The biggest consequence of easy money is market concentration afforded by stock repurchases of the past decade. I don’t know if we will ever be able to return to anything even close to normalized ten-year rate. People couldn’t “deal” with 3% and this goes back to the fact that corporate America simply do not develop high-risk high-return businesses because the hurdle rate is so low. These two factors will lead to a dramatic decrease in innovations.
Too much money and too few places to invest it
41–50 of 104 posts
Re: Too much money and too few places to invest it
#42> "How we got here: The Fed's quantitative easing program pushed the cost of borrowing money to next to nothing for nearly a decade, allowing companies to splurge on debt for mergers and acquisitions and to boost revenue." Put another way, the Fed made the rich richer, and the lack of significant "trickle down" has created a socio-political Charlie Foxtrot; of which the Fed is not accountable for.
The Fed is against raising the minimum wage because it will make inflation increase above the allowed 2% per year. Which kind of makes sense because paying workers more will make things more expensive especially service businesses. But, they should still raise the minimum since most service businesses are heading for automation and the bump will help workers have a better job transition.
Source? I dont believe they ever said that.
Re: Too much money and too few places to invest it
#43What about investing it in the planet. Fund lobby groups. Fund companies working on alternative energy tech. There was a (YC funded?) startup on here recently looking to turn air and water into fuel in an efficient enough way. That sort of stuff. Unless the goal is purely to maximise gains of course. Announce "I am investing 10Bn in climate change startups over 50 years", so that people can plan their career around this.
Re: Too much money and too few places to invest it
#44Why not invest in R&D to invent what to invest in then?
Re: Too much money and too few places to invest it
#45Earlier quoted context omitted.
I thought ZIRP was the culprit, with QE being a response to the 2008 crashes that stacked up on it.
and QE is just kicking the can down the road a little further. We are the new Japan.
Frankly every (developed) country is the new Japan when you look at debt loads and demographic ratio trends.
They’re the canary in the coal mine for all of us.
Re: Too much money and too few places to invest it
#46Earlier quoted context omitted.
Wouldn't it just make the automation viable more quickly?
I feel like companies are already racing for it. Just look at how fast outsourcing has taken place across SMBs and public companies.
They do it when the cost of automation is less than the cost of labor. In some areas that has already happened, sure. But what's the result when you cause it to happen more?
Re: Too much money and too few places to invest it
#47> "How we got here: The Fed's quantitative easing program pushed the cost of borrowing money to next to nothing for nearly a decade, allowing companies to splurge on debt for mergers and acquisitions and to boost revenue." Put another way, the Fed made the rich richer, and the lack of significant "trickle down" has created a socio-political Charlie Foxtrot; of which the Fed is not accountable for.
The Fed is against raising the minimum wage because it will make inflation increase above the allowed 2% per year. Which kind of makes sense because paying workers more will make things more expensive especially service businesses. But, they should still raise the minimum since most service businesses are heading for automation and the bump will help workers have a better job transition.
Could you elaborate how the timing of a minimum wage hike now could help with the adjustment to the arrival of automation related job loss? Note: No snark on my part, it seems plausible and I'm generally looking to be able to debate the topic more intelligently.
Re: Too much money and too few places to invest it
#48Earlier quoted context omitted.
The Fed is against raising the minimum wage because it will make inflation increase above the allowed 2% per year. Which kind of makes sense because paying workers more will make things more expensive especially service businesses. But, they should still raise the minimum since most service businesses are heading for automation and the bump will help workers have a better job transition.
Wouldn't it just make the automation viable more quickly?
It could boost per worker automation, but there will be fewer workers, and less economic output to reinvest into capital (which is essentially automation), so there will be less automation in general.
So higher automation per worker but lower automation per capita.
Re: Too much money and too few places to invest it
#49> "How we got here: The Fed's quantitative easing program pushed the cost of borrowing money to next to nothing for nearly a decade, allowing companies to splurge on debt for mergers and acquisitions and to boost revenue." Put another way, the Fed made the rich richer, and the lack of significant "trickle down" has created a socio-political Charlie Foxtrot; of which the Fed is not accountable for.
It’s trickled down but in narrow bands. For example, starting salaries in the Bay Area are up big in the last decade, partly because of an influx of easy money into tech growth tech companies. However, much of that goes directly into the pockets of land owners. Ultimately the winners in QE are those that own the finite resources.
Ya, and? Isn't that always the case - the owners of finite resources profit. Is there some other way it would be?
Re: Too much money and too few places to invest it
#50Ironically the best thing they can do to create new investment opportunities is pay their workers more, but they never will because they are too short sighted.
If you pay your workers more you have less money for investment opportunities...
To repeat the basic premise of the article, the lack of money is not the problem, the lack of investment opportunities is. That lack is due to insufficient demand in the economy. You can stimulate that demand most easily by increasing the income of the lowest paid workers, who spend money the fastest. It also would produce productivity growth which would boost profits.