Bitcoin Forum

According to Ray Dalio:
Source: https://edition.cnn.com/2020/05/15/perspectives/ray-dalio-capitalism/index.html

* What do you think? It seems like the US is moving closer to central planning since the government decides to interfere with the free-market.
* At the time of this pandemic, should the government let the market regulate itself?
* What is the rule of the government in this "new capitalist" system? Should it be called "pure capitalism?"

the FED buying corporate debt does put a new face on things. they are now openly choosing economic winners and losers, pumping funds into failing businesses at their choosing when the free market would have let them go bankrupt. unlike treasury stimulus, there is no semblance of accountability or transparency. they are really fucking with the investment landscape.

in all fairness, the USA has never been a free market in the sense of laissez-faire economics. it's a "mixed economy" rife with regulations, subsidies, and welfare entitlements. https://en.wikipedia.org/wiki/Mixed_economy#Mix_of_free_markets_and_state_intervention

this takes it to a new level though.


there's essentially 2 schools of thought on this. the austrians and other austerity supporters think perpetual growth is a fairy tale and that the market should be left to its own devices even if that means a depression wiping out much of the economy.

the keynesians and other demand side economists see a depression as the ultimate evil, much worse than money printing and bailouts.

What I understand little about America is its oligarchy and strong plutocracy maneuvering. There are institutions such as the IMF world bank as a representation of the US government, but the real economic player in the US and in the world is wall stickers. Investors and markets are Wallstreet. Business people, money holders, hedge funds, private equity funds, venture capital, and investment banking are all on Wall Street. If the government issues bonds, Government bonds, the bonds that buy are investors on Wallstreet.


The tariff war is evidence of US interference with the free market, an overly intervening government in the free market has been increasingly seen in the Trump administration since the trade war blew.

In the name of democracy and the free market that is always echoed by the US the government should not intervene. Although the market mechanism is not always effective and efficient. because what is needed by consumers and suppliers is not always available, so that sometimes causes excess or lack of inventory in the market. Competition is not always effective, unfair competition such as monopoly will greatly disrupt the market balance. The emergence of community needs that cannot be provided by the market, such as public facilities.

Learning from the great depression, I think the historical evidence of the failure of the free market system, the government does need to intervene in the market with an adjusted level. Government intervention policies in the economy must develop that are adaptive in nature and adjust to market conditions.

The US positions its government as a public service provider, regulator, supervisor, and driver of growth and stability.

The great depression is evidence that Laizes Faire is normatively impossible to implement.

In a way the United States has never been a perfectly capitalist society and various examples of government intervention in the market is abundant throughout history. The SEC has been in existence for many years now.

The major drivers of a free market would be the forces of demand and supply, this would allow those who show the ability to meet the demand of the public in taste and volume would thrive. This period of pandemic does shift the balance of the scale a bit, non-essential services are closed, SMEs are also hard hit, demand is equally regulated as movement of people is restricted. The lack of money in circulation also affects the market and by extension, the economy.

I believe there should be an intervention, at least until the market is again open, and people can go about business as usual.

I think you may have meant to ask the role of the government in the new system. [I think] They would say they are the support for the free market to ensure it doesn't collapse. Technically they regulate the market.

And which one you prefer? Or you have your own "theory?"

What is more efficient than the market mechanism?

How the great depression is the evidence of the failure of the free market system? What happened in the great depression?

What if the interventions make the situation worse than let the economy free as is, and let the invisible hand regulate the economy?

i don't pretend to know what the ideal is. krugman and powell et al would say a depression in many ways is exponentially worse than slow devaluation by inflation. i wouldn't know but the idea is persuasive on some levels.

i suppose a 3rd idea would reinforce the notion that it isn't inflation per se that's the problem, but rather unpredictable and high inflation. i've heard convincing arguments that a 0.5% or 1% perpetual, but unquestionably stable/predictable inflation (like monero's tail emission) is superior to bitcoin's fixed supply dynamic.

i'm not nearly as offended by keynesians as many in the bitcoin realm are. i see the interest rates banks are paying. i'm capable of finding more reasonable places to park my money for better returns.

Doubt it. Right now, they are so much divided that they even made wearing a mask a political thing. Think about it, there are people in USA right now who thinks if you wear a mask you are a liberal and vote for the democrat party. And they are not wrong neither, most of the non-mask people are republicans but there are tons of people who wear masks and vote for both parties as well.

You know why? Because, they are not idiots and they realize that if you do not wear the mask you may end up DEAD. So, when a country is divided about wearing a mask to stay safe or not wearing a mask and risking death how could you expect them to change anything as major as capitalism. That country doesn't even make health a social policy, like if you have money you can live but if you are poor and don't have money you might as well die.

There will definitely not be centralized planning in the USA, but here I see the noticeable spread of certain features of socialism, personally, for sure. The rich are too rich, and the poor are faced with huge problems with both money and work during the coronavirus.

Any society, despite the various political systems existing in them, is centralized. Decentralization of management is partially possible only at the local level, the higher this level, the greater the degree of centralization of public administration. The task of each society is to establish a reasonable balance between centralization and decentralization of social relations.
Of course, our world is constantly changing and this process is continuous. There is no alternative to the current social order. At the same time, we understand that they are already outdated and an update is needed.

 actually, we should not be too important what it is, it is important that the US now needs to do everything to revive their economy. capitalism has made people really unable to survive this epidemic and what is certain is that the government must get involved. they need to adjust their economy so that people will not suffer badly in the coming months. maybe they will change many policies in Capitalism but only in the short term.

Inflation != Increase money supply mate
Perhaps the focus should be to increase productivity (more goods and services), not to tweak the emission rates.

In a socialist country, the rich (the regime) will be filthy rich, and the poor (the ordinary people) will be so miserable. There's no way they can get out of that situation, unlike in capitalism, where everyone can try their luck as entrepreneurs.

^ Let me explain my opinion, every society has a different centralized political system. Decentralized governance can only be done at the lower levels of a government's political system but it cannot be at the high levels of the political system. Because this high-level political system can only handle public administration. What each society should do is establish a balanced and rational system of centralization and decentralized relationships in each society. Because we all know that the world is constantly changing and this is a process that we will never be able to stop.

Only now you noticed it?

The US is a socialist country for a long time already. Their government still allows people to have guns, though.

Well, a government intervention would be through QE, providing stimulus for SMEs and support for major players etc. There are quite a number of downsides to this; Inflation notably. This would have a domino effect, the value of cash would be reduced and people who have them stashed up in savings' accounts gets poorer. Assets would also spike in price.
This could also create an unequal market, and create a design that would shortchange some businesses. These would further adversely affect the economy and the recovery process would be slow.

On the flip side letting the market operate freely, would leave the economy stagnant for a period of time. Spendings would remain low and businesses would lose out, I can't tell how long it would take for the market to recover.

The modern free market is not absolutely free, never been. Capitalism was never about absolute freedom in the market. It was about fair competition and equal opportunity for all. This freedom has always been within the bounds of laws, regulations, and other perimeters.  


No, not absolutely. There is always what we call public interest. The capitalist market is profit-oriented. Somehow, the government has a responsibility to make sure that such a goal will not be to the detriment of the overall society.  


Of course, not. The "leave alone" preference of laissez-faire is simply impossible to implement. But this does not mean that the government will take over private firms. They will just intervene whenever necessary. After all, they have the largest stake in the society.  

The world economy is passing a crisis moment when most of the business men have locked their shutter and producers have stopped their production and there by they are losing huge profit. You should know that world's export and import have declined below 50%. So, the govt. and central banks are trying to up rise this declining economy by providing loan, incentives and subsidy etc. to the business men, producers etc. In such special moments, it is necessary of the govt. to interfere and regulate the market. All these steps are for the benefit of the free market economy, not for changing the capitalism system.  I think, when this pandemic situation will over, free-market will go freely and no question will be aroused on the existence of pure capitalism.       

But I was thinking a country that allows for guns is more like a liberal country and not socialist  ;D

I have heard and read that US is a presidential system where there are checks and balances and not socialist that is centralized.

This was done during a pandemic period and I doubt it would continue forever. But even in a pandemic situation they helped companies more than they helped people and we all have seen how useless that is. Trump actually has three tweets about how stock market moved above 25k, one in 2018, one in 2019 and one recently, he talked about how awesome stock markets are going by pointing out the three same levels and doesn't even realize it.

When you help people, those people spend the money on companies and companies profit anyway. If you pay it to companies directly, they just pay themselves bonuses. So, at the end of the day america is still a big capitalist country, the biggest capitalist country in the world, and even if it doesn't work they are brainwashed and will continue to be one.

there are two types of inflation---monetary inflation and price inflation.

https://en.wikipedia.org/wiki/Monetary_inflation
https://en.wikipedia.org/wiki/Inflation

they are directly related:


this is exactly why people fear that money printing policies will result in high inflation or hyperinflation. increasing the money supply devalues each unit of money, increasing prices.


the fundamental problem presently is that people are spending less money on goods and services, due to high unemployment and lack of confidence in the future.

we already have a problem of too much productivity. there is no demand for the current level of productivity, which is why there are so many layoffs happening. you can't get people to buy stuff they don't want just by making more of it.

Still, the citation from Wikipedia is weak.
Source: https://en.wikipedia.org/wiki/Monetary_inflation

Here is why...

Austrian:
Source: https://mises.org/library/inflation

Mainstream:
Source: Williamson, Macroeconomics 6th ed, Pearson

I think Mises' view is more biased, or he wants to emphasize "printing money" in his lecture. The evidence why the mainstream definition of inflation is more accurate is in the short run, for example, on Islamic fasting month (in the Islamic majority country), inflation will be high not because of printing money stuff, but because an increase in demand since people tend to eat more quality/complete foods during that period.
https://journal.umy.ac.id/index.php/esp/article/view/6576

Well, since economics is a social science, there's no such thing as binary yes or no, let's spin it shall we
Needs or wants are not equal to demand.

Source: https://www.investopedia.com/terms/d/demand.asp

As long as people are still alive and healthy, people will always need products and services, but they are unable or unwilling to pay at a particular price level. Hence, the idea is to keep producing because more supply will lower the price, with the hope that people can or willing to pay at the new price level. By giving incentives for essential businesses, they will keep producing, keep paying its worker, lower the price, plus preventing scarcity and hoarding at the same time.

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Yes, "I'm an idiot sandwich."

What if economics is like mother nature? https://www.youtube.com/watch?v=emvV1rdzlwo

@fabiorem @gantez, a country that allows guns, is a Marlboro country.

Ah I remember watching/reading this case somewhere, is it the 2008 bailouts?

The mistake would be thinking this is something new, money has been devalued many times previous.   We're just repeating things here and the technology and some terms are new due to sophisticated markets but the base idea to create new money is not new and I presume all the effects will follow historical precedent also.

Is the expansion of the monetary base.   Prices will always vary, by season and supply and demand but that does not reflect the value alteration of the dollar itself.   Problem is modern economics teaches many different things now, I'll just say the simplest you can get a rule the more likely it will be true.   So thats it for me, just that first sentence is enough to describe it.   Fractional reserve will alter the amount of currency in circulation according to monetary velocity I think so its a confusing subject, our view is not clear.    Statistics and hedonics (https://en.wikipedia.org/wiki/Hedonic_regression) will adjust raw price data to reflect inflation as measured and reported by government, technology does account for alot of why inflation has not been reported as a problem thus far.   

My take is we diverged from capitalism a long time ago and this is the tail end of that game perhaps this virus forcing a natural contraction has lit the touchpaper because you cant really fail to acknowledge that loss.   I dont know how long it'll take till we reach the end game and some kind of reset but hopefully not too long or it'll just add more waste.   

i'm only talking about the long run, and tbh these two quotes say the same thing to me---basically the monetary theory of inflation. (https://www.albany.edu/~bd445/Economics_301_Intermediate_Macroeconomics_Slides_Spring_2014/Monetary_Theory_of_Inflation.pdf) it's pretty well accepted that all else equal increasing the money supply will eventually increase prices. the demand side economic view is that increasing the money supply is fine since we get adequate (if not equivalent) growth and thus stable/low price inflation. the austrian view is that this is only a temporary phenomenon before depressions wipe out all that growth.

i wasn't lobbying for one or the other, just distinguishing between the two schools of thought, and remarking that a predictably low and static emission rate may be a third approach. to bring up monero again---over the long term, its emission rate is firmly in between bitcoin's and the fed's target inflation rate. it seems like a good compromise between velocity (hoarding) and unchecked price inflation (increasing the money supply without equivalent growth).


that necessarily means businesses make less money. those with small margins already may become unprofitable entirely.

people with ample savings and continuing income will gladly scoop up discounted prices, but they are the people who haven't changed their spending habits. it's the unemployed/partially employed/failing business owners, who no longer have income to buy even at deflated prices, that are the issue. that's a huge chunk of the economy presently.

anyway, i'm just pointing out what i think could happen, not trying to predict doomsday or lobby for the austrian side. i'm both ambivalent and indifferent about deep monetary theory---too many unknowns for me to contemplate all that seriously. i simply don't know what's gonna happen re the current recession and future inflation either.

From your question, I realize that it is not the market that is ineffective and inefficient but the normative values of trade that are violated by the culprit. The nature of free value, free value in a free market is less appropriate because economics is the subject's behavior, which is strongly influenced by the values and the environment that surrounds it. The behavior is not constant, but it is very dynamic and always changes according to the dynamics of the socio-economic order of society. The order of values of justice in the economic field is needed in order to support balance and equality.

Even though economic norms have been introduced, because basically human nature is never satisfied, and there are always good vs. bad, an honest, fair, and wise supervisor or regulator is needed. And the need to separate sectors related to the interests of the lives of many people so as not to be privatized.

Is it possible to achieve a price balance in the market through aggregate supply and aggregate demand?


Simple answers to the early history of the role of the state began to be accepted again in the market mechanism is after the great depression. So I conclude that the free market system failed. If the free market system does not fail, of course, state intervention will not be used as a way to accelerate economic balance, which ends in a red carpet leading to the second world war.

Along with the development of the American industry in the aftermath of the first world war, there was a change in consumption lifestyle by means of credit which caused the production of luxury goods to increase. There was a lot of demand but not based on real money, this included over demand.

The stock market boom spurred, individuals and entrepreneurs aggressively invest their money in shares with the belief that buying shares is a guarantee of profits because of the relatively rising prices. Producers who want to get more money to invest ramp up, which in turn causes oversupply. Eventually, an imbalance occurs where the number of offers is higher than the amount of demand.

A free market plus a speculative boom in the stock market plus the practice of buying on margin plus a credit system with interest causes disaster.

According to Bitcointalk school of economics?

Neither the Austrian nor the mainstream said that inflation is solely about printing money.

The Austrian view is about the system as a whole, about the price changes due to the money supply changes, while the mainstream says that it is correct in the long run. Still, both said it's about price changes.

Without acknowledging such a simple term, people cannot learn more about inflation in mainstream (real-world) economics, e.g., core inflation, demand-pull, cost-push, wage push, etc. https://www.economicshelp.org/blog/2656/inflation/different-types-of-inflation/

So when people see the price increases inflation even after seasonality adjustment, it is not necessarily because of central banks playing with the money supply. Remember M v / Y = P, even if v and Y are pretty stable, it still can change (in the short run) due to various reasons.
https://www.economicshelp.org/macroeconomics/inflation/monetarist-theory-inflation/

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Did you mean equilibrium? Well, in macroeconomics, when you plot AD and SRAS, you will get the equilibrium point. But this is not about one single price or price discovery like in microeconomics.

If it's about market equilibrium, then read about "Notes on equilibrium."
https://www.investopedia.com/terms/e/equilibrium.asp

The problem is the free market (laissez-faire) was never fully implemented, not even before the great depression. Like you said, maybe it is just a utopia since humans are bad, so the idea of the (humane) self-interest is irrational.

Anyway,

There are still lots of beers here. Anyone else cares to join the discussion? lol

Dictionary definitions prior to the Federal reserve act show inflation is expansion of the monetary base (https://talkimg.com/images/2023/06/12/A53EJ.png).   Since then politics eclipsed economics and we believe anything is possible, fundamentals  matter less then what we perceive hence prices are inflation now though that too has changed so we dont have any common reference over decades.
   We cant have peak FIAT occurring now if we arent fully committed to the castle in the sky, its real I can touch it and it'll probably fall or change significantly.   Imo its going to occur in my lifetime because the story started decades ago so its not some avant-garde prediction to expect an accumulation in effects that cause change.


If someone can dig out an ancient text book and look it up that'd work too.

I don't want to go to that direction mate, that there is some conspiracy to dilute the meaning of inflation. Because, in economics, we studied all of it, and take the best words to explain the phenomenon. As long as we agree that inflation is about "a general increase in prices and fall in the purchasing value of money." --according to the Oxford Dictionary (https://www.lexico.com/en/definition/inflation). Then what causes the decrease in the value of money can be many things:
* Increases money supply;
* Loss in confidence on a particular government;
* Supply/demand shock.

For example, for the same reason, about better-explaining things, mainstream economists reject the objective theory and labor theory of value.