As someone who has no clue about finance, I found this text accessible, fun to read, and helpful, and would love an update for now that we have the reverse problem—what would be the recommendation for what to do now, and why isn’t it being done?
I would also love to read a rebuttal filling in more on why the central bank acts like this. I have generally found that when figures in authority do something that seems patently stupid immediately to an outsider, there are reasons why they aren’t doing otherwise, often not the ones they initially state or can easily explicate, and that it is worth figuring those out—sometimes they are good reasons or at least legitimate hurdles one needs to think around. E.g. are there really no downsides to interest rates dropping below zero beyond a mental block at a number, and would people in the US and Europe take to it the same way as those in Japan did? ′
And is destroying money as easy in practice, that is, socially, as creating it, especially when the only hurdle to creating it is convincing the government that this is a responsible thing to do that won’t lead to runaway inflation when you hand the government/business/populace additional funds which they would very much like, while destroying it intuitively sounds like it would be rather unpleasant for the one whose money is being destroyed? Like, right now in Europe, there seems to be a general agreement that the current inflation height is capital letters real bad, and yet simultaneously, the government wants extra funds to build a military against Russia from scratch after decades of sleeping on it, fix our urgent green transition in energy and infrastructure after decades of sleeping on it, invest in climate resilience measures because we slept on it and the climate is breaking and we are getting flooded/roasted, and appease a populace that cannot get housing or food and is considering voting for nazis again, while biodiversity and human minority groups are also calling the alarm and wanting funds, too, and we just spent a ton of money on a pandemic while making very little, and now there is an increasing realisation that if we don’t spend on AI safety we might have another apocalyptic rider in the room, with all of these being individual problems that seem like they are improved by more money, not less, even though in total, that backfires. Even though inflation seems to make a lot of this even worse, destroying enough money to fix it sounds brutally hard in practice—which money do you destroy, where will it be missing, and how will that entity cope with that when they are already broke, and how do you get that entity to agree to being robbed because the general fiscal policy fucked up? Maybe the banks were reluctant because printing moah money if they hadn’t printed enough sounded like something they could totally still do next year with only minimal and hard to pinpoint negative consequences for the economy in the meanwhile, while destroying it next year if they had printed too much would not go down well and they would definitely get personally blamed and hence they were hence biased to undershoot. - Again, I have no idea about finance, but I would like to understand this at least a little, with how it is fucking up my EU right now.
As someone who has no clue about finance, I found this text accessible, fun to read, and helpful, and would love an update for now that we have the reverse problem—what would be the recommendation for what to do now, and why isn’t it being done?
I would also love to read a rebuttal filling in more on why the central bank acts like this. I have generally found that when figures in authority do something that seems patently stupid immediately to an outsider, there are reasons why they aren’t doing otherwise, often not the ones they initially state or can easily explicate, and that it is worth figuring those out—sometimes they are good reasons or at least legitimate hurdles one needs to think around. E.g. are there really no downsides to interest rates dropping below zero beyond a mental block at a number, and would people in the US and Europe take to it the same way as those in Japan did? ′
And is destroying money as easy in practice, that is, socially, as creating it, especially when the only hurdle to creating it is convincing the government that this is a responsible thing to do that won’t lead to runaway inflation when you hand the government/business/populace additional funds which they would very much like, while destroying it intuitively sounds like it would be rather unpleasant for the one whose money is being destroyed? Like, right now in Europe, there seems to be a general agreement that the current inflation height is capital letters real bad, and yet simultaneously, the government wants extra funds to build a military against Russia from scratch after decades of sleeping on it, fix our urgent green transition in energy and infrastructure after decades of sleeping on it, invest in climate resilience measures because we slept on it and the climate is breaking and we are getting flooded/roasted, and appease a populace that cannot get housing or food and is considering voting for nazis again, while biodiversity and human minority groups are also calling the alarm and wanting funds, too, and we just spent a ton of money on a pandemic while making very little, and now there is an increasing realisation that if we don’t spend on AI safety we might have another apocalyptic rider in the room, with all of these being individual problems that seem like they are improved by more money, not less, even though in total, that backfires. Even though inflation seems to make a lot of this even worse, destroying enough money to fix it sounds brutally hard in practice—which money do you destroy, where will it be missing, and how will that entity cope with that when they are already broke, and how do you get that entity to agree to being robbed because the general fiscal policy fucked up? Maybe the banks were reluctant because printing moah money if they hadn’t printed enough sounded like something they could totally still do next year with only minimal and hard to pinpoint negative consequences for the economy in the meanwhile, while destroying it next year if they had printed too much would not go down well and they would definitely get personally blamed and hence they were hence biased to undershoot. - Again, I have no idea about finance, but I would like to understand this at least a little, with how it is fucking up my EU right now.