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What if your entire worldview was just because of near-zero interest rates?

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Re: What if your entire worldview was just because of near-zero interest rates?

#101

Post by SilasX »

mc32 wrote: post #81
rayiner wrote: post #73

I suspect near-zero interest rates for a decade also contributed to the political realignment of affluent suburbs trending Democrat. So long as the Fed would buy federal debt cheaply and there was no significant inflation, Democrats could advocate multi-trillion social programs while promising to maintain Reagan-era tax rates on even quite affluent folks.

I want to know what happened to the promised "Peace Dividend". Military spending was supposed to go way down, not just down, and civilians were supposed to reap the benefits... Instead Industrialists took up the Globalization mantra and forgot the little guys (the guys and gals working in factories) and happily told them it would mean lower cost of living --conveniently leaving out that they would also earn much less…

I’m not sure it’s fair to say Perot was laughed at. He commanded a tremendous following, and got 19% of the vote in the 1992 election, without a major party endorsement, and after hamstringing himself by leaving the race and re-entering.

https://en.wikipedia.org/wiki/1992_United_States_presidentia...

Re: What if your entire worldview was just because of near-zero interest rates?

#102

Post by ihatepython »

lettergram wrote: post #88
lokar wrote: post #13

People who complain about extreme fed policy should look to congress. The inability of congress to address core economic and financial issues forces the feds hand.

Lol “forces the feds hand” Congress, in part because of the fed, doesn’t have the ability to regulate it. This is why Andrew Jackson originally dismantled the second bank of the United States (the irony of him being on the $20 federal reserve note is painful). The way the fed really works is that those closest to the supply of money get a higher valued dollar. During the pandemic the fed was straight up letting certa…

The Fed is one of the most misunderstood institutions. Basically, everything you have said is completely wrong, which makes difficult to write a reply, because where to start?

In short, the original design of the Fed was correct, where each branch was independent and could set their own interest rate, and they purchased commercial paper to stimulate the economy. This changed during WWII, where the government mandated that they had to purchase government bonds to support the war.

Congress is the main problem, where they spend money recklessly with no intention of paying anything back.

The Fed is in a position where if they don't raise interest rates, they will be blamed for the bad economy.

The Fed is a convenient scapegoat, used by people who assume that Youtube videos are correct.

Re: What if your entire worldview was just because of near-zero interest rates?

#103

Post by [deleted] »

rayiner wrote: post #73

I suspect near-zero interest rates for a decade also contributed to the political realignment of affluent suburbs trending Democrat. So long as the Fed would buy federal debt cheaply and there was no significant inflation, Democrats could advocate multi-trillion social programs while promising to maintain Reagan-era tax rates on even quite affluent folks.

[deleted]

Re: What if your entire worldview was just because of near-zero interest rates?

#104

Post by colinjoy »

mitthrowaway2 wrote: post #78
neilv wrote: post #48

> It became the new normal, and the generation that entered Wall St. during this time is now disoriented, for they “do not know a world without cheap money.” [...] Whenever people are humbled by the melting away of things they took for granted, now that’s a topic worth exploring. I'm trying to figure out parallels and implications for tech jobs. Where in tech jobs will be first to decide they need to "rediscover the…

Low interest rates created a preference for subscription models over up-front sales. It may have felt like the transition to cloud software and subscription pricing was due to technology shifts or mobile phones, but it was probably driven by interest rates. If higher interest rates stay around for the long term, it's quite possible that tech going forward will be a little more like the '90s: An up-front sticker price…

Given how subscription models are also pushed down the throat of consumers, who do not want them, I would believe that the love for ARR plays an even bigger role.

Re: What if your entire worldview was just because of near-zero interest rates?

#105

Post by andrekandre »

mc32 wrote: post #81
rayiner wrote: post #73

I suspect near-zero interest rates for a decade also contributed to the political realignment of affluent suburbs trending Democrat. So long as the Fed would buy federal debt cheaply and there was no significant inflation, Democrats could advocate multi-trillion social programs while promising to maintain Reagan-era tax rates on even quite affluent folks.

I want to know what happened to the promised "Peace Dividend". Military spending was supposed to go way down, not just down, and civilians were supposed to reap the benefits... Instead Industrialists took up the Globalization mantra and forgot the little guys (the guys and gals working in factories) and happily told them it would mean lower cost of living --conveniently leaving out that they would also earn much less…

  > now Bernie has sold out and pretends
in what way?

Re: What if your entire worldview was just because of near-zero interest rates?

#106

Post by benjaminwootton »

I definetly think a lot of the startup world view is just a function of low rates.

Startups could run for decades with $billions in losses and only a passing focus on eventual profits.

All of those losses flowed into the bank accounts of big tech (via AWS credits, Google and Facebook Ads).

All of the high salaries, employee expectations and leverage in tech startups and big tech derive from that spigot of cheap money.

What if it was all just an illusion for a few decades? It’s going to be a bumpy readjustment when it’s all that most of us have known.

Re: What if your entire worldview was just because of near-zero interest rates?

#107

Post by bialpio »

lesam wrote: post #41
bialpio wrote: post #30

Earlier quoted context omitted.

My understanding is that you can play tricks with stocks so that you don't really need to realize the gains to benefit from them. They can be used as collateral for loans, directly donated to charities (lowers down your tax bill w/o forcing you to realize the gain), there's also the step-up basis loophole (or was it already closed?). I may be missing some details (and other creative ways to do "tax optimization") tho…

I never see anyone complaining about buybacks because of tax reasons though. In particular, the author is complaining companies are not spending enough on R&D because of buybacks. It is true that buybacks are more tax efficient than dividends, which is why companies generally do buybacks instead of dividends. The US tax on capital gains is definitely a mess though.

I was mostly responding to the "but they can't be spent either" part. From my perspective there isn't that much difference if a company is doing a buyback vs a dividend, as long as it's sharing its profits with the investors (w/o that, I view the stock market as a legal Ponzi scheme); I'm not really commenting on how much money should transfer to the shareholders though.

Re: What if your entire worldview was just because of near-zero interest rates?

#108

Post by mym1990 »

CoastalCoder wrote: post #49

> "What if your entire worldview was just because of near-zero interest rates?" Worldviews typically include who we are, why we're here, what purpose (if any) we have in life, etc. It seems strange to me that someone's worldview could be thoroughly based on interest rates.

I think the question aims to say that one's world view, which is a combination of your experiences, interactions, and learnings...might be based off of the adverse effects of zero interest rates(things happening around you or to you) rather than one's world view being solely based off of an understanding of interest rates(which I am pretty confident that most people don't have any deep knowledge about).

Re: What if your entire worldview was just because of near-zero interest rates?

#109

Post by miguelazo »

benjaminwootton wrote: post #106

I definetly think a lot of the startup world view is just a function of low rates. Startups could run for decades with $billions in losses and only a passing focus on eventual profits. All of those losses flowed into the bank accounts of big tech (via AWS credits, Google and Facebook Ads). All of the high salaries, employee expectations and leverage in tech startups and big tech derive from that spigot of cheap money…

It has skewed the labor market to an insane degree. So much talent went into idiotic pursuits, and away from anything that had to do with public service.

Re: What if your entire worldview was just because of near-zero interest rates?

#110

Post by iakh »

mitthrowaway2 wrote: post #99
s1artibartfast wrote: post #4

Earlier quoted context omitted.

I never understood the negative attention stock buybacks have received relative to dividends. They do basically do the same thing, but nobody is offended when companies pay a dividend.

They are completely different with respect to their impact on stock options . If you hold stock options, a dividend doesn't benefit you. You need to hold shares to get the dividend. In fact, the dividend can cause the share price to fall (if it was not already anticipated) as the company's capital gets drained to pay shareholders. On the other hand, buybacks (causing a sudden, surprising increase in share price) are…

This isn't accurate. Options are discounted by their expected dividend payout. Unless a company is issuing either 0 dte or decades out expiration options, no options are giving any corporate exec 100x leverage.
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