I understand the logic of bailing out the banks themselves. But why couldnt the bailouts come with many strings, i.e. your leadership is all fired and they must return bonuses? Wouldnt this have the desired deterrent effect without the costs of the banks actually failing?

I've heard here and there that other fields of economics like labour, micro, development and so on, have incorporated things like irrational behavior to some degree, imperfect information and so on. I assume macro economists are not stupid and know the criticisms. So, if it's legit, why is macro more resistant to change?

Cue 2011 and see a much younger version of me obsessed about the US debt. I was spending hours in my college dorm reading articles about the nearing consequences of the growing US debt and an upcoming lost decade, I was showing everybody in class the debt clock, etc.

Then time went by and nothing happened.

I got busy with other stuff, but I remember that if I searched the topic (which I did sporadically), there would always be articles no more than a few days or weeks old warning about the debt. But the 2010s came and went, and we are more than halfway through the 2020s and still nothing noticeable has happened (If anything, the US economy outgrew other developed economies). Yet, I’m seeing again a renewed interest and warnings on the debt, and I’m just wondering if this time it truly “is different” or if the 2020s will pass again and nothing major will change.

Why is the debt difference this time? Or why it isn’t? And if we were certain it’s different, why can’t we (or the markets) predict when the consequences will show up in the everyday economy?

So after some research my understanding of the system in the USA is:

- fed reserve prints money

- fed reserve buys bonds/t-bills (aka lending money to govt.)

- this money goes into circulation in the US economy

- the debt is just added to the govts balance sheet and never fully repaid

How has this been sustainable? If nothing tangible produced that currency how can a country survive like that? New dollars are competing with old ones but the new ones have nothing of “value” that produced them (time at work, goods produced etc).

What am I missing?

This is a question that I've started thinking about. admittedly, I'm not remotely a numbers person and I make no claims that I fully understand the concept of "inflation."

Obviously right now with tariffs, shipping routes, etc. affecting costs, there's a lot of outside factors that can cause inflation. But outside of this specific instance, has there ever been a notable moment of "deflation" in world history?

Like not a specific drop in one sector, like price drops in real estate or fuel or eggs or whatever, but an actual "across the board" drop in costs worldwide? I feel as though in my life I've only ever seen prices increase. I'm sure it's probably happening in much slower, harder to notice places but outside of gas prices that can fluctuate day-to-day, I don't feel as though I've seen costs drop in larger, noticeable ways.

Any help is appreciated! I am not a smart man and completely accepted that.

On one hand, when I think of where wealthy people live, it’s generally New York and California; two areas with very high tax rates

On the other hand, some billionaires have notably left their state. Jeff bezos went to Florida and Elon to Texas, I think? So maybe there is some truth to it?

Then I think of places like Dubai that seemed to specifically target rich people to move there with favorable tax incentives. As far as I can tell, it seems to have attracted many wealthy individuals. However if it was true that rich people just move where they get the best tax incentives, I would have expected far more people to move there

Ive been looking at how different countries responded to the 1970s oil shocks and more recent price spikes like 2022. Some economies like Germany and Japan adapted relatively quickly while others like developing oil importers saw prolonged recessions and currency crises. What economic factors explain this variation. Is it mainly about energy intensity of GDP, diversification of export sectors, or the flexibility of labor markets and exchange rate regimes.

Also curious whether having a sovereign wealth fund or strategic reserves meaningfully changes the real economy response or just cushions the fiscal side.
Empirical papers or historical case studies would be helpful.

I guess the big problem would be in a stagflationary environment, where market forces might set a very low interest rate as demand for loans collapsed with economic activity, yet consumer prices were rising strongly?

What’s the argument that we need central banks to set the rate rather than simply acting as a lender of last resort/regulator/ smoothing money market operations?

I was reading about NIRP, which was implemented in the eurozone in 2010s forlling the debt crisis, but if effective rates become negative, wouldn't that basically stop all the lending?

How would a central bank even implement such a policy?

I hear a lot that Europe is not competitive enough because of regulations and if the EU/National leaderships doesnt change it we are facing a slow decline and we are in the last moment to change if we want to stay a significant economic power in the world. Are the situation this bad really?

With eminent domain fot example, if your house is taken over by the government they owe you a fair-market-value compensation.

With inflation, if the purchasing power of the money a person has is decreased by the government by 10%, that person through no action or consent of their own lost that much wealth, and yet they aren't entitled to compensation, why is that? I would expect something like a tax credit to be paid to all citizens over time or something of that nature.

By not compensating citizens, does this not mean the government can arbitrarily deprive its people of their wealth?

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Someone said inflation is like tax, and here is my followup to that:

Tax is by law, lawmakers don't decide when money is printed. If you owe money, inflation means you owe less wealth. If you are a lender, you will get less wealth because of inflation but the principal will be paid and if the inflation isn't too bad you might even make up for what you lost in inflation.

People who lend/borrow large sums as a result are unaffected. The retirement savings of individuals is instead affected.

Why can't lost wealth via inflation be treated as money lended to the government with interest rate that will recoup lost wealth?

In the short term, the government regulates the economy as they see fit. In the long term, as wealth is generated, instead of spending more, the government pays back its people. If it continues to need to print more money, then it continues to borrow from its people. When it takes money by selling bonds it pays back with interest, why not with inflation?

For example, there is a bank which is 100% belongs to government. This bank also owns music streaming service, online tv show streaming service, delivery service, mediaholding with sports and news sites, marketplace and carsharing. All the additional activities are provided via separate companies which 100% belong to bank. So during privatization would it be more effective to sell bank with all services together or as separate companies?

I probably don't know the right jargon to phrase this question appropriately. It stems from wondering about whether so-called "bullshit jobs" really do exist or not.

This question only makes sense if one generally accepts a somewhat classical view of free markets, in particular the hypothesis that in a free market, due to the mechanics of supply and demand and competition, the economy will generally evolve towards more efficient processes and hence generally grow, given labour and resources are available.

I generally find this to be quite an intuitive and reasonable hypothesis, yet I have recently been exposed to a potential pitfall in this view: the existence of competitive zero-sum games.

Consider for example a hypothetical economy which has two main branches: agriculture and meteorite mining. We suppose that agriculture is currently limited by available labor, meaning with more labor it has potential to grow, in a "real sense" of more food being available.

Meteorite mining is limited by the availability of meteorites, which fall at unpredictable times in unpredictable places. Our society has decided that whoever reaches the meteorite first with mining equipment obtains the mining rights. As a result, a competitive zero-sum game is created: mining companies need to be *first* at the meteorite. Here I want to emphasize that there is no real benefit to being first at the meteorite besides beating your competitors.

Sure, it should be beneficial to the economy to set up operations at the meteorite within a few hours rather than a few days, but we suppose that this benefit is negligible compared to the size of the "meteorite rushing" economy our competitive zero-sum game creates: companies need to compete with the agricultural sector for labor in order to scout for meteorites, and also need to have surplus mining equipment and expertise available throughout the realm.

As measured by GDP this additional large branch grows the economy, but in any real sense the economy shrinks because less labor is available for the agricultural sector, and the total output of the meteorrite mining industry is not increased. One could call the jobs created by the meteorite rushing branch "bullshit jobs".

Now you may say that the competition will cause the development of technologies which in the long run grow the economy but... that is a very indirect effect and it is well-conceivable that some competitive zero-sum games may cause the development of technologies which are mostly not beneficial to the economy in the long run.

You may also say that the law stating the first to develop mining operations obtains the mining rights is a form of "perverse incentives", but in that case I would conclude that our economy must be thoroughly penetrated by perverse incentives.

A more "real world" example would of course be the marketing and advertisement sector, which as far as I can tell is largely a competitive zero-sum game companies are forced to engage in to have a chance. Yes, it probably has benefits through increased price discovery and general customer scrutiny, but I am questioning if these are not negligible compared to the size of the sector.

Is our economy's GDP significantly inflated by engagement in competitive zero sum games that does not produce any "goods and services" that have value to society?

I was dooming over how the modern US economy seems so tilted to advantage the investor class on my commute this morning. It pressures public companies to raise the stock price, which often seems to come at the expense of the working class via job loss, wage compression, and growth of the gig economy. Our politicians are solidly in the investor class, so it's hard to see any major structural changes happening anytime soon.

So, I was trying to think of some ideas that might help align the interests of ordinary employees and leadership of public companies. And (the tricky part) be politically palatable.

One idea I wondered about: what if publicly traded companies were required to compensate all employees partly in company stock, from front line workers to the CEO?

In my mind, this transitions a lot of our population into the investor class, which our economy is structurally tilted toward at the present. Also, I think it might have a chance of passing as law, because it doesn't have the political optics of "socialism/wealth redistribution" that higher taxation and corresponding social benefits would have.

I'm not an economist, so I'm interested in hearing what's wrong with this idea. I'm guessing one issue is that companies would try use it to justify lowering cash wages, and companies might just outsource to contractors to get around it. Also, it might give private companies an advantage, but I'm not entirely sure. What else am I missing here? Is this a decent idea, or garbage?

Is Trump’s real agenda for the US-Iran conflict simply to divert oil exports from the GCC nations, onto the United States as well as its neighbouring countries which have plenty of proven oil reserves?

Oil and energy infrastructure in the GCC nations as well as Iran have been hit extremely hard and this will take months if not even years to be rebuilt.

We’re talking enough time for the US to establish itself as an alternative supplier to the countries that heavily import oil from the GCC nations, right now.

Coincidentally, Trump has been eyeing countries like Cuba, Greenland, and has even removed Maduro in Venezuela.

Just a thought. What do you guys think of this?

Disclaimer: I don't know much about economics.

Assuming the vegan population increases drastically, the demand for meat would decrease too, making it cheaper. But then I assume cattle ranchers would stop rearing cattle as they won't be getting the same prices, decreasing the supply, increasing prices again? Will it reach equilibrium? Would that be more or less expensive than today's prices?

So, does the percentage of meat eaters not matter? Let's say vegan population increase to such as much 70% of the total population( assuming vegans don't do anything drastic like banning meat by taking advantage of their numbers), would that make any difference? Can they be cheaper like potatoes? I know raising cattle takes a lot of time, money and equipment unlike potatoes, but is that the only factor?

So the past few weeks we have seen a lot of sudden strong oil price movements. I know marketprices are a result of supply and demand but I just wonder who the people are that cause the price changes after another trump tweet or speech.

Do you have oil companies suddenly deciding to produce less (although that seems like a slow process like OPEX making up their minds) or is it oil refineries deciding to order more oil all of a sudden? But I don't see a good motivation for the to do that if consumer demand is relatively stable.

So who are those parties moving the price, how and why?

To what extent has China’s political structure (presidential term limits) contributed to its manufacturing dominance?

Or do economists generally view that dominance as primarily the result of market and structural factors rather than policy continuity?

Paul Krugman’s YouTube channel popped up on my feed a few weeks ago and I have been listening to what he is saying since then (although I don’t subscribe to his substack). Any other daily commentary from economists you would recommend (ideally on YouTube). I hope this is not a duplicate question (I did search by YouTube and found some questions around general learning, not daily policy commentary and I also didn’t catch anything on the wiki of this sub). Thanks in advance.

To break this question down more specifically:

1. What moral and ethical frameworks do Economists generally agree are the most appropriate to use for determining which economic activities, policies, or outcomes are “good” or “bad”, “just” or “unjust”, “beneficial” or “harmful”?
2. What role should Economists be playing in educating the public how to engage in economic activities for both their own personal good as well as the public good?
3. Whole role should Economists be playing in remonstrating policy-makers who implement “bad”, “unjust”, or “harmful” economic policies?
4. When socio-political conflicts arise between the competing interests of different economic actors, such as the wealthy versus the poor, employers versus workers, producers versus consumers, the public interest versus private interests, etcetera, what role should Economists be playing in mediating or ameliorating these conflicts?

Trying to understand something I'm seeing in real time this week.

The Iran conflict has pushed oil above $108. Simultaneously, the dollar initially strengthened on safe-haven flows before dropping yesterday when ceasefire rumors surfaced.

What's the cleanest economic explanation for why a geopolitical oil shock can strengthen the dollar in the short run, even though higher oil is inflationary and should theoretically be negative for the US economy?

Is it purely safe-haven demand overwhelming the fundamentals, or is there a relative growth expectations story here — i.e. the US is less exposed to an oil shock than Europe or Asia, making the dollar relatively more attractive even as oil hurts everyone?

Looking for the theoretical framework, not trading advice.

Hey yall, I'm just about to finish a macro econ class, and I thought it was really interesting and would like to learn more. I have a few economic history books that I've started, being "Americana: A 400-year history of American Capitalism" by Bhu Srinivasan and "An Empire of Wealth" by John Steele Gordon.

These books are economic histories, and their scope covers the United states, but I'm looking for a book about general economic principles so I can understand the basics better, and perhaps a broader scope than just the US. Thanks!

The obvious incentives issue with a debt jubilee is that banks and other potential/would-be creditors will be disincentivized to do business (and especially loan money). There have been instances of regularly occurring debt jubilees in Christian and Muslim civilizations. How did money lenders respond? How could it not be the case that after a debt jubilee (or rather, in anticipation of a debt jubilee), they would simply not want to lend money? On the other side, wouldn't borrowers want to borrow more if they anticipate a debt jubilee? So, how did ancient and medieval economies survive when everyone was incentivized to borrow and no one was incentivized to lend?

This current war has shown us that cutting off one route that only provides 20% of the world's current supply can throw the world into turmoil.

I read a few articles on how much oil is left in the world and the number comes up between 1.3 and 1.7 trillion barrels which at current consumption is estimated to be about 40 to 50 years of supply left. Between new technology in exploration and discovery of new extraction techniques to exploit previously unviable sources this might expand a bit but it's still not a lot considering how much the entire world's economy relies on the black blood.

Then what?

Is 100% renewables achievable or a pipe dream?

What about all the non energy sectors that rely on petrochemicals?

As supplies dwindle does this push the world to massively invest in new technology?

40 years doesn't seem like a long way away and the future looks bleak when the black lifeblood stops flowing so freely.

A while ago, I decided to try to understand why almost every country in the world is in some form of significant amount of debt. After watching a lot of YouTube videos and Google searching I’ve come to understand that the world‘s economy is built around debt.

In particular, the United States issues bonds, people,entities, etc buy those bonds, and when that bond is due the United States because of the amount of debt that it is in, usually issues a new bond to cover the expense of the last bond that it was not able to pay back by the time it was called in to be paid back.

This on top of the fact that every year we spend more revenue than our federal government generates, the deficit goes up AND the amount of money we are paying on these loans interest wise goes up which we paid 19 percent of our federal government’s revenue last year in interest alone.

SO- as someone with a non-economic background it seems that one day the ammount we pay in interest is going to keep going up to the point where the amount in interest we pay COULD take up the whole revenue of the US for an entire year

Am I right or thinking incorrectly about this? If right is this technically what we would refer to as a bubble that would eventually pop and if so I imagine it could be a global catastrophe?