- Intraday Timing of General Collateral Repo Markets (Liberty Street Economics): Specifics, Specifics, Specifics! Love the human details this layers on to a niche-ier technical market mechanism.
- Three Things I Think I Think – Learning From Bad Inflation Takes (pragcap): Good points about the need for MMT crowd to acknowledge that demand side is probably at least part of the composition of inflation; QE simply shifts composition of money-like assets in real economy, not quantity; and the measures that monetary policy attempts to impact are mainly determined by fundamentals at the primary level, with the fed’s secondary market operations having only marginal effects.
- Linus and Lucy: with the Jerry Granelli Trio (youtube): Jerry Granelli was drummer of the Vince Guaraldi Trio and recently died. “People heard the heart in it. Honestly, I turned left creatively with my career after that and never thought about it for a while; jazz musicians are sometimes not as open as they may seem when it comes to people having hits or things crossing over—everybody gets all uppity. But then I matured enough to realize that it went way beyond music. It was the first entry point to jazz for a lot of people. And now that I’ve got my credentials as an artist, I’m proud and delighted to be a part of it.”
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:
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.
Continuation of this: https://franklythinking.net/2021/07/15/ft-alphaville-catchup-part-1/
- Everything Wrong with the “Money Printer Go Brrrr” Meme – pragcap: Problem #1 – Jerome Powell Doesn’t actually Print Cash; Problem #2- Jerome Powell Doesn’t Really Have the Money Printer; Problem #3 – Jerome Powell Doesn’t Enable Fiscal Policy; Problem #4 – The Fed’s Powers are More Constrained Than Many Assume.
- World War 2, M2 and 2020s vision: Velocity matters!
- Man Group analysis shows it pays to own oil, gold and wine, and possibly also a bitcoin if and when inflation bites. – alphaville op-ed
- No Floor, No Ceiling – “Today, we face the opposite problem. We are individuals, at the whims of forces we do not understand, trying to convince ourselves that our old institutions have the power to save us. There is no longer a ceiling above us to restrict our earning potential. But there is also no floor underneath.“
What is the optimal way to read the internet? Would quaretly intakes of “the discourse” be more efficient? More effective? Would it be a stronger filter and separate signal from noise? I like the ritual of Alphaville, Marginal Revolution, Matt Levine, and the likes everyday but maybe there is a variation on that consumption pattern that would improve my well-being.
They list a few examples:
- Moving from the Upper West Side to Nashville
- Getting a dog – high upfront costs today (and to be fair, plenty of maintenance costs…) but for years on the margin you will swap expensive nights on the town for free nights hanging with your pup
- Playing chess
- Not purchasing the weird old multi-$100 hardcover academic book on Amazon
My considerations of inflation have been limited to discussions on index components, labor/wage dynamics, and menu pricing. I liked the exercise of placing preferences surrounding good, services, and activities on the inflation/deflation spectrum.
What are other examples of inflationary/deflationary preferences? And what happens if you place inflation/deflation towards the center of your personal aesthetics? And if you do, which way on the spectrum should you optimize towards?
- I bought a nice road bike during the pandemic and now spend hours a week riding it that might have otherwise been spent on spin classes (the upfront cost impacts the breakeven “deflation point” but still…)
- Can you rank games on a deflationary spectrum? Settlers of Catan has expansion packs. A deck of playing cards provides fun for years. Aforementioned chess depends on just how long someone sticks with it. Is Dungeons and Dragons the ultimate deflationary game?
- Wikipedia is deflationary for infovores
- Are libraries more deflationary than book stores?
- From an inflation viewpoint, is it better to go out for dinner with friends or invite them over to cook?
- Drinking has to be inflationary
- Is religion an inflationary or deflationary force?
- What about dating and marriage? And at what phases?
- AI and ML?
- Fashion rentals company are getting more and more popular (and then you have places like Esty and Ebay):
Some of these are just examples of underutilized fixed assets being squeezed out of the economy. But others are aesthetic choices about how to spend your time. To the extent you can aspire to shift your preferences, which way should you attempt to move them?
I can imagine a nice deflationary life where I stretch my current assets to go very very far. But I suspect that might not lead to sustained happiness. And at the aggregate level my intuition is that would tend to decrease societal progress.
Be it because of some sort of mimetic desire dynamic or incentives in the job market or something else, I think we are probably a bit happier individually (and on the whole wealthier as a society) with inflation “at or around 2 percent.” But don’t let that hold you back from moving to Nashville!