Central Banking and why it's not as simple as people think

[eyeball]

5 minutes ago, Moonbox said:

I don't really know, but this is well outside their wheelhouse/mandate, so I suspect you're right.  That's a good thing.  

Like driving a boat at night in the fog with no electronics.  It can be done but I'd be inclined to anchor up and see how things look in the morning.

[Moonbox]

3 hours ago, eyeball said:

Like driving a boat at night in the fog with no electronics.  It can be done but I'd be inclined to anchor up and see how things look in the morning.

Not at all.  It'd be more like trying to incorporate the long-term projections of dietary and demographic trends of Canadians over the next 30 years into your decisions about how to operate your fishing boat over the next 6-18 months.  It's sort of related, but well outside of the scope of your business and certainly not something you can control.

Edited November 28, 2022 by Moonbox

[eyeball]

2 hours ago, Moonbox said:

Not at all.  It'd be more like trying to incorporate the long-term projections of dietary and demographic trends of Canadians over the next 30 years into your decisions about how to operate your fishing boat over the next 6-18 months.  It's sort of related, but well outside of the scope of your business and certainly not something you can control.

Predicting 6 - 18 months out is easy enough but I can also look at how fisheries managers are under or worse mismanaging fish stocks and incorporate that into my long term calculus.  That said I can mitigate for decline I'll like face over time by counting on prices for fish to increase as they become more scarce.  From the fisherman's perspective staying in business still makes sense because he's still making the same relative to the cost of being there.  As long as industry is doing okay that way it's managers are under less pressure to change much if anything.

Then the stock collapses....like the sudden shock of hitting a rock that everyone nonetheless knew was close by.

I disagree you can't control for this but you really have to want to before you can.  It's too easy to sing la la la with fingers inserted you know where.

[Moonbox]

35 minutes ago, eyeball said:

I disagree you can't control for this but you really have to want to before you can.  It's too easy to sing la la la with fingers inserted you know where.

You're layering complexity on top of complexity.  Economic and climate sciences are both exceptionally complicated, with so many variables at play that even the brightest in their respective fields can at best offer guesses, probabilities and scenarios.  Any model meant to integrate them would therefore be an order of magnitude more complicated and probably inaccurate to the point of uselessness.

That's not to say that economists don't try to make WAGs and encourage businesses and governments to incorporate environmental costs into their long-term plans, but that's far outside the scope or purview of the central banks and their raison d'etre.