Apologies for having a strong opinion about the roots of the crisis which I think is reasonably well informed. And yes I am operating within some sort of framework.
I'm always willing to adjust based on new information.
I think I have a pretty good idea about how asset pricing relates to interest rates expectations and inflation expectations. If you want a better idea of where I'm coming from I recommend Coursera's Financial Markets course.
I'm not lumping them together. I said: "Why would anyone invest in productivity or infrastructure when the governments are signalling you will make a lot more money speculating on bubbles and we will keep backing you up in doing that. Cheap money is a double edged sword."
So I differentiate (to some extent) between the "real" economy (which no one is incentivized to invest in) and what the authors call the FIRE economy. I just disagree where I think the authors are pointing to a root cause where I see something that is just a symptom. I do agree with the authors points about the negative impact of bailouts but this is only part of the equation in my opinion. Also at the end of the day it's really hard to separate the "real" from the "financial". You can use the money created to go buy things in the real world.
There is not much new in the paper. Lots of people have talked about the role of debt in the crisis. Lots of people have talked about how bailing out the banks encourages bad banking practices.
The paper's intent is to articulate a particular ideological element within the current mainstream(finance being equated to the real economy), identify its appearance, and set the stage for a counter ideology that pushes finance away from power; it's more historical-political in nature than anything.
So yes, saying it says nothing new is missing the point, because it's not really aimed at economists who have already started critiquing these distinctions. If it aimed to craft new theory or policy, it probably wouldn't be referencing more detailed, years to decades old, sources in every other paragraph.
I see. I guess I'm not that familiar with ideologies in the world of economics academia.
In the real world I don't think there's anyone, including central bankers, who currently thinks (or really ever thought) that bailing out banks that give bad loans is a good idea or e.g. that companies taking debt to buy back shares is a good idea. Central bankers also don't think (any more) that QE or reducing rates can restore real economic growth to the pre-crisis levels.
What do you think looking at "finance" vs. "real" economy is going to get us? How will it impact policies? What does it mean to "push finance away from power" and what are the implications?
Not to mention the futility of trying to track what's finance and what's real. Is VC "real" or "finance"? When Microsoft buys LinkedIn is this "real" or "finance"? Is Facebook a part of the "real" economy? Disney? My retirement savings that are sitting in the bank, is that "real" or "finance"?
I'm always willing to adjust based on new information.
I think I have a pretty good idea about how asset pricing relates to interest rates expectations and inflation expectations. If you want a better idea of where I'm coming from I recommend Coursera's Financial Markets course.
I'm not lumping them together. I said: "Why would anyone invest in productivity or infrastructure when the governments are signalling you will make a lot more money speculating on bubbles and we will keep backing you up in doing that. Cheap money is a double edged sword."
So I differentiate (to some extent) between the "real" economy (which no one is incentivized to invest in) and what the authors call the FIRE economy. I just disagree where I think the authors are pointing to a root cause where I see something that is just a symptom. I do agree with the authors points about the negative impact of bailouts but this is only part of the equation in my opinion. Also at the end of the day it's really hard to separate the "real" from the "financial". You can use the money created to go buy things in the real world.
There is not much new in the paper. Lots of people have talked about the role of debt in the crisis. Lots of people have talked about how bailing out the banks encourages bad banking practices.