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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?

#251

Post by mjburgess »

antonomon wrote: post #179
RayVR wrote: post #117

I just can’t take this person seriously. Clearly written by a non-expert and the questions/ideas are, as a result, well-trodden ground without anything original to add. Take this representative quote “It’s Jerome Powell’s world: never before have I seen markets move so erratically in response to a once-boring Jackson Hole conference. Actually, the first time I ever heard of this event was this year since some acquain…

While I try not to comment to 'defend my views' because it's a bit lame, I have to plainly say I am not "just opening my eyes to the huge role central banks play in the economy." I have been following markets many years, both as an investor and because I enjoy reading about economic history (also as part of my study). My whole point with that sentence was - did you ever pay attention to a Jackson Hole conference befo…

If it helps, they weren't talking to you.

As soon as you put something out there in the world people are going to have conversations about it, with their own temperaments, that they'd never have with you.

You can take that personally, or realise that their comment really has nothing to do with you nor is meant for you to read it.

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

#252

Post by MomoXenosaga »

tasuki wrote: post #245
jongjong wrote: post #119

I've been saying this for the last 5 years. People don't realize how powerful the 'money printer' is. All the money which exists in the system was created out of nothing and injected into the economy through a few specific channels (mostly as credit backed by debt). IMO, everything in modern society is influenced in some way by interest rates; even culture and morality. Money printing can distort the market pricing m…

> All the money which exists in the system was created out of nothing People keep saying this. But hasn't it almost always been true, almost everywhere? Apart from some rare exceptions, such as people using livestock as money.

A bunch of smart Dutch people got the idea of asking people for money which they would pay back with future profits.

This managed to fund a war with the Spanish empire that owned almost all silver mines.

Paper won against hard currency. And the rest is history.

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

#253

Post by tomcam »

nobrains wrote: post #241
jongjong wrote: post #119

I've been saying this for the last 5 years. People don't realize how powerful the 'money printer' is. All the money which exists in the system was created out of nothing and injected into the economy through a few specific channels (mostly as credit backed by debt). IMO, everything in modern society is influenced in some way by interest rates; even culture and morality. Money printing can distort the market pricing m…

I refer to this as the US 3rd nuclear bomb. Most countries hold USD reserves/bonds. If US prints money, the wealth of all countries holding USD goes down. While the wealth of US increases. Since US started this monetary policy of easy money printing, they have been "bombing" the rest of the world, violence-free, ammunition-free and uranium-free. I am not an American, but if I were, I would be pretty happy about it. Y…

> If US prints money, the wealth of all countries holding USD goes down. While the wealth of US increases.

True, yet average Americans lose out because their savings get eaten away by inflation

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

#254

Post by notahacker »

nobrains wrote: post #241
jongjong wrote: post #119

I've been saying this for the last 5 years. People don't realize how powerful the 'money printer' is. All the money which exists in the system was created out of nothing and injected into the economy through a few specific channels (mostly as credit backed by debt). IMO, everything in modern society is influenced in some way by interest rates; even culture and morality. Money printing can distort the market pricing m…

I refer to this as the US 3rd nuclear bomb. Most countries hold USD reserves/bonds. If US prints money, the wealth of all countries holding USD goes down. While the wealth of US increases. Since US started this monetary policy of easy money printing, they have been "bombing" the rest of the world, violence-free, ammunition-free and uranium-free. I am not an American, but if I were, I would be pretty happy about it. Y…

People in other countries usually have freedom to minimise their US dollar holdings, holding their wealth in pesos, rupees or lira instead and only obtaining dollars for specific transactions.

But they don't, because they'd lose a lot more wealth if they held it in pesos, rupees or lira than USD.

In fact the story of the last decade has been one of significant increases in the purchasing power of wealth held in dollars compared even with currencies of reasonably stable Western developed economies.

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

#255

Post by PeterisP »

neilwilson wrote: post #98

Given that putting interest rates up is an artificial intervention into the market for money, what if your worldview is based around allowing financial institutions to extract rent by taxing people for setting up home? Why is setting the price of money artificially - which gives free government money to financial institutions - better than the alternative: setting the base price of labour by guaranteeing people a job…

I'd rather say that keeping interest rates down required a continuous artificial intervention into the market for money - the current rate rise seems quite fully driven by reasonable market pressure, not by some artificial intervention.

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

#256

Post by salawat »

travisjungroth wrote: post #22
salawat wrote: post #5

Earlier quoted context omitted.

In a stock buyback, the investor only is made whole by "exiting" the stock. I.e., if that stock has voting rights, and you're more interested in being able to influence as a shareholder, you're left out of the "lifting of every risk sinker" when a company does a buyback. In fact, it guarantees that the amount of shareholder influence as a whole decreases, because if someone were to reacquire that share it would be mo…

> Stock buybacks are therefore not equivalent in any way to paying of dividends. They are extremely similar. The differences are around timeline and tax advantages, none of which you covered. In a buyback, your percent ownership in the company will go up and the price will go up (barring other factors). You can sell some stock to keep your percentage flat and get some cash, making it like a dividend. Or, you can make…

If and only if people previously holding stock sell back to the company. Regardless, you realize no gains if you do not exit your interest on that stock. The exit is non-optional, and often not reenterable from.

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

#257

Post by PedroBatista »

nmfisher wrote: post #169
mvhvv wrote: post #158

Earlier quoted context omitted.

What do you think the value is in a stock that doesn't pay dividends? It seems to me that if you remove them, you're getting into pyramid-scheme territory.

(1) the expected value of the company changing its mind and choosing to pay dividends in future + (2) the value of vote to remove management and replace them with someone who will pay dividends + (3) a legal right to share in the proceeds of sale/dissolution of the company. These are actually worth quite a lot. But you do make a good point, particularly when it comes to companies like Facebook, who don't pay dividend…

I don’t know much about FB structure but there has been some murmurs about the board offering Zuckerberg a one way plane ticket to Hawaii soon.

Is this even possible?

“No one” cares about dividends since they are taxed like income and after corporate buy backs going the route next year I wonder what Wall Street will come up with..

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

#258

Post by michaelt »

qaq wrote: post #213
spaceman_2020 wrote: post #195

Earlier quoted context omitted.

The typical Indian maid works in multiple households. My maid works in 7 different houses, spending approx. 1-1.5 hours in each. An individual household paying her more can only go so far - EVERYONE will have to start paying her more. I already pay her substantially more than prevailing rate, but can everyone else afford to do the same?

It does not have to be about "them" you have a path available to you to make a person that you supposedly feel bad about better off.

While spaceman_2020 certainly has the money to pay their maid a lot more if they earn 50x what their maid does, that doesn't address the issue of all the other maids in the economy.

I mean, I give a sandwich to the one homeless guy I see on my daily commute, which might have a big impact on that one guy - but let's not pretend I'm solving homelessness by doing so.

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

#259

Post by salawat »

aeternum wrote: post #17
salawat wrote: post #5

Earlier quoted context omitted.

In a stock buyback, the investor only is made whole by "exiting" the stock. I.e., if that stock has voting rights, and you're more interested in being able to influence as a shareholder, you're left out of the "lifting of every risk sinker" when a company does a buyback. In fact, it guarantees that the amount of shareholder influence as a whole decreases, because if someone were to reacquire that share it would be mo…

So by your line of reasoning, a stock split should leash a company and hold them accountable since the cost to acquire or require shares is now much less than before. We don't need the SEC, we just need to force companies to perform stock splits!

Voting shares + people active exercising and riding management like no tomorrow.

Point I'm making is that you can't declare a mechanism where you gain money but must exit as equivalent to you gain money, but no effect on your position as equivalent things.

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

#260

Post by salawat »

realityking wrote: post #18
NickNameNick wrote: post #10

Earlier quoted context omitted.

Wouldn't that friend on who's voting the stock that company holds in itself? Is it the CEO? The board? The chairman? Or are the stocks cancelled from the total?

Bought back shares are either retired or held in the company’s treasury stock. Either way, there’s no voting right for these shares.

Again, this decreases actionable accountability to the external world.

This should make it clear why stock buybacks would be preferred. Fewer people with standing to sue if they don't agree with management's direction.

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