Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How This Ends

avc.com

Post reply on HN
Print view View original

551–560 of 698 posts

Re: How This Ends

#551

Post by pas »

lamontcg wrote: post #334
fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

This has all happened before. In 1998 Greenspan cut rates due to the Asian financial crisis and worries over Y2K which blew up the dot com bubble. Then they slashed rates down to nearly ZIRP and held them low which blew up the housing and finance bubbles that deflated in 2008. None of this started in 2008. What is different this time is the wage inflation and the unionization drives that we're seeing. The Fed is like…

> We've also had prices being out of whack with fundamentals for decades, that is also nothing new.

isn't this a bit more complicated than that? for example in housing though the prices are propped up by the tech companies (and startups), which can pay all those high salaries thanks to their valuations and cashflows (which are fueled by cheap credit, eg. credit cards). but also low rates allowed people to get bigger mortgages. so in that sense the fundamentals (cashflows) are there, but things with limited supply blow the fuck up, whereas wages barely moved up in comparison, and PCE was slightly below 2% (which was the target).

> There are a lot more crazies in power.

very underappreciated risk.

> At some point the cyclical game that we're in with engineered recessions, low rates, low risk premiums, cheap money, insane valuations, asset bubbles, etc has to break.

yes, but also these valuations are so high because the expected cashflows are also high, because almost everything (not just tech) is global and the world got a LOT richer (eg China)

the risks are structural (politics, eg. wars, crazy tariffs, brexit), but the potential for solving them are too (easier migration [eg Japan], more trade harmonization [US-EU], education and healthcare reform [US])

Re: How This Ends

#552

Post by zeckalpha »

tenpies wrote: post #233
nostrademons wrote: post #133

Earlier quoted context omitted.

Assuming you're expecting inflation to moderate over 10 years. I think people who expect we're going to go back to pre-pandemic supply chains are vastly underestimating the difficulty of bringing a complex system like the economy up from a cold start. In my experience with complex systems that are much less complex than the economy (merely a few hundred million lines of code), it can't be done . You have to increment…

I don't think there's even going back to pre-pandemic supply chains solely because how the West's cancel culture effectively ended globalization when Russia invaded Ukraine. There will be no global supply chain any more. Any country with a brain now knows they have to be completely independent of the West in every aspect. Sovereign assets must be within their borders. Currency reserves? Held at domestic banks as much…

Trump’s trade war with China was cancel culture?

Re: How This Ends

#553

Post by pas »

jeffbee wrote: post #178
gedy wrote: post #166

Earlier quoted context omitted.

I heard the same thing in the last housing bubble before 2008

Really? It was obviously not true back then and is obviously true now. Housing starts hit nearly an all-time record high in the U.S. in January 2006. But then housing starts almost hit zero in 2009, and have never recovered.

https://fullstackeconomics.com/the-2000s-housing-bubble-was-...

Re: How This Ends

#554

Post by pas »

symlinkk wrote: post #29
herf wrote: post #28

I agree we are working through an asset bubble in tech and housing - P/E's went quite a ways above the historical line, as did housing prices. But think about the chip shortage (automotive, consumer electronics) - raising interest rates does not "fix" supply and make prices lower. Think about oil & gas markets. Think about labor shortages. When supply is broken, it's not only a monetary policy problem. Most of these…

The “chip shortage” was fake. The actual issue was inflation since the start.

inflation is (due to) shortage

Re: How This Ends

#555

Post by nl »

pas wrote: post #539
nl wrote: post #520

Earlier quoted context omitted.

US 10 year bond rates are 3.1%. The one time in history they have gone beyond 10% it took 2 years to go from 7.32% in Sep 1977 to reach 10% in October 1979, and then peak at 15% in 1981. It's not impossible bonds will reach 10% again. But it seems unlikely, and it seems safe to think it would take 3+ years to get there. https://www.macrotrends.net/2016/10-year-treasury-bond-rate-...

OP probably meant corporate bonds? (otherwise I also think it's just wildly unrealistic)

The OP wrote: "If inflation continues and the fed becomes aggressive with hiking, all assets are dead. Bonds will be wrecked, stocks will be wrecked, cash is wrecked, even gold (depending on how aggressively they hike) will be dead because it's actually a really good deal to buy bonds when they yield north of 10% (if we get there)."

Reads like they are referring to the Fed. Even if they aren't, US AAA-rated bonds generally track the Fed rate +1% to 1.5%[1].

So corporate bonds at 10% means the Fed rate is 8.5%+. I don't think this is realistic within the next 2 years.

[1] https://ycharts.com/indicators/moodys_seasoned_aaa_corporate...

Re: How This Ends

#556

Post by pas »

omginternets wrote: post #65
fny wrote: post #5

Earlier quoted context omitted.

You need to understand more about macroeconomics, monetary policy, ad government, along with studying past how past markets behaved under similar conditions. History doesn't repeat but it rhymes becomes the mantra.

What are the must-read books in macroeconomics and monetary policy?

https://www.reddit.com/r/Economics/wiki/reading

Re: How This Ends

#557

Post by jwilber »

mym1990 wrote: post #224
jwilber wrote: post #192

Earlier quoted context omitted.

“Don’t point fingers at us boomers!” One sentence later: “None of you young folks have accountability.”

Yeah, I said "we", but I guess you'll twist it in whichever way you like /shrug Also: thanks for reinforcing my point hehe, appreciate that :)

Here’s how I’m reading the scenario: Rather than admit that the wording of your comment is easily taken out of the context you intended (that is, taking accountability for your previous statement), you claim that I’m “twisting” your comment to my view (for some unknown reason).

And all this spawning from your post claiming that nobody these days takes accountability (but they did in the past).

And none of that includes mention of your snide “hehe, I’m right you’re wrong” ending comment. (Really raising the bar of interaction here).

Re: How This Ends

#558

Post by PaulDavisThe1st »

lumost wrote: post #549
zarzavat wrote: post #532

Earlier quoted context omitted.

Inflation is still going up because there’s a war between Ukraine and Russia. This has caused food and energy prices to skyrocket. The Fed can raise rates to 69% but it’s still not going to cause (say) the grain in Odessa to make its way to people’s stomachs. Is a certain amount of rate increase justified? Yes, you don’t want an inflation spiral to develop. Beyond that, we are going to have to live with a certain amo…

If it was just one item you would expect that consumers would cut back elsewhere. Instead we see that they can demand more wages, and companies can demand higher prices even if they are decoupled from wheat. The latter is only possible if there is too much money in the system, the signal about wheat production gets lost. As the feds money printer doesn’t work evenly, those who are closer to it get more money. I can o…

> Instead we see that they can demand more wages [ ... ] The latter is only possible if there is too much money in the system,

When your employee is making gigantic profits, asking for more in wages has no relationship to the money supply.

Re: How This Ends

#559

Post by [deleted] »

PaulDavisThe1st wrote: post #522
lazide wrote: post #510

Earlier quoted context omitted.

The only reason there is a housing shortage is because there is an excess of jobs and money in that place. Which is changing. Houses in sunnyvale went from 750k-1m and impossible to find one for sale to 350k (yes really!) and on the market for years around ‘08.

> "an excess of jobs and money in that place" Nope. For one thing, there's the largest generation of the 20th century at peak retirement, cashing out of family houses that have gained huge amounts of value, and looking to move to amenity-rich locations. For another thing, the investment industry, short of other options, has started buying houses to rent them (short or long term), squeezing supply and driving up price…

[deleted]

Re: How This Ends

#560

Post by nl »

lupire wrote: post #308
cyberge99 wrote: post #137

Earlier quoted context omitted.

We also had a previous US administration handing out cash like candy in the form of stimulus checks.

The only problem with that was not taxing the wealthy to shrink the money supply.

Taxing the wealthy may or may not be a good idea.

Shrinking the money supply is an awful idea. If money supply shrinks is decreases investment, increasing unemployment. Commerce stops (because people assume there money will be worth more in the future so they reduce spending) which increases unemployment more.

There's a reasonable debate to be bad about tax rates for wealthy people. I don't think any economist on either side of politics thinks decreasing money supply is a good idea.

Post reply on HN