jpkoning (u/jpkoning)

jpkoning commented on Setelinleikkaus: When Finns snipped their cash in half to curb inflation jpkoning.blogspot.com/202... · Posted by u/Michelangelo11

lbotos · a year ago

You make it sounds like they aren't doing regular open market operations, but as I understand it... they still do?

https://www.newyorkfed.org/markets/domestic-market-operation...

jpkoning · a year ago

The Fed still does purchases and sales, but not for the purpose of driving the overnight interest rates towards its target. The level of the overnight rate is not affected of any purchases or sales that the Fed does.

jpkoning commented on Setelinleikkaus: When Finns snipped their cash in half to curb inflation jpkoning.blogspot.com/202... · Posted by u/Michelangelo11

eru · a year ago

> It's not just the size of Operation Gutt that is striking to the modern eye. It's also the oddity of the tool being used. Today, we control inflation with changes in interest rates, not changes in the quantity of money. To soften the effect of the global COVID monetary overhang, for instance, central banks in the U.S., Canada, and Europe began to raise rates in 2022 from around 0% to 4-5% in 2024.

It's a bit more interesting than 'the central bank sets interest rates'.

Simplified: the central bank decide on an interest rate that they want to see. By itself that decision doesn't do anything.

What happens next is that they buy and sell government bonds in the open market. The interest rate can be seen as the inverse of the price of bonds.

If the central bank wants to see a lower interest rate, they buy bonds with freshly printed money to drive up their prices, ie drive down the interest rate.

If the central banks wants to increase the prevailing interest rate, they sell government bonds from their inventory and essentially destroy they money they receive in return.

So even when the language of modern central banking talks about interest rates, they still change the quantity of money to implement that.

(This is all simplified, especially with the interest on excess reserves that was popular with the Fed for a while. And there's also repos and reverse repos etc.)

jpkoning · a year ago

"What happens next is that they buy and sell government bonds in the open market."

This describes how central banks operated in the U.S. before 2008 and in Canada before the 1990s. The Federal Reserve and the Bank of Canada both set a target for the overnight interest rate, and then they hit that target by doing open market purchases (or sales) of bonds, effectively adding funds to (or draining funds away from) the overnight lending market. By changing the quantity of funds, they influenced the interest rate.

What changed is that both central banks introduced interest payments on balances that banks hold at the central bank. Previously, these balances earned 0%. With this new tool, they could directly set the overnight interest rate by adjusting the rate paid on these reserves, eliminating the need for regular open market operations.

jpkoning commented on PayPal restores to its TOS $2,500 charge for any post they don't like twitter.com/jeremyknauff/... · Posted by u/mhb

jpkoning · 3 years ago

The Grit Daily article cited in the linked-to tweet is fake news. It alleges that PayPal's proposed misinformation clause and associated $2500 penalty, which was cancelled by PayPal earlier this month, has been quietly "added back into the terms of service with equally ambiguous language."

This can be proven wrong with a quick check of PayPal's acceptable use policy in the WayBack Machine. The $2500 fine that the article alleges has been added back after "criticism on social media died down" has been there since 2021. [https://web.archive.org/web/20211013092233/https://www.paypa...]

As for article's allegation that a prohibition on intolerance has just been added this October, that clause been there since 2018. [https://web.archive.org/web/20181108164503/https://www.paypa...].

So there is no justification to the article's allegation that the clauses have been quietly added back to PayPal acceptable use policy.

Furthermore, in building its argument that the misinformation clause was sneakily "added back into the terms of service," the article erroneously makes the assumption that a prohibition on intolerance equates to a prohibition on misinformation. This doesn't follow.

I'm not trying to support PayPal's acceptable use policy. But if you're going to attack it, at least use facts.