One thing I have found about HN in general is a refusal to ponder the meaning of money itself.
1 Why is a small amount of inflation considered a "good thing"? In just one generation, inflation targets reduce the purchasing power by nearly 50%. What if you knew that assumption lead to all kinds of terrible outcomes, but they only surfaced after 7-8 election cycles?
2 Why is a gold standard considered impractical? After all, today, the technology actually exists to at least make this a worthwhile pursuit (that is, a digital gold standard which doesn't involve the actual movement of physical gold)
3 Why is there so little discussion on the "amount of currency units your central government printed this year"? I find it remarkable, and somewhat amusing frankly, that there could be so many intelligent people on a forum (compared to the average online forum) and how few of these folks have asked themselves this question.
4 Why is there so little discussion on the possibility of currency deflation being a very good thing for the people on the margins of society?
It certainly doesn't help that 99% of the folks who ask these questions happen to be both male and white, which just makes people auto-associate these ideas with racism, privilege etc. I don't think the core ideas themselves have been given sufficient thought for a few decades.
And as for Patrick Collison, I am willing to bet he hasn't read a single book written by Thomas Sowell (whose books will at the very least force you to ask these questions, even if you might come to different conclusions to others who read his books).
It’s very challenging to ponder these questions in a public forum, because so many people hold uninformed or nonsensical views on them. Whenever I’ve tried to discuss them, I’ve had to fight off very basic misunderstandings like:
* The Fed prints money by giving free gifts to banks. That is, QE for $500 billion means banks are $500 billion richer.
* The first person to get a new dollar has an unfair advantage, since they can spend it before the rest of the economy knows about the extra dollar.
* Inflation is a deterministic function of the money supply. There wouldn’t be inflation if we didn’t create more money.
I’m sure you understand the problems here, and I certainly don’t hate educating people about them. But it’s hard to have a deep discussion punctuated by constant breaks into monetary theory 101.
> The Fed prints money by giving free gifts to banks. That is, QE for $500 billion means banks are $500 billion richer.
This is a straw man, $500 billion in loans (normally above market value for collateral) means banks could be anywhere from 0-500 billion dollars richer but they are certainly not poorer.
>The first person to get a new dollar has an unfair advantage, since they can spend it before the rest of the economy knows about the extra dollar.
Have you seen the stock market lately? Investors have done well in this new easy money economy and until that money trickles down they certainly have it much easier than they otherwise would.
>Inflation is a deterministic function of the money supply. There wouldn’t be inflation if we didn’t create more money.
In the long run this is true. Especially the second statement, it's almost trivial to prove: Imagine an island with 10 dollars in circulation. The amount of goods produced doubles, and everyone is able to trade and consume all the goods. The price of the goods must necessarily be cut in half on average, so that the 10 dollars are able to pay for all the goods.
> This is a straw man, $500 billion in loans (normally above market value for collateral) means banks could be anywhere from 0-500 billion dollars richer but they are certainly not poorer.
It's not universally a strawman. I've had people propose to me, in all apparent seriousness, that we should just take the QE funding and give it to individuals instead.
> Have you seen the stock market lately? Investors have done well in this new easy money economy and until that money trickles down they certainly have it much easier than they otherwise would.
I've seen this theory, but it fundamentally doesn't make sense. Money is fungible; there's no trickling barrier dividing the money supply into "investment dollars" and "consumption dollars". (It is of course true that monetary policy can affect asset prices in other ways.)
> In the long run this is true. Especially the second statement, it's almost trivial to prove: Imagine an island with 10 dollars in circulation. The amount of goods produced doubles, and everyone is able to trade and consume all the goods. The price of the goods must necessarily be cut in half on average, so that the 10 dollars are able to pay for all the goods.
This isn't so, because you're missing the critically important concept of the velocity of money. If everyone buys and sells things twice as often to match the doubling in total production, prices won't need to be cut. It may help with the intuition here to imagine playing a video of the island at 2x speed; the number of goods they produce in any given time interval will double, yet the total number of dollars in circulation won't change.
1 Why is a small amount of inflation considered a "good thing"? In just one generation, inflation targets reduce the purchasing power by nearly 50%. What if you knew that assumption lead to all kinds of terrible outcomes, but they only surfaced after 7-8 election cycles?
2 Why is a gold standard considered impractical? After all, today, the technology actually exists to at least make this a worthwhile pursuit (that is, a digital gold standard which doesn't involve the actual movement of physical gold)
3 Why is there so little discussion on the "amount of currency units your central government printed this year"? I find it remarkable, and somewhat amusing frankly, that there could be so many intelligent people on a forum (compared to the average online forum) and how few of these folks have asked themselves this question.
4 Why is there so little discussion on the possibility of currency deflation being a very good thing for the people on the margins of society?
It certainly doesn't help that 99% of the folks who ask these questions happen to be both male and white, which just makes people auto-associate these ideas with racism, privilege etc. I don't think the core ideas themselves have been given sufficient thought for a few decades.
And as for Patrick Collison, I am willing to bet he hasn't read a single book written by Thomas Sowell (whose books will at the very least force you to ask these questions, even if you might come to different conclusions to others who read his books).