U.S. economy shrank at a 1.4% annual rate in the first quarter

Post by pradn » Thu, Apr 28, 2022, 5:28 PM UTC

adventured wrote: post #239

pradn wrote: post #201

Earlier quoted context omitted.

A country with a declining population can keep a growing economy or low immigration, but not both. Some countries (the Anglophone countries, France, and Germany) are magnets for labor given their relatively high wages, standard of living, and multi-culturalism (racism and anti-immigrant politics are problems, but still). But others, like Japan (with low immigration) or Bulgaria (with low immigrant interest) can't rea…

Or you can have lots of immigration and a per capita contracting economy like France. France population 1990: 58 million | France population today: 67 million France GDP 1990: $1.2 trillion | France GDP today: $2.9 trillion ($1.2t inflation adjusted forward 32 years is $2.7 trillion) They gained 15-16% in population, and gained 6-7% in GDP. A big net drop per capita over such a duration, particularly for a major affl…

Post by MuffinFlavored » Thu, Apr 28, 2022, 5:37 PM UTC

HFguy wrote: post #153

mensetmanusman wrote: post #140

It’s always good to remind people that: GDP ~= Population * Productivity If your population growth flat-lines (which it did last year), productivity has to compensate. Can productivity compensate if the average age is getting older (people tend to be less productive after a certain median age)? One reason investing in index funds makes sense is the underlying assumption that global population growth keeps increasing…

It is a common mistake, but stocks don't have a positive return because GDP increases over time. They have a positive expected return over time because they have a risk premium. That is, to invest and take on risk, an investor will demand a return above and beyond the expected value of the cash flows the business generates. Whatever path of GDP and/or population is expected to be is already factored into the discount…

Post by dragonwriter » Thu, Apr 28, 2022, 5:47 PM UTC

MichaelBurge wrote: post #244

dragonwriter wrote: post #122

Earlier quoted context omitted.

> I really don’t want to sound calloused because caring for the weak and the elderly is a pillar of civilizations, but my impression was that the bulk of “excess deaths” were not among the most economically active populations Really? The elderly may not be likely to work , but they still consume (they consume lots of medical services in proportion to their numbers, for instance.) > reducing the burden on the state fo…

"They consume medical care" sounds a lot like the broken window fallacy: If you smash a bunch of windows, you're increasing GDP and creating jobs when they get repaired. To a ruthless cold-blooded optimizer, deleting the elderly should be good for the economy because you save on their maintenance costs and their resources get redistributed to more active investors. This might decrease GDP, but that only reflects on G…

Post by adolph » Thu, Apr 28, 2022, 5:54 PM UTC

taylodl wrote: post #125

adolph wrote: post #77

Earlier quoted context omitted.

> supply is constrained and money is not constrained. What could go wrong?

Inflation should take care of demand. A constrained supply is going to move the demand curve to higher prices - which we're seeing. The higher prices will bring demand in alignment with supply. Traditionally, to deal with the problem of constrained supply you would lower rates to make more capital available in order to create more supply-producing assets. I don't think the Fed should lower rates in this situation bec…

Post by snake_doc » Thu, Apr 28, 2022, 6:00 PM UTC

MuffinFlavored wrote: post #273

HFguy wrote: post #153

Earlier quoted context omitted.

It is a common mistake, but stocks don't have a positive return because GDP increases over time. They have a positive expected return over time because they have a risk premium. That is, to invest and take on risk, an investor will demand a return above and beyond the expected value of the cash flows the business generates. Whatever path of GDP and/or population is expected to be is already factored into the discount…

> You have an expected return because you are taking on risk. I have a dumb question. Most publicly traded companies rarely issue new shares. Why does a company care about its share price? If we are being rewarded for buying and holding their shares based on the growth a company makes quarterly, how does the company benefit from their share price going up? They don't commonly take loans against their shares or issue…