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Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

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Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#171

Post by array_key_first »

nickff wrote: post #170
array_key_first wrote: post #154

Earlier quoted context omitted.

Social Security is not really relevant to the deficit, that's just a thing some politicians say because they want to dismantle the pie to take their piece. Every time someone points to SS as the source of our fiscal woes, we should be immediately skeptical.

Social Security is 22% of the budget, how is that not relevant to the deficit? It's the largest single category of spending, and spending more than the government takes in is the source of the deficit. https://fiscaldata.treasury.gov/americas-finance-guide/feder...

Because it's not real spending, because the money was already put aside. We take more in SS taxes than we pay out - it's a net positive.

It's sort of like looking at the IRS and saying "look how much it costs!"

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#172

Post by nickff »

array_key_first wrote: post #171
nickff wrote: post #170

Earlier quoted context omitted.

Social Security is 22% of the budget, how is that not relevant to the deficit? It's the largest single category of spending, and spending more than the government takes in is the source of the deficit. https://fiscaldata.treasury.gov/americas-finance-guide/feder...

Because it's not real spending, because the money was already put aside. We take more in SS taxes than we pay out - it's a net positive. It's sort of like looking at the IRS and saying "look how much it costs!"

Payroll taxes are supposed to cover Medicare and Social Security (along with some other programs), but they cover less than 2/3 of those costs. It’s not true that “the money was already put aside”, because retirees these days are getting about triple what they put in, and the ‘pot of money’ saved up to cover Social Security ‘promises’ is forecast to run out. There is an infinite number of ways to juggle the numbers, but the government is spending a lot of money on 'non-discretionary' programs, and revenues are not high enough to support everything.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#173

Post by selimthegrim »

ratelimitsteve wrote: post #94
forinti wrote: post #19

Earlier quoted context omitted.

Leaving large portions of the population jobless surely can't be good for business and political stability.

I feel like a lot of people aren't fully examining what AGI would mean for labor. As of right now labor exists separate from capital, which is to say the economy is made of workers, stuff and money. Workers get stuff, put labor into it and turn it into more valuable stuff, capital owns that stuff so they sell it to other workers (usually) and give their workers some portion of the increase in value. AGI would mean th…

You mean a catch 187

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#174

Post by dzhiurgis »

insane_dreamer wrote: post #158
dzhiurgis wrote: post #146

Earlier quoted context omitted.

What creates more value - 1 developer or 1 developer working at 10x pace?

First of all, 1 dev _producing_ at 10x pace is a myth. But second of all, companies do not need to 10x their software production output. Rather the goal, if the 10x productivity is achieved, is to _reduce_ human labor while retaining desired levels of output. If ultimately you're replacing humans with AI agents, you're exchanging one value for another.

I’m sorry, what? Companies do not need features? Next thing you’ll tell me they need to improve code quality?

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#175

Post by dzhiurgis »

bigfatkitten wrote: post #156
dzhiurgis wrote: post #144

Earlier quoted context omitted.

> big players are struggling to show meaningful revenue from the investment ChatGPT's $10b per year is not insignificant tho.

It is when compared with their capex, and where is that revenue coming from? It’s predominantly coming from other AI hopefuls incinerating capital.

> where is that revenue coming from?

800M active users aka 10% of worlds population.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#176

Post by whimsicalism »

nickff wrote: post #172
array_key_first wrote: post #171

Earlier quoted context omitted.

Because it's not real spending, because the money was already put aside. We take more in SS taxes than we pay out - it's a net positive. It's sort of like looking at the IRS and saying "look how much it costs!"

Payroll taxes are supposed to cover Medicare and Social Security (along with some other programs), but they cover less than 2/3 of those costs. It’s not true that “the money was already put aside”, because retirees these days are getting about triple what they put in, and the ‘pot of money’ saved up to cover Social Security ‘promises’ is forecast to run out. There is an infinite number of ways to juggle the numbers,…

it's not worth arguing with someone who has bought into the SS budgeting fiction, imo. essentially all economists agree with you

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#177

Post by whimsicalism »

CraigJPerry wrote: post #160
whimsicalism wrote: post #151

Earlier quoted context omitted.

Leveraging your power as "sovereign currency issuer" means monetizing the debt, aka inflating away the debt, which is disastrous in terms of what it does to purchasing power but also in terms of creditor confidence. Please, Stephanie Kelton didn't discover some secret hack to get money for free - I would recommend learning traditional macro before going on the MMT train.

There's so much to unpack here. I think the first thing to agree is that we don't need a model when we can just look directly at the law. This goes in the bin: >> recommend learning traditional macro It obscures what is legally required to happen and it completely ignores entire aspects of the financial system through a series of absurd assumptions. So rather than rely on any models, be they orthodox or heterodox, le…

> Is it when the select panel banks, the primary dealers are legally obligated to make fair market bids for every issuance? (there aren't many other markets where the buyer legally obligated to buy)

Yes, it comes in at the 'fair market bids' part. When yields spike, the mechanism still “works” legally, but the government’s interest costs and financial stability risks explode in real terms.

The “law” doesn’t immunize you from inflation, balance sheet stress, or a collapsing yield curve. The Fed can’t conjure real resources; it can only reprice claims on them. Monetizing debt isn’t free. Ask the U.K. gilt market in 2022 how far “sovereign currency issuer” logic got them before the Bank of England had to step in. The government isn't immune from market forces.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#178

Post by CraigJPerry »

whimsicalism wrote: post #177
CraigJPerry wrote: post #160

Earlier quoted context omitted.

There's so much to unpack here. I think the first thing to agree is that we don't need a model when we can just look directly at the law. This goes in the bin: >> recommend learning traditional macro It obscures what is legally required to happen and it completely ignores entire aspects of the financial system through a series of absurd assumptions. So rather than rely on any models, be they orthodox or heterodox, le…

> Is it when the select panel banks, the primary dealers are legally obligated to make fair market bids for every issuance? (there aren't many other markets where the buyer legally obligated to buy) Yes, it comes in at the 'fair market bids' part. When yields spike, the mechanism still “works” legally, but the government’s interest costs and financial stability risks explode in real terms. The “law” doesn’t immunize…

>> Yes, it comes in at the 'fair market bids' part

No, you’re confused. The legally obligated “fair market bids” - a tongue in cheek term - isn’t conducted in dollars. I believe you’re thinking of the secondary market activity which occurs at a later time - where private buyers purchase from the primary dealer banks and those txns are in dollars.

At the primary dealer purchase stage, the fed provides the funds to purchase via the PDCF. “The market” has precisely zero influence over this process.

You’re kind of randomly firing in different directions with the last paragraph, its too removed from reality to make much of a useful comment on.

Re: Bank of England flags risk of 'sudden correction' in tech stocks inflated by AI

#180

Post by bigfatkitten »

dzhiurgis wrote: post #175
bigfatkitten wrote: post #156

Earlier quoted context omitted.

It is when compared with their capex, and where is that revenue coming from? It’s predominantly coming from other AI hopefuls incinerating capital.

> where is that revenue coming from? 800M active users aka 10% of worlds population.

Of which a small minority are paying subscribers.
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