4 ms·

Sadly education is not historically a factor, as highly educated people are among the first to flee a doomed economy while government 'economists' keep assuring

Sadly education is not historically a factor, as highly educated people are among the first to flee a doomed economy while government 'economists' keep assuring everything will be fine.

m0zg 6y ago
"Flee" _where_ this time? All economies are fucked, if not now then a month from now when it gets colder and all of this starts anew where they managed to subdue the first wave. I think these insane valuations are just pricing in the upcoming global wave of inflation at this point. FWIW, I'm betting on it. I'm taking on a ton of debt by buying another house.
- grumple 6y ago
  How much inflation could we have? The only people getting more money right now are the super-rich and the most poor. Lots of middle class / working class can’t work or earn money and those are the people that drive costs of anything we care about.
  - m0zg 6y ago
    > How much inflation could we have? Very close to unlimited amount if it gets out of control. See e.g. Venezuela, Zimbabwe, or Russia in early 90s, among other countries. > can’t work or earn money They will be able to soon if they still can't. You can't keep the economy shut down forever. So it'll be shut down selectively until Nov 3 and opened completely shortly thereafter. /s On a more serious note, having lived through hyperinflation myself, people who can work will have their salaries adjusted upward enough to keep them working (and therefore putting some semblance of food on the table), but not enough to keep up with inflation. At least that's how it worked in Russia in the 90s. In Russia, though, the situation was relieved somewhat by the availability of the almighty dollar. You could temporarily protect your rubles from hyperinflation by buying dollars, and then selling them for rubles when you need money. With dollar (and really, all currencies) collapsing, I'm not sure what people are going to do, worldwide. Seems to me that a global inflationary spiral could de-facto reduce everyone's debt obligations to each other. So whoever is owed debts of any kind would take a massive haircut. In the 90s that was the Russian Government. The beneficiaries were people now known as "oligarchs". They borrowed unimaginable amounts of money (with kickbacks to government officials of course), bought up the Soviet factories, mines, and oil production that didn't yet collapse, and then paid back with hyperinflated money, fractions of a kopeck on the ruble.
    - JMTQp8lwXL 6y ago
      > You could temporarily protect your rubles from hyperinflation by buying dollars, and then selling them for rubles when you need money. With dollar (and really, all currencies) collapsing, I'm not sure what people are going to do, worldwide. You could temporarily hold bonds, stock, etc. Many other equity classes out there with high liquidity, which can be converted to cash whenever you like.
      - m0zg 6y ago
        No, you don't understand. For one thing you'd need to be completely brain dead to hold _bonds_ in this scenario specifically. You're basically lending money to whoever is issuing bonds and they'll be paying you pennies on the dollar in devalued currency. You should be _issuing_ bonds, if you're a company, and hoping you find enough fools to buy them up. For another, US stocks are necessarily tied to the US economy, which will be completely fucked for a decade if hyperinflation were to occur. I think you can deduce for yourself what will happen to stocks in this case. Don't get me wrong, I think Venezuela-style hyperinflation is unlikely (unless we get a communist government or something in which case hyperinflation will be the least of our problems, and the economy would be fucked for a hundred years). But higher than normal inflation is very, very likely indeed, and you need to start thinking in terms of what that means for you. The old things like "buying bonds" might cease to work to increase, or even maintain wealth, irrespective of yield, if this gets even remotely out of control.
        JMTQp8lwXL 6y ago
        If there's going to be hyperinflation in the US, there's going to be hyperinflation elsewhere. The US sets the baseline for global macroeconomic health. You mention why bonds are bad, I'll concede that, but you could have enumerated other asset classes in more detail. US Stocks are bad, because the US is doing bad... what about foreign stocks? What about gold? You don't have to hold cash.
    - tuatoru 6y ago
      You're conflating two things, currency exchange rate changes and inflation. Inflation to a first approximation is wage rises. "Too much money chasing too few goods" is the traditional formulaion. Western economies have split. For the majority wages are not rising. For the affluent minority incomes are rising sharply. So we see little inflation in the goods and services bought by poor people, but steep price rises in goods bought by rich people. The latter are mainly collectibles: stocks and bonds, real estate, artworks, gold and jewels, cryptocurrencies, etc. We won't see Zimbabwe-style hyperinflation unless there is massive redistribution.

Sadly education is not historically a factor, as highly educated people are among the first to flee a doomed economy while government 'economists' keep assuring everything will be fine.

m0zg 6y ago

"Flee" _where_ this time? All economies are fucked, if not now then a month from now when it gets colder and all of this starts anew where they managed to subdue the first wave. I think these insane valuations are just pricing in the upcoming global wave of inflation at this point. FWIW, I'm betting on it. I'm taking on a ton of debt by buying another house.

grumple 6y ago
How much inflation could we have? The only people getting more money right now are the super-rich and the most poor. Lots of middle class / working class can’t work or earn money and those are the people that drive costs of anything we care about.
- m0zg 6y ago
  > How much inflation could we have? Very close to unlimited amount if it gets out of control. See e.g. Venezuela, Zimbabwe, or Russia in early 90s, among other countries. > can’t work or earn money They will be able to soon if they still can't. You can't keep the economy shut down forever. So it'll be shut down selectively until Nov 3 and opened completely shortly thereafter. /s On a more serious note, having lived through hyperinflation myself, people who can work will have their salaries adjusted upward enough to keep them working (and therefore putting some semblance of food on the table), but not enough to keep up with inflation. At least that's how it worked in Russia in the 90s. In Russia, though, the situation was relieved somewhat by the availability of the almighty dollar. You could temporarily protect your rubles from hyperinflation by buying dollars, and then selling them for rubles when you need money. With dollar (and really, all currencies) collapsing, I'm not sure what people are going to do, worldwide. Seems to me that a global inflationary spiral could de-facto reduce everyone's debt obligations to each other. So whoever is owed debts of any kind would take a massive haircut. In the 90s that was the Russian Government. The beneficiaries were people now known as "oligarchs". They borrowed unimaginable amounts of money (with kickbacks to government officials of course), bought up the Soviet factories, mines, and oil production that didn't yet collapse, and then paid back with hyperinflated money, fractions of a kopeck on the ruble.
  - JMTQp8lwXL 6y ago
    > You could temporarily protect your rubles from hyperinflation by buying dollars, and then selling them for rubles when you need money. With dollar (and really, all currencies) collapsing, I'm not sure what people are going to do, worldwide. You could temporarily hold bonds, stock, etc. Many other equity classes out there with high liquidity, which can be converted to cash whenever you like.
    - m0zg 6y ago
      No, you don't understand. For one thing you'd need to be completely brain dead to hold _bonds_ in this scenario specifically. You're basically lending money to whoever is issuing bonds and they'll be paying you pennies on the dollar in devalued currency. You should be _issuing_ bonds, if you're a company, and hoping you find enough fools to buy them up. For another, US stocks are necessarily tied to the US economy, which will be completely fucked for a decade if hyperinflation were to occur. I think you can deduce for yourself what will happen to stocks in this case. Don't get me wrong, I think Venezuela-style hyperinflation is unlikely (unless we get a communist government or something in which case hyperinflation will be the least of our problems, and the economy would be fucked for a hundred years). But higher than normal inflation is very, very likely indeed, and you need to start thinking in terms of what that means for you. The old things like "buying bonds" might cease to work to increase, or even maintain wealth, irrespective of yield, if this gets even remotely out of control.
      - JMTQp8lwXL 6y ago
        If there's going to be hyperinflation in the US, there's going to be hyperinflation elsewhere. The US sets the baseline for global macroeconomic health. You mention why bonds are bad, I'll concede that, but you could have enumerated other asset classes in more detail. US Stocks are bad, because the US is doing bad... what about foreign stocks? What about gold? You don't have to hold cash.
  - tuatoru 6y ago
    You're conflating two things, currency exchange rate changes and inflation. Inflation to a first approximation is wage rises. "Too much money chasing too few goods" is the traditional formulaion. Western economies have split. For the majority wages are not rising. For the affluent minority incomes are rising sharply. So we see little inflation in the goods and services bought by poor people, but steep price rises in goods bought by rich people. The latter are mainly collectibles: stocks and bonds, real estate, artworks, gold and jewels, cryptocurrencies, etc. We won't see Zimbabwe-style hyperinflation unless there is massive redistribution.