6 ms·

> The 'economy' is doing great. Stocks go ever higher despite pandemics and money trends. The stock market is doing great but all economic indicators are down.

> The 'economy' is doing great. Stocks go ever higher despite pandemics and money trends. The stock market is doing great but all economic indicators are down. The stock market has no bearing on the economy right now.

PeterStuer 6y ago
It's been a Ponzi casino propped up by a relentless torrent of cash oozing into it straight from the printing presses for a very, very long time
- thedudeabides5 6y ago
  That maybe a little aggressive. The comment above hit the nail on the head, it's actually pretty simple. Old people = asset holders (aka holders of financial obligations, bonds and stocks) Young people = usually in debt (student, auto, credit card, mortgage) and hoping to earn their way out with income. Aka the young are the very debtors that the old creditors are lending to via their retirement funds of bonds and stocks. An the Fed, well really their only tool is to print to do what? Buy financial assets. So in times of stress they buy those assets/liabilities, pushing up their prices first through decreasing long term rates (hence buying government bonds) and then with QE infinity, eventually buying the actual same asset/liabilities that make up the rich people's portfolios. Hence we response to a drastic income shock by...bailing out rich people. Ideally the Fed would just monetize government spending directly to those poor people, but as you can see with Pelosi-McConnell 2020, that stuff needs to go through Congress, which is a partisan mess.
  - tremon 6y ago
    I think the ponzi scheme refers to the amount of money flowing around in financial schemes that isn't actually "money". By creating numerous financial products and valuations that aren't actually based on assets, the banking system has been able to "print" more money than the central bank would ever allow. And that "money" is what's propping up the stock market. That's why the stock market is no longer representative of the economy: "money" has become an economy in itself.
  - PeterStuer 6y ago
    "Old people = asset holders (aka holders of financial obligations, bonds and stocks) Young people = usually in debt (student, auto, credit card, mortgage) and hoping to earn their way out with income." Rich young people are being financially supported by their rich parents. Poor young people aren't as their parents aren't 'asset holders' either. The whole 'generational conflict' is a ruse, like so many of the divisive narratives being propped up, especially in the US but also in many other places, to further divide and distract. The 'trickle down' economic fairy tale is one propagated by both parties, ever since the Regan years imho.
    - arrosenberg 6y ago
      > The 'trickle down' economic fairy tale is one propagated by both parties, ever since the Regan years imho. Close - 1975. https://en.wikipedia.org/wiki/Watergate_Babies https://en.wikipedia.org/wiki/Watergate_Babies
leetcrew 6y ago
> The stock market has no bearing on the economy right now. nor should you expect it to. people buy securities when they expect them to be worth more when they sell (or are forced to sell) them. they sell securities when they no longer believe that. either way, it doesn't have much to do with what is happening this instant. right now the market is saying that, in aggregate, people expect the economy to bounce back before they are forced to liquidate their holdings.
- an_opabinia 6y ago
  > people buy securities when they expect them to be worth more when they sell (or are forced to sell) them. they sell securities when they no longer believe that. If anything, the shocking over performance of retail investors has nothing to do with that trite characterization. It could be as simple as options having a built-in exit strategy, which is actually what retail lacked. People were selling and buying at the wrong times, and now they aren’t, because the thing they are trading forces them to exit at a “good time.” With an unemotional exit strategy, retail traders are taking greater risk for greater reward and obtained it. Is this good for the economy? Would you rather have people sit on their stock portfolios until they die, passing millions of dollars tax free to their heirs, who don’t spend it either or spend it on overpriced housing? Or would you rather people take profits (and losses - to other winners) every two weeks, occasionally, you know, buying a variety of somethings?
- mywittyname 6y ago
  Buy-and-hold investors aren't usually spooked until bankruptcies start rolling in. Think about how long the GFC was brewing before the stock market took a hit. You could see the problems for years, but it wasn't until the fall of Lehman, AIG, etc that people really began to panic sell. Bankruptcy is the one situation where buy-and-hold doesn't work. So until we start seeing large bankruptcies, I doubt the stock market will really panic. And let's be honest, the likelihood of any of the top 10 companies in the S&P 500 going bankrupt right now is nil. And that's >25% of the total value of the index right now.
  - leetcrew 6y ago
entropea 6y ago
The stock market has no bearing on ~50% of US population who own absolutely no stock except meager small amounts in 401k's. 18-29 year olds, 70% do not own any stock, 401k, etc. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...

PeterStuer 6y ago

It's been a Ponzi casino propped up by a relentless torrent of cash oozing into it straight from the printing presses for a very, very long time

thedudeabides5 6y ago
That maybe a little aggressive. The comment above hit the nail on the head, it's actually pretty simple. Old people = asset holders (aka holders of financial obligations, bonds and stocks) Young people = usually in debt (student, auto, credit card, mortgage) and hoping to earn their way out with income. Aka the young are the very debtors that the old creditors are lending to via their retirement funds of bonds and stocks. An the Fed, well really their only tool is to print to do what? Buy financial assets. So in times of stress they buy those assets/liabilities, pushing up their prices first through decreasing long term rates (hence buying government bonds) and then with QE infinity, eventually buying the actual same asset/liabilities that make up the rich people's portfolios. Hence we response to a drastic income shock by...bailing out rich people. Ideally the Fed would just monetize government spending directly to those poor people, but as you can see with Pelosi-McConnell 2020, that stuff needs to go through Congress, which is a partisan mess.
- tremon 6y ago
  I think the ponzi scheme refers to the amount of money flowing around in financial schemes that isn't actually "money". By creating numerous financial products and valuations that aren't actually based on assets, the banking system has been able to "print" more money than the central bank would ever allow. And that "money" is what's propping up the stock market. That's why the stock market is no longer representative of the economy: "money" has become an economy in itself.
- PeterStuer 6y ago
  "Old people = asset holders (aka holders of financial obligations, bonds and stocks) Young people = usually in debt (student, auto, credit card, mortgage) and hoping to earn their way out with income." Rich young people are being financially supported by their rich parents. Poor young people aren't as their parents aren't 'asset holders' either. The whole 'generational conflict' is a ruse, like so many of the divisive narratives being propped up, especially in the US but also in many other places, to further divide and distract. The 'trickle down' economic fairy tale is one propagated by both parties, ever since the Regan years imho.
  - arrosenberg 6y ago
    > The 'trickle down' economic fairy tale is one propagated by both parties, ever since the Regan years imho. Close - 1975. https://en.wikipedia.org/wiki/Watergate_Babies https://en.wikipedia.org/wiki/Watergate_Babies

leetcrew 6y ago

> The stock market has no bearing on the economy right now. nor should you expect it to. people buy securities when they expect them to be worth more when they sell (or are forced to sell) them. they sell securities when they no longer believe that. either way, it doesn't have much to do with what is happening this instant. right now the market is saying that, in aggregate, people expect the economy to bounce back before they are forced to liquidate their holdings.

an_opabinia 6y ago
> people buy securities when they expect them to be worth more when they sell (or are forced to sell) them. they sell securities when they no longer believe that. If anything, the shocking over performance of retail investors has nothing to do with that trite characterization. It could be as simple as options having a built-in exit strategy, which is actually what retail lacked. People were selling and buying at the wrong times, and now they aren’t, because the thing they are trading forces them to exit at a “good time.” With an unemotional exit strategy, retail traders are taking greater risk for greater reward and obtained it. Is this good for the economy? Would you rather have people sit on their stock portfolios until they die, passing millions of dollars tax free to their heirs, who don’t spend it either or spend it on overpriced housing? Or would you rather people take profits (and losses - to other winners) every two weeks, occasionally, you know, buying a variety of somethings?
mywittyname 6y ago
Buy-and-hold investors aren't usually spooked until bankruptcies start rolling in. Think about how long the GFC was brewing before the stock market took a hit. You could see the problems for years, but it wasn't until the fall of Lehman, AIG, etc that people really began to panic sell. Bankruptcy is the one situation where buy-and-hold doesn't work. So until we start seeing large bankruptcies, I doubt the stock market will really panic. And let's be honest, the likelihood of any of the top 10 companies in the S&P 500 going bankrupt right now is nil. And that's >25% of the total value of the index right now.
- leetcrew 6y ago

entropea 6y ago

The stock market has no bearing on ~50% of US population who own absolutely no stock except meager small amounts in 401k's. 18-29 year olds, 70% do not own any stock, 401k, etc. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...