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   Patricia Aas (patricia@social.vivaldi.net)'s status on Tuesday, 06-Aug-2024 08:06:02 JST Patricia Aas

   So… the stock market freaked out because an indicator of a recession called “the Sahm rule” was triggered by the unemployment numbers coming out of the US.

   This of course weakened the NOK and already Norwegian unemployment was going up, so now half of the Norwegian economists are saying that the Norwegian central bank should increase the interest rate to make the NOK more attractive and the other half is saying they should decrease it to make sure we don’t end up in a recession.

   Thank goodness economists have an answer for us when things look bleak.

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     Patricia Aas (patricia@social.vivaldi.net)'s status on Tuesday, 06-Aug-2024 08:06:01 JST Patricia Aas

     in reply to

     Also it’s starting to bother me that central banks have managed to carve out a completely undemocratic space for themselves, basically becoming an unelected branch of government.

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     Patricia Aas (patricia@social.vivaldi.net)'s status on Tuesday, 06-Aug-2024 08:06:02 JST Patricia Aas

     in reply to

     My completely unsolicited and ridiculously amateur thoughts:

     I can’t seem to find good data that increasing the interest rate does anything outside of the obvious: making loans more expensive (and thereby a lot of other goods) and lending more profitable. Basically, taking from the people who need to lend and giving to those who have enough to lend out. Reverse Robin Hood.

     The current inflation seems to have complex and interacting causes and I think there’s a reasonably good chance it would’ve sorted itself out.

     The interest hikes have, however, also contributed to the inflation, while increasing housing costs dramatically for owners and renters. And simultaneously gutting the Norwegian construction sector.

     So… my guess? There’s a good chance there will be a recession, maybe not a big one 🤷🏻♀️, but even worse: I think there’s a good chance the central banks created it.

     Bill repeated this.
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     Patricia Aas (patricia@social.vivaldi.net)'s status on Tuesday, 06-Aug-2024 09:30:36 JST Patricia Aas

     in reply to

     But my superficial understanding is that it says that when you see a velocity increase in the unemployment rate (even after allowing for three months of smoothing) there is a good chance the economy is in trouble. (Someone who’s good at math please correct me if I’m off. My insomnia makes my brain lazy.) And if that’s it then… I mean… I guess that sounds reasonable? “If your temperature is significantly higher than normal, you’re probably sick”

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     Patricia Aas (patricia@social.vivaldi.net)'s status on Tuesday, 06-Aug-2024 09:30:36 JST Patricia Aas

     in reply to

     What’s weird about the economy is that it is surprisingly irrational and emotion based. It is possible that the central banks have put us in this position unnecessarily based on weird unscientific theories and assumptions, and it might be that indicators of a recession is what pushes us into a recession because people get scared.

     It’s like when people tell me women are too emotional, and I look back at a career full of men in meeting rooms shouting, calling people names, banging the table, storming out and slamming the door behind them. While I haven’t once seen a woman do any of those things.

     Economists: people are rational
     People: hold my beer 🍺

     Bill repeated this.
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     Patricia Aas (patricia@social.vivaldi.net)'s status on Tuesday, 06-Aug-2024 09:30:36 JST Patricia Aas

     in reply to

     I didn’t mean this to be a Kamala vs Trump thing, but lol, who is the “too emotional” candidate? It’s not exactly a hard call 🤣

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     Patricia Aas (patricia@social.vivaldi.net)'s status on Tuesday, 06-Aug-2024 09:30:37 JST Patricia Aas

     in reply to

     The way folks talk about the Sahm rule is interesting, because they say “it’s never wrong!”, but… I mean of course it isn’t, it was literally the result of looking at past recessions, it was published in 2019. It feels like people are screaming: look the graph fits perfectly with these data points, and the graph was actually created by connecting those same dots.

     Maybe it’s just me. It feels like it’s just me.
     https://en.wikipedia.org/wiki/Sahm_rule