4 ms·

It's not just that 'work' is not valued. The problem is that 'value creation' is not valued (particularly in the tech sector). There are plenty of highly paid b

It's not just that 'work' is not valued. The problem is that 'value creation' is not valued (particularly in the tech sector). There are plenty of highly paid bullshit jobs. Tech corporations are essentially empty shells; their market caps are not based on the value that they create for society but on the rate of money printing by the reserve banks of the world. Because tech corporations are not subjected to free market forces like everybody else, they eventually lose their ability to create new value (and the kinds of people who join these companies and stay there do not have a value creator mindset). Indeed, if you compare the price of S&P500 companies relative to most stable-value commodities such as gold, it would seem that the S&P500 hasn't grown at all in the last 5 years. However, S&P500 correlates strongly with the growth in M1 and M2 money supply. This indicates that the growth in nominal price of stocks in the past 5 years is entirely artificial. Young tech workers cannot compete with corporations because the playing field is not even. If your competitor is getting free money from someone, how can you possibly compete with them in any market? This is why all young people in tech these days are eventually absorbed into corporations. Whether through employment or phony acqui-hire. It's also why big corporations like Google used to buy up startups and then kill the project immediately afterwards. It's mostly phony money transfer with hidden motives and it's not related to value creation.

cryptica 6y ago
BTW, the main reason why this is getting downvoted is because the wealthiest investors already know all this and many of them read HN... They think they can keep manipulating the economy forever to keep their stock prices up through money printing and they want to suppress this information because they don't want shareholders to realize it and dump the stock before they do. There is tremendous peer pressure right now to suppress this kind of content for insiders and employees to not sell their shares... But the bad news for these people is that the last people to sell their stocks are going to lose and it's a very fragile situation. It wouldn't take many employees to dump to cause a stock market crash now. Usually employees and small shareholders are the losers. If you look at who is buying Bitcoin now, it's MicroStrategy, Greylock partners and A16z (smart money)... Many are also moving into gold and silver. Do you seriously think that the rank and file corporate bureaucrat/employee who's been sitting through useless meetings every day for 10 years is worth the $2 to $10 million in corporate stocks that they own? Did they deliver that kind of value to society? No. If I owned corporate stocks worth even $100K and the bosses kept discouraging selling of stocks by employees, I would sell everything right now and change companies. You will never see such good valuation again. As always, the first to jump on the new trend always win and it's always going to be the smallest group possible. The majority always loses.
- quacked 6y ago
  I agree with the overall shape of both of the parent comments to my comment, but the main question I have is- what can be done?
  - aww_dang 6y ago
    I can't imagine anything in practical, palatable or pragmatic realm. The idealists usually suggest things like a gold standard. Perhaps a more pertinent question would be: How long can this continue?
    - quacked 6y ago
      It's funny, I was just thinking about the gold standard, but of course it couldn't be returned to as that would destroy the valuation of the holdings of the various financial elite. https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ (As an aside, the IRA and 401(k) were introduced in 1973 and 1978, respectively- a great way to trick the public into thinking that runaway cash valuation was a valuable move for America.) Many people don't think it will continue for long, which is why everyone's buying guns, I guess.
    - jackcosgrove 6y ago
      > How long can this continue? With ZIRP it can continue for a long time. Political intervention will come sooner. Keep your eye on the 2024 election, as that's predicted to be the first election where Millennials and younger will be the majority of the electorate.
  - cryptica 6y ago
    Something will be done about it regardless of whether it is planned or unplanned. The government can't just keep giving corporations a free ride using free fiat credit and expect the currency to retain its value and reputation. The only thing holding the value of the world's currencies right now is coercion by governments. But the system always seems to open up opportunities for contrarians and dissidents to make a profit by going against the flow. The stronger the coercive force is, the higher the risk, the bigger the opportunity - There will always be people willing to take risks, no matter how big because the rewards are always proportional.
adamsea 6y ago
I don't know enough to comment one way or another and so would love a critique of this comment from a downvoter's perspective so I can learn more.
hnxyz 6y ago
Intriguing. Could you elaborate on your statements about tech market caps being dependent on reserve bank printing money? Also, what does it mean that tech companies are not subject to the same market forces as everyone else? They are in direct competition with the next software firm - they seem to want to overcome this by building a pervasive tech ecosystem that forces users to be dependent on their software.
- cryptica 6y ago
  >> Could you elaborate on your statements about tech market caps being dependent on reserve bank printing money? All currencies of the world are free-floating and not backed by anything and reserve banks keep constantly printing new currency and injecting it into the economy either via 'loans' through regular banks or through government contracts (since the Fed gives the government free money to pay for employees and big corporate contracts like the $10 billion one they gave to Microsoft recently). For the past 10 years, we've had a situation such that interest rates have been at 0% and reserve requirements by banks have kept getting lower (since COVID19, they're 0%). This allows regular banks to print as much money as they like; whenever a bank makes a loan, they just type new currency into existence into someone's account. Also, the Fed has been buying toxic assets (such as bad corporate and mortgage debt) from the market (again using money that they just 'printed' into existence and backed by nothing). This has created an economic situation with a lot of hidden inflation; most of it ends up inflating stock prices because corporations and their shareholders use bank loans to buyback their shares from the market; this causes artificial high demand for the stock and drives up the price (this is why corporations today have such low P/E ratios and pay low dividends relative to share price). A lot of the buy orders on the market today are backed by debt (either which the corporation took out themselves to do buybacks or that of insiders or third-parties who have an interest in seeing the stock price go up). Insiders understand that if interest rates can stay at 0% forever (which is what MMT advocates are promoting), then they will always be able to keep borrowing more money later to pay off their old debts because the stock price will always go up... And if the next generation comes along and starts doing the same thing (buying corporate stocks using debt), then each new generation ends up paying off the debts of the previous generation. Note that this scheme works even if the financial instrument has nothing of economic value behind it. It's also why cryptocurrencies have been able to hold up such good valuations in spite of people paying for electricity to mine Bitcoin. They just restrict the supply, borrow money from banks, buy the asset, then in the future, someone else will take a loan to buy it and further drive up the price (and you'll be able to pay off your debt). Banks do require collateral to give loans, but the problem is that a lot of the collateral these days is intangible and so people can just claim that the market price is the true value of the collateral... Which creates a vicious cycle and allows people to take bigger and bigger loans. And the reason why corporations are not on an even playing field is because their executives and employees become wealthy from constant stock appreciation (fueled by collective debt) and then they invest in each other's businesses and award each other big contracts which keeps the currency circulating between themselves. Echo chambers created by social media today help to prevent money from flowing between different classes of people. The big money tends to stay within the corporate sphere and is secured by a large network of venture capitalists and investors who only invest in people within that corporate sphere. Any flow of money out of the corporate sphere can pose a major threat because it could pop the bubble when people realize how much more value they can get on the outside for the same money.

cryptica 6y ago

BTW, the main reason why this is getting downvoted is because the wealthiest investors already know all this and many of them read HN... They think they can keep manipulating the economy forever to keep their stock prices up through money printing and they want to suppress this information because they don't want shareholders to realize it and dump the stock before they do. There is tremendous peer pressure right now to suppress this kind of content for insiders and employees to not sell their shares... But the bad news for these people is that the last people to sell their stocks are going to lose and it's a very fragile situation. It wouldn't take many employees to dump to cause a stock market crash now. Usually employees and small shareholders are the losers. If you look at who is buying Bitcoin now, it's MicroStrategy, Greylock partners and A16z (smart money)... Many are also moving into gold and silver. Do you seriously think that the rank and file corporate bureaucrat/employee who's been sitting through useless meetings every day for 10 years is worth the $2 to $10 million in corporate stocks that they own? Did they deliver that kind of value to society? No. If I owned corporate stocks worth even $100K and the bosses kept discouraging selling of stocks by employees, I would sell everything right now and change companies. You will never see such good valuation again. As always, the first to jump on the new trend always win and it's always going to be the smallest group possible. The majority always loses.

quacked 6y ago
I agree with the overall shape of both of the parent comments to my comment, but the main question I have is- what can be done?
- aww_dang 6y ago
  I can't imagine anything in practical, palatable or pragmatic realm. The idealists usually suggest things like a gold standard. Perhaps a more pertinent question would be: How long can this continue?
  - quacked 6y ago
    It's funny, I was just thinking about the gold standard, but of course it couldn't be returned to as that would destroy the valuation of the holdings of the various financial elite. https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ (As an aside, the IRA and 401(k) were introduced in 1973 and 1978, respectively- a great way to trick the public into thinking that runaway cash valuation was a valuable move for America.) Many people don't think it will continue for long, which is why everyone's buying guns, I guess.
  - jackcosgrove 6y ago
    > How long can this continue? With ZIRP it can continue for a long time. Political intervention will come sooner. Keep your eye on the 2024 election, as that's predicted to be the first election where Millennials and younger will be the majority of the electorate.
- cryptica 6y ago
  Something will be done about it regardless of whether it is planned or unplanned. The government can't just keep giving corporations a free ride using free fiat credit and expect the currency to retain its value and reputation. The only thing holding the value of the world's currencies right now is coercion by governments. But the system always seems to open up opportunities for contrarians and dissidents to make a profit by going against the flow. The stronger the coercive force is, the higher the risk, the bigger the opportunity - There will always be people willing to take risks, no matter how big because the rewards are always proportional.

adamsea 6y ago

I don't know enough to comment one way or another and so would love a critique of this comment from a downvoter's perspective so I can learn more.

hnxyz 6y ago

Intriguing. Could you elaborate on your statements about tech market caps being dependent on reserve bank printing money? Also, what does it mean that tech companies are not subject to the same market forces as everyone else? They are in direct competition with the next software firm - they seem to want to overcome this by building a pervasive tech ecosystem that forces users to be dependent on their software.

cryptica 6y ago
>> Could you elaborate on your statements about tech market caps being dependent on reserve bank printing money? All currencies of the world are free-floating and not backed by anything and reserve banks keep constantly printing new currency and injecting it into the economy either via 'loans' through regular banks or through government contracts (since the Fed gives the government free money to pay for employees and big corporate contracts like the $10 billion one they gave to Microsoft recently). For the past 10 years, we've had a situation such that interest rates have been at 0% and reserve requirements by banks have kept getting lower (since COVID19, they're 0%). This allows regular banks to print as much money as they like; whenever a bank makes a loan, they just type new currency into existence into someone's account. Also, the Fed has been buying toxic assets (such as bad corporate and mortgage debt) from the market (again using money that they just 'printed' into existence and backed by nothing). This has created an economic situation with a lot of hidden inflation; most of it ends up inflating stock prices because corporations and their shareholders use bank loans to buyback their shares from the market; this causes artificial high demand for the stock and drives up the price (this is why corporations today have such low P/E ratios and pay low dividends relative to share price). A lot of the buy orders on the market today are backed by debt (either which the corporation took out themselves to do buybacks or that of insiders or third-parties who have an interest in seeing the stock price go up). Insiders understand that if interest rates can stay at 0% forever (which is what MMT advocates are promoting), then they will always be able to keep borrowing more money later to pay off their old debts because the stock price will always go up... And if the next generation comes along and starts doing the same thing (buying corporate stocks using debt), then each new generation ends up paying off the debts of the previous generation. Note that this scheme works even if the financial instrument has nothing of economic value behind it. It's also why cryptocurrencies have been able to hold up such good valuations in spite of people paying for electricity to mine Bitcoin. They just restrict the supply, borrow money from banks, buy the asset, then in the future, someone else will take a loan to buy it and further drive up the price (and you'll be able to pay off your debt). Banks do require collateral to give loans, but the problem is that a lot of the collateral these days is intangible and so people can just claim that the market price is the true value of the collateral... Which creates a vicious cycle and allows people to take bigger and bigger loans. And the reason why corporations are not on an even playing field is because their executives and employees become wealthy from constant stock appreciation (fueled by collective debt) and then they invest in each other's businesses and award each other big contracts which keeps the currency circulating between themselves. Echo chambers created by social media today help to prevent money from flowing between different classes of people. The big money tends to stay within the corporate sphere and is secured by a large network of venture capitalists and investors who only invest in people within that corporate sphere. Any flow of money out of the corporate sphere can pose a major threat because it could pop the bubble when people realize how much more value they can get on the outside for the same money.