@dlakelan@mastodon.sdf.org
@dlakelan@mastodon.sdf.org avatar

dlakelan

@dlakelan@mastodon.sdf.org

Applied Mathematician, Julia programmer, father of two amazing boys, official coonhound mix mutt-walker.

PhD in Civil Engineering. Debian Linux user since ca. 1994.

Bayesian data analysis iconoclast

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GhostOnTheHalfShell, (edited ) to random
@GhostOnTheHalfShell@masto.ai avatar

@economics@a.gup.pe

The remarkable aspect of mainstream economists is their persistence treating values in (digital) ledgers as actual instances of banknotes (physical paper) as their mental model, then selectively dropping the model.

And they refuse to submit to accounting rules.

https://profstevekeen.substack.com/p/why-you-cant-win-an-argument-with

🧵

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
I've never really understood the money multiplier concept. Here is M2/all bank reserves...

Looks pretty constant to me 🙄
@economics

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @economics@a.gup.pe

Banks can make reserve deposits into checkable deposits via loans. Banks can make Govt bonds into checkable dep. via loans... banks can make mortgage backed securities into checkable dep. via loans... banks can make collateralized debt obligations into checkable dep. via loans...

The actual amount of "reserve dollars" is irrelevant. Either you lend against a govt bond, or you sell the bond to The Fed for reserves... make little diff

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @economics@a.gup.pe

Well, if we ignore cash, the multiplier is D/R, and D/R is what I plotted... it went from 180 to 10 overnight, basically overnight The Fed converted bonds to Reserves as if this was something that would save us all... Of course it helps avoid violating banking laws etc but if "the money multiplier" were a real thing, then M2 would have been about 17 times bigger than it was in 2010 or so.

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @economics@a.gup.pe

Right at one bank every loan goes on the books as an asset, no reserves are required because you never need to transfer to another bank you can just hold those loan papers, when people pay each other you're just moving money from one deposit account to another... The single central bank is just a bookeeper. This is the real "work" banks do. What they get paid for is being careful with numbers.

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
It's right. Just imagine starting with a bank that has $1 reserve, and an infinite string of people each borrowing $1000. every loan they make adds the loan paper asset and the $1000 deposit. Whenever they get a check they just move deposits from say my account to your account. Their equity never goes negative because they never actually have to deliver anything to anyone, everything is ledger data.
@economics@a.gup.pe

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @economics@a.gup.pe

Right, as people slowly pay interest to the bank, the bank slowly accumulates funds. If its paid exactly enough to pay its workers and have the owners pay for their cost of living, then the whole thing is stable and money doesn't go out of control. If the bank accumulates more than the cost of operations then slowly the bank's owner becomes the owner of all assets in the world as they use money to buy up stuff.

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @economics@a.gup.pe

These are really good questions that actually would be best addressed by agent-based modeling, where individual agents (banks, employees, investors, bond traders, federal govt, state govt, firms etc) each have behaviors defined by rules and you run the system adjusting the rules to see how the scenario plays out. is a great tool for this using the Agents.jl library in part because it's fast

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @economics@a.gup.pe

Minsky seems to be great based on Keen's blog posts and I like the double-entry bookkeeping part a lot. But it is primarily concerned with aggregate behavior it seems to me. It's probably possible to model say 10000 different agents but it would be unwieldly.

@psmaldino wrote a book on agent based models of social systems. https://www.amazon.com/Modeling-Social-Behavior-Mathematical-Agent-Based/dp/0691224145/

dlakelan, to random
@dlakelan@mastodon.sdf.org avatar

If you take the population and divide by the rate of housing starts per year, you get a quantity in dimensions of time and units of years. This quantity roughly speaking is related to the "longevity of a dwelling" you need to have in order for the housing per person that's available not to decline. So if real longevity of houses is more or less a constant, then when this graph is high housing availability is declining, and when it's low it's growing... There's a reason millennials feel cheated

dlakelan,
@dlakelan@mastodon.sdf.org avatar

Roughly we can say that we need required longevity to be equal to typical longevity of real buildings, and the assumption should be that the steady state that was about right... somewhere in the 150 year range on this graph.

dlakelan,
@dlakelan@mastodon.sdf.org avatar

Note that there's a dimensionless factor not included in here, so this is just proportional to the real required longevity. The factor is more or less related to the typical household size, which has been fairly constant at like 2.6-2.5 people/dwelling for the last 20+ years but declined from near 4 in 1940. Data available here: https://www.census.gov/data/tables/time-series/demo/families/households.html

dlakelan,
@dlakelan@mastodon.sdf.org avatar

Dagnab it, I am constantly wishing I had more text in my messages and forgetting to tag stuff in my first post. This message is just to tag @economics@a.gup.pe and some hash tags

This discussion is about housing longevity and the adequate production rate of housing starts to keep housing from becoming scarce. There's a graph in the first post that shows very interesting dynamics.

dlakelan, to Economics
@dlakelan@mastodon.sdf.org avatar

Gelman's blog asked the question "is it really just the economy stupid?"... A long discussion occurred. One economist I respect (Dale Lehman) argued from official statistics that the "real income" of the bottom 10% of nominal income has gone up in recent years. I argued based on a fixed uniform weighted CPI that it had gone down. Further discussion ensued. 1/ @economics@a.gup.pe

baldur, to random
@baldur@toot.cafe avatar

One of the things that the Stack Overflow brouhaha demonstrates is that it doesn’t matter if a service was founded by people trusted by the community (Atwood and Spolsky) and was broadly community-led. If it’s a VC-funded startup, they will sell out their users at some point.

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@donw
You know what continues to be sharable and open? forum.openwrt.org, discourse.julialang.org and similar. Stack Overflow is trash compared to most of them. And they are practically unfunded by comparison.
@raganwald @baldur

dlakelan, to random
@dlakelan@mastodon.sdf.org avatar

Read a thread about hiring processes and corporations etc. It make me think about how incredibly much smaller the ideal company size is than the companies we work for today. Has anyone ever noticed how incredibly productive Anarchist groups of open source software developers are compared to... Google/Facebook/IBM/Microsoft/Whatever? Like, the Slashdot software was written by a couple of guys, Mastodon by a couple of guys, Git was created by Linus Torvalds and passed off to a few tens of people?

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
Yeah, anyway, dweebs like this hedge fund guy want to take credit for all these cars and telephone systems and whatever but they're all critically reliant on open source software invented by guys like you and me working in little 3-50 person collaborations and the thing that he's really responsible for (at best) is wrestling enough cash together to keep the production flowing. It's not nothing, but it's really not anything amazing either. Sigh...

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
It's survivorship bias. Ideas are everywhere, but only ideas + massive infusions of cash lead to large businesses. It's not the fucking ideas it's the grubby green stuff that's different. If I gave any random masters student in engineering a billion dollars they'd have a very useful business at the end of it, and if not, we could do that like 40 times in a row just for the cost of the Metaverse or whatever.

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
Literally if we had taxed Elon Musk 40 billion dollars and then just given 40,000 grants of $1M each via the SBIR program we'd have vast more useful productivity than what yielded from his Twitter buyout. Like, VASTLY better.

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
For sure we could have stuff like Mastodon multiplied by 100x if we just had grants to produce useful public goods... I can't even imagine how much better society would be if in the US 50M people were working for $100k/yr govt grant money to do music, educational videos, open source software, books, movies, etc

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
Ooh, those institutions though... They have been corrupted so badly, tripling the administration, replacing full faculty with adjunct teaching staff... Look at how quick they were to send head-breakers after peaceful campus protesters... Universities resemble hedge funds more than learning institutions. So, in spirit I agree but in practice I'd rather see some innovative competition than fund them as is.

GhostOnTheHalfShell, (edited ) to Economics
@GhostOnTheHalfShell@masto.ai avatar

@economics@a.gup.pe

File this under the heading economics is not even a dismal science, because mainstream economics isn’t even science. Economics could actually be a rigorous discipline, if orthodoxy can be kicked out.

“ In contrast to its attitude to private debt, which it ignores, mainstream economics obsesses about government debt. But this volte-face doesn't besmirch its record of being 100% wrong.”

https://profstevekeen.substack.com/p/its-a-mixed-credit-fiat-world-e3f

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@mike805
The problem is it's not enough to have a correct theory to make money, you also have to know facts about what people are doing. For example, if I jump out of an airplane without a parachute you would probably imagine I would die, but then they did a randomized controlled trial and NOONE who jumped without a parachute died... it's a published research paper
@GhostOnTheHalfShell @economics@a.gup.pe

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@mike805
Turns out the plane was sitting stationary on the runway. Your model was right but certain relevant facts were missing.

Btw here's the paper
https://www.bmj.com/content/363/bmj.k5094

@GhostOnTheHalfShell @economics@a.gup.pe

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@mike805
Anyway, the whole "if you're so smart why aren't you rich" falls apart when you realize that you can be 100% correct and still not have the information needed to put into your model to make good predictions... And people who have insider trading info can be dumb as a brick and make money.
@GhostOnTheHalfShell @economics@a.gup.pe

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @msbellows @economics@a.gup.pe

If the real economy is growing, in general you will need the size of the money supply to grow too, or prices will decline and this often causes people to misallocated production. So you should run deficits. If the economy is not growing but the interest rate isn't particularly high then you should probably reduce your deficits. If the economy is not growing but interest rates are high you should increase them... 1/

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell @msbellows @economics@a.gup.pe

because in that case money is probably a limiting factor... If prices of goods are going up but real production isn't increasing, you should tax money out of the system and run a "government surplus" because people are demanding things with money that just aren't produceable. 2/

dlakelan,
@dlakelan@mastodon.sdf.org avatar

@GhostOnTheHalfShell
Well, the limiting factor for monetary growth is inflation, if the economy is lackluster but interest rates are low (therefore money is relatively easy to get) you won't get improved output from helicoptering money, you'll just get inflation. But if interest is high, yeah helicoptering money could help.
@msbellows @economics

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