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What to Worry About in This Surreal Bull Market

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Re: What to Worry About in This Surreal Bull Market

#221
post #205
post #202

Earlier quoted context omitted.

>...That's why a house costs on average 24 times more today than in 1960, There might be isolated cases of that happening, but in general, nothing close to that. >...In fact, if you look at a fifty-year period after World War II, home prices were absolutely steady. In 1947 the Case-Shiller index stood at 110, and in 1997, adjusted for inflation, it stood at 110 again. http://www.motherjones.com/kevin-drum/2010/08/cha…

>There might be isolated cases of that happening, but in general, nothing close to that. Where people want to live and work are cities. If you look at urban housing vs wages, housing has grown 3x compared to wages. Considering urban areas isolate cases is somewhere in between funny and absurd. >The tax burden has basically gone opposite of what you imply. I have neither stated nor implied anything about tax burden. I…

>...Considering urban areas isolate cases is somewhere in between funny and absurd.

What you said was "That's why a house costs on average 24 times more today than in 1960,"

You didn't say you were only taking about urban areas, and you have given no evidence that a house costs on average 24 times more today than 1960 when adjusted for inflation. You also haven't given any evidence that the increases in the house prices are due to the tax rates especially when there are more obvious factors.

>...I have neither stated nor implied anything about tax burden.

What you said was "It's a neo-feudal give away."

>...What I want to do is incentivize a greater velocity of money,

Increasing aggregate demand isn't some magic solution to every economic problem. Long term what makes a country wealthy is increased productivity.

>...The very fact that insane rate existed was the incentive for most everyone else to do something with their money rather than nothing.

The WW II rates of 90+ percent don't mean "...incentive for most everyone else to do something with their money rather than nothing". It actually means the opposite of what you mean. If the government will take any gains you make, you invest the money in bonds that won't be taxed. If, for example, you want to incentive people to invest in new businesses, you would look at lowering the tax rates for that investment - not increase them.

As a rule, most economists are opposed to very high marginal tax rates due to the inefficiencies they introduce - compensation being moved to non-salary, money wasted on CPAs, lawyers and lobbying congress for special deductions, dead weight losses for economic activity that isn't done, etc.

Re: What to Worry About in This Surreal Bull Market

#222
post #111

We're approaching year-end when there's typically some inflows resulting from 401k and IRA investments. Does this cash sit on the sidelines waiting for the crash, or does it go into the market?

401k and investments from people who think their IRAs need to be contributed during the calendar year (and have the ability to) will go in because even with high prices, you only get to contribute a certain amount per year.

Re: What to Worry About in This Surreal Bull Market

#223
post #111

We're approaching year-end when there's typically some inflows resulting from 401k and IRA investments. Does this cash sit on the sidelines waiting for the crash, or does it go into the market?

401k and investments from people who think their IRAs need to be contributed during the calendar year (and have the ability to) will go in because even with high prices, you only get to contribute a certain amount per year.

Right but it can go in as cash and not be immediately invested. I'm wondering whether that might happen given the current state of the market.
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