5 ms·

I'm not sure if "crash" is the problem. Crashes happen in markets, it's part of the business cycle. OP is discussing a 30+ year time horizon, though. I can thi

by thraway2016 10y ago

I'm not sure if "crash" is the problem. Crashes happen in markets, it's part of the business cycle. OP is discussing a 30+ year time horizon, though. I can think of a few potential things that would precipitate not just a crash, but a long-term economic malaise: - Climate change - Political/social unrest (extrapolate Brexit, Trump, etc) - Mass unemployment caused by automation (you can't "retrain" 5MM 50yo truck drivers) - Empire collapse (has happened with every single empire in history - what makes the U.S. exempt?) - Nuclear exchange (tensions with Russia steadily increasing) - Grey goo / UFAI (I know, crazy, but still, 30+ year time horizon) While I'm sympathetic to the view that alarmist "the crash is coming" thinking is likely incorrect, whenever one discusses decades-long time horizon in an era of accelerating technology and political uncertainty, I don't think it's unreasonable to suggest that the VIX is not considering tail risk of unlikely, but highly impactful events.

Naga 10y ago
I choose to ignore serious but unlikely events like that in my planning. A nuclear exchange or grey goo scenario is going to ruin my retirement plans no matter if I keep my investments in cash or in stocks. I'll have bigger problems than if I can sell my investments or not.
tzs 10y ago
> OP is discussing a 30+ year time horizon, though. I can think of a few potential things that would precipitate not just a crash, but a long-term economic malaise ... > Climate change The climate change consequences big enough to cause a long-term economic malaise are far enough out to not affect most of today's workers. We'll mostly just get things that cause short term disruption, like more large storms, more weather variability, more record high tides, and similar things. The big things, like sufficient sea level rise to require abandoning significant parts of many major cities, long term changes in water availability that significantly change agriculture for whole regions, and so on are usually forecast to be in the 100+ year timeframe. This is one of the frustrating things about climate change. Over the long term it likely has disastrous consequences for humanity, but it can be largely averted or at least limited if action is taken early enough. But "early enough" puts you a time when the consequences are still localized and intermittent, and so it is easy for people to overlook it (especially when they can make more money by doing so).
- umanwizard 10y ago
  > The climate change consequences big enough to cause a long-term economic malaise are far enough out to not affect most of today's workers. Source?
adventured 10y ago
> Empire collapse (has happened with every single empire in history - what makes the U.S. exempt?) The US isn't anything like traditional historical empires for one. It hasn't built its prosperity on invading other nations to annex them and plunder their national wealth, which is traditionally how empires temporarily sustain themselves. The US built its immense wealth today (just under half of all private wealth on earth is owned by Americans) overwhelmingly through invention, engineering, industry, trade, manufacturing, radical productivity gains spanning two centuries, and lots of immigration. Historical empires have always run out of lands to conquer and wealth to steal from other nations, and then they collapse as they fail to placate their own people or get defeated militarily by the lands they previously conquered. The USD global reserve is a vulnerability? That's one potential issue. However, the US was the world's largest economy - by about 1890 - long before it had the global reserve currency. Japan has a disastrous situation on its hands economically, and a currency they're very aggressively abusing, and yet they're still the world's #3 economy with a substantial GDP per capita. The notion the US would just wilt without the global reserve currency, is absurd. What lands has the US annexed that it's going to get pushed out of (and lose the plunder/tax from said nations)? What nation/s is the US stealing all of its prosperity from, such that that is going to end soon? Are we taking $5 trillion annually from Vietnam and Mexico (it's actually the other way around given the vast US trade deficit, we're sending hundreds of billions to the rest of the world)? Further, the US was the first Capitalist nation. From day one it was heavily built on the principles of the free market and trade, not invasion and plunder. (and before anyone chimes in to loudly proclaim that the US has never been a perfect Capitalist nation: no kidding, such wasn't implied) Otherwise there would be no Canada, at some point in the last century we would have invaded for their natural resources. The US also would have pulled a Russia, and taken Japan and parts of Europe, using its rather wild military & resource advantage at the end of WW2.
- thesimpsons1022 10y ago
  The US has always been built on the plunder of its nonwhite inhabitants. One can wax poetic about the free market or educated work force but that is the truth. The roman republic didn't fall because of issues with resource extraction or plunder. It fell when a powerful enough demagogue named Ceasar took power and undermined it on a wave of populism. A Nero like dictator (trump) is all we really need to crash and burn into the annals of history.

Naga 10y ago

I choose to ignore serious but unlikely events like that in my planning. A nuclear exchange or grey goo scenario is going to ruin my retirement plans no matter if I keep my investments in cash or in stocks. I'll have bigger problems than if I can sell my investments or not.

tzs 10y ago

> OP is discussing a 30+ year time horizon, though. I can think of a few potential things that would precipitate not just a crash, but a long-term economic malaise ... > Climate change The climate change consequences big enough to cause a long-term economic malaise are far enough out to not affect most of today's workers. We'll mostly just get things that cause short term disruption, like more large storms, more weather variability, more record high tides, and similar things. The big things, like sufficient sea level rise to require abandoning significant parts of many major cities, long term changes in water availability that significantly change agriculture for whole regions, and so on are usually forecast to be in the 100+ year timeframe. This is one of the frustrating things about climate change. Over the long term it likely has disastrous consequences for humanity, but it can be largely averted or at least limited if action is taken early enough. But "early enough" puts you a time when the consequences are still localized and intermittent, and so it is easy for people to overlook it (especially when they can make more money by doing so).

umanwizard 10y ago
> The climate change consequences big enough to cause a long-term economic malaise are far enough out to not affect most of today's workers. Source?

adventured 10y ago

> Empire collapse (has happened with every single empire in history - what makes the U.S. exempt?) The US isn't anything like traditional historical empires for one. It hasn't built its prosperity on invading other nations to annex them and plunder their national wealth, which is traditionally how empires temporarily sustain themselves. The US built its immense wealth today (just under half of all private wealth on earth is owned by Americans) overwhelmingly through invention, engineering, industry, trade, manufacturing, radical productivity gains spanning two centuries, and lots of immigration. Historical empires have always run out of lands to conquer and wealth to steal from other nations, and then they collapse as they fail to placate their own people or get defeated militarily by the lands they previously conquered. The USD global reserve is a vulnerability? That's one potential issue. However, the US was the world's largest economy - by about 1890 - long before it had the global reserve currency. Japan has a disastrous situation on its hands economically, and a currency they're very aggressively abusing, and yet they're still the world's #3 economy with a substantial GDP per capita. The notion the US would just wilt without the global reserve currency, is absurd. What lands has the US annexed that it's going to get pushed out of (and lose the plunder/tax from said nations)? What nation/s is the US stealing all of its prosperity from, such that that is going to end soon? Are we taking $5 trillion annually from Vietnam and Mexico (it's actually the other way around given the vast US trade deficit, we're sending hundreds of billions to the rest of the world)? Further, the US was the first Capitalist nation. From day one it was heavily built on the principles of the free market and trade, not invasion and plunder. (and before anyone chimes in to loudly proclaim that the US has never been a perfect Capitalist nation: no kidding, such wasn't implied) Otherwise there would be no Canada, at some point in the last century we would have invaded for their natural resources. The US also would have pulled a Russia, and taken Japan and parts of Europe, using its rather wild military & resource advantage at the end of WW2.

thesimpsons1022 10y ago
The US has always been built on the plunder of its nonwhite inhabitants. One can wax poetic about the free market or educated work force but that is the truth. The roman republic didn't fall because of issues with resource extraction or plunder. It fell when a powerful enough demagogue named Ceasar took power and undermined it on a wave of populism. A Nero like dictator (trump) is all we really need to crash and burn into the annals of history.