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How This Ends

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Re: How This Ends

#261

Post by wombatpm »

chiefalchemist wrote: post #43
johnNumen wrote: post #18

Earlier quoted context omitted.

Most of those deaths probably had a positive or null effect, since they primarily occurred in the 65+ demographic. edit: It is interesting to contemplate the possibility that the death of so many seniors exacerbated the inflation problem. That's a lot of assets that were previously tied up in retirement accounts and real estate that suddenly flowed into the hands of middle aged people.

65+ and often at the lower end of economic scale (at least in the USA). I can't imagine that much flowed. E.g., housing prices would have feel as supply outpaced demand. For the non 65+ that died, that's a negative for the economy. Loss of productive years, etc.

There are also follow on effects. My Inlaws passed away over the last three years. It has been a huge time sink and blow to productivity this whole time.

Long Covid among the survivors is the big unknown to productivity

Re: How This Ends

#262

Post by abirch »

MikePlacid wrote: post #211
abirch wrote: post #111

Earlier quoted context omitted.

I thought that the liquidity was driven by the money multiplier and the Fed's quantitative easing. If the fed set the interest rate at 10% but put in 20 trillion dollars into the economy there'd be bubbles everywhere.

But Feds have both put trillions of dollars into the economy and kept the interest rate near zero. So I think it’s useless to argue which exactly of these moves has caused bubbles.

You're right about now. If we desire to tease these issues apart we can look at history both the US and elsewhere.

Re: How This Ends

#263

Post by quintushoratius »

TekMol wrote: post #235
proteal wrote: post #229

Earlier quoted context omitted.

Risk in this context means uncertainty - since the government can print money it is always able to pay its debts. You might not get a great return on your investment, but the government always has the capability to pay you back. There’s little reward with no risk.

I disagree. When I lend 2022 dollars to the government, I give away a certain amount of buying power. I don't know if I will get that buying power back when I get my 2032 dollars. The government does not always have the capability to pay me back my buying power. It cannot create value at will. It can create money at will. But the more money it creates, the less value it has. So it cannot create value at will.

Governments are not the only source of bonds. 10-year securities are not the only denomination.

Re: How This Ends

#264

Post by nradov »

tenpies wrote: post #233
nostrademons wrote: post #133

Earlier quoted context omitted.

Assuming you're expecting inflation to moderate over 10 years. I think people who expect we're going to go back to pre-pandemic supply chains are vastly underestimating the difficulty of bringing a complex system like the economy up from a cold start. In my experience with complex systems that are much less complex than the economy (merely a few hundred million lines of code), it can't be done . You have to increment…

I don't think there's even going back to pre-pandemic supply chains solely because how the West's cancel culture effectively ended globalization when Russia invaded Ukraine. There will be no global supply chain any more. Any country with a brain now knows they have to be completely independent of the West in every aspect. Sovereign assets must be within their borders. Currency reserves? Held at domestic banks as much…

There will still be global supply chains outside of the pariah states. But purchasing will be diversified across more sources so as to mitigate the risks of disruption from politics, violence, natural disasters, pandemics, etc. This will be a more stable and resilient system, but it will be less efficient (Ricardo's Law of Comparative Advantage), and the average rate of economic growth will slow down.

Re: How This Ends

#265

Post by nostrademons »

tenpies wrote: post #233
nostrademons wrote: post #133

Earlier quoted context omitted.

Assuming you're expecting inflation to moderate over 10 years. I think people who expect we're going to go back to pre-pandemic supply chains are vastly underestimating the difficulty of bringing a complex system like the economy up from a cold start. In my experience with complex systems that are much less complex than the economy (merely a few hundred million lines of code), it can't be done . You have to increment…

I don't think there's even going back to pre-pandemic supply chains solely because how the West's cancel culture effectively ended globalization when Russia invaded Ukraine. There will be no global supply chain any more. Any country with a brain now knows they have to be completely independent of the West in every aspect. Sovereign assets must be within their borders. Currency reserves? Held at domestic banks as much…

I'll go even further: de-globalization pits governments (who want to become independent of other nation-states) against their people (who have benefitted from cheap goods, and will have to deal with the inflation). The likely outcome is that at least some of those governments are going to fall, and the nation-state system is likely to collapse.

Unfortunately this by itself isn't good for globalization, because it relies upon free trade, stable legal systems, and secure supply lines to work. So even if you get rid of the governments that seek to detach from the world economy, the goods can't get to consumers when they get intercepted by warlords.

I think that eventually the world may converge upon city-states as a cultural unit and corporate feudalism as an economic one, but it's likely to be an exceptionally bloody transition.

Re: How This Ends

#266

Post by Apocryphon »

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…

> even gold

And for now, even crypto?

Re: How This Ends

#268

Post by [deleted] »

natly wrote: post #71

Getting really annoying to have to keep track of macro events affecting my life year after year instead of just being able to live a normal peaceful life.

[deleted]

Re: How This Ends

#269

Post by bennysomething »

tenpies wrote: post #214
chmod600 wrote: post #126

Earlier quoted context omitted.

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).

Aside from the leverage issues other point out in RE, you have to consider the political risk. How safe do you feel that a piece of paper saying that plot of land is yours will hold up when there's a raging mob threatening politicians to do something about homelessness/housing prices/AirBnB/Asset managers holding all the properties? The political risk in the West is at Emerging Markets levels. We've seen G7 nations d…

What do you mean by create an entire second class of citizenship ? (Genuine question)

Are you referring to things like "key workers" (I personally hate this idea)

Re: How This Ends

#270

Post by staticman2 »

nostrademons wrote: post #133
staticman2 wrote: post #61

Earlier quoted context omitted.

You are comparing treasury rates a bond will pay out over the next 10 years with inflation over the last year. This is apples and oranges.

Assuming you're expecting inflation to moderate over 10 years. I think people who expect we're going to go back to pre-pandemic supply chains are vastly underestimating the difficulty of bringing a complex system like the economy up from a cold start. In my experience with complex systems that are much less complex than the economy (merely a few hundred million lines of code), it can't be done . You have to increment…

The 10 year breakeven inflation rate is less than 3 percent.

Is it a perfect estimate of inflation? No.

But I would trust it more than hot takes from non experts.

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