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How This Ends

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Re: How This Ends

#291

Post by bjt »

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…

Let's save the term "cancel culture" for people getting fired over a tweet.

Economic sanctions in response to invading another country is a very different thing, and not a new thing.

Re: How This Ends

#292

Post by jimmaswell »

lupire wrote: post #276
tenpies wrote: post #214

Earlier quoted context omitted.

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…

Landlords have been protected by governments for as long as governments existed.

There are exceptions like what Mao Ze Dung did.

Re: How This Ends

#293

Post by walleeee »

vintagedave wrote: post #171
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.)

instead of pursuing speculative gains consider investing it in yourself or in your immediate locale or region, in the economic and ecological transformation we all sorely need

devaluation of everything is a consequence of unsustainable economics and the fix is not to find a convenient hidey-hole for your money but to invest time, money and attention building a future sans witless speculation, profligate consumption, public and corporate unaccountability, and consumer monoculture

Re: How This Ends

#294

Post by acover »

jimmaswell wrote: post #228
vintagedave wrote: post #171

Earlier quoted context omitted.

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.)

Same as always, keep investing in a well-diversified spread. The stock market as a whole will always bounce back. That or society collapses and your numbers in a computer are worthless anyway. This is the first big downturn I've been prepared to invest in, so personally I'm going to buy more than usual. I see it as stocks being on sale.

Why does it need to be collapse or all time highs? Stagnation and decay seem entirely possible. Negative real returns seem entirely possible when bonds had negative nominal returns.

Re: How This Ends

#295

Post by hnmullany »

lupire wrote: post #276
tenpies wrote: post #214

Earlier quoted context omitted.

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…

Landlords have been protected by governments for as long as governments existed.

https://www.nytimes.com/1976/04/12/archives/housing-abandonm...

Re: How This Ends

#296

Post by mikebenfield »

jeffbee wrote: post #140
herf wrote: post #28

I agree we are working through an asset bubble in tech and housing - P/E's went quite a ways above the historical line, as did housing prices. But think about the chip shortage (automotive, consumer electronics) - raising interest rates does not "fix" supply and make prices lower. Think about oil & gas markets. Think about labor shortages. When supply is broken, it's not only a monetary policy problem. Most of these…

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.

The reason there's a housing shortage is that almost all US cities have insanely terrible urban planning and zoning policies. There's no guarantee this will continue forever. In fact, I see quite a bit of evidence that Americans are gradually waking up to the fact it's possible to have decent, livable cities if you don't do everything completely backwards.

So, for instance, I think it's actually possible (not guaranteed) a substantial amount of housing will be built in the Bay Area in the next 10 years, which will decrease the willingness of people to pay $2M for a generic small house in a suburb.

Re: How This Ends

#297

Post by etrautmann »

nradov wrote: post #230
ptero wrote: post #210

Earlier quoted context omitted.

If you think that there is some major economic turmoil ahead with dropping asset values across the board (and I personally this is fairly likely), the general advice is to aim for a positive alpha. That is, if you are moderately well off or better, invest to "go down less than your neighbors". Assets across the board lose value, but if at the end of the fall you preserved a higher fraction of your money to invest tha…

The general advice is always to aim for a positive alpha. No investor aims for a negative alpha, regardless of the economic climate.

Yes, but it's unclear how to intersect this with a reasonable tax strategy for many retail investors. i.e. do I sell everything and pay capital gains or sit?

Re: How This Ends

#298

Post by h2odragon »

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…

I really hope you're wrong. I can't actually disagree with you.

Re: How This Ends

#300

Post by thawaya3113 »

abirch wrote: post #253
hackernewds wrote: post #180

Earlier quoted context omitted.

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)

I'm not a Bezos fan in general but his response to Biden's tweet was spot on. https://www.twitter.com/JeffBezos/status/1525309091970699265

I disagree with Biden’s tweet and Bezos’s tweet.

I personally believe that the vast majority of the inflation we are seeing today has nothing to do with government debt/deficits, so the government reducing its deficit will have minimal impact on inflation.

However, a lot of people do believe, or at least claim to believe, that inflation is almost entirely being driven by government deficits, in which case corporations paying more in taxes would certainly have an impact on inflation, so tying the two together is certainly not misinformation, and if this view is correct, then it will reduce inflation.

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