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It’s mostly a demand shock, not a supply shock, and it’s everywhere

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Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#211

Post by Jensson »

asdff wrote: post #194
EEMac wrote: post #167

Earlier quoted context omitted.

The 1920s have something to say about markets that climb without reference to underlying production.

If anything the great depression supported this thesis of stocks always going up, and you can safely forget sweating the actual underlying economics. If you held through the crash or bought at the bottom you'd obviously be doing fine. Look at this chart (1). Seem familiar? Looks a lot like the great recession or March 2020 to me: a big plunge that took headlines followed by an unstoppable bull trend, in this case one…

USA losing its status as the world leader might change that trend though. Before the pandemic it could be a few decades away, but now? Possibly within even just a few years, if that happens I wouldn't want to be among those having my savings in American stocks.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#212

Post by RC_ITR »

kevinmchugh wrote: post #166
RC_ITR wrote: post #85

Earlier quoted context omitted.

What everyone is going to have a real hard time wrapping their head around for the next few years: We built a highly efficient economy for a set of behaviors. A shock happened that caused a lot people to change their behaviors (probably for a long time, since they've had 2 years of 'practice'). Our economy, which was built for those old behaviors (living in cities, riding public transit, eating at restaurants, travel…

Didn't more Americans already live in suburbs then cities before covid? What percent of Americans were regular public transit riders?

8 Million people, which, while a small % of population, is huge compared to the c. 100mn cars that get sold globally per year.

And similar to the suburbs point, sure the suburbs existed before COVID, but they are becoming more heavily utilized (extra bedrooms turned to offices reduces the supply of housing) at the same time as an uptick in demand.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#213

Post by lemax »

oarabbus_ wrote: post #198
ryanSrich wrote: post #116

Earlier quoted context omitted.

Yeah I imagine Turo is exploding. When I traveled this summer my options for a 5 day rental were $2,200 from all the rental car companies, or $375 from Turo.

How do they deal with insurance? I'm not sure I'd feel very comfortable trusting a random stranger to use my car for 5 days, unless I was sure I'd be paid out in full (or more) if they were to damage or total the vehicle.

Most companies like Airbnb, Turo, Boatsetter (airbnb for boats) offer some insurance they negotiate with an underwriter like Geico. Getting this sort of insurance individually is much more costly or next to impossible, which is why we don't see people short-term renting expensive assets to each other on Craigslist. I imagine negotiating the ability to dole out these sorts of policies at scale with Lloyd's of London or GEICO is fairly arduous, but it seems like one of more key pieces for these companies to successfully get off the ground to me.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#214

Post by rsj_hn »

RC_ITR wrote: post #209
rsj_hn wrote: post #153

Earlier quoted context omitted.

> Natural gas extremely expensive? Let me introduce you to renewables, which btw are getting better and better every year. Shutting down a natural gas pipeline that people depend upon just before winter, and then lecturing them about solar panels is not a good look. Artificially increasing the price of natural gas causes famines, it causes food and fertilizer to be more expensive, and it makes it hard for people to h…

Woah, what are you honestly on about? You can claim that the US is artificially raising natural gas prices, but the exact opposite is true. By chance of circumstance, we've historically underbuilt LNG processing facilities and that is isolating the US market from the rest of the world, so we have some of the lowest natural gas prices in the world right now. Please take your uninformed takes and cringey political rall…

I'm not the one ranting here. Biden has

1) put a moratorium on oil and gas leases in Federal lands and waters

2) cancelled one pipeline already and is about to cancel another (which means prices go up as trucks need to ship in the fuel)

The above makes oil and gas more costly to extract and to ship, which raises the price.

Moreover he is lobbying to remove all investment tax deductions for Oil and Gas (even though other industries still obtain them)

> Please take your uninformed takes and cringey political rallying elsewhere

^^This is what this platform is not designed for.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#215

Post by [deleted] »

rsj_hn wrote: post #153
RC_ITR wrote: post #85

Earlier quoted context omitted.

What everyone is going to have a real hard time wrapping their head around for the next few years: We built a highly efficient economy for a set of behaviors. A shock happened that caused a lot people to change their behaviors (probably for a long time, since they've had 2 years of 'practice'). Our economy, which was built for those old behaviors (living in cities, riding public transit, eating at restaurants, travel…

> Natural gas extremely expensive? Let me introduce you to renewables, which btw are getting better and better every year. Shutting down a natural gas pipeline that people depend upon just before winter, and then lecturing them about solar panels is not a good look. Artificially increasing the price of natural gas causes famines, it causes food and fertilizer to be more expensive, and it makes it hard for people to h…

[deleted]

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#216

Post by RC_ITR »

rsj_hn wrote: post #214
RC_ITR wrote: post #209

Earlier quoted context omitted.

Woah, what are you honestly on about? You can claim that the US is artificially raising natural gas prices, but the exact opposite is true. By chance of circumstance, we've historically underbuilt LNG processing facilities and that is isolating the US market from the rest of the world, so we have some of the lowest natural gas prices in the world right now. Please take your uninformed takes and cringey political rall…

I'm not the one ranting here. Biden has 1) put a moratorium on oil and gas leases in Federal lands and waters 2) cancelled one pipeline already and is about to cancel another (which means prices go up as trucks need to ship in the fuel) The above makes oil and gas more costly to extract and to ship, which raises the price. Moreover he is lobbying to remove all investment tax deductions for Oil and Gas (even though ot…

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Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#217

Post by rsj_hn »

Jensson wrote: post #204
rsj_hn wrote: post #199

Earlier quoted context omitted.

> at some point USA needs to start to deliver value back to the rest of the world First they already receive something of value, which is our money. No one forces them to sell their stuff for our money. Nor does selling us $1 of goods entitle them to get anything above and beyond $1 of our money. They have already been paid with sufficient value. Now they must spend that dollar in America somewhere. So they have a ch…

> The moment they stop doing b) and start doing a), the trade deficit will be balanced. And a rate of a trillion worth of goods per year will stop flowing into USA, that is the current trade deficit, you don't think that will cause some sort of crash? Your explanation here is like saying "This isn't a bubble, people wanted to pay this much for stocks, if stocks don't deliver people will sell and prices goes down, tha…

> And a rate of a trillion worth of goods per year will stop flowing into USA

A 1% tax would not cause a trillion worth of goods per year to stop flowing into the USA. Honestly, I think you are reacting too emotionally. The nice thing about a tax is it can be gradually increased to reduce foreign investment. There are actually many that have discussed taxes on foreign capital inflows, it's not some random idea I just cooked up.

>Your explanation here is like saying [crazy stuff]

No, it's nothing like that. If you have some substantive disagreement, let's here it over the doomsaying. Note, the real downside here is just somewhat higher equilibrium interest rates, which is why now is a great time to do this.

> crash will be horrible.

See above.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#218

Post by throwaway34241 »

Jensson wrote: post #189
BenoitEssiambre wrote: post #160

Earlier quoted context omitted.

Exactly, this is what a functional economy that is not crippled by financial logjams looks like. It's possible to overdo it but that is much less damaging than under doing it like in the 2010s.

You are wrong, 2010 wasn't enough, and now it is back to worse than 2007, USA is currently consuming goods from other countries and doesn't produce enough to sustain it, and it hasn't produced enough to sustain its consumption for 50 years now. USA is just continuing to borrow from the rest of the world (printing a reserve currency is the same thing as borrowing/taking), shipment after shipment of goods gets sent to…

Most of the economy isn't tradeable though, including major sectors like housing, education, health care etc.

If other countries get sick of buying US bonds, the relative value of the currency might depreciate. But as long as it doesn't happen all of a sudden that might not be catastrophic - other countries having stronger currencies might reduce US imports and increase exports (narrowing the trade deficit). Plus increasing automation might mitigate the cost of manufacturing in the US vs overseas.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#219

Post by MeinBlutIstBlau »

evergrande wrote: post #29
arthurcolle wrote: post #10

Earlier quoted context omitted.

Thank god we have crypto & NFTs to help people use all this free cash

Actually, that's a good point. Inflation would be even worse if that cash was going into physical goods and services. The government now has an incentive to leave crypto alone aside from providing clarity.

until the bubble bursts and bankrupts shittons of people causing bank runoffs and failures...like in 1929 and 2008...

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#220

Post by Jensson »

rsj_hn wrote: post #217
Jensson wrote: post #204

Earlier quoted context omitted.

> The moment they stop doing b) and start doing a), the trade deficit will be balanced. And a rate of a trillion worth of goods per year will stop flowing into USA, that is the current trade deficit, you don't think that will cause some sort of crash? Your explanation here is like saying "This isn't a bubble, people wanted to pay this much for stocks, if stocks don't deliver people will sell and prices goes down, tha…

> And a rate of a trillion worth of goods per year will stop flowing into USA A 1% tax would not cause a trillion worth of goods per year to stop flowing into the USA. Honestly, I think you are reacting too emotionally. The nice thing about a tax is it can be gradually increased to reduce foreign investment. There are actually many that have discussed taxes on foreign capital inflows, it's not some random idea I just…

But the current inflow of goods has nothing to do with foreign investments, it has to do with the US government printing a ton of money and ultimately that money gets used to buy goods from other countries.

And no matter what finance trickery you do, fact is that USA will need to stop consuming so much. Your solution would lead to the same decrease in consumption, just with different means. And when that happens it will no longer be able to attract foreign workers as easily since American consumption is no longer privileged. And when that happens the domino effect will cause issues all over the economy.

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