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This doesn't excuse WeWork being excessively unprofitable but low or negative returns don't directly imply anything "Counterfeit". I like to point out that low

This doesn't excuse WeWork being excessively unprofitable but low or negative returns don't directly imply anything "Counterfeit". I like to point out that low or negative real returns on stores of value have historically been the norm. Before financial systems existed, almost all investment had negative returns if you didn’t put work and energy into them. To store value, you had to accumulate stuff, buildings or land. Most options either had high maintenance costs, were subject to risk of damage from natural causes and theft, were very volatile or required hard labor to get production out of. Even more recently, it has often been difficult to get low risk, hassle free, liquid, positive real returns. From a basic science perspective this seems to reflect the laws of thermodynamics that tell us that everything tends to decay without a constant supply of work and energy. In general, most things require maintenance to keep their worth. The 20th century may have been an outlier. Because of unprecedented demographic and technological growth, positive risk free real returns on liquid assets were easy to find. It is possible that under favorable conditions, wealth can have positive returns and even compound into very good long run returns but it is not a guarantee and there is nothing natural about it. It may not continue forever, particularly amidst an aging and retiring population in a world no longer as rich in easy to exploit natural resources. While people are used to get negative returns on very short term purchases, you buy fresh vegetables at the supermarket even if they degrade over time, they can’t seem to accept the normalcy of negative returns on longer term assets despite the tendencies inherent in the laws of physics. In nature, squirrels’ nut caches have a certain percentage of losses from theft and spoilage. Returns tending towards the negative are natural even if they can seem unusual for people just out of the 20th century.

briandear 7y ago
There are apparently European banks paying negative interest now as well.
NortySpock 7y ago
Dividend stocks from an established company should still provide returns; that would be a liquid asset with positive returns.
- BenoitEssiambre 7y ago
  Yes but risky as stock price can go down.
lwb 7y ago
His assertion here is that "Endless money-losing is a variant of counterfeiting". I just don't see how that claim stands up to any real scrutiny. Counterfeiting is a totally different thing. To your point about negative real returns: just because it's been that way in the past doesn't mean that it's not a tragedy or that it's not possible to have reliable assets that keep their value over time. This is an especially desirable quality in currencies, and why gold and now bitcoin are so important.
- BenoitEssiambre 7y ago
  >This is an especially desirable quality in currencies This is an especially UNdesirable quality in currencies. A deflationary currency cannot become mainstream without causing a huge amount of instability. Deflation at some point causes people to build stashes of tokens instead of investing in real businesses with real production capacity. When this trend becomes widespread enough, it causes global production capacity to drop. That's right, when enough people do it, token hoarding displaces investment in businesses and factories and lowers global production capacity. This means token hoarding causes a future drop in things available to buy with these very tokens. Eventually when token stashes become too big and seemingly valuable, there will be people who want to buy real things with their stock of tokens. These tokens will be chasing fewer goods which will mean prices for stuff will rise (tokens will lose value). This may happen suddenly when people with large stockpiles of tokens notice that value is dropping and see that there are tons of other tokens waiting on the sideline ready to make it drop even further. Hoarders are likely to rush to get rid of their stockpile all at the same time before they're worthless which will cause their fall to worthlessness. This kind of drop brings the tokens closer to their natural intrinsic value of zero and resets the cycle, which can then start again, such is aggregate economics. The 1920s and 1930s suffered from this type of production drop but with gold tied currencies instead of cryptocoins. It happened to a lesser extent in 2007 when western world central banks failed to keep inflation rates high enough. It's important for the world's sake to not let deflationary currencies become too popular. When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, there will be disappointment when many people try to exchange them for real stuff. That is true for crypto currencies as well as government currencies (that is why the system is designed to make banks invest people's money in real businesses and minimize the proportion of money that is stockpiled idly). It's true that crypto currencies are currently not widely held enough to significantly affect the aggregate economy but speculation already keeps them volatile and the knowledge that as they get more popular, there will be more macroeconomic pressures towards volatility will keep the speculation wild and cryptocoins unstable. Currencies that are not designed to lose value over time can not be stable. Intrinsically worthless tokens engineered to have better than market real returns (risk adjusted, liquidity adjusted,) compared to real productive investment will always fluctuate increasingly wildly as they get more popular.

briandear 7y ago

There are apparently European banks paying negative interest now as well.

NortySpock 7y ago

Dividend stocks from an established company should still provide returns; that would be a liquid asset with positive returns.

BenoitEssiambre 7y ago
Yes but risky as stock price can go down.

lwb 7y ago

His assertion here is that "Endless money-losing is a variant of counterfeiting". I just don't see how that claim stands up to any real scrutiny. Counterfeiting is a totally different thing. To your point about negative real returns: just because it's been that way in the past doesn't mean that it's not a tragedy or that it's not possible to have reliable assets that keep their value over time. This is an especially desirable quality in currencies, and why gold and now bitcoin are so important.

BenoitEssiambre 7y ago
>This is an especially desirable quality in currencies This is an especially UNdesirable quality in currencies. A deflationary currency cannot become mainstream without causing a huge amount of instability. Deflation at some point causes people to build stashes of tokens instead of investing in real businesses with real production capacity. When this trend becomes widespread enough, it causes global production capacity to drop. That's right, when enough people do it, token hoarding displaces investment in businesses and factories and lowers global production capacity. This means token hoarding causes a future drop in things available to buy with these very tokens. Eventually when token stashes become too big and seemingly valuable, there will be people who want to buy real things with their stock of tokens. These tokens will be chasing fewer goods which will mean prices for stuff will rise (tokens will lose value). This may happen suddenly when people with large stockpiles of tokens notice that value is dropping and see that there are tons of other tokens waiting on the sideline ready to make it drop even further. Hoarders are likely to rush to get rid of their stockpile all at the same time before they're worthless which will cause their fall to worthlessness. This kind of drop brings the tokens closer to their natural intrinsic value of zero and resets the cycle, which can then start again, such is aggregate economics. The 1920s and 1930s suffered from this type of production drop but with gold tied currencies instead of cryptocoins. It happened to a lesser extent in 2007 when western world central banks failed to keep inflation rates high enough. It's important for the world's sake to not let deflationary currencies become too popular. When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, there will be disappointment when many people try to exchange them for real stuff. That is true for crypto currencies as well as government currencies (that is why the system is designed to make banks invest people's money in real businesses and minimize the proportion of money that is stockpiled idly). It's true that crypto currencies are currently not widely held enough to significantly affect the aggregate economy but speculation already keeps them volatile and the knowledge that as they get more popular, there will be more macroeconomic pressures towards volatility will keep the speculation wild and cryptocoins unstable. Currencies that are not designed to lose value over time can not be stable. Intrinsically worthless tokens engineered to have better than market real returns (risk adjusted, liquidity adjusted,) compared to real productive investment will always fluctuate increasingly wildly as they get more popular.