<story><title>A First Lesson in Econometrics (1970) [pdf]</title><url>https://www.uibk.ac.at/econometrics/lit/siegfried_jpe_70.pdf</url></story><parent_chain><item><author>boppo1</author><text>This is way off topic but hopefully it will get allowed because I think you have the expertise to help:&lt;p&gt;It seems to me that the widely accepted practice of market stimulation by interest rate intervention has the cost of destroying price discovery. Also, that it is a primary cause of wealth inequality. These relationships seem to me actually obvious: push down DCF denominators and valuations go up, inefficient businesses stay in business and employ people digging holes. Sure, we get good jobs reports, but we also work harder to make less. Meanwhile those who hold wealth see its value increase disproportionate to &amp;#x27;actual&amp;#x27; worth and common people who hold little or none can afford less and less of it. It seems like a pretty direct policy of &amp;#x27;rich get richer, poor get poorer&amp;#x27;. Worse yet, as I look at the world around me, it all seems to support my hypothesis. Tesla, spacs, NFTs, housing, blackrock &amp;amp; vanguard &amp;amp; gates buying land, etc. I could go on and on with examples.&lt;p&gt;But the thing is, I got shitty grades in my college econ courses. It&amp;#x27;s laughable to me that all the highly educated people at central banks somehow haven&amp;#x27;t thought of this but &lt;i&gt;I&lt;/i&gt; have. I&amp;#x27;m being serious, I&amp;#x27;m kind of a lazy idiot. By any reasonable measure, I expect that I&amp;#x27;m wrong.&lt;p&gt;Could you point me in the direction of some primary sources that address the relationship between interest rate intervention and price discovery? I&amp;#x27;ve been told to pick up an undergrad macro text, but those all just seem to say &amp;quot;low rates = easier to get loans = mo&amp;#x27; jobz&amp;quot; without any rigor.&lt;p&gt;Open market ops and other interventions are so common and accepted, the only other people I see complaining are precious metals schizos. Surely there&amp;#x27;s a theoretical foundation for the policy&amp;#x2F;practice.</text></item><item><author>bachmeier</author><text>My monetary economics professor in grad school was teaching a paper and told us that when the authors claim it&amp;#x27;s obvious, that means it&amp;#x27;s not obvious. So he wrote out the derivation over the weekend and gave us a four-page, single-spaced handout with all the equations behind that single &amp;quot;obvious&amp;quot; result.</text></item><item><author>lowkeyokay</author><text>This was made me laugh. So many times I read ‘it should then be obvious that…’ What the?! No it isn’t. Text book authors must hate students.</text></item></parent_chain><comment><author>smallnamespace</author><text>You’re not crazy, if you want to find lots of discussion about this topic head to
&lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;alhambrapartners.com&amp;#x2F;tag&amp;#x2F;eurodollar-university&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;alhambrapartners.com&amp;#x2F;tag&amp;#x2F;eurodollar-university&amp;#x2F;&lt;/a&gt;&lt;p&gt;But to be fair to the Fed (not to excuse plenty of incompetence), the banks in 08 became close to insolvency. The ‘proper’ way to inject money into the economy would’ve required Congress to authorize a recapitalization of banks - which would’ve been political suicide.</text></comment>
<story><title>A First Lesson in Econometrics (1970) [pdf]</title><url>https://www.uibk.ac.at/econometrics/lit/siegfried_jpe_70.pdf</url></story><parent_chain><item><author>boppo1</author><text>This is way off topic but hopefully it will get allowed because I think you have the expertise to help:&lt;p&gt;It seems to me that the widely accepted practice of market stimulation by interest rate intervention has the cost of destroying price discovery. Also, that it is a primary cause of wealth inequality. These relationships seem to me actually obvious: push down DCF denominators and valuations go up, inefficient businesses stay in business and employ people digging holes. Sure, we get good jobs reports, but we also work harder to make less. Meanwhile those who hold wealth see its value increase disproportionate to &amp;#x27;actual&amp;#x27; worth and common people who hold little or none can afford less and less of it. It seems like a pretty direct policy of &amp;#x27;rich get richer, poor get poorer&amp;#x27;. Worse yet, as I look at the world around me, it all seems to support my hypothesis. Tesla, spacs, NFTs, housing, blackrock &amp;amp; vanguard &amp;amp; gates buying land, etc. I could go on and on with examples.&lt;p&gt;But the thing is, I got shitty grades in my college econ courses. It&amp;#x27;s laughable to me that all the highly educated people at central banks somehow haven&amp;#x27;t thought of this but &lt;i&gt;I&lt;/i&gt; have. I&amp;#x27;m being serious, I&amp;#x27;m kind of a lazy idiot. By any reasonable measure, I expect that I&amp;#x27;m wrong.&lt;p&gt;Could you point me in the direction of some primary sources that address the relationship between interest rate intervention and price discovery? I&amp;#x27;ve been told to pick up an undergrad macro text, but those all just seem to say &amp;quot;low rates = easier to get loans = mo&amp;#x27; jobz&amp;quot; without any rigor.&lt;p&gt;Open market ops and other interventions are so common and accepted, the only other people I see complaining are precious metals schizos. Surely there&amp;#x27;s a theoretical foundation for the policy&amp;#x2F;practice.</text></item><item><author>bachmeier</author><text>My monetary economics professor in grad school was teaching a paper and told us that when the authors claim it&amp;#x27;s obvious, that means it&amp;#x27;s not obvious. So he wrote out the derivation over the weekend and gave us a four-page, single-spaced handout with all the equations behind that single &amp;quot;obvious&amp;quot; result.</text></item><item><author>lowkeyokay</author><text>This was made me laugh. So many times I read ‘it should then be obvious that…’ What the?! No it isn’t. Text book authors must hate students.</text></item></parent_chain><comment><author>xapata</author><text>&amp;gt; It seems to me that the widely accepted practice of market stimulation by interest rate intervention has the cost of destroying price discovery. Also, that it is a primary cause of wealth inequality.&lt;p&gt;Those claims deserve an explanation and empirical evidence.&lt;p&gt;Measuring price discovery itself is a bit awkward.  You could say that poor quality price discovery would result in more price volatility, and that increased costs of price discovery would result in lower liquidity.  Unfortunately, both of those things have many other causal factors.  How would you untangle the causes to isolate the effects of interest rate intervention?&lt;p&gt;Making the leap to saying it&amp;#x27;s the primary cause of wealth inequality is absurd.  So long as society uses a market economy, or allows any form of individual wealth aggregation, wealth is likely to follow a log-normal distribution.</text></comment>