11–20 of 151 posts
I was hoping that the OP would address a related idea that I find rather weird: it’s sometimes said that “this excess liquidity has to go somewhere” and that “the excess liquidity has gone into [housing/stocks/commodities/other asset class]”. But I don’t get this: It might seem plausible that if stock prices go up they absorb liquidity from the system. But (ignoring new stock issues / newly build houses) in every tra…
I was hoping that the OP would address a related idea that I find rather weird: it’s sometimes said that “this excess liquidity has to go somewhere” and that “the excess liquidity has gone into [housing/stocks/commodities/other asset class]”. But I don’t get this: It might seem plausible that if stock prices go up they absorb liquidity from the system. But (ignoring new stock issues / newly build houses) in every tra…
(See also my other comment here).
[flagged]
It’s a nice NLP-generated text, so now, what is scientific correct about it, given that ChatGPT is not configured for reasonings or for citing sources? There is a reason why HN guidelines forbids robot-generated answers.
Earlier quoted context omitted.
It’s a nice NLP-generated text, so now, what is scientific correct about it, given that ChatGPT is not configured for reasonings or for citing sources? There is a reason why HN guidelines forbids robot-generated answers.
Just to clarify your position, do you think this specific passage contains mistakes or is misleading in any way (if so, please be precise), or are you generally doubtful about this technology but are fine with the text above?
Asking your parent to engage with an essentially unlimited firehose of unfounded claims just plays into that hand.
I really recommend reading this text on ChatGPTs lack of usefulness for academic conversations https://acoup.blog/2023/02/17/collections-on-chatgpt/
I was hoping that the OP would address a related idea that I find rather weird: it’s sometimes said that “this excess liquidity has to go somewhere” and that “the excess liquidity has gone into [housing/stocks/commodities/other asset class]”. But I don’t get this: It might seem plausible that if stock prices go up they absorb liquidity from the system. But (ignoring new stock issues / newly build houses) in every tra…
Transaction demand refers to earning money with a job or business and then spending it. Precautionary demand refers to demand for money based around uncertainty in the future, you keep some money around because you want to insure against losing your job (rainy day fund) and finally, once you have so much money you satisfied these two, there is still the fact that money is the most liquid asset. Money can be traded into other things faster than anything else. So this is basically day trading, buying low and selling high. The problem though is that at some point the Keynesian beauty contest begins. People not only react to fundamentals but also the reactions of other investors making investment decisions. Someone invests because they genuinely believe in the stock,
then people invest because they think people believe in the stock,
then people invest because they think people invest in the stock because people invest in fundamentals.
This is a rationality trap that doesn't end until the bubble pops and then people move onto something else.
What you are concerned about can be explained by a weakened form of a liquidity trap. The problem with the liquidity trap is that it is pretty theoretical in the sense that it is absolute. Like getting 100% efficiency. But in practice a liquidity trap can also be in the form of trapping liquidity in specific economic sectors and that can be described as a continuum.
For example, we separate the economy into the real economy and the financial economy. The financial economy is just a model of reality, but it is possible that messing with the model of reality is more profitable than actually doing something in the real world. This means money is allocated away from the real economy and into the fantasy of the financial economy. People do sell their financial assets but only to buy something else in the financial economy. It is a one way street of money flowing into the financial economy but never back and this is why you need constant government intervention that reinvests the money back into the real economy. It is obviously an ugly solution but what are you going to do? Introduce a wealth tax?
Earlier quoted context omitted.
Just to clarify your position, do you think this specific passage contains mistakes or is misleading in any way (if so, please be precise), or are you generally doubtful about this technology but are fine with the text above?
The issue with ChatGPT is that it produces convincingly sounding texts that more often than not contain factual errors that are obvious to people familiar with the field, but require effort to disprove for lay persons. Made up citations, for example. As such, they’re worthless. A human is capable of producing a similar made up text, but ChatGPT makes it trivial to anyone, flooding the conversation with useless noise,…
However, dismissing anything produced by chatgpt simply because it was made by chatgpt is not right, which is why I was asking an opinion about that passage: if the text is accurate, it should not matter who or what wrote it.
Earlier quoted context omitted.
The issue with ChatGPT is that it produces convincingly sounding texts that more often than not contain factual errors that are obvious to people familiar with the field, but require effort to disprove for lay persons. Made up citations, for example. As such, they’re worthless. A human is capable of producing a similar made up text, but ChatGPT makes it trivial to anyone, flooding the conversation with useless noise,…
Thank you for the reference, I know about the dangers of chatgpt and some skepticism is certainly warranted. However, dismissing anything produced by chatgpt simply because it was made by chatgpt is not right, which is why I was asking an opinion about that passage: if the text is accurate, it should not matter who or what wrote it.
I was hoping that the OP would address a related idea that I find rather weird: it’s sometimes said that “this excess liquidity has to go somewhere” and that “the excess liquidity has gone into [housing/stocks/commodities/other asset class]”. But I don’t get this: It might seem plausible that if stock prices go up they absorb liquidity from the system. But (ignoring new stock issues / newly build houses) in every tra…
Of course as you point out that money will go to the seller and does not simply evaporate. Now in the heads of a founders. They could decide to sell less equity (say only 5% to still raise just $1M) but let's be honest, they won't VC will tell you it is a bad idea and the startup down the street is expecting the $2M (again still plays out slowly over time so you don't really notice the slight raises in valuation). The founder can then use that money to do more work (initially) of course the founder has to bid for workers (programmers) which to assume a simplified model is also a finite pool.
The example repeats, this time not for equity but for labor. The programmer is really worth $100K but you _really_ need one and if you don't pay them $110K he will take an over at the other startup. You can afford them after all you just raised $1.2M. This pattern repeats until you have programmers demanding $200K. All of the sudden you NEED that $2M valuation otherwise you cannot afford to hire anyone.
Those programmers have needs to, a house for example, let us assume there are only 10 houses and...
You get where this is going.
This can continue as long as the underlying value of the business can support it (the margins of VC, founders, programmers, etc just decrease gradually). So who loses? The people that are not part of this subsystem that got money injected, the people holding the 'bag' as they say when the bubble pops.
This is essentially a trap that is hard to get out of because there are many different stages in the process each with costs. The programmer can only go work for $100K if the house goes back down in price etc.