41–50 of 85 posts
Ok, this seems like a good post. At the end of the day, what do I, as a single investor, do? I'm 50 years old, 2 kids in college, I have a $300,000 mortgage on a house presently worth $1M. I have $300,000 cash and an open eTrade account. What do I do with the cash? A) keep it as cash B) Pay off the mortgage C) Buy some QQQ D) Buy some T-notes E) there is no E. I am a simple man. Let's start with a simple solution.
The problems this article outlines are very real, but the explanation for the underlying mechanics doesn't really pass any kind of a sniff test for me. The central thesis is that real economic growth is stagnating because the overhead for producing energy grows with time. But this is not the case! Fossil fuels will run out eventually, yes, but nearly every other type of energy production does not suffer from this, an…
You can blame Moloch or wall Street or whatever for making it functionally impossible for whatever multipolar market-actor reasons, but with the right choices we could have plenty of energy today, just as we could (but don't) feed everyone on Earth.
Eventually the will bea point where it does actually become physically impossible to generate that much power without melting the Earth's crust or boiling the seas, but that's a long, long way away.
>> Rather, what we need to do is to calibrate the physical economy such that we can benchmark the monetary against the material. This enables us to avoid the futility of measuring the monetary only against itself. Garden-variety Gold Standard quackery.
Ok, this seems like a good post. At the end of the day, what do I, as a single investor, do? I'm 50 years old, 2 kids in college, I have a $300,000 mortgage on a house presently worth $1M. I have $300,000 cash and an open eTrade account. What do I do with the cash? A) keep it as cash B) Pay off the mortgage C) Buy some QQQ D) Buy some T-notes E) there is no E. I am a simple man. Let's start with a simple solution.
Keep 12 months living expenses in cash/t-bills. Depending on your age, increase to 24 mos if kids etc If cash remaining -> if mortgage rate >4% pay down mortgage (locking in 4%+ yield). If you want to average 50% towards mortgage 50% VOO (S&P Index fund) Deeper post -> https://monetarymusings.substack.com/p/how-to-not-blow-up-wh...
Locking in 4% AFTER TAX yield ... if you invest the $300K and it earns 4% you still can't pay the mortgage interest with those funds
Ok, this seems like a good post. At the end of the day, what do I, as a single investor, do? I'm 50 years old, 2 kids in college, I have a $300,000 mortgage on a house presently worth $1M. I have $300,000 cash and an open eTrade account. What do I do with the cash? A) keep it as cash B) Pay off the mortgage C) Buy some QQQ D) Buy some T-notes E) there is no E. I am a simple man. Let's start with a simple solution.
A - Never. Cash with no return is just decaying with inflation.
B - Depends on interest. If your mortgage interest is lower than no-risk interest (e.g. SGOV) then no, you'd be throwing money away by paying off the mortgage. If OTOH your mortgage interest is substantially higher than no-risk interest, then yes, paying it off (or at least overpaying monthly) is a good idea. There is a gray area if your mortgage interest is slightly higher than no-risk return right now. Numerically it makes sense to pay the mortgage, but there is also a safety aspect in keeping the liquid cash on hand.
So that leaves some combination of C & D. The best ratio there is a harder question to answer.
Some nits:
The “energy cost of energy” metric seems a bit suspect and I wonder how it’s calculated. One reason I would expect it to go up because solar power is getting cheaper, and therefore it makes more sense to “waste” it on overprovisioning. Another is that the costs of fossil fuel are getting higher in some places. More detail is needed to see if it means anything.
Stock market valuations are in large part based on expectations about future growth. Perhaps these expectations are wrong? But I’m not sure that tells us anything one way or another about the wealth we already have. Perhaps some better way is needed to understand the present and past.
The goal of post-modern society is to create wealth without additional energy costs. If I write software that schedules health care more efficiently, I've created value and therefore wealth. If I make a video game that's more fun than the previous generation of games, likewise.
Posts like this make me want to hurry up and buy a farm
Hurry, then, while your money is still worth something and there's farms to be had. I did and never looked back, no mortgage, no loans, no nothing. Use your money to become less dependent on future money. In the end it is independence which gives you security, not money in the market or on the bank.
This affects me because the urgency toward ownership and being less dependent on future money is prudent in some ways, but also naive in others?
When I think about owning property and being free of monthly rent, there's a truth to that. And it feels nice to say we've achieved generational wealth. But maintaining the property costs money and property taxes are recurring, forever. So I've relaxed on this idea that it'll be markedly different from rent.
Curious how you think about it?
> On this basis, global material prosperity has grown by 25% since 2004, which is nowhere near claimed “growth” of 96% in real GDP over that period. Moreover, the 25% rise in aggregate prosperity has been matched by the rise in population numbers over those twenty years. This assumes that the GDP growth and the material prosperity are in a simple linear relation. I don't think this makes sense. A small solar panel th…
Another bold, unsupported claim in the OP is that renewables and nuclear cannot materially slow the effects of resource depletion. I mean, yes, there's not an infinite amount of land, rare earth metals and the sun won't last forever, but the resource depletion absolutely looks different from an internal combustion engine (and an efficient ICE or gas power station is the same outcome for lower material cost than an inefficient one, for that matter)
Finally, be aware that he's been predicting imminent economic collapse for almost 20 years now. He'll probably be correct someday (assuming he lives a very long life), but that doesn't mean much IMO.