undefined | Better HN

0 pointseru5mo ago0 comments

> [...] undermine lower-paid competing workers, and create solidarity among workers.

Nice 'solidarity' there!

> Most US factory workers and miners didn’t end up with good service industry jobs, for example.

Which people are you talking about? More specifically, when?

As long as overall unemployment stays low and the economy keeps growing, I don't see much of a problem. Even if you tried to keep everything exactly as is, you'll always have some people who do better and some who do worse; even if just from random chance. It's hard to blame that on change.

See eg how the draw down of the domestic construction industry around 2007 was handled: construction employment fell over time, but overall unemployment was low and flat. Indicating an orderly shuffling around of workers from construction into the wider economy. (As a bonus point, contrast with how the Fed unnecessarily tanked the wider economy a few months after this re-allocation of labour had already finished.)

> Sure, at a macro level an economist viewing the situation from 30,000 feet sees no problem - meanwhile on the ground, you end up with millions of people ready to vote for a wannabe autocrat who promises to make things the way they were. Trying to treat economics as a discipline separate from politics, sociology, and psychology in these situations can be misleading.

It would help immensely, if the Fed were more competent in preventing recessions. Nominal GDP level targeting would help to keep overall spending in the economy on track.

0 comments

derangedHorse5mo ago

The Fed is capable of doing no such thing. They can soften or delay recessions by socializing mistakes and redistributing wealth using interest rates, but an absence of recessions would imply perfect market participants.

eruOP5mo ago

> [...] but an absence of recessions would imply perfect market participants.

No, not at all. What makes you think so? Israel (and to a lesser extent Australia) managed to skip the Great Recession on account of having competent central banks. But they didn't have any more 'perfect' market participants than any other economy.

Russia, of all places, also shows right now what a competent central bank can do for your economy---the real situation is absolutely awful on account of the 'special military operation' and the sanctions both financial and kinetic. See https://en.wikipedia.org/wiki/Elvira_Nabiullina for the woman at the helm.

See also how after the Brexit referendum the Bank of England wisely let the Pound exchange rate take the hit---instead of tanking the real economy trying to defend the exchange rate.

> They can soften or delay recessions by socializing mistakes and redistributing wealth using interest rates, [...]

Btw, not all central banks even use interest rates for their policies.

You are right that the central banks are sometimes involved in bail outs, but just as often it's the treasury and other more 'fiscal' parts of the government. I don't like 'Too big to fail' either. Keeping total nominal spending on a stable path would help ease the temptation to bail out.

j / k navigate · click thread line to collapse