[trcollinson]

I think this is important. You are right this has happened before. 2008/09, 2000, 1987, twice in the 1970's. And history will no doubt repeat itself.

But my point is the way our economy currently works doesn't handle a 6 month reserve well. We don't incentive companies to hold on to cash like that. We need to come up with the incentive to do something different, whether it is save cash or "something else". But right now, the incentive is to spend cash and allow for a bailout.

Additionally, we don't think in the future very much. We think about this quarters earnings. So again, we need to incentive long term thinking and resiliency as you suggest. Unfortunately, I am not sure how to do that.

[mindslight]

> We don't incentive companies to hold on to cash like that. We need to come up with the incentive to do something different

This isn't some novel problem that we don't understand, but rather the direct result of decades of economic policy. The solution is called raising interest rates.

[trcollinson]

First off, I don't disagree. But I unfortunately think a lot of people will disagree, especially right now. If we increase the interest rate we know exactly what will happen. We will see a decrease in economic growth and spending. Stocks will slow down. Obviously at the same time inflation decreases.

The problem is we do know we need to increase the interest rate. But no one wants to do that now. "We're in a bad economic time and we need rapid growth! We'll raise it later." Later comes and we say "We can't do it now! We're growing! That will slow things down. We'll raise it later." No one wants to bite the bullet and do that. Again, we need to think long term and not so short term. I don't know how to solve that.

[mindslight]

I agree that it's currently a terrible time to raise interest rates, although any time over the past decade would have been nice. A year ago they even started to go up a little, but were nipped in the bud well before COVID. Had to keep that Line going up!

Politically what needs to happen is that everybody who is not Wall Street or the 1% needs to realize that ZIRP is a direct attack on their economic power, to benefit the central government/bankers who dole out the piles of the newly printed money. Obviously discussion of this remains well outside the Overton Window of mass media.

Given how ever-increasing government debt itself discourages rates going up, the buy in of the middle class (retirement number gets bigger, so it is good), and how deftly the fake political duopoly divides the plebs even as they know they're being had (here we go again with dueling "presidential" dumpster fires!) I doubt this will happen any time soon. And so what will happen is eventual societal and currency collapse, either when the foreign markets route around USD or when the People finally reach our breaking point. I just hope it happens slow enough to be less of a catastrophe.

[harryh]

Low interest rates helped produce one of the best labor markets in living memory before covid19 hit. This was a huge boon to lots and lots of people outside of the 1%.

[mindslight]

That's another piece of the mistaken middle class buy in - labor is not an end unto itself. At the same time we have massive technological progress focused on the goal of reducing human effort, the Federal Reserve is optimizing to keep everyone working full time. The entirely predictable result is a load of meaningless bullshit jobs, especially concentrated in the sectors that receive the new money.