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Charles Mitchell and the 1929 stock crash

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Re: Charles Mitchell and the 1929 stock crash

#51

Post by imtringued »

eftychis wrote: post #41
throwaway290 wrote: post #37

Earlier quoted context omitted.

I think it's scarcity (or to be precise scarcity mentality, which would probably extend into post-scarcity). The very reason for trying to find profit in the first place, real estate crypto or whatever, arises from wanting to outcompete someone else for resources.

That is the definition of an economy.

In theoretical microeconomics people's marginal utility per unit of effort is so low at some point that the marginal cost of additional effort exceeds the marginal utility and they stop working.

The expectation that every individual is trying to swallow the economy whole is actually impossible and the only reason why any individual would even consider pursuing that path is because for some reason the marginal cost of effort to obtain more utility is zero. In other words there is infinite demand for freebies but not infinite demand for things that require effort.

There is no such thing as a cost of zero, someone else will have to pay for it. It turns out the government offers a lot of free services that scale up with how much property you own and other people without property have to pay taxes to pay for those services.

Re: Charles Mitchell and the 1929 stock crash

#52

Post by vaneri2007 »

logifail wrote: post #33

> "The bank was just basically selling anything that came along that they could make money on, and really weren’t telling investors about what their internal investigations had uncovered about the quality of the securities." That line sounds like it could be straight out of The Big Short (2015), essentially nothing has changed in the best part of 100 years.

Nothing changes and nothing will ever change. Once you reach a certain level, you are above law and other sharks will see value in you. You will no matter what make money, even idiots at this level make money. Got something similar in my company, lots of big and important people joined; took all the money and either flee to other companies or stayed on the board of director while lots of people were let go! Image is more important than results.

Re: Charles Mitchell and the 1929 stock crash

#53

Post by G3rn0ti »

bruce511 wrote: post #10

The crash didn't happen because of 1 banker, but it did happen because of things he, and his contemporaries dreamed up. Basically bankers make money when money flows. It flows only when "there is something better". So to keep making money there always has to be "something better" and ultimately that becomes unsustainable. 1929 was a re-adjustment, where all the bullshit is cleaned away. It was perhaps the first time…

> it did happen because of things he, and his contemporaries dreamed up

Well yes and no. The common root of all evil behind all the bank runs and market crashes throughout the last 100 years is monetary inflation. It is not a coincidence that the worst economic crises happened after the installation of the Federal Reserve.

For a good general overview on this topic I recommend reading „The Ethics of Money Production“.

Re: Charles Mitchell and the 1929 stock crash

#54

Post by axiolite »

imtringued wrote: post #49
Shorel wrote: post #22

Earlier quoted context omitted.

I think it is properties again. And harder this time. Except this time it is worse. It's not about the rising prices of properties, but the idea that there isn't something else more profitable than real state long term that makes me feel the economy is stuck in a bad place. Cryptocurrencies are noisy news-makers, but their total value is still very small compared to basically anything else.

If you own land you own a piece of the planet. How much is permanent ownership over a given plot of land worth? Millions? Billions? Trillions? Infinite? Why would any sane person even run a business if the government pays massive subsidies (public services) to make your land more valuable? Just buy more land.

> How much is permanent ownership over a given plot of land worth?

> the government pays massive subsidies (public services) to make your land more valuable

Most of us have to pay taxes on property we own every year, pay for many of the public services (water, sewer, trash, etc.), and the benefits returned from taxes (like roads and police) are generally not worth the amount paid in a strict sense.

If you think a plot of land is oh so valuable, may I suggest you invest in some remote plots in Nevada, as there is no shortage, and they are quite inexpensive...

Re: Charles Mitchell and the 1929 stock crash

#55

Post by Shorel »

rippercushions wrote: post #38
Shorel wrote: post #27

Earlier quoted context omitted.

Every time someone says cryptocurrencies are 'a bubble' I know they are not paying attention. Or for some reason think there is going to be a single event that will finally end cryptocurrencies. Or they have an agenda and want them to end. It's not a single bubble, that stuff happened several times already. They lost more than 50% of their value in a short amount of time, several times already. It's a boiler. Its per…

I don't think anybody is expecting cryptocurrencies as a whole to cease to exist. I do think a lot of people, including myself, see the current turmoil in the market as only a precursor to what will happen if/when Tether implodes and a whole lot of funny money is suddenly sucked out of the system. In crypto history terms, this would be a Mt Gox level event, which crashed prices by over 80%: https://en.wikipedia.org/w…

Exactly. I expect that to happen to tether eventually, just because of inflation.

There's also the probability of a 'flippening' event in the future, because ETH is no longer PoW. So ETH would switch to be the #1 currency. Or maybe not.

But the cat is out of the bag, and cryptocurrencies are here to stay, and I would even say in any four year period they will still gain more than any other kind of asset for the foreseeable future.

Re: Charles Mitchell and the 1929 stock crash

#56

Post by MrPatan »

imtringued wrote: post #49
Shorel wrote: post #22

Earlier quoted context omitted.

I think it is properties again. And harder this time. Except this time it is worse. It's not about the rising prices of properties, but the idea that there isn't something else more profitable than real state long term that makes me feel the economy is stuck in a bad place. Cryptocurrencies are noisy news-makers, but their total value is still very small compared to basically anything else.

If you own land you own a piece of the planet. How much is permanent ownership over a given plot of land worth? Millions? Billions? Trillions? Infinite? Why would any sane person even run a business if the government pays massive subsidies (public services) to make your land more valuable? Just buy more land.

Because land is very easily taken away, so very easy to tax

Re: Charles Mitchell and the 1929 stock crash

#57

Post by dang »

burglekutt wrote: post #3

Such a clickbaitey title. There were just a few.. THOUSAND.. causes that culminated in the 1929 crash, but saying one person caused it gets those clicks.

Yes, we've changed the title now (as the site guidelines ask in such cases: https://news.ycombinator.com/newsguidelines.html).

Please let's talk about the interesting bits now.

Re: Charles Mitchell and the 1929 stock crash

#58

Post by roenxi »

bruce511 wrote: post #10

The crash didn't happen because of 1 banker, but it did happen because of things he, and his contemporaries dreamed up. Basically bankers make money when money flows. It flows only when "there is something better". So to keep making money there always has to be "something better" and ultimately that becomes unsustainable. 1929 was a re-adjustment, where all the bullshit is cleaned away. It was perhaps the first time…

> But greed, the root of all of this, will always be with us.

Greed isn't the root of all this, because greed was present at times when the market did crash, didn't crash, generated enormous real value and at all other times. Greed is just a mindset that makes people act, a bit like a fuel for activity. Fuel is associated with forest fires, but fuel isn't really a root cause.

5 years of confusion in the stock market isn't even that interesting. We shouldn't be talking about it almost a century later. Our stock market isn't even connected to the performance of the real economy like it was back then, modern markers went up during COVID and down with the recovery, because central bank policy has successfully dissociated reality from returns.

Re: Charles Mitchell and the 1929 stock crash

#59

Post by conductr »

fshbbdssbbgdd wrote: post #17
photochemsyn wrote: post #15

Earlier quoted context omitted.

Indeed, but how about derivatives market for mortgage-backed securities? That was created by the abolition of Glass-Steagall. Heavily promoted by 'ol Alan Greenspan at the time, wasn't it? Free-market deregulation ideology in the name of international competitiveness was how it was sold as I recall.

Credit default swaps and collateralized debt obligations also predate the repeal of Glass-Steagall. I think Glass-Steagall got somewhat mythologized after the financial crisis, because there was a desire to hold related political figures responsible. It meant that people who endorsed the repeal had their fingerprints on the Great Recession. There’s some truth to the claim - Lehman was both an investment bank and a co…

Sure they existed but I always felt like the Glass-Steagall kept things separate enough and things really blew up when you had the banks merging with investment banks. They then had the mortgage product pipeline and the derivatives instruments to offload them. The guys who exploded did so because they were over leveraged and could not cover the margin call when the market dipped. Oh and also didn’t get a bail out, they were just instantly insolvent.

I’ve slept since then but that’s how my brain seems to remember it.

Re: Charles Mitchell and the 1929 stock crash

#60

Post by andromeduck »

axiolite wrote: post #54
imtringued wrote: post #49

Earlier quoted context omitted.

If you own land you own a piece of the planet. How much is permanent ownership over a given plot of land worth? Millions? Billions? Trillions? Infinite? Why would any sane person even run a business if the government pays massive subsidies (public services) to make your land more valuable? Just buy more land.

> How much is permanent ownership over a given plot of land worth? > the government pays massive subsidies (public services) to make your land more valuable Most of us have to pay taxes on property we own every year, pay for many of the public services (water, sewer, trash, etc.), and the benefits returned from taxes (like roads and police) are generally not worth the amount paid in a strict sense. If you think a plo…

It's not the land that's valuable but the lands proximity to goods and services - in that sense, it's not fair that the value created by those goods and services is accrued by a private property that did not pay a proportionate fraction of the revenue sustaining it as the bulk of revenue is raise from other means.

This is where the Georgist idea of land value tax comes in.

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