designed to fool even the most intelligent observer, as can be seen by the high degree of trust placed in the system by my esteemed colleagues here at HN.
Congress has the power to monitor and "regulate" The Fed. That is, The Fed is not - or isn't supposed to be - completely autonomous. It has oversight, or should.
The reality is, it does not. Congress lets The Fed run wild. That might be the status quo, but it's not how it legally needs to be.
So yes, Congress isn't doing their job. And no one (read: the media) is questioning that negligence.
Again, only in America. << That's not editorial. It's a statement of fact.
Not a down-voter and I agree with your positions, but why stop at congressional oversight? Why should a private company [1] be controlling a nation's money supply?
The fire him, Wall Street and the rest panics. They keep him and we get more insanity.
He was interviewed on Marketplace (NPR) this past week and he should be a politician. Tons of half answers and such. Another disconnected elite with zero affinity for accountability.
I can't speak for Europe, but Congress does have the power to put The Fed on a leash and they don't. The conflict of interest is blinding. We The People in the darkest dark. Again.
That's the scope of Only in. America, in this case.
This is mostly a central banking failure. Take a look around the world, for decades the only thing the central banks have been doing is printing money. If that is ever going to work, put swines in their seat would do their jobs perfectly.
To me printing money should only be used as emergency measure just like administering of adrenaline in emergency room and must be reviewed afterwards. Unfortunately such instrument has been abused for a prolonged period as central banks saw no inflations. Of course there was no inflations in central banks' eyes. The first thing was that the definition of CPI was biased and not considering assets.
Secondly in a global economy, inflation can happen elsewhere. So in the past decades, China actually absorbed lot of the actual inflations. And lastly and most importantly, the printed money went into the wrong hands. The extra printed money goes to the banks first, then goes to the rich in the form of loans. There is so much money in the market and it would be nice and easy to make money by bumping the assets prices up. So why would anyone put money into anywhere but virtual economies? That's pretty much what happened in recently decades, properties, shares etc. skyrockets but what really make their value changed so much? Nothing but too much money. For the poor, obviously they can hardly get any loans, so they only get their normal pay which would be diluted over time.
Crisis happens mostly because the poor doesn't have enough money to spend. Printing money obviously cannot resolve the problem, but it do be able to maintain the momentum a little bit longer by making it worse. The burst got delayed but eventually will come back harder, sooner or later.
What does it mean when inflation happens elsewhere? Isn't that kind of a good thing (if not hostile) - because we can buy stuff from "elsewhere" for cheaper?
This happened during the Asian financial crisis of the late 1980s, late 90s, and early to mid 2000s, depending on the country. Some people speculate that the currencies were manipulated to crash so that people could swoop in and buy assets for cheap in Asian countries. Samsung to this day has large foreign investor ownership for example.
It shouldn't have stopped them from maintenance though; they just didn't feel like doing maintenance. If a company wants to spend money on something they can always get a loan for it and consider issuing the shares out again later if needed.
The problem with a share buyback is if you do it and then the share price falls again.
>The problem with a share buyback is if you do it and then the share price falls again.
how's that a problem? I get it might seem like you're back to square one if you did a buyback early this year, and the recent market crash brought the share price to before the buyback, but you still permanently:
1. paid out money to the shareholders who sold
2. increased the ownership stake of the remaining shareholders
If it falls again, it's not value neutral anymore - it's a transfer to whoever sold. So then the complaint that you could've used the money on maintenance against poisoning babies becomes true.
> really useful ventures like large infrastructure projects
give me an example of large infrastructure projects like this. The only examples i can think of are things which gov't fund via tax payer money, and don't expect to be able to reap private profit off; things like roads, rail, electrification of the grid etc.
Wasn’t that the Soviet double ruble system? Whenever the Politburo wanted to find a mega project the money was wished into existence and things happened (just as it’s done today) yet it was illiquid and only usable in a sealed silo, separate from the normal exchange ruble.
That's not what the parent comment is talking about. Berezka stores were originally created to earn dollars by selling Soviet wares to tourists, and later gradually reoriented towards the few Soviet citizens who earned dollars and looked for some way to spend them. Not to be confused with other special stores unavailable to ordinary citizens that supplied party members.
What parent comment is talking about was the system of cash and cashless (безнал) roubles. Cashless roubles were used for industry purposes and couldn't be converted to the ordinary roubles available to the population. When USSR allowed cooperation (primitive private business) in the late 80s, it was used by many officials as a tool to convert the cashless roubles from the organization's they controlled into real currency in their private pockets. And a lot of oligarchs (including Khodorkovsky) got their fortunes that way.
It's ironic that now ordinary Russians blame the chaos and injustice of the 90s on capitalism and free market, whereas a lot of that was created by a state economy system and exploited by corrupt beurocracy of a communist party.
There would need to be some tight regs to make that work, or else large companies would buy up all the housing supply and force everyone to pay them rent.
I think individual home ownership is important, and thats not where I'd want to start cutting.
Credit for second homes being less cheap - totally onboard.
In my view, it's not a failure of any central bank. The additional liquidity is generated by other banks, in the form of overvaluations and financial constructions that allow loans without backing securities.
Governments as a whole have a lot of different hammers for monetary policy. It's just that every other one depends on the Congress understanding the problem and cooperating.
Technically they are (everybody who works for the Fed or the Bank of England gets a governmenT paycheck) and in a technical sense they aren’t, or try not to be (independent balance sheets).
But they are involved in policy decisions, being consulted and themselves asking. They do t have an independent mission the way, say, a trucking company does.
it's just as much government as the supreme court. senate confirmed presidential appointees. they have a dual mandate (price stability and low unemployment)
No they are not, though it's easy to understand the confusion. From the SF Feds website:
The Board of Governors—Located in Washington, D.C., Board members are appointed by the U.S. President and confirmed by the U.S. Senate. Board members and staff are civil service employees.
The 12 regional Reserve Banks—Located around the country, the 12 Federal Reserve Banks are chartered as private corporations. Employees are not civil service.
The Federal Open Market Committee (FOMC)—Composed of the Federal Reserve Governors and the Federal Reserve Bank presidents, the FOMC is charged with conducting monetary policy.
Yes, I'm aware of the legal fiction that they are not part of the government. But they are, as they are run by people appointed by the government, and therefore serve the government.
I rather think the fiction is that they serve the government, but I also have The Creature from Jekyll Island in the backseat for light reading so my perspective probably is heavily biased.
You aren't biased at all [1]. Our dear colleagues (along with the majority of the American populace) are just deeply ideologically committed to the idea of the Federal Reserve being a public institution, because they've been told this implicitly all their lives.
The truth, which is difficult to uncover and requires digging into some legislation, is of course unsettling, because it points to the nature of the American system and which institutions have power. Hint: if an institution is immune to bankruptcy or prosecution, it's probably the one in charge.
Right. It’s really up to businesses and governments. Businesses to make productive investments and governments to make the appropriate counter-cyclical investments (beyond just interest rates) to keep the productive investments more attractive than the non-productive speculative ones for businesses.
Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.
Housing always lags, usually by 18-24 months. Real estate transactions are slow - they require a bunch of research, non-fungible goods in an illiquid market, physically scoping out properties, financing sources that are notoriously sluggish and thorough in their diligence, and a slow closing process. And the sellers don't need to sell - they can just hold onto their places and live in them or rent them out. That means that when money dries up in the housing market, liquidity dries up before prices drop: people just hold onto their houses and don't sell them rather than take the loss.
This also means that housing is pretty resilient to recessions that last < 1 year. Nationwide the '73, '80, '82, '91, and '01 recessions were barely blips to housing prices [1]. It takes a sustained downturn of > 4 years or so in a regional economy to make a serious dent in housing prices.
Hard to say, but it has always been like that. Housing prices are extremely sticky. With corrections most of the work ends up being done by inflation while prices stagnate. One peculiar advantage to the burst of inflation is that it could help the housing bubble correct itself relatively quickly.
There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything.
Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing.
I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless.