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The Financialization of the American Elite

americanaffairsjournal.org

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Re: The Financialization of the American Elite

#71

Post by solotronics »

asmithmd1 wrote: post #56
solotronics wrote: post #39

Earlier quoted context omitted.

I think the firehose we have now of unconstrined fiat currency will go down in the history books as an aberration in the history of money. Money and the economy are part of the bedrock of modern society and the human interactions that happen on a macro and micro level. When you get down to it fiat currencies like the USD became uncoupled from reality when it went off being pegged to a physical amount of gold/silver.…

The history of the Spanish Conquistadors successful search for physical gold in the new world has been written and it is a period of inflation in Spain. Instead of focusing on bringing back real wealth from the new world (coffee, chocolate, tomatoes, potatoes), they brought back useless yellow metal that just caused inflation. The idea is to match the money supply to the real wealth in the economy. I don't disagree w…

Bitcoin! I am only half joking. Maybe the answer is an electronic currency that inflates at a slower or set rate?

Re: The Financialization of the American Elite

#72

Post by solotronics »

Qasaur wrote: post #41
solotronics wrote: post #39

Earlier quoted context omitted.

I think the firehose we have now of unconstrined fiat currency will go down in the history books as an aberration in the history of money. Money and the economy are part of the bedrock of modern society and the human interactions that happen on a macro and micro level. When you get down to it fiat currencies like the USD became uncoupled from reality when it went off being pegged to a physical amount of gold/silver.…

Not only in the history of money, but in the history of humanity. Think of all the lost prosperity that has been siphoned off since 1971 and the collective rise in living standards people could have afforded. We are very comfortable as technologists and other high-paying (read: inflationary) professionals, but there is a large class of people who are getting thoroughly shafted by these monetary policies and they are…

Even though we might benefit in the short term if this is kept up there could be a massive uprising by those who have been disenfranchised, ie. the French revolution.

Re: The Financialization of the American Elite

#73

Post by lisper »

solotronics wrote: post #70
lisper wrote: post #53

Earlier quoted context omitted.

> they will explain this period as a hyperinflation No, they won't, because it wasn't.

I understand that there is only a moderate increase per year in the cost of consumer goods but there is a trillion more digital USD being created every 2 years. Specifically 1,200,000,000,000 USD in a 2 year period. 2,280,000 per minute. https://www.federalreserve.gov/releases/h6/current/default.h...

Yes, it's a mystery why this isn't causing huge inflation. Nonetheless, the indisputable fact of the matter is that it isn't.

Re: The Financialization of the American Elite

#74

Post by Animats »

throwaway2048 wrote: post #35
hedvig wrote: post #25

Earlier quoted context omitted.

The same who say that never gets around to the tweaks

Reminds me of the people who say that regulations strangles innovation, and is the reason why $HUGE_COMPANIES dominate, we must remove the regulations and promote a free market where quality goes up and prices come down, except the second part rarely seems to end up happening, but not before the controls that helped mitigate the abuse of the large players get removed.

OK, so let's take free markets seriously.

The EU has a study which I cited in a previous posting indicating that price competition requires four substantial sellers. One is a monopoly, two tend to implicitly cooperate as a duopoly, sometimes there's competition with three but often two of those dominate as a duopoly, but with four, price competition usually appears. It takes at least four players to have a free market.

So, less than four players in a market, and Government constraints kick in. Breakups, blocks on mergers, restrictions on expansion, higher taxes and closer scrutiny for the top 3. The US used to do stuff like that. The EU now does.

Now that's a free market.

Re: The Financialization of the American Elite

#75

Post by Qasaur »

lisper wrote: post #73
solotronics wrote: post #70

Earlier quoted context omitted.

I understand that there is only a moderate increase per year in the cost of consumer goods but there is a trillion more digital USD being created every 2 years. Specifically 1,200,000,000,000 USD in a 2 year period. 2,280,000 per minute. https://www.federalreserve.gov/releases/h6/current/default.h...

Yes, it's a mystery why this isn't causing huge inflation. Nonetheless, the indisputable fact of the matter is that it isn't.

It's not causing cousumer price inflation, but it definitely is causing price inflation in other parts of the economy (equities, real estate, startup valuations etc.).

Re: The Financialization of the American Elite

#76

Post by DrAwdeOccarim »

DennisP wrote: post #37
DrAwdeOccarim wrote: post #11

Earlier quoted context omitted.

It feels like we aren't really in a capitalistic system as much as we used to. The moral hazard of zero percent interest seems to have infected the way we allocate capitol. One example is the We Company S1 where basically, like FB and Snap, investors no longer have a say in how the business is run because the founder(s) control all the voting shares. Basically in the past, capital was scarce and so investors could de…

Also, see the book Cornered by Barry C. Lynn, who argues that over the last couple decades, the U.S. economy has been mostly taken over by monopolies, so we don't have much open free market competition anymore. The monopolies generally aren't obvious. For example, we have three major car companies, but they all get their parts from the same suppliers. In 2009 Ford asked Congress to bail out Chrysler and GM, because i…

Interesting, that's a point I hadn't considered. So in a system that is awash in cheap credit and every major consumer stable is controlled by a duo/triopolpy, inflation can we controlled while the owners of production continue to gain wealth. It's interesting to look at the things "rich" people buy like houses, vacations/experiences, and high-end consumer goods--those things have all increased in price in the sense that they "now exist" where as in the past the spread between poor quality and high quality was probably tighter. The difference between a cheap car and an expensive car is dramatic in both quality and price, same with food, real estate location, clothes, etc. Does anyone offer a CPI for luxury goods? I bet inflation in that has been dramatic especially in the past decade.

Re: The Financialization of the American Elite

#77

Post by deafcalculus »

Animats wrote: post #4

He's missing a big change since 1949 or 1974 - the demise of communism. It's not that communism was all that successful, but it was competition for capitalism. Capitalism had to do better for the voters than communism. From about 1920 to 1980, American business was scared of communism as an alternative system. In the 1950s and 1960s, when the USSR looked to be surging ahead, there was heavy PR about how capitalism de…

It wasn't just the death of communism. Globalization also hurt labor unions. Capital could credibly threaten to move production to low wage countries and often did so. This greatly weakened the unions.

Re: The Financialization of the American Elite

#78

Post by lisper »

Qasaur wrote: post #75
lisper wrote: post #73

Earlier quoted context omitted.

Yes, it's a mystery why this isn't causing huge inflation. Nonetheless, the indisputable fact of the matter is that it isn't.

It's not causing cousumer price inflation, but it definitely is causing price inflation in other parts of the economy (equities, real estate, startup valuations etc.).

No, it isn't, and certainly not since 1982.

Between 1980 and 2000, California median home prices increased at a rate of less than 1% a year [1]. Over that same period many states saw price drops in real estate.

In Southern California between 2000 and today, house prices increased at an average of about 5% a year [2].

Even health care is only going up at about 5% a year on average. Tuition is going up at about the same rate.

None of this is even remotely in the same ballpark as hyperinflation.

[1] https://www.cnbc.com/2017/06/27/how-much-housing-prices-have...

[2] https://www.latimes.com/business/la-fi-southern-california-h...

[3] https://www.kff.org/other/state-indicator/avg-annual-growth-...

Re: The Financialization of the American Elite

#79

Post by reallydude »

lisper wrote: post #65
drtillberg wrote: post #58

Earlier quoted context omitted.

Ok, ok, asset price inflation measured by the S&P 500 has been about 9% annually from $123 in 1982 to $2,920 in 2019. In addition, the availability of debt amplifies increases. For example, the Case-Shiller Home Price Index increased from 100 to 220 between 2000 and 2019 (about 4% annually), but owners often leverage 80% at the start, and they actually have a 13% annual return (less carrying costs)-- lets say double…

https://en.wikipedia.org/wiki/Hyperinflation

Exactly. It fits for the world-wide inflation.

> In economics, hyperinflation is very high and typically accelerating inflation.

> It quickly erodes the real value of the local currency, as the prices of all goods increase.

This is in process. You seem to think there's a specific periodic minimum that is absolute. If the period is decades, it looks the same.

> This causes people to minimize their holdings in that currency as they usually switch to more stable foreign currencies, often the US Dollar.[1] Prices typically remain stable in terms of other relatively stable currencies.

Given this has affected every currency (not counting some closed off systems like NK) the flight currency is property/land/gold/etc

Re: The Financialization of the American Elite

#80

Post by lisper »

reallydude wrote: post #79
lisper wrote: post #65

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Hyperinflation

Exactly. It fits for the world-wide inflation. > In economics, hyperinflation is very high and typically accelerating inflation. > It quickly erodes the real value of the local currency, as the prices of all goods increase. This is in process. You seem to think there's a specific periodic minimum that is absolute. If the period is decades, it looks the same. > This causes people to minimize their holdings in that cur…

> This is in process.

Right. And Jesus is coming back any day now.

Part of the definition of hyperinflation is that it happens fast. Price increases that take place over decades is not hyperinflation, it's just regular old inflation.

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