Stefanie SchulteApr 6, 2017

My #listofinterests *):

#economics
#toobigtofail
#financialstability
#systemicrisk
#shadowbanking
#cooperatives
#linux

*) Explanation:
"Let's play a game, to help some of the newcomers make connections: name 5-7 things that interest you but aren't in your profile, as tags so they are searchable. Then boost this post or repeat its instructions so others know to do the same." (an idea from @HedgeMage)

Show threadDoc Edward Morbius ❌​Apr 6, 2017
@stefanieschulte @HedgeMage Any alt coins, bit or otherwise? Does anyone anywhere in finance know who Frederick Soddy is? If so, capsule assessment would be of interest.
Show threadHedgeMage
@dredmorbius @stefanieschulte I play around with cryptocurrencies and blockchain tech on and off, but it's not an obsession. I live in a world where most people haven't yet mastered password management and back-ups, let alone keeping their workstation malware-free...so I won't be giving up on analog currencies as a concept soon.
Apr 6, 2017 at 5:16pmWeb
Show threadDoc Edward Morbius ❌​Apr 6, 2017

@HedgeMage @stefanieschulte A friend is ... working on a ... um ... critical discussion of bitcoin. I've seen a draft. It's entertaining.

I'm inclined to think that Bitcoin's the best educational tool ever created on central banking and financial regulation.

Show threadStefanie SchulteApr 7, 2017
@dredmorbius @HedgeMage Sorry for not replying earlier... Personally, I believe that getting rid of fractional reserve banking would be a bad idea (and part of the ideology around bitcoin is related to full reserve banking, to my understanding). At the same time, mainstream economics doesn't explain banking (and money, whatever "money" means) very well. Therefore the discussion about bitcoin might be useful.
Show threadStefanie SchulteApr 7, 2017

@HedgeMage @dredmorbius By the way, about fractional reserve banking, I recommend this post: http://review.chicagobooth.edu/magazine/summer-2014/bank-runs-arent-madness-this-model-explained-why

The post explains why we have fractional reserve banking, how it can be stabilized and what went wrong during the crisis (shadow banks played an important role).

Show threadHedgeMageApr 7, 2017
@stefanieschulte @dredmorbius I sent it to my ereader for whenever I have downtime, thanks :)
Show threadDoc Edward Morbius ❌​Apr 8, 2017
@stefanieschulte @HedgeMage I've largely come around on FRB, though I'm still wondering what happens when net return on capital is flat or negative, long-term. A distinct possibility. Deloitte's Shift Index showing secular declining ROIA 1965-present is chilling. Denning has a good overview:
https://www.forbes.com/sites/stevedenning/2012/01/25/shift-index-2011-the-most-important-business-study-ever/
Show threadDoc Edward Morbius ❌​Apr 8, 2017
@stefanieschulte @HedgeMage Deloitte's own homepage on that:
https://www2.deloitte.com/us/en/pages/center-for-the-edge/topics/deloitte-shift-index-series.html
Show threadDoc Edward Morbius ❌​Apr 8, 2017
@stefanieschulte @HedgeMage I've been digging into historical (18th, 19th / early 20th) discussions of money: Smith, Jevons. The focus on /medium/ (coin, notes, gold) rather than /meaning/ is fascinating. Still need to read Keynes & Friedman. Soddy was a Nobel chemist who suggested energy as the basis for money, an idea used by H.G. Wells and Arthur C. Clarke in sci-fi. It's useful but not complete of itself either. Georgescu-Roegen, Minsky, and Keen also have interesting ideas.
Show threadDoc Edward Morbius ❌​Apr 8, 2017
@stefanieschulte @HedgeMage A lot of my current understanding comes from Neal Stephenson, "Cryptonomicon" and "The Baroque Cycle", also Joseph Tainter's analysis of the Roman Denarius (compare Smith's discussion of coin debasement), and a few other stray bits. I find goldbugs and bitheads ... tedious.
Show threadStefanie SchulteApr 8, 2017

@dredmorbius One could argue that gold itself is in a bubble right now: People are buying it not because they expect more productive uses of gold in the future, but because they believe somebody else is going pay even more for it (self-reinforcing process).

That can be quite unhealthy, especially when financed with debt, as history has shown. I think the "money" system is only partly responsible for the amount of bubbles/speculation in an economy, though.

Show threadDoc Edward Morbius ❌​Apr 8, 2017

@stefanieschulte Yes. And /that/ gets into a few further areas -- manias (Mackay, "The Madness of Crowds") -- and figuring out just what it is that price, and cost, and value are. Which is where some of the 19th century texts are also interesting. W.F. Lloyd, Bohm-Bawerk, etc. Smith's discussion of prices makes more sense when you realise that regularly-produced goods (esp: ag, wood), rents, stocks (esp: nonrenewable resources), wages, and assets behave very differently.

https://redd.it/48rd02

Show threadDoc Edward Morbius ❌​Apr 8, 2017

@stefanieschulte I thought much of my thinking here was completely nuts. I at least have some fairly good company.

Natural resources especially has ... some /fascinating/ pricing oddness, most especially oil, though also coal and gas. Daniel Yergin's "The Prize", ch. 13, BP's Annual Statistical Review, Hotelling, etc. /end/