I can’t explain why some forms of framing seem to stick better than others. From the “boomers retiring” meme, when the boomer generation seems to go on forever, to low interest rates being simulative, the public sometimes latches on to crazy notions and just can’t seem to let go no matter how crazy or damaging they actually are..
Take the low interest rates meme. It sounds plausible until one thinks about the context. We don’t even really need quotes from Friedman to figure it out. The FF rate is at zero and the economic world is still crumbling to the ground. Maybe our economic world was still crumbling to the ground in 2009-10 because the FF rate can’t go any lower and the Fed needed to do something else. Maybe that interest rate tool is broken when it reaches zero while the economy is still in free fall. If so, why is everyone still crazy about “low interest rates causing bubbles?” Nominal rates are still up there e at zero while real rates are around -2% – not-so-nice and tight policy.
And it gets even crazier, too. How about the House just passed a bill intending to more closely scrutinize monetary policy decisions that is framed around the rules and methods that go into setting nominal interest rates and the Taylor rule that seems highly inappropriate in an era where inflation barely registers. I suppose it makes sense to the politicians to want to monitor a broken and therefore obsolete monetary policy tool; they’re always a day late and a dollar short. Or maybe they just wanted to provide the incentive for the Fed to put off creating the conditions in which nominal rates should become positive – as a seeming threshold to more Congressional oversight.
About the boomer thing… If I were to make sense of the boomers’ retiring explanation of the labor force, it would seem that what might be implied, since LFPR considers working age people only, is that many of them have experienced age discrimination and involuntary retirement. There isn’t any other way of putting it that makes sense after a stock market crash of the magnitude as in late 2008 and early 2009. If it’s true, discussions about retirement of the boomers is very sad; and it gets minimized in formal discussions about demographics in the labor force that make it appear natural rather than a phenomenon of having been ousted from a long career with nowhere to go so they just stay home.
I am starting to think that most of the time almost nothing in this world make sense. I must have lead quite a sheltered life because I only started to notice just how crazy things are about 5 years ago. It was only about two and half years ago I decided to make my own blog to discuss some of the craziness one farce at a time, and I’ve seen little improvement since then.
Sometimes I feel about as significant as a single drop in the ocean. At times I’ve felt like giving up, like I should have just kept my trap shut (my word processor silent) and minded my own business. But that’s just the thing. I didn’t have any other business because unlike the boomers, I still have just shy of two decades to go before I can get full retirement – and I was dodging the bullet of having to sleep in my car in a park on the regular basis after having lost my job in late 2007, the bullet that so many people in Southern California (where I am from) weren’t able to dodge. I’ve got video footage here of middle class people sleeping in their cars at a park because they had nowhere to go. I looked at that and actually felt lucky that my husband and I were hanging on by a thread. I had never seen anything like it.
And that is why I didn’t and don’t shut up and forget about it. Most of us MM’ers know exactly what happened to those people and to me, and the majority of people who lost their homes in the last five years in an epic wave of foreclosures not seen since the 1930’s. We know what disinflation does to debt. Many of us know what it takes to buy a house and can at least imagine the devastation of losing it. We know it was by and large unnecessary, but happened only because of some very strange notions about inflation that have been documented on nearly every MM blog as being quite extreme.
One of the reasons I’ve been against what feels like a drift toward MM synthesis with the mainstream is that mainstream economics doesn’t offer much to explain the chaos and wanton financial destruction of average people. If the reality of the situation had been different, if there hadn’t been people sleeping in their cars, losing everything and families being torn apart, I would have no trouble at all with Plosser, or Fisher, or any other of the Keystone Kops on the FOMC dominate the conversation. But nominal shocks have real effects, and so what they do matters in absolutely no small way to daily life even for just insignificant small drops in the ocean. They hurt many; they hurt and instilled a kind of angst into millions of people the world over that we’ve never before known. I can say that I know exactly what it is to have a panic attack because we’ve run out of money and are facing a default on a mortgage. It’s a complete nightmare.
Perhaps the irresistible urge toward synthesis, agreeing to things that don’t seem particularly important in the big picture, is natural. But I think I’ll be standing on the outside looking in, then. Because I don’t agree with anything that can result in that kind of financial devastation and destruction and just wave it off as a natural course of demographics, business, or anything else not having to do with tight money that because that way in a reality of the developed world revolving around credit.
The people who represent the mainstream, I am not one of them. And I really don’t have it in me to be one of them because I do care about the human condition. I think the mainstream needs to be more like MM. I wouldn’t have it any other way.
PS: I just realized that three of the four videos I posted at the link have been taken down or moved. I’ve been trying to find them, but need to get some sleep. I will update once I find them again.