Tag Archives: finance must reads

Independence from What?

Independence from What? (Just Money). This is a really cool piece.

discuss more fundamental constitutional questions of how we can make central banks more democratic internally and at once more independent, by redefining independence as not against democracy but rather against the executive and financial markets.

Delegating Money Power

Does delegation increase efficiency or simply avoid responsibility to handle things democratically?

…I wonder whether debates over the institutional design of central banks hinge more than we commonly think on prior debates about the nature of money and what we might call “money power”, as well as the specific role of private banks in money creation.” vs administrative law theory.

The power to make money, and the power to decide who gets to make money, is one of the most awesome powers of the modern world. A central bank tasked with managing the amount of credit in a system in which most credit is, in fact, created by private banks faces a peculiar set of constraints that make it uniquely vulnerable to elaborate forms of more or less overt blackmailing. This poses challenges that are distinct from other administrative powers, and the resulting questions concerning the banking system as a provider of credit seem to point us instead toward the political theory of, what Chiara Cordelli has recently called, the privatized state.

Constitutions and Democracy

“If our concern is with better decisions and more just distributive outcomes, why not organize central banks more democratically internally by, for example, ensuring that various segments of society—not least labor alongside capital—are equally represented?”

“we can place central banks on a more democratic footings that would operate independently from the rest of the existing political system. This holds open the promise that central banking can be at once more democratic and yet independent.”

Independence from Finance

But is it possible to reconceptualize independence itself? Instead of assuming that the primary source of interference against which central banks have to be insulated consists in elected officials or the public at large, there are a number of obvious forces that are just as possibly distortive and corruptive, if not more so.

Veb account on inflation and how measurement is politics

Veb account essay on inflation being socially situated aggregate measure used to make the complex pricing decisions of millions of people legible to policy makers. Makes a great point about how thinking inducitvely about this stuff is both more accurate (cus this stuff differs across quantities, places, and time) and more useful politically. Some quotes below but worth reading the whole very readable thing:

inflation: Oren Cass and Jacques Derrida as Harold Bloom wlog

The basic thesis today is that the specification of alternative consumption baskets for measuring inflation is a good historical/narrative/rhetorical method, and should be taken up as such by folks with policy in view. “Inflation” is always only ever deeply socially situated, and mostly works as a point of social and political contestation. Rather than fighting over which is the capital-T True account of inflation, we should instead build out a profusion of accounts of inflation all originating from different constituencies with clear and justifiable methodological choices. From there, we can maybe start to triangulate towards what’s going on in the economy in the discourse.

The title is a little goofy, and a play on a core idea in the work of Harold Bloom: that the only interpretation of a poem is another poem. Unlike Derrida, Bloom says that this dynamic is only true for “Strong Poets” (something meant to be read as Famous White Bigwigs, the kinds of people David Foster Wallace would deem important). In Derrida, the only interpretation of anything is another interpretation, bonus points if you can take apart another interpretation and use its bits for yours. It only matters where it comes from insofar as that fact of origin is an unavoidable aspect of the interpretation itself. The argument I’m trying to make today maybe comes close to “the only way to beat a model is with another model,” but I’m using literary figures to make sure everyone understands that I’m trying to situate things within rhetorical rather than predictive space. Ultimately, the interpretation of a measurement of inflation is only ever going to be a different measurement of inflation.

The problem is – as everyone clever has been pointing out since the beginning of the pandemic, and really back to the 1930s – there’s no “final” measurement of inflation that meaningfully holds for all people in all locations. Pretty much everyone buys different things in different amounts every year. Worse, things are usually priced differently in different places!

The idea that the only valid levels of analysis are the individual and the full aggregate is a little silly to me….

At the same time, working bottom-up helps inoculate against the idea that the optimal response to inflation is the curtailment of demand. If the price of housing is rising somewhere, the best answer is probably to build more housing, not make everyone so poor that they can’t afford to keep bidding the price up.