Take That, Congress

[Dinner]

It's dangerous for you to think Kuci knows lots about economics. He's young, and economics is not a science despite claims some people may make. People in his field are conditioned to trust in The Models and The Theories blindly and explicitly. I've seen way too many people over the years with an arrogant attitude about economics (or finance) and get burned badly. Hell, the whole mess the US is in is a prime example of that. Canada had policies that Kuci et al would've railed as stupid in 2004 (heavy bank/mortgage regulation, for instance), but now in hindsight the world is pointing to Canada as an example of how to do it right.

I think it's very important you realize economics is not definitive. There's a reason economics degrees tend to be BAs.

Canada certainly got banking and mortgage regulations more correct than the US and that's putting it mildly.

[KrazyHorse]

I don't know why Krazyhorse is trying so hard to prove this statement wrong.

Feel free to demonstrate where you believe I'm in error then, you twit. Until then, I'm going to assume you've got nothing to say other than to express some mealy-mouthed relativism whereby you assume that all the opinions expressed in this thread are equally valid despite the fact that I've spent far more of my time reading and thinking about this than you or your compatriots have, that my oona are based in well-accepted macro theories and are supported by considerable empirical evidence.

[Hauldren Collider]

Feel free to demonstrate where you believe I'm in error then, you twit. Until then, I'm going to assume you've got nothing to say other than to express some mealy-mouthed relativism whereby you assume that all the opinions expressed in this thread are equally valid despite the fact that I've spent far more of my time reading and thinking about this than you or your compatriots have, that my oona are based in well-accepted macro theories and are supported by considerable empirical evidence.

But it violates Asher's common sense! You guys are just autistic mathie folks, that's why you can't predict things like stock market crashes and bubbles the way Asher can.

[Dinner]

For the second chart, the beta of spx vs 5yr tips should be on the order of ~4. A beta of 25 is ****ing unacceptable and indicates extraordinarily tight monetary policy.

I'm curious about the details of exactly what "the beta of spx vs 5yr tips" means. I agree that no one is lending so there is a shortage of money in the economy but that said the two ways to improve this, in my mind, is either to increase the total supply of money (essentially what the Fed is trying to do) or to find ways to get existing money to circulate more efficiently (I.E. get people to stop sitting on cash stockpiles and actually get it circulating). Am I right? The current problems seems to be, at their heart, that banks either don't have the money to lend (because they're not sufficiently capitalized) or don't have the desire to lend (mostly out of fear of the borrower not having the ability to repay) while corporations are sitting on ~$2.5 trillion which they're not spending because they have insufficient demand to expand or even maintain their current production/employment levels. So either finding fiscal ways to boost aggregate demand (so that corps start hiring and increasing production based on new demand), recapitalizing banks or convincing them to easy credit requirements, or simply increasing the money supply would work, yes?

Of these things it seems like boosting aggregate demand via fiscal policy would be the most effective and least destructive to saved wealth but due to Republican obstructionism (and just down right stupidity as demonstrated by BK's posts) this is not politically possible so all we're left with is the monetary policy of increasing the money supply? Wouldn't this mean we're ignoring possible policy changes which could be designed to encourage banks to lend more? Though I honestly am unsure how to do this in a sustainable manner without forcing them to make risky loans which might just worsen the situation.

[Dinner]

Could there also be some sort of tax or regulation policy changes which we could put into effect to incentive corps to stop sitting on that $2.5 trillion stock pile? t would have to be a delicate balancing act though so as not to set off capital flight. Alternatively, US corps make a bundle over seas but rarely repatriate most of their profits because they don't want to pay corporate taxes on the repatriated money. A long term cut in corporate tax rates is clearly not possible within our current budget constraints but maybe a short term (1 year) corporate tax holiday to encourage them to bring those profits back here? The problem is they'd likely still just sit on that money as they're already doing with the other $2.5 trillion due to lack of demand but maybe some of it will get spent thus increasing the amount of money circulating in the economy. Either way increased capital inflows to the country has to help the economy over the long term.

[KrazyHorse]

Oerdin: beta is the ratio of covariance of the two variables (spx, tips spread) to the variance of the tips spread

The reason it should always be less than 5 is that when beta is greater than 5, monetary policy is having an effect on projected future activity beyond that of simply impacting nominal values. 5 is because it's the 5 year rate, and because inflation is essentially stable beyond 5 years.

[MORON]

What is up with participating in threads with innate tactical weaknesses, no practical use in either in direct application or general propose signalling and is asking to be AMOGed? masochists......

[giblets]

Feel free to demonstrate where you believe I'm in error then, you twit. Until then, I'm going to assume you've got nothing to say other than to express some mealy-mouthed relativism whereby you assume that all the opinions expressed in this thread are equally valid despite the fact that I've spent far more of my time reading and thinking about this than you or your compatriots have, that my oona are based in well-accepted macro theories and are supported by considerable empirical evidence.

I haven't argued with you. I haven't argued with Ben, either. In fact I'd like it if everyone simply ignored the *******s.

[KrazyHorse]

They were signaling group affiliation and being "informed". They didn't realize that their interpretation was patently false.

[KrazyHorse]

I haven't argued with you. I haven't argued with Ben, either. In fact I'd like it if everyone simply ignored the *******s.

Right, in favor of you and your little band of ignoramuses providing content-free commentary.

[giblets]

Right, in favor of you and your little band of ignoramuses providing content-free commentary.

If I want your opinions on macroeconomics I'll read Scott Sumner's blog. That way I don't have to put up with such a high level of vitriol and pride.

[KrazyHorse]

I really liked it when you told me that inflation expectations were not indicative the stance of monetary policy...

[giblets]

Yes, calling everyone an ignoramus if they don't define "monetary loosening" according to your personal preference is really super insightful.

[-Jrabbit]

While the topic is not the same, today's Basic Instructions strip made me think of this thread...

[notyoueither]