THE ECONOMY

Clinamenic

Binary & Tweed
Maybe you're talking of a specific time when that did happen, but as a rule, inflation moves in thd opposite direction to interest rates so Fed raising the rate is supposed to control inflation, not exacerbate it (all other things being equal).
Yeah I could very well have it backwards, not sure. Either way I'm not yet able to really intuit how it works.

You might ask why it's the Fed not the treatment can do that... which is a good question I'd say.
I would hope the large scale asset purchases are conducted under congressional oversight here, but for all I know it could be primarily at the discretion of the fed board of governors.
 

IdleRich

IdleRich
Strange how the trustworthiness of the system is partially determined by the existing trust in the system, as in a catch-22. The system needs widespread trust in order to function properly and justify the trust.
This is one of the things I was thinking about when in the other thread people were talking about how crypto and other stuff is based on a mutual kinda joint fantasy - I really don't see that as a new thing at all.

There seems to be a huge misunderstanding wherein people think pound coins and 10 dollar notes and so on are "real" - I suppose because they have a tangible representation that you can hold in your hand. I remember reading an opinion piece with someone speaking disparagingly about "funny money" and speculation and so on, saying that they, by virtuous contrast kept their money under their bed - totally failing to grasp that the value in those notes can evaporate just like a dodgy mortgage backed security even as the notes themselves remain.

OK to be generous, perhaps there is a point that if cash itself is intangible and derives value only from collective belief then perhaps a derivative product is intangible squared... even less real. But I still think the step from solid and real to fantasy is the big one and most people don't even realise that they have taken in.
 
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wild greens

Well-known member
The energy crisis is largely Russian provocation- it's the largest supplier of natural gas to Europe and has put the brakes on this summer

Germany are trying to retaliate by blocking the sign off on the new Russian line but Putin has Gazprom semi-nationalised so they can fuck around. One of the stocks discords was on about the flow being even more restricted earlier in the month
https://www.naturalgasintel.com/eur...ws-reverse-on-key-russian-pipeline-lng-recap/

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Petrol crisis is largely fake off the back of the driver shortage but its what £1.45 at the moment? Most of this is trying to recompense for the lost covid revenue imo, but its also the last hurrah for oil so doubtful that will reduce to April 2020 levels or ever even close. I was getting diesel for 98p in some places at one point!

Personally i read the "economy" talk from crypto realms and it talks about it as if it is an artificial construct generated by governments but imo, the current scenario in the UK is driven more by

russian fuel provocation x poor brexit negotiations x european hgv labour thinking fuck this i am staying in mainland rather than having to sit in tilbury docks for another six hours

Re hgv driver shortage, the IR35 regs should have been pushed back two years. Most of the hgvs are on the books now and stuck in the time & a half working reg scenario as opposed to "independent" contractors smashing it out- i think john eden posted about this in the brexit thread

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No idea what any of the american talk means
 

IdleRich

IdleRich
Yeah I could very well have it backwards, not sure. Either way I'm not yet able to really intuit how it works.
Definitely that's the normal way that it's supposed to work, the Fed or Bank of England raises interest rates to lower inflation and vice versa, normally to try and keep it within some predetermined target range which someone somewhere decided was the best value.

And at the same time they need to consider that raising interest rates will be a major blow to those in debt - especially variable rate mortgage holders - but pleasing to savers and vice versa. So raising the rate could mean that for some people, sure, inflation has been curbed and their money goes further- but as they are paying more to their mortgage each month, they have less of it...

I would hope the large scale asset purchases are conducted under congressional oversight here, but for all I know it could be primarily at the discretion of the fed board of governors.
You would hope so right? The Fed is a weird thing that I don't know much about, partly cos it's not my country and partly cos I probably wouldn't understand it anyway. But if it went rogue, like just messing around with interest rates and so on for a laugh, I dunno if there is a mechanism to rein it in.
 

wild greens

Well-known member
I guess there is the idea that bitcoin/eth is an inflation hedge but i look at tether these days as if it is enron and i don't believe in it

I do continue to mine monero though
 

IdleRich

IdleRich
"Anyone able to explain what is happening and how serious it is?" is easy to answer... the answer to that is "no".

But I think if we, ok I, act less like a cunt and look at the underlying question "what is happening and how serious is it?" it's just too vague.

Maybe if you asked some smaller questions that are part of that whole some of us could at least try maybe.
 

Clinamenic

Binary & Tweed
This is one of the things I was thinking about when in the other thread people were talking about how crypto and other stuff is based on a mutual kinda joint fantasy - I really don't see that as a new thing at all.

There seems to be a huge misunderstanding wherein people think pound coins and 10 dollar notes and so on are "real" - I suppose because they have a tangible representation that you can hold in your hand. I remember reading an opinion piece with someone speaking disparagingly about "funny money" and speculation and so on, saying that they, by virtuous contrast kept their money under their bed - totally failing to grasp that the value in those notes can evaporate just like a dodgy mortgage backed security even as the notes themselves remain.

OK to be generous, perhaps there is a point that if cash itself is intangible and derives value only from collective belief then perhaps a derivative product is intangible squared... even less real. But I still think the step from solid and real to fantasy is the big one and most people don't even realise that they have taken in.
Very sound considerations here. Especially since most of the money in the US money system exists as numbers on privately administered ledgers. In that sense also, crypto is not very new. Also gold standard was severed long ago, to my knowledge.
 

Clinamenic

Binary & Tweed
You would hope so right? The Fed is a weird thing that I don't know much about, partly cos it's not my country and partly cos I probably wouldn't understand it anyway. But if it went rogue, like just messing around with interest rates and so on for a laugh, I dunno if there is a mechanism to rein it in.
I did just watch a hearing with Powell and Yellen, and at the very least they seemed to be very compliant. Yellen seemed more in alignment with progressive agendas than Powell did, but I suppose actions speak louder than words.

But I'm right with you: don't know much about it, don't know the degree of authority congress has over Fed.
 

Clinamenic

Binary & Tweed
I guess there is the idea that bitcoin/eth is an inflation hedge but i look at tether these days as if it is enron and i don't believe in it

I do continue to mine monero though
Yeah I'm not sure where to stand about whether crypto in general should be considered a hedge against inflation. Are you concerned about regulators cracking down especially on monero?
 

IdleRich

IdleRich
Remember that inflation isn't always a bad thing for everyone. Suppose you have a million pound debt and then there is a period of hyperinflation, afterwards you do still owe a million... but the value of your debt has changed from a house to a loaf of bread.

Of course that's an extreme example, and maybe if you live somewhere with that kind of inflation the size of your debt is not your biggest worry. But the general point - that loans can be inflated away to nothing or almost nothing in certain circumstances - does stand.
 

Clinamenic

Binary & Tweed
Things like this make me think that inflation at a certain, stable rate can actually be a good thing systematically, and not just for indebted individuals, i.e. the 2% inflation that the Fed aims for, if I'm not mistaken.
 

IdleRich

IdleRich
Also, is crypto totally inflation proof? I understand that Bitcoin* has a built-in scarcity which will work against inflation. But that is just one of the factors that influence inflation, is it certain that the scarcity cannot be overwhelmed by other factors? I'm not playing devil's advocate or anything like that, I genuinely don't know the answer. My gut feeling is that the price of Bitcoin goes up and down so it's not totally impervious to inflation, just better protected than a traditional currency.


*I say Bitcoin cos I know about that, I guess others are the same, do they all have that sane element to their design?
 

Clinamenic

Binary & Tweed
Also, is crypto totally inflation proof? I understand that Bitcoin* has a built-in scarcity which will work against inflation. But that is just one of the factors that influence inflation, is it certain that the scarcity cannot be overwhelmed by other factors? I'm not playing devil's advocate or anything like that, I genuinely don't know the answer. My gut feeling is that the price of Bitcoin goes up and down so it's not totally impervious to inflation, just better protected than a traditional currency.


*I say Bitcoin cos I know about that, I guess others are the same, do they all have that sane element to their design?
I could just have an incorrect understanding of inflation, but I think the price of bitcoin going up would be deflation, i.e. value of a unit of currency increasing, no?

Unless there is a distinction between a currency and a speculative asset/security in this regard, with inflation/deflation pertaining to the former and depreciation/appreciation pertaining to the later.

And yeah, the max supply of BTC is ~21,000,000 because the rate at which new BTC is minted tapers off until then. But that doesn't mean there is 0% chance that the supply cap changes. If the majority of nodes in the bitcoin network, i.e. computers running bitcoin's code, switch to a different code with a different supply cap, then the economics of Bitcoin changes accordingly.
 

IdleRich

IdleRich
And since USD is the global reserve currency, could inflation help minimize US national debt?
I dunno. I was talking about personal debt being inflated away. As a general rule I would be very wary of taking a rule that applies to personal finance and assuming it applies to national finance - and vice versa.
 
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