31–40 of 71 posts
Earlier quoted context omitted.
Money is quite simple - it is the accumulation of value of individual work. The same way batteries store electricity - money store value of work. The same way batteries exchange stored electricity to perform work, money is exchanging stored value to work of others that we desire.
How does this explain the loss of value of money by inflation?
Money is strange, right? It literally doesn't exist yet it can run out and cause entire nations to go into chaos. Since it is literally a sociological experiment, are we going to get to the point where we fine tune the allotment such that we disable down-turns? It's almost as if we simply just get angsty all at once, see a global therapist and the economy recovers.
Money is strange, indeed. But disabling downturns might be something we don’t want. From the article: “Recessions are a healthy, necessary part of the economic cycle. They keep investors, businesses, and households disciplined. They remove overcapacity and make room for innovation and evolution. The US has endured 42 recessions and five depressions since the 1780s. The US economy recovered from every single one, retu…
Money is strange, right? It literally doesn't exist yet it can run out and cause entire nations to go into chaos. Since it is literally a sociological experiment, are we going to get to the point where we fine tune the allotment such that we disable down-turns? It's almost as if we simply just get angsty all at once, see a global therapist and the economy recovers.
Money is strange, indeed. But disabling downturns might be something we don’t want. From the article: “Recessions are a healthy, necessary part of the economic cycle. They keep investors, businesses, and households disciplined. They remove overcapacity and make room for innovation and evolution. The US has endured 42 recessions and five depressions since the 1780s. The US economy recovered from every single one, retu…
https://asia.nikkei.com/Economy/Loose-lending-keeps-Japan-s-...
You can measure the number of cars being produced and houses built. It doesn't really matter how you quantity value the value of a 1999 vw golf relative to the 2019 model. Once iphones, Google, Spotify & such get thrown into the mix... GDP just doesn't tell us much about how economic output has changed over the last 20 years.
For the average person, I think we need to think in different terms. Housing, education, transport, consumables and manufactured goods & services.
Generally I feel the trend (in Europe, at least) has been to big gains in the latter categories and stagnation/negative growth in the former. Housing affordability has gotten worse. Transport has gotten more expensive. Education has gotten more expensive (both for students and in total) and is "worse" in terms of leading to predictable career/income outcomes... a key decision-driver of education choices.
Meanwhile consumables (food, washing detergent) have gotten cheaper. Manufactured goods (furniture/iphones) have gotten way better/cheaper. Services are a mixed bag (financial services dragging the whole category down).
These categories are generally not fungible. No reductions in the price of food or iPhones (not even free) will help make housing more affordable.
GDP... I'm not sure what it really measures anymore. It's become totally abstract. Meaningful within models but not indicative of anything about the world.
I think it had meaning 40 years ago, but the etherealization of the economy ate it.
All that said... Uniquely low GDP growth relative to high S&P returns. Picketty is probably going nuts.. in soft spoken French.
Earlier quoted context omitted.
It is not possible to disable downturns. It sounds different if framed as the longest economic bender in history. The hangover is likely to be brutal. Alternatively one might argue that what is happening is a kind of bifurcation. The wealthy and well measured get an ongoing expansion while the poor, shiftless, and unrecorded fall through the cracks at alarming rates. We didn't have homeless families in significant nu…
Huh? The homeless rate has been going down across the country over the past few years. Maybe you're just in one of the few states where it has been increasing, like New York, California, or Massachusetts. https://www.usich.gov/tools-for-action/map/
Few would doubt the rise of the "working homeless" across the western world. The concept of someone having a fulltime job and still not able to afford rent is new. It is today's sharecropping imho.
And then there is the other modern phenomena: the legally mandated homeless. Every large city in the US now seems to have a bridge or overpass filled with people who are not legally allowed to live anywhere else. Stringent limitations on where certain convicts may live is also new.
But QE is also highly addictive. The next downturn will most likely take place within the next 18 months. It's going to catch a lot of dumb money flat-footed, and that means big declines in the stock market - something that has now become simply not acceptable politically.
There's one more piece of candy in the jar though: negative interest rates.
Where the Fed decides to go with short term rates isn't really that important anymore. Far more important is how it begins to lay the groundwork for negative rates.
Because negative interest rates will transform the grossly distorted world economy into something completely unrecognizable.
I think that GDP (and therefore inflation) don't actually measure what they used to. You can measure the number of cars being produced and houses built. It doesn't really matter how you quantity value the value of a 1999 vw golf relative to the 2019 model. Once iphones, Google, Spotify & such get thrown into the mix... GDP just doesn't tell us much about how economic output has changed over the last 20 years. For the…
I'm not sure what it really measures anymore