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>we all depend on the stock market to climb about 10% a year Can anyone point me to any scientific reasoning behind this? As I'm not an economist, I was always

>we all depend on the stock market to climb about 10% a year Can anyone point me to any scientific reasoning behind this? As I'm not an economist, I was always baffled by an expectation that the market will always grow. That instantly brings to my mind the comparison to cancer.

xapata 8y ago
Purely based on empirical observation. The rate of growth is actually quite bad for capitalism in the long run, as it's unsustainable. See Piketty's inequality. As capital agglomerates, it creates instabilities. When a large capital cluster collapses, if it's too big the collapse has systemic impact. If everyone is small, an individual may experience greater risk, but the system is robust. In reply to the other comments: Economic growth is different from stock market asset appreciation.
jonknee 8y ago
It's a byproduct of having more people and more productivity every year, you don't need large amounts of either for it to compound. (And you don't need 10%, a lot more money is in bonds than equities and at much lower rates.)
- thrav 8y ago
  Surely there has to be a ceiling to “more people” though, right?
  - jonknee 8y ago
    Yes and that will bring all sorts of troubles, look at Japan for a modern example. One of many reasons we should be welcoming immigrants instead of shutting them out.
    - losteric 8y ago
      Why can't progress in technology replace population growth through higher productivity? We tend to cut costs and reward the capital managers... but why not maintain costs while rewarding employees?
      - eric-hu 8y ago
        What you're saying is theoretically possible. I just think it's to socialist for America.
        humanrebar 8y ago
        Paying workers isn't "socialist".
        TeMPOraL 8y ago
        But forcing private individuals to act against their own self-interest in order to protect the whole from disproportional damage is often considered "authoritarian".
        zgramana 8y ago
        Cite your sources. The whole concept of a legal system is predicated on that very idea.
        TeMPOraL 8y ago
        It is, and I didn't say it's a bad thing. The only thing I said is that it can be called by bad names, and if you want sources, open any news site or political discussion thread on the Internet.
        zgramana 8y ago
        Authoritarianism is antithetical to rule of law. It “forces people to act against their own self-interest because The Authority says so.” This is why the US has long described itself as a “nation of laws”: to set itself apart from (non-constitutional) monarchies, oligarchies, and dictatorships. I haven’t seen any journalists confuse the two, but of course people offering an opinion are free to confuse them.
    - Chris_Chambers 8y ago
      It’s a good thing the racists who ceaselessly parrot this genocidal narrative will stay trapped in their echo chambers online and never actually have the power to enforce their insidious will to begin the process of exterminating the Japanese by undermining the foundation of their ethnostate.
    - hiram112 8y ago
      Yes it'd be a shame if, in the long run, Japan stabilized its population growth or even shrank down to what was sustainable for several thousand years. Japan is the size of California, and its population is 127 million or more than 3x that of CA. The average size of a single family dwelling is less than half that of the US. Japan cannot feed itself, nor power itself, and depends on open trade and foreign countries for almost all its natural resources. This was not always the case, though. Their growth outgrew their borders in the early 21st century - they were forced to expand into their neighbors' yards for space and resources, and we all know how well that turned out. Maybe the idea of endless exponential population growth isn't the best idea, and if Japan would prefer to keep their culture instead of bowing down to the globalist elites who want open borders, never-ending GDP growth and markets, I give them credit. What we are doing in the West with unlimited immigration and forced diversity will not end well, IMO.
      - jonknee 8y ago
        > Yes it'd be a shame if, in the long run, Japan stabilized, or even decreased, its population growth. Japan's population is currently declining... https://www.washingtonpost.com/news/worldviews/wp/2016/02/26/its-official-japans-population-is-drastically-shrinking/ https://www.washingtonpost.com/news/worldviews/wp/2016/02/26...
      - icebraining 8y ago
        Nobody in the West is allowing unlimited immigration. In the US there's obviously strong executive action against it, and the EU is paying billions to keep immigrants out (€3B more approved just this year).
Something1234 8y ago
Not a really economist, but... The general idea is that there will be dips and bubbles, but over the long run, Growth will happen. In general, we need to make things better. When we make things better we create growth.
mhb 8y ago
That instantly brings to my mind the comparison to cancer Why not bamboo?
- bitcoinisqueen 8y ago
  OP is clearly going through a hard time in their life right now. Could have literally answered with their reply to almost any question. Examples: "Vanilla ice cream is good" - "Reminds me of cancer" "Let's go watch 50 shades of grey" - "Reminds me of cancer" "What do you think of bitcoin?" - "Reminds me of cancer"
dboreham 8y ago
"Expect that" is not quite the same as "depend on".
jadedhacker 8y ago
The stock market also grows typically above GDP growth as well (in the short term). https://www.quora.com/How-can-the-stock-market-grow-faster-than-GDP https://www.quora.com/How-can-the-stock-market-grow-faster-t... EDIT: Unless people actually sold their stocks instead of holding in which case it'd be GDP.
tremon 8y ago
I've always considered it as self-fulfilling prophecy, like Moore's law. There is (was) no inherent reason for the semiconductor market to grow like it did, but the simple prediction, coupled with competitive pressure, made every player in the industry work to match the prediction for fear of falling behind.
- Nomentatus 8y ago
  Enthusiasm may well have shortened the doubling period, true. But all tech has a Moore's law curve, and always has had - always logarithmic growth, but the doubling time varies.

xapata 8y ago

Purely based on empirical observation. The rate of growth is actually quite bad for capitalism in the long run, as it's unsustainable. See Piketty's inequality. As capital agglomerates, it creates instabilities. When a large capital cluster collapses, if it's too big the collapse has systemic impact. If everyone is small, an individual may experience greater risk, but the system is robust. In reply to the other comments: Economic growth is different from stock market asset appreciation.

jonknee 8y ago

It's a byproduct of having more people and more productivity every year, you don't need large amounts of either for it to compound. (And you don't need 10%, a lot more money is in bonds than equities and at much lower rates.)

thrav 8y ago
Surely there has to be a ceiling to “more people” though, right?
- jonknee 8y ago
  Yes and that will bring all sorts of troubles, look at Japan for a modern example. One of many reasons we should be welcoming immigrants instead of shutting them out.
  - losteric 8y ago
    Why can't progress in technology replace population growth through higher productivity? We tend to cut costs and reward the capital managers... but why not maintain costs while rewarding employees?
    - eric-hu 8y ago
      What you're saying is theoretically possible. I just think it's to socialist for America.
      - humanrebar 8y ago
        Paying workers isn't "socialist".
        TeMPOraL 8y ago
        But forcing private individuals to act against their own self-interest in order to protect the whole from disproportional damage is often considered "authoritarian".
        zgramana 8y ago
        Cite your sources. The whole concept of a legal system is predicated on that very idea.
        TeMPOraL 8y ago
        It is, and I didn't say it's a bad thing. The only thing I said is that it can be called by bad names, and if you want sources, open any news site or political discussion thread on the Internet.
        zgramana 8y ago
        Authoritarianism is antithetical to rule of law. It “forces people to act against their own self-interest because The Authority says so.” This is why the US has long described itself as a “nation of laws”: to set itself apart from (non-constitutional) monarchies, oligarchies, and dictatorships. I haven’t seen any journalists confuse the two, but of course people offering an opinion are free to confuse them.
  - Chris_Chambers 8y ago
    It’s a good thing the racists who ceaselessly parrot this genocidal narrative will stay trapped in their echo chambers online and never actually have the power to enforce their insidious will to begin the process of exterminating the Japanese by undermining the foundation of their ethnostate.
  - hiram112 8y ago
    Yes it'd be a shame if, in the long run, Japan stabilized its population growth or even shrank down to what was sustainable for several thousand years. Japan is the size of California, and its population is 127 million or more than 3x that of CA. The average size of a single family dwelling is less than half that of the US. Japan cannot feed itself, nor power itself, and depends on open trade and foreign countries for almost all its natural resources. This was not always the case, though. Their growth outgrew their borders in the early 21st century - they were forced to expand into their neighbors' yards for space and resources, and we all know how well that turned out. Maybe the idea of endless exponential population growth isn't the best idea, and if Japan would prefer to keep their culture instead of bowing down to the globalist elites who want open borders, never-ending GDP growth and markets, I give them credit. What we are doing in the West with unlimited immigration and forced diversity will not end well, IMO.
    - jonknee 8y ago
      > Yes it'd be a shame if, in the long run, Japan stabilized, or even decreased, its population growth. Japan's population is currently declining... https://www.washingtonpost.com/news/worldviews/wp/2016/02/26/its-official-japans-population-is-drastically-shrinking/ https://www.washingtonpost.com/news/worldviews/wp/2016/02/26...
    - icebraining 8y ago
      Nobody in the West is allowing unlimited immigration. In the US there's obviously strong executive action against it, and the EU is paying billions to keep immigrants out (€3B more approved just this year).

Something1234 8y ago

Not a really economist, but... The general idea is that there will be dips and bubbles, but over the long run, Growth will happen. In general, we need to make things better. When we make things better we create growth.

mhb 8y ago

That instantly brings to my mind the comparison to cancer Why not bamboo?

bitcoinisqueen 8y ago
OP is clearly going through a hard time in their life right now. Could have literally answered with their reply to almost any question. Examples: "Vanilla ice cream is good" - "Reminds me of cancer" "Let's go watch 50 shades of grey" - "Reminds me of cancer" "What do you think of bitcoin?" - "Reminds me of cancer"

dboreham 8y ago

"Expect that" is not quite the same as "depend on".

jadedhacker 8y ago

The stock market also grows typically above GDP growth as well (in the short term). https://www.quora.com/How-can-the-stock-market-grow-faster-than-GDP https://www.quora.com/How-can-the-stock-market-grow-faster-t... EDIT: Unless people actually sold their stocks instead of holding in which case it'd be GDP.

tremon 8y ago

I've always considered it as self-fulfilling prophecy, like Moore's law. There is (was) no inherent reason for the semiconductor market to grow like it did, but the simple prediction, coupled with competitive pressure, made every player in the industry work to match the prediction for fear of falling behind.

Nomentatus 8y ago
Enthusiasm may well have shortened the doubling period, true. But all tech has a Moore's law curve, and always has had - always logarithmic growth, but the doubling time varies.