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How This Ends

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171–180 of 698 posts

Re: How This Ends

#171

Post by vintagedave »

fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank?

It sounds from your comment like there is _nothing_ that won't be devalued, even gold. Is real estate worthwhile?

(Note: I am in the EU not US.)

Re: How This Ends

#172

Post by 55555 »

runeks wrote: post #45

> In the early 80s, the G7 economies tightened the money supply, raising interest rates dramatically, in an effort to bring inflation under control. This article points out a similarity between the early 80s and now. So I think it's appropriate to point out a major difference as well. Consider this chart[1] which shows both the short term interest rate (Federal Funds rate) and long term interest rate (10-year Treasur…

lol the way you started your comment led me to believe I was going to be reading good news. Then it was just more horrible news.

Re: How This Ends

#173

Post by riku_iki »

datalopers wrote: post #161
riku_iki wrote: post #120

Earlier quoted context omitted.

There are amazon, google, msft and apple, with almost $1trln annual revenue combined, they will continue paying to a plenty of workers.

Cool, I’ll let YC’s entire portfolio know there’s plenty of jobs at the big tech cos.

You are switching topics. The point is that there will be plenty of funds inflow to support housing market.

Re: How This Ends

#174

Post by hackernewds »

chmod600 wrote: post #126
fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

I motice that you left out real estate from your analysis. RE is interesting because it's both an asset as well as something you can use. So if there's general inflation, it's got both upward pressure (because it's an alternative to rent from a consumer standpoint) and downward pressure (because bonds are an alternative to RE from an investment standpoint).

RE is at massive peak levels already though that buyers cannot shell out those prices, esp as mortgage prices go up.

Re: How This Ends

#175

Post by hackernewds »

CyanLite4 wrote: post #162
cyberge99 wrote: post #137

Earlier quoted context omitted.

We also had a previous US administration handing out cash like candy in the form of stimulus checks.

That was “only” a few hundred billion. It pales in comparison to the $9 trillion in QE over the past decade given to the largest banks.

That doesnt add up. An inordinate amount of money was printed in the last 2 years (up to 25% of the supply[1]

[1] https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were...

Re: How This Ends

#176

Post by ptero »

user3939382 wrote: post #75
ptero wrote: post #55

Second half of 1940s and early 1950s are, IMO, a much better data point on how asset prices and economy would develop than 1970-80s than the author chooses. The situation in 1940s, with massive post-war government debt and high inflation is a much better match to today's state than 1970s with low debt and high inflation.

There are other huge differences though, right? In the second half of the 40s the US had a giant manufacturing economy whereas the rest of the world's manufacturing output was devastated by the war. I'm not an expert in this area but had the impression that it was this imbalance between the US and the rest of the world that played a huge part in our hegemonic success following that period, so I'm not sure what the pu…

Certainly. There are big differences between now and 1940s in many things: manufacturing capacity, education levels, societal cohesion, easier acceptance of risk to life, etc. etc.

I am just saying that purely from the economic perspective and its key characteristics of asset prices and inflation (that the author focuses on), today is much closer to the 1940s than to the 1970s. And I am personally investing on this assumption, as I think that the fiscal and monetary choices that US will be forced to make will drive the economy along a path with many similarities to the post-war decade. Just my 2c (and, obviously, not an investment advice).

Re: How This Ends

#177

Post by hackernewds »

tempsy wrote: post #124
chrisco255 wrote: post #66

Earlier quoted context omitted.

Risk-free loss? But maybe it's better than cash, the only other risk-free alternative? Perhaps you're paying for preservation of capital as the asset bubble deflates, and maybe that's not a bad deal?

you can buy $10k in inflation protected bonds a year per person or $15k if you buy via a tax refund

The current returns is at 9.6%

Re: How This Ends

#178

Post by jeffbee »

gedy wrote: post #166
jeffbee wrote: post #140

Earlier quoted context omitted.

Housing is not a bubble, at least not in the U.S.A. The prices are supported by a fundamental shortage of the product. It is not driven by speculation but demographic pressure.

I heard the same thing in the last housing bubble before 2008

Really? It was obviously not true back then and is obviously true now. Housing starts hit nearly an all-time record high in the U.S. in January 2006. But then housing starts almost hit zero in 2009, and have never recovered.

Re: How This Ends

#179

Post by mym1990 »

zw123456 wrote: post #49

One factor that I think might be different this time than from the 1980's is productivity increases from WFH. There are a number of studies showing that WFH has resulted in an increase in overall productivity. And has also helped curtail the demand for gas, although that is picking up. It remains to be seen if the Fed can wrangle the so called "soft landing", but productivity increase could potentially make that a bi…

https://fred.stlouisfed.org/series/OPHNFB

Although we've had gains from Q4 2019 to Q4 2021, I am not sure they are significantly higher than baseline in other periods. I would be skeptical of a productivity increase due to WFH simply because of the supply crunch that in many ways hindered the ability of people to output at maximum levels.

Maybe if we are talking some specific sectors.

Re: How This Ends

#180

Post by hackernewds »

abirch wrote: post #48
freediver wrote: post #31

Earlier quoted context omitted.

> that bond yields would never normalize. Now that they have, there is a risk free alternative to stocks. Treasury bond yields are 3%, inflation is 8.5%, so in real terms you are guaranteed to lose 5.5% annually if you hold bonds. Or basically instead of risk-free gain you are holding gain-free risk.

The good news is the US Government doesn't have to pay back 5.5% of its debt. Unfortunately the spending keeps increasing.

Yet the government keep spending like debt isn't high ($40B to Ukraine aid) and ignoring causes of inflation for political gain (Biden tweeted: it's time to for corporations to pay their share to bring down inflation)
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