Venice’s failed war against Constantinople led to the first bond market
Thread
Unofficial Hacker News client; not affiliated with Y Combinator.
Venice’s failed war against Constantinople led to the first bond market
Unofficial Hacker News client; not affiliated with Y Combinator.
mono442 · · focus · HN ↗
smallmancontrov · · focus · HN ↗
Congress (and, increasingly, the executive) can't simply choose to print and spend. They can choose to spend in excess of revenue, but to do this they must sell treasuries, they must borrow and spend, but the bond market is allowed to say "no." We are seeing this in real time as interest rates rise. In contrast, if the politicians want to print and spend they have to beg/pressure/persuade the Federal Reserve to run the money printer and buy the treasuries.
Whether this is good or bad depends on your politics. I like separation of powers. I'm not keen on the idea of handing congress/executive the power of the printer, people in the US are very sanguine about how that can go. I'm also not keen on destroying the money printer, because the events of 100 years ago showed us what deflationary shocks look like (even worse than the inflationary shocks) and unlike my goldbug relatives and crypto-pilled friends I payed attention. The mechanism of having an independent body that guards the printer is the best compromise I have heard, so personally I'm glad it's the one we have.
Challenge: propose something better.
roenxi · · focus · HN ↗
This comes up a lot, but it seems to be a just-so story. People seem not to have a justification for why deflation is the major factor instead of any other economic lever and every time one of these terrible deflationary events happen the country involved tends to end up a really nice place to live. The big example of the US in the 1930s led to an economy that conquered most of the known world in short order and reigned pre-eminent for 60 years. It doesn't appear to have held them back.
The inflationary shocks have a bad track record and be associated [0] with impoverished backwaters and collapsed states. Even then it isn't as obvious that the inflation is the cause as much as that the government of the time didn't have any better ideas than printing money to try and solve their problems, which obviously isn't going to work.
> Challenge: propose something better.
This seems easy to do; the money could be handed out per-capital instead of disappearing into asset markets.
[0] <a href="https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperinflationary_periods" rel="nofollow">https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...
klrefg · · focus · HN ↗
> People seem not to have a justification for why deflation
They obviously do. Because it disproportionately disadvantages debtors, makes investment much riskier and rewards rentiers, therefore reducing the economic productivity.
> one of these terrible deflationary events happen the country involved tends to end up a really nice place to live
Yeah, I think you need some additional arguments and data to establish that there is a causal link between these two. Same could be said about the economic booms in the US after WW1 and WW2 (to an extent the Civil War as well).
smallmancontrov · · focus · HN ↗