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This article is proof that there is something wrong in the system. The article mirrors those "an era of never ending growth" posted by Jon Katz et al during the
by maxklein 15y ago
This article is proof that there is something wrong in the system. The article mirrors those "an era of never ending growth" posted by Jon Katz et al during the first boom.
The first boom was a game of financial geeks. The boom was a way for smart people who are into financials to move money from one set of hands into their own hands. The computer nerds got played by financial nerds - value was not really destroyed, it just relocated into the pockets of a few saavy guys.
There are signs that the same thing is happening again, but this time on a different scale. Certain big time investors make their money from playing mathematical games on the financial market. They are betting low and selling high. Those same investors have seen another opportunity to do such trades, but betting on these so called 'startups'. There is a certain category of financial wizard - once you see them jumping into an industry, it means that the mathematics has gotten complicated enough that they can use their knowledge advantage to move money from one set of hands into the other.
The rumours of a boom are not unfounded. There is a financial game being played, but it's not a penny game like the first one, this time it's a premium game. They are avoiding the mass of last time and moving bigger chunks of money around.
People are going to lose money, but I don't think those people willl be Joe Ordinary this time. I think it's going to be a bunch of medium-wealthy people, who will buy into the claims of extra-ordinary returns.
In the end, the same thing will happen - the cycle of money being pushed around and part of it going to the people in charge of the system is going to stop, and once more people will lose money.
However, I doubt the outcry will be particularly large this time, because there will be less people affected, even if the sums could be similar.
Where there is a lot of money moving around, there are people trying to get that money to come to them. Those people are the same people 'controlling' the eco-system.
Watch the edges of any movement. When you see the 'uncool' people dropping out of the game, then there is something wrong in the middle. Watch the cycle of money - when investors are giving money to a company, which then takes that money and buys another company who also received money from the same company, then it means that people are using cyclical methods to 'invest' other peoples money, and then get themselves paid out.
There is no innovation problem - new and good products are being created everyday. That's fine. The boom lies in this financial layer that the financial geeks are building on top of the natural process of innovation - and the methods that are being used are there to benefit the companies participating in the financing.
- nazgulnarsil 15y agowealth is not zero sum. wealth is created and destroyed by the actions of individual and group economic activity all the time. so the popular refrain that "value was not really destroyed, it just relocated into the pockets of a few saavy guys." is not true. the market rewards correctly predicting trends in future valuation. that valuation fluctuates due to psychology as well as fundamentals means that the game will contain elements of deception, but that doesn't alter the underlying economics.
- JanezStupar 15y agoI believe that OP is implying that some markets sometime do not create value. e.g. Ponzi Scheme.
- dantheman 15y ago>> The computer nerds got played by financial nerds - value was not really destroyed, it just relocated into the pockets of a few saavy guys. I'm not 100% sure which boom, dotcom or realestate, but both destroyed significant amounts of wealth. When money is spent building companies or houses that aren't needed then wealth is destroyed, those people could have been doing something to maintain or increase the amount of wealth. If you spend 100MM on 10MM company then you destroyed wealth, if you spend 10MM on a 1MM house you've destroyed wealth - those resource could have been put to better use satisfying other's needs and wants.
- phlux 15y agoWhy do you think goldman sachs is involved with facebook, same reason but larger scale than the investments in ycombinator recently.