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I view it as such: do you believe we have achieved peak efficiency with regards to production of goods and providing services? If not, there’s room for the econ
by wsc981 7y ago
I view it as such: do you believe we have achieved peak efficiency with regards to production of goods and providing services? If not, there’s room for the economy to grow.
I am not an economist though, this is just my layman’s view.
- jjeaff 7y agoThe actual question is whether the market thinks that future efficiency gains are on the way or not. If the market does, then that efficiency is already priced in and you can't make any money off of it. What you actually have to figure out is: is there any unexpected future efficiency gains that the market doesn't expect. You have to know something that the market does not.
- strbean 7y ago> The actual question is whether the market thinks that future efficiency gains are on the way or not. If the market does, then that efficiency is already priced in and you can't make any money off of it. Isn't this ignoring opportunity cost, uncertainty, etc.? If the expectation of future gains is priced in, wouldn't treasury bonds sell for face value + remaining interest on the secondary market?
- outworlder 7y agoI guess they are assuming perfect knowledge.
- strbean 7y agoI'm sure all the players are acting rationally as well!
- turc1656 7y agoThis isn't quite true. I get what you're saying, but from a technical perspective, it's not accurate. The markets also go up based on the total money supply in the system. If the government takes on a lot of debt, eventually a portion of that makes its way to the stock market, among other places. You don't actually need to improve efficiency/productivity if the government has tools like the discount rate, open market operations, the ability to alter margin requirements on derivatives, fed funds rate, as well as programs and policies like MMIF, TAF, CPPF, ABCP, TALF, ZIRP, to manipulate the money supply and the velocity/flow rates of money.