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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.
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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.
I don't see this guideline? [0] [0]: https://news.ycombinator.com/newsguidelines.html
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While good as a cynical or satirical answer, our younger readers might want to learn the correct answer first...
Both posts are important here, IMHO. We have two signals to arrive at economic and productive decisions in our society, which favors distributed decisionmaking: democratic votes and price. There are all kinds of problems with the former, as for the latter: we rely on individuals to make efficient decisions, however this requires some kind of scarcity. Scarcity which is largely in effect for the majority of the popula…
But in general rich people are rich BECAUSE they are good at thinking about being rich.
Your point made sense until you mentioned wealth inequality-- but wealth inequality exists EXACTLY because rich people are good at thinking about being rich. These decisions may not be productive in terms of society -- but they generally favour growing or maintaining the status of "being rich".
No? Unless I misunderstood something.
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I'm not sure what you mean by "excess liquidity ends up in assets." Keep in mind that asset prices are set at each instant by the marginal buyer and the marginal seller. If someone buys a single share of, say, TSLA for twice its most recently quoted price, the market cap of TSLA would instantly double (until the next trade is executed). Prices can rise or drop a lot, even if little money trades hands. If you're askin…
I’m asking a practical question, not broad economic theories (which are mostly bs). How does newly created money (which first goes in commercial bank reserves) finally ends being used to buy houses and stocks?
Well, you have some newly created money, whilst the demand for holding money balances (which depends on the price level and the volume of economic activity) stays the same. So what happens is that money is exchanged away like a hot potato until the demand for money balances rises to match the extra created money. In the short run, this is a mixture of higher prices and a higher volume of expected economic activity, both of which would raise asset prices.
> This is one instantiation of an idea that was omnipresent in 2021-2022—that much of the weirdness in financial markets, from GameStop to crypto to stock market volatitlity, was driven by an excess of liquidity. This idea made a certain amount of inarticulable, pre-intuitive sense, but that sensibility does not a gears-level understanding make.
Seriously? This paragraph is fucking garbage.
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The part that I don't get is why the money is sloshing. Edit: That is to say, why is the liquidity moving from place to place. To follow the analogy, If I put water in a bucket, it levels relatively quickly. Why does the liquidity "slosh" around for years.
In shipping industry, to avoid sloshing which could destablize the oil containers, you compartmentalize.
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The rationale that seems most reasonable to me is decades of low interest rates. Interest rates are essentially an indication of how expensive money is. When interest rates are low, money is "cheap". Outside of the FED purchasing bonds, Banks giving loans is another way to "print money". So when interest rates are low, more people and businesses take out loans, and as a consequence there is more money circulating, "s…
That's the part I do get. The part I dont get is why it moves from place to place.
> When the rate of return is high, savers can achieve their goals by buying, holding, and harvesting the resulting cash flow. When it is low, they must turn to other strategies: leverage, arbitrage, momentum trading, more sophisticated quant trading, and “beauty contest trading“: betting on what others will find popular, for (arguably) extra-economic reasons. I don't think this is how people behave. I think collectiv…
I don't think either take is correct but the former is closer to the truth. It is all risk reward trade-off. If bonds have the same yield as other Investments with no risk, of course Savers and investors would select them over riskier strategies. This has less to do with discounting painful lessons and more to do with the spread on the return rate.
Read this: https://monevator.com/bond-market-crash/