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End of Golden Era for Investors Spells Troubles

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Re: End of Golden Era for Investors Spells Troubles

#101

Post by pj_mukh »

ramblerman wrote: post #73

I don't know if there is reason to be either optimistic or pessimistic, but let's not be simplistic. The long run is incredibly hard to predict, with all the cool tech around the corner and scientific advances that may be available in 30-50 years, the stock market may simply not be a big factor in most people's lives. Maybe that is the worst fear of a company like Bloomberg that exists to be the ESPN of financial ran…

Truth. All this 'animal spirits' behaviour of the public markets ranges from nonsensical to counter-productive. Need other vessels of investment.

Re: End of Golden Era for Investors Spells Troubles

#102

Post by RobertoG »

msandford wrote: post #83
RobertoG wrote: post #65

Earlier quoted context omitted.

So, we agree that default is not an issue? If there is any doubt here is in the words of Alan Greespan: "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" http://www.cnbc.com/id/44051683 Can we agree also that inflation is not a problem at the moment?

"Technical default" and "Effective default" are obviously different, but if the purchasing power of the dollars you're paid in are only 1% of the dollars you've loaned, that's effective default. If the government practices effective default over a period of 50 years most people don't really get it. If the government practices effective default over 3-6 months, everyone will understand and it could be very destructive…

Do you know what makes people poorer? Closing public services, not investing in infrastructure, reducing spending in science and technology, reducing spending in public education and public health. Those are real things.

Why not we worry about this?

Re: End of Golden Era for Investors Spells Troubles

#103

Post by Retric »

Amezarak wrote: post #100
Retric wrote: post #97

Earlier quoted context omitted.

Looking at the total quantity of trade misses how profitable that trade is. Saudi Arabia gained wealth by selling oil at massive margins not just massive amounts of oil.

Those percentages aren't volumes, they're dollars. The profitability is built in to the numbers.

First, there is a giant spike of exports from ~1944 to 1952 where exports hit ~5% GDP over imports. This brought a lot of money not just to businesses, but also individual households. Imports only really grow past exports in ~1975.

Second, %GDP just says how much money exchanged hands. The important number for wealth accumulation is value capture. Aka Profit not Revenue. China has a huge chunk of worldwide manufacturing, but its mostly low margin sales slowing their wealth accumulation.

PS: Foxconn employs 1.3 million people and has 4.106 billion in profit. Apple has more than 10x the profit with less than 1/10th the number of workers.

Re: End of Golden Era for Investors Spells Troubles

#104

Post by RobertoG »

Amezarak wrote: post #94
Retric wrote: post #84

Earlier quoted context omitted.

US still has a significant chunk of WWII debt after one of the greatest sustained economic booms of all time. Growth really is not the answer. Inflation sounds great, just default without technically defaulting, until you actually see what it does to the economy. The real solution is to simply spend vastly less money accepting that pain now is better than letting the US become a failed state.

> US still has a significant chunk of WWII debt after one of the greatest sustained economic booms of all time. Let's pretend this is true. (I doubt it.) Let's keep in mind that US debt is owed in bonds, redeemable in US dollars. If I get a 30 year mortgage in 1945 and simply rollover the debt whenever it comes due, but my wealth has increased dramatically, my mortgage does not matter. If I take out a 100k mortgage a…

"I can only speculate why the story is so popular."

I'm going to try to speculate too.

Inflation is the monster used to scare public opinion from public spending. Public spending is undesirable because two reason. First, it's redistributive: you are creating money and growing the economy but this grow goes mostly to everyone. Second, you are competing for labour with capital. That means labour becomes more scarce. More scarce labour means, expensive labour. Expensive labour is again redistributive.

So, if this (speculative) view is true, the reason is not very original.

In fact, it's the oldest history in the world since the start of the neolithic.

Re: End of Golden Era for Investors Spells Troubles

#105

Post by jhoechtl »

cm2187 wrote: post #14

I think it can get much worse than that. I don't know why people think the current levels of accumulation of debt are sustainable but there is a limit to what even the US can roll in term of debt. All developped nations are at around 100% debt to GDP, more than 200% if you include private debt, and growing at 3-5% per annum. Now does anyone really think that sometime soon any developped country will start making publ…

The US profited enormous from Europe falling to pieces. Re-building Europe swept in money into US kofers for many, many years and is in fact still ongoing, albeit to a very small extend.

Consequently thinking your thoughts ahead will inevitably results in either WWIII or massive poverty coming all over us the moment the first asks value for money and demands his money back. In fact we are already there as we are relying on fiat money rather than backing by "real" goods.

Re: End of Golden Era for Investors Spells Troubles

#106

Post by RobertoG »

Retric wrote: post #99
Amezarak wrote: post #94

Earlier quoted context omitted.

> US still has a significant chunk of WWII debt after one of the greatest sustained economic booms of all time. Let's pretend this is true. (I doubt it.) Let's keep in mind that US debt is owed in bonds, redeemable in US dollars. If I get a 30 year mortgage in 1945 and simply rollover the debt whenever it comes due, but my wealth has increased dramatically, my mortgage does not matter. If I take out a 100k mortgage a…

Your assuming US was paying all of the interest on debt. They where rolling over principle and interest which causes things to spiral. Also, US had negative inflation in 1955 and overall low rates from 1950-1969. It only spiked after that. 1974 to 1982 where generally bad. http://www.usinflationcalculator.com/inflation/historical-in...

You can get inflation in two ways.

One way: people and firms are expending more money that the economy can digest. If a government wanted to compensate this, could raise taxes or, ironically, retiring money from the system emitting debt.

The other way: the money that people is expending is the same but the economy, for some reason, shrink. That would be a supply shock. That is what happened in the 70's with the oil cartel.

Re: End of Golden Era for Investors Spells Troubles

#107

Post by TheCoelacanth »

kabouseng wrote: post #96
TheCoelacanth wrote: post #81

Earlier quoted context omitted.

Post WW2 has been one of the most peaceful periods ever in human history. It might not be peace in the absolute sense, but it's about the closest humans have ever achieved.

I doubt the people or Iraq, Iran, Afghanistan, Korea, Vietnam, Liberia, Sierra Leone, Bosnia, Kuwait, Somalia, SAR or Serbia would agree with you, to name just a few... If I may ask, how do you get to your statement? Is there some metric one can look at to determine it?

Because those regions were so much more peaceful when the Mongols or the Ottomans or the crusaders were rampaging through them /s

I'm not saying that there isn't localized violence, just that global level is down. Stephen Pinker's The Better Angels of our Nature is one source to support this idea.

Re: End of Golden Era for Investors Spells Troubles

#108

Post by Bombthecat »

cm2187 wrote: post #14

I think it can get much worse than that. I don't know why people think the current levels of accumulation of debt are sustainable but there is a limit to what even the US can roll in term of debt. All developped nations are at around 100% debt to GDP, more than 200% if you include private debt, and growing at 3-5% per annum. Now does anyone really think that sometime soon any developped country will start making publ…

That's why stuff like bitcoin is so interesting.

Re: End of Golden Era for Investors Spells Troubles

#109

Post by cm2187 »

Amezarak wrote: post #94
Retric wrote: post #84

Earlier quoted context omitted.

US still has a significant chunk of WWII debt after one of the greatest sustained economic booms of all time. Growth really is not the answer. Inflation sounds great, just default without technically defaulting, until you actually see what it does to the economy. The real solution is to simply spend vastly less money accepting that pain now is better than letting the US become a failed state.

> US still has a significant chunk of WWII debt after one of the greatest sustained economic booms of all time. Let's pretend this is true. (I doubt it.) Let's keep in mind that US debt is owed in bonds, redeemable in US dollars. If I get a 30 year mortgage in 1945 and simply rollover the debt whenever it comes due, but my wealth has increased dramatically, my mortgage does not matter. If I take out a 100k mortgage a…

I think you are discounting the Zimbabwe and Weimar Republic experiences a bit too quickly. The equation I print money = I create inflation does hold. Right now we see a very concentrated inflation in real estate and stocks which are not counted in the CPI indices, because the money printing is done through bank balance sheets and asset managers (by buying treasury and ABS securities) but as soon as the gvt starts paying its employees and suppliers with printed money, even the CPI indices will go wild. In any case it's not because the CPI index doesn't say there is inflation that there isn't. My rent is going up every year at a much higher rate than the CPI index. Not treating property as a cost of living is just absurd.

Re: End of Golden Era for Investors Spells Troubles

#110

Post by Bombthecat »

noir-york wrote: post #48

We're gonna be overdue for a large war within 20 years so the pension pot of today's millenials, or indeed, anyone's, is going to be the least of their worries. By large I mean either a world war or a big regional one - and large wars have a habit of resetting economies, technology and societies. Most likely flashpoints: Russia and/or South East Asia. Best investment - I am guessing either a New Zealand or a South Am…

And shares in weapon producer / developers ( robot weapons)
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