Ask HN: Do you think the economy makes sense?

Modern economies in the west are almost all based on the idea that monetary policy (interest rates) should be used to set both an inflation target and maintain full employment.

In fact, interest rates are not particularly useful for either.

The reason people want monetary policy rather than fiscal policy is because they think that a board of appointed governers is somehow more accountable than congress, sort of like how people think Bitcoin is a great currency because the creation of new coins is governed by maths rather than policy.

This is obviously stupid if you know what money is and how it works, but people are pretty confused about what money is and how it works.

Anyway here are my opinions on your points:

> soaring and stagnating housing sector

There is really only one reason house prices go up and that's lack of supply. In the US that's caused by a range of reasons, in Australia it's caused by excessive government fees and charges commensurate with the "user pays" mentality:

https://www.fanniemae.com/research-and-insights/perspectives...

https://www.livewiremarkets.com/wires/the-real-reason-aussie...

> tumult in the Stock market (soaring 20/21, tumbling 2022)

Stock market growth is driven by investment in business. Government fiscal stimulus was good for the economy during and emerging from covid, and the tech sector in particular was a hot item because everyone needed more tech to cope with remote working. The economy was going pretty well, but inflation caused mostly by supply side shocks and lack of competition was seen as a threat, so governments started putting up interest rates. When you increase interest rates, you increase the rate of risk free return on cash, so people take money out of the stock market and put it into bonds and/or high interest accounts, which takes the wind of the sails of stock market growth. At the same time, crypto has been crashing because it's fundamentally worthless, and somehow the increase in institutional investors going into crypto has lumped it in with the rest of the tech sector, so now crypto is a leading indicator for tech stocks, even though tech stocks are actually productive and crypto is even more worthless than pokemon cards, but functionally similar. Once crypto falls so far that it can no longer recover and prices decouple from other tech stocks, tech will rebound and crypto will go to $0.

> plateau consumer spending, consumer still “holding in” > Inflation and increase in consumer spending > Related: the end of cheap debt

Customers have seen rent, mortgage, petrol and food costs go up. So spending is up. But they can't buy any of the additional shit they would normally buy with their disposable income, so spending is down in those areas.

> Supply chain chaos

China COVID zero policy, Russian war.

> Popular sentiment and reporting of looming recession

Increasing interest rates can easily cause a recession. It may or may not weaken inflation. The Volcker experiment is illustrative.

> Uncertainties in global markets, major international relations crises

Mostly to do with energy and fossil fuel interests, some ideology. Listen to Dave Troy, he's on point.

> Crypto (let’s not get too caught up in this one, pretty please)

Already mentioned

> Strong employment

Sort of. Jobs are strong, but casualisation is high and wages are low. This is mostly to do with the lax way that employment is reported. If you look at labour wastage it tells a different story. Still, government fiscal stimulus did create jobs, which is good, but they would be better off doing it through a job guarantee that would ensu...