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The stock market and economy have parted ways

washingtonpost.com

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Re: The stock market and economy have parted ways

#501

Post by saganus »

fatbird wrote: post #500
saganus wrote: post #204

Earlier quoted context omitted.

Interesting insight. I always thought gold/silver coins would be more useful than jewelry. I mean, how can you verify if a ring or necklace is actual gold, but not be able to verify a coin? I guess using the age-old method of density perhaps? do you know what did process to exchange jewelry looked like?

I think it's more that a ring or necklace is more easily scratch tested for hardness, harder to counterfeit, and less valuable individually. If I show up with a gold krugerrand (1oz, approx. $1,800 at today's prices), expecting to get that value or even half, you're not going to give me that value without somehow testing it. A basic density test involves both scales and beaker with water for volume--who's going to ca…

Makes sense.

I guess this is one of those things that sound good 'on paper' , but after deeper analysis it's not so straight forward.

Like others said, it's probably easier to trade toilet paper, cans of food or cigarettes than ounces of gold.

Re: The stock market and economy have parted ways

#502

Post by pas »

qqqwerty wrote: post #300
mrfredward wrote: post #256

Earlier quoted context omitted.

Printing money to get through a recession vs printing money as the primary way of funding government programs are wildly different things. The mere suggestion that U.S. officials were serious about running a deficit of a large percentage of GDP could send people fleeing U.S. dollar denominated assets, and thanks to the exchange rate effects cause a spike in inflation before the programs even started. The thing that m…

We haven't even rolled back the quantitive easing from the last recession. These financial rescues are now becoming permanent fixtures on our balance sheets. At least with health care, we would have something to show for these massive injections of money. Instead we just get inflated asset prices and growing wealth inequality.

Why is it a problem that they are still on the balance sheets? The instruments that have maturity will eventually vanish on their own, and the Fed can sell off the rest later.

It's better to do QE than "wait out" a recession, or wait for Congress. (Plus QE keeps the national debt service costs down too.)

The asset bubbles are not the real signs of inequality. After all, if every US citizen would have some savings and some of that in passive index funds, no one would complain about this. The problem is that people have no money, no disposable income, no savings, no job security, etc.

Re: The stock market and economy have parted ways

#503

Post by pas »

thorwasdfasdf wrote: post #451
msteffen wrote: post #435

Earlier quoted context omitted.

Yes--see https://www.investopedia.com/ask/answers/082515/who-decides-... under "How the Fed Creates Money With QE": "The Fed can indeed create money "out of thin air." To be more precise, it does so with keystrokes on a computer. This was illustrated with its QE program, also known as open market operations. That's when the Fed buys an asset from a financial institution and pays for it with money it simply creates."

and i know this is technically fully legal. but conceptually, it seems like fraud. I mean, they're just creating money at will and buying up assets. if anyone else did that, they'd be in jail.

but it's not anyone else, it's the central bank of the USA, as mandated by Congress.

they provide price stability (by keeping the money supply corresponding to the demand) and they try to maximize employment (by helping the economy through providing liquidity, every central bank is the "lender of last resort" but that's for emergencies, usually they operate simply by providing forward guidance and conducting open market operations to keep the interbank interest rate close to the target rate).

don't think of them like just a bank, it's more like the Mint, combined with an expert panel that tries to smooth out the fluctuations of the economy ( https://en.wikipedia.org/wiki/Real_business-cycle_theory )

Also, as long as they don't try to get clever - like the Bank of Japan did with strategic loans ("window guidance" back in the 80s).

Re: The stock market and economy have parted ways

#504

Post by importantbrian »

Infinitesimus wrote: post #456
importantbrian wrote: post #421

Earlier quoted context omitted.

This assumes that the other manufacturers don't also gather data from actual cars, on actual roads, driven by actual humans. Which is not the case. Toyota for example has it's TSS system. Toyota also makes around 10 million cars a year. Tesla makes around 370k. Even if they had a head start it's not going to take long for them to get lapped.

I haven't explored Toyota's offering but Tesla's OTA updated will always give them an edge. With all Toyota's data, you will have to buy a brand new car to get whatever improvements your data contributed to the system. With Tesla, you get those improvements while you're asleep and maybe your car drives a bit better. For a tech-centric space where people are used to software improving overtime, Tesla will have an edge…

Will it though? GM plans to add OTA to all models and Ford announced it for the new F-150. Even without OTA it is not true that you have to buy a new car to get software updates. You can take it into the dealer and get it done.

If amount of data collected and OTA are Tesla's big edge then there's even less chance they will dominate the market and put all their competitors out of business, because those advantages are going to go away over the next couple of years.

Re: The stock market and economy have parted ways

#505

Post by empthought »

sudosysgen wrote: post #476
empthought wrote: post #449

Earlier quoted context omitted.

> 20% more Where did this number come from? At 4% compounding over 40 years, you will have at least 130% again over what you put in.

The issue is two-fold - assuming that all the money comes at beginning, and forgetting about inflation, and not taking into account the shift in risk towards the later ten years, and assuming that your income stays the same. When taking into account the increase in income both absolute and in real terms after necessary expenses, you realize that a lot more than the majority of the money is invested in the latter 25 y…

No, I came to my conclusion by putting away $100 every month for 40 years. $48000 is put in, $114000 is present at the end with a (historically unprecedented low) 4% overall return. Exactly the same amount of money is put away in the last 25 years as in the first 25 years.

The shift in risk should be accompanied by changes to the portfolio mix, of course.

Re: The stock market and economy have parted ways

#506

Post by charwalker »

Quinner wrote: post #246
charwalker wrote: post #205

Earlier quoted context omitted.

Printing money has recently shown to have little impact on inflation. This is likely due in part to lack of consumer spending (can't inflate prices if nobody is buying it anyway) as well as spreading the USD across billions of people in dozens of interconnected economies that base off the dollar. The recent $5 trillion injection from the Fed (buying bad debt/assets) and Treasury (stimulus/PPP) may simply show that we…

Printing money has not had much impact on consumer prices. But it seems very plausible that it is causing inflation of asset prices, including equities, and that that is a distortion of the market that could have negative long-run repercussions.

For the record, I support this view. CPI inflation does not track with individual financial assets/tools or specific costs like education.

Re: The stock market and economy have parted ways

#507

Post by david927 »

taurath wrote: post #445
david927 wrote: post #290

Earlier quoted context omitted.

By nine months it will be a debt crisis which has become a liquidity crisis which then forces a fire-sale of assets.

Why won't the fed just pump another $8T into the economy to prop up the assets further?

It could... But each dollar they add puts the country's solvency at risk. And it's already deeply at risk.

But you're not alone thinking this. I'm deeply concerned at how many people think that the Fed can just "manage" this. I feel like I'm watching generational wealth falter and the spoiled children are reacting to the news with, "My dad will just put it on his card."

Re: The stock market and economy have parted ways

#508

Post by charwalker »

aaronblohowiak wrote: post #328
Quinner wrote: post #246

Earlier quoted context omitted.

Printing money has not had much impact on consumer prices. But it seems very plausible that it is causing inflation of asset prices, including equities, and that that is a distortion of the market that could have negative long-run repercussions.

This is the most important and often under-looked thing in this whole thread. This will further lead to wealth gaps and difficulty for working people to "get ahead".

And that is on top of the mismanagement of PPP funds after the IG over that was fired and replaced with a loyalist. We are only starting to see where billion of tax dollars went including a large chunk to churches and millions to Kanye West and campaign donors/supporters. If one has an issue with looting by protestors, they really need to look at the looting by the wealthy. Not just PPP loan abuse but also historically low tax rates and a pass for environmental abuse too.

Re: The stock market and economy have parted ways

#509

Post by charwalker »

pas wrote: post #502
qqqwerty wrote: post #300

Earlier quoted context omitted.

We haven't even rolled back the quantitive easing from the last recession. These financial rescues are now becoming permanent fixtures on our balance sheets. At least with health care, we would have something to show for these massive injections of money. Instead we just get inflated asset prices and growing wealth inequality.

Why is it a problem that they are still on the balance sheets? The instruments that have maturity will eventually vanish on their own, and the Fed can sell off the rest later. It's better to do QE than "wait out" a recession, or wait for Congress. (Plus QE keeps the national debt service costs down too.) The asset bubbles are not the real signs of inequality. After all, if every US citizen would have some savings and…

I think the comment above is suggesting that, either instead of or alongside, current Fed cash injections and distributions by the Treasury we need to push for and implement programs that leverage us out of the QE cycle. A universal healthcare system, student loan forgiveness and free or reduced cost education, a basic income over complex safety net benefits, that sort of thing. As it stands, QE is preventing a massive crash but it's not a long term solution.

Re: The stock market and economy have parted ways

#510

Post by sudosysgen »

empthought wrote: post #505
sudosysgen wrote: post #476

Earlier quoted context omitted.

The issue is two-fold - assuming that all the money comes at beginning, and forgetting about inflation, and not taking into account the shift in risk towards the later ten years, and assuming that your income stays the same. When taking into account the increase in income both absolute and in real terms after necessary expenses, you realize that a lot more than the majority of the money is invested in the latter 25 y…

No, I came to my conclusion by putting away $100 every month for 40 years. $48000 is put in, $114000 is present at the end with a (historically unprecedented low) 4% overall return. Exactly the same amount of money is put away in the last 25 years as in the first 25 years. The shift in risk should be accompanied by changes to the portfolio mix, of course.

But it's not how people save. The average person has too many expenses and not enough income at age 22 to save up as at age 45. And in those later years, the returns diminish.

Sure, if you have sufficient income to be able to save up enough for retirement just as soon as you get a job, that works. But that's not the reality for the average person. Most people don't get a high-paying job straight out of school.

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