In the same way that excessive cynicism about politician corruptness paved the way for an extremely corrupt con artist like Trump to win, I think that excessive cynicism about fiat currency has paved the way to people getting scammed by con artists in crypto as well.
So rather then attack crypto let me defend fiat currency against the idea it’s just make believe. Every year you have to send the US Government dollars in the form of taxes. If you don’t send dollars men and women with guns will show up at your house and throw you in jail. The entity that does this runs the most powerful military in history. That government also has proven to be stable over a long time and is able to back its promises by taxing the wealthiest society in history. And of course the banking/currency/means of exchange/etc are extremely sophisticated. Did you know at the click of a button you can transfer cash on Venmo with no gas fees? At some level this is all “socially constructed,” but in a way that is extremely robust beyond everyone deciding to believe it one day.
Saving Lincoln seems logistically easier than stopping Princip. You already speak English. As a long time DC resident, you even know where the theater is! (Although I think it has since remodeled.) The knock on effects of delaying WWI seem unknowable: maybe pressure builds up more and a world war begins anyway, but now atomic weapons are held by both sides. The effects of saving Lincoln, while unknown, are generally thought to be good: better Reconstruction, hopefully less or no Jim Crow…
On Schumer, I think the important thing to understand is that he probably isn't consciously dwelling on the idea that "we can throw away concrete wins as a party as long as no one's mad at me." Instead, what's happening is that Schumer's from Brooklyn. He's surrounded by progressives 24/7. He's also in rarified air as a caucus leader. He talks to the upper echelon of Democratic donors and interest groups every day, and the donors as Matt has pointed out in the past are way to the left of even rank-and-file Dem voters. That probably skews his sense of what's popular in an unconscious way.
It wasn't like that in 2007, and certainly not in 1999 when Schumer first joined the Senate. New York has always been a liberal state, but not nearly as uniformly then as it is now. Before Schumer beat D'Amato, New York had a Republican Senator and Governor *and* NYC had a Republican Mayor *and* the one Democratic Senator was Pat Moynihan. As everyone knows the country has gotten more and more regionally polarized in recent years and Schumer's behavior and mentality are products of that. It's not so much that he's "forgotten" the Baileys, as that there are mathematically way fewer Baileys around him now than there used to be. The same thing has probably happened to Kamala Harris, who ran normie-friendly campaigns when she was first running for DA in the '00s.
That obviously doesn't let them off the hook: it's their responsibility to look at objective data and consciously overrule their gut feelings on what the voters want. But that, I suspect, is what's happening with them psychologically. Senators from less-deep-blue states really need to get in Schumer's ear and tell him that he's steering them into a ditch. I was heartened to see Tim Kaine push back a little bit on the idiotic abortion strategy this week (https://twitter.com/JHWeissmann/status/1524561503977881602) but we need more of that.
I have a question not necessarily for Matt: are there any prominent working class people in the Democratic party? I can't think of any. I thought maybe AOC but it turns out she's an architect's daughter who interned for Senator Kennedy in college.
The reason why Schumer can get away with losing, even on an issue as big as abortion, is that American political parties are incredibly weak. The Democrats don’t punish leaders who lose, because they don’t care about winning as a team, just about winning reelection for themselves.
In strong parties, leaders who can’t pass winning bills get the boot, and members have an incentive to select effective leaders.
For the political science case in favor of strong parties, check out Responsible Parties, by Ian Shapiro and Frances Rosenbluth (both at Yale). You can also find some good Shapiro lectures on YouTube.
Speaking of messaging bills that no chance of passing - what's up with Democrats in Congress introducing the "Price Gouging Prevention Act of 2022?"
Do Democrats feel like they have it to easy in the upcoming midterms so they need to gift attack add material for Republicans to run on Democrats supporting Venezuela style socialism?
I think Matt's techno-optimist priors are blinding him from seeing the obvious answer, which is that crypto is the dumbest thing humans have ever invented and everyone with a modicum of common sense called this outcome ages ago.
On the Fed bank accounts thing, there are definitely some tricky things to think through:
If you're actually going to take deposits (the Ricks proposal Matt linked to proposes this, but in theory you could have a Fed account where you can only spend money the government gives you like tax refunds or Social Security, etc.), then you're going to need to do some Know Your Client/Anti Money Laundering (KYC/AML) work. Banks are required to make sure their clients aren't using their accounts to facilitate illegal activity (e.g. selling illegal drugs and just depositing the cash in the bank). They're supposed to look into the source of funds; for most of us, this is just a direct deposit from a company (and the company's bank is supposed to be doing KYC/AML on *it*) so this is straightforward. For anyone doing cash business, it's not. Ask someone who deals with small retail or cash payments as a small business owner sometime - the bank does an annoying level of investigation into their activity. I think this is an issue that the Fed could solve, but there's every reason to be worried that the government wouldn't be good at clamping down on illegal activity.
The trickier side is actually what to do with the money. I think Prof. Ricks is implicitly assuming that the Fed would just store the deposits there, but this would be challenging. The Fed would effectively be acting as a "narrow bank", and the Fed has actually banned banks from doing this. Their concerns are basically that by taking customer deposits and parking them at the Fed, narrow banks would drain liquidity from the system (the equivalent of hiking interest rates), forcing the Fed itself to inject more liquidity in by buying bonds or lending to banks (basically restoring the deposits to commercial banks that the narrow bank took away). However, this makes banks long-term dependent on Fed funding, and they don't want that.
You could also have the Fed act like a normal bank and lend money. Here though, there's definitely history of government-controlled banks directing lending inefficiently (and expensively!) for political purposes. The German Landesbank system is a good example here.
To wrap all this up with a constructive suggestion: what do you (everyone! not just Matt) think about the UK's shall-issue checking account system? My understanding is that they require banks to issue no-fee basic checking to everyone - wouldn't that be easier and simpler than expanding the Fed into a consumer-facing bank?
Going back in time creates huge X risk. Surviving the Cold War was extremely lucky considering the downside and doing anything that forces history to rerun that time again is deeply irresponsible. The most important thing is to go back in time and get rich so you can donate to Time Travel Safety organizations.
It would be interesting to know why you think the T-Mobile/Sprint merger was bad - I work in the industry and Sprint was circling the drain. Without the merger or someone like Elon Musk coming in and buying the company, Sprint was pretty much doomed.
And though it is still very early days, Dish - the new fourth carrier as part of the deal - is doing innovative stuff in its 5G network buildout. It’s ambitious and Dish might not succeed, but I think giving Dish the opportunity to compete as a requirement of the merger deal was a good regulatory move.
"Trump allowing the Sprint/T-Mobile merger was an egregious failure, and the Obama administration allowing Facebook to buy Instagram was in retrospect a mistake"
The (non-Trumpy) argument at the time was that T-Mobile was simply not effective as a telecom carrier, and that it's better for competition to have 3 telco companies versus 2.5. Also, part of being a telco company is being granted a government monopoly on x amount of spectrum, and the argument was that T-Mobile was literally not using it. You don't use your government-granted monopoly on natural resources, they get revoked and given to a more effective market player instead.
As has been noted many many times, Instagram had literally no revenue and a small number of users when they were acquired by FB. There is literally no legal or antitrust standard known to man that would have prevented this acquisition. It's OK to invent new standards going forward ('if you're an x-sized tech company, you're not allowed to purchase a competitor in your domain, regardless of size'), but that simply didn't exist at the time
About the Russia question I think a lot of people including me really underestimated the pent-up rage Europe had against Putin. Germany and the UK are mad he murdered people on the streets of their capital cities. Poland hates Russia even more than it hates gay people. Half of Eastern Europe’s leaders seem positively delighted at the opportunity to shovel lethal aid into Ukraine if it kills Russian soldiers. Europe seems to collectively have reached a “enough with this guy’s shit” moment and really taken Ukraine as an opportunity to stick it to him.
RE Matt's time machine and "I think the fun answer is that I’d try to go to Sarajevo in 1914 and try to stop Gavrilo Princip from shooting Franz Ferdinand."
Cmon, man - how about going back to the Ford Theater, thwarting John Wilkes Booth and boosting the likelihood of a successful Reconstruction? For starters, the location is a lock and everyone around speaks your lanuage.
Secondly, WWI had a certain inevitability about it; if it hadn't been triggered by that assassination it likely would have been something else, as multiple empires jockeyed for position. Of course, an embittered South keeping life miserable for now-free Blacks had a certain inevitability as well...
In the same way that excessive cynicism about politician corruptness paved the way for an extremely corrupt con artist like Trump to win, I think that excessive cynicism about fiat currency has paved the way to people getting scammed by con artists in crypto as well.
So rather then attack crypto let me defend fiat currency against the idea it’s just make believe. Every year you have to send the US Government dollars in the form of taxes. If you don’t send dollars men and women with guns will show up at your house and throw you in jail. The entity that does this runs the most powerful military in history. That government also has proven to be stable over a long time and is able to back its promises by taxing the wealthiest society in history. And of course the banking/currency/means of exchange/etc are extremely sophisticated. Did you know at the click of a button you can transfer cash on Venmo with no gas fees? At some level this is all “socially constructed,” but in a way that is extremely robust beyond everyone deciding to believe it one day.
Saving Lincoln seems logistically easier than stopping Princip. You already speak English. As a long time DC resident, you even know where the theater is! (Although I think it has since remodeled.) The knock on effects of delaying WWI seem unknowable: maybe pressure builds up more and a world war begins anyway, but now atomic weapons are held by both sides. The effects of saving Lincoln, while unknown, are generally thought to be good: better Reconstruction, hopefully less or no Jim Crow…
Bloody Dem consultants making me change all my pro choice signs to pro decision ones
On Schumer, I think the important thing to understand is that he probably isn't consciously dwelling on the idea that "we can throw away concrete wins as a party as long as no one's mad at me." Instead, what's happening is that Schumer's from Brooklyn. He's surrounded by progressives 24/7. He's also in rarified air as a caucus leader. He talks to the upper echelon of Democratic donors and interest groups every day, and the donors as Matt has pointed out in the past are way to the left of even rank-and-file Dem voters. That probably skews his sense of what's popular in an unconscious way.
It wasn't like that in 2007, and certainly not in 1999 when Schumer first joined the Senate. New York has always been a liberal state, but not nearly as uniformly then as it is now. Before Schumer beat D'Amato, New York had a Republican Senator and Governor *and* NYC had a Republican Mayor *and* the one Democratic Senator was Pat Moynihan. As everyone knows the country has gotten more and more regionally polarized in recent years and Schumer's behavior and mentality are products of that. It's not so much that he's "forgotten" the Baileys, as that there are mathematically way fewer Baileys around him now than there used to be. The same thing has probably happened to Kamala Harris, who ran normie-friendly campaigns when she was first running for DA in the '00s.
That obviously doesn't let them off the hook: it's their responsibility to look at objective data and consciously overrule their gut feelings on what the voters want. But that, I suspect, is what's happening with them psychologically. Senators from less-deep-blue states really need to get in Schumer's ear and tell him that he's steering them into a ditch. I was heartened to see Tim Kaine push back a little bit on the idiotic abortion strategy this week (https://twitter.com/JHWeissmann/status/1524561503977881602) but we need more of that.
I have a question not necessarily for Matt: are there any prominent working class people in the Democratic party? I can't think of any. I thought maybe AOC but it turns out she's an architect's daughter who interned for Senator Kennedy in college.
The reason why Schumer can get away with losing, even on an issue as big as abortion, is that American political parties are incredibly weak. The Democrats don’t punish leaders who lose, because they don’t care about winning as a team, just about winning reelection for themselves.
In strong parties, leaders who can’t pass winning bills get the boot, and members have an incentive to select effective leaders.
For the political science case in favor of strong parties, check out Responsible Parties, by Ian Shapiro and Frances Rosenbluth (both at Yale). You can also find some good Shapiro lectures on YouTube.
Speaking of messaging bills that no chance of passing - what's up with Democrats in Congress introducing the "Price Gouging Prevention Act of 2022?"
Do Democrats feel like they have it to easy in the upcoming midterms so they need to gift attack add material for Republicans to run on Democrats supporting Venezuela style socialism?
I think Matt's techno-optimist priors are blinding him from seeing the obvious answer, which is that crypto is the dumbest thing humans have ever invented and everyone with a modicum of common sense called this outcome ages ago.
On the Fed bank accounts thing, there are definitely some tricky things to think through:
If you're actually going to take deposits (the Ricks proposal Matt linked to proposes this, but in theory you could have a Fed account where you can only spend money the government gives you like tax refunds or Social Security, etc.), then you're going to need to do some Know Your Client/Anti Money Laundering (KYC/AML) work. Banks are required to make sure their clients aren't using their accounts to facilitate illegal activity (e.g. selling illegal drugs and just depositing the cash in the bank). They're supposed to look into the source of funds; for most of us, this is just a direct deposit from a company (and the company's bank is supposed to be doing KYC/AML on *it*) so this is straightforward. For anyone doing cash business, it's not. Ask someone who deals with small retail or cash payments as a small business owner sometime - the bank does an annoying level of investigation into their activity. I think this is an issue that the Fed could solve, but there's every reason to be worried that the government wouldn't be good at clamping down on illegal activity.
The trickier side is actually what to do with the money. I think Prof. Ricks is implicitly assuming that the Fed would just store the deposits there, but this would be challenging. The Fed would effectively be acting as a "narrow bank", and the Fed has actually banned banks from doing this. Their concerns are basically that by taking customer deposits and parking them at the Fed, narrow banks would drain liquidity from the system (the equivalent of hiking interest rates), forcing the Fed itself to inject more liquidity in by buying bonds or lending to banks (basically restoring the deposits to commercial banks that the narrow bank took away). However, this makes banks long-term dependent on Fed funding, and they don't want that.
You could also have the Fed act like a normal bank and lend money. Here though, there's definitely history of government-controlled banks directing lending inefficiently (and expensively!) for political purposes. The German Landesbank system is a good example here.
To wrap all this up with a constructive suggestion: what do you (everyone! not just Matt) think about the UK's shall-issue checking account system? My understanding is that they require banks to issue no-fee basic checking to everyone - wouldn't that be easier and simpler than expanding the Fed into a consumer-facing bank?
Going back in time creates huge X risk. Surviving the Cold War was extremely lucky considering the downside and doing anything that forces history to rerun that time again is deeply irresponsible. The most important thing is to go back in time and get rich so you can donate to Time Travel Safety organizations.
It would be interesting to know why you think the T-Mobile/Sprint merger was bad - I work in the industry and Sprint was circling the drain. Without the merger or someone like Elon Musk coming in and buying the company, Sprint was pretty much doomed.
And though it is still very early days, Dish - the new fourth carrier as part of the deal - is doing innovative stuff in its 5G network buildout. It’s ambitious and Dish might not succeed, but I think giving Dish the opportunity to compete as a requirement of the merger deal was a good regulatory move.
Matt made the same error that a lot of people seem to make when he answered the crypto question.
He answered with an explanation of why it might go up.
She actually asked, why should it exist at all.
Q: Matt, do you recommend hiring a nanny?
A: hiring an ex-prisoner or recovering addict is a great idea!
I just thought this was unintentionally hilarious.
"Trump allowing the Sprint/T-Mobile merger was an egregious failure, and the Obama administration allowing Facebook to buy Instagram was in retrospect a mistake"
The (non-Trumpy) argument at the time was that T-Mobile was simply not effective as a telecom carrier, and that it's better for competition to have 3 telco companies versus 2.5. Also, part of being a telco company is being granted a government monopoly on x amount of spectrum, and the argument was that T-Mobile was literally not using it. You don't use your government-granted monopoly on natural resources, they get revoked and given to a more effective market player instead.
As has been noted many many times, Instagram had literally no revenue and a small number of users when they were acquired by FB. There is literally no legal or antitrust standard known to man that would have prevented this acquisition. It's OK to invent new standards going forward ('if you're an x-sized tech company, you're not allowed to purchase a competitor in your domain, regardless of size'), but that simply didn't exist at the time
About the Russia question I think a lot of people including me really underestimated the pent-up rage Europe had against Putin. Germany and the UK are mad he murdered people on the streets of their capital cities. Poland hates Russia even more than it hates gay people. Half of Eastern Europe’s leaders seem positively delighted at the opportunity to shovel lethal aid into Ukraine if it kills Russian soldiers. Europe seems to collectively have reached a “enough with this guy’s shit” moment and really taken Ukraine as an opportunity to stick it to him.
RE Matt's time machine and "I think the fun answer is that I’d try to go to Sarajevo in 1914 and try to stop Gavrilo Princip from shooting Franz Ferdinand."
Cmon, man - how about going back to the Ford Theater, thwarting John Wilkes Booth and boosting the likelihood of a successful Reconstruction? For starters, the location is a lock and everyone around speaks your lanuage.
Secondly, WWI had a certain inevitability about it; if it hadn't been triggered by that assassination it likely would have been something else, as multiple empires jockeyed for position. Of course, an embittered South keeping life miserable for now-free Blacks had a certain inevitability as well...