7 ms·

The advice just falls flat for me. Honestly, if the only winning move is to invest for the long term then why even bother with capital markets at all? Sounds

The advice just falls flat for me. Honestly, if the only winning move is to invest for the long term then why even bother with capital markets at all? Sounds like a waste of time when what we really want is for people to own the means of production. Dump 100% of federal tax revenue into index funds and let it grow faster than the interest on T-bills issued for expenditures. Churn for ~50 years and start paying UBI from the massive profits. Would the government even need to pay interest on the T-bills in USD? Why not just issue more T-bills as interest because after all the long term pretty much guarantees the government would be swimming in cash in 50 years and have no trouble repaying it all. Incidentally the federal government would also become the majority shareholder of every company in the world. If the market can magically let everyone with enough money invested in their youth retire happily then it follows that letting the government own all the stocks and issue UBI would result in roughly the same outcome.

sombremesa 6y ago
> Dump 100% of federal tax revenue into index funds and let it grow faster than the interest on T-bills issued for expenditures. I don't come to HN for comic relief, but there it is.
teraku 6y ago
Few things to unpack here. >Honestly, if the only winning move is to invest for the long term then why even bother with capital markets at all Because they are gamblers, that's why. Most (reasonable) people only invest long-term. >Sounds like a waste of time when what we really want is for people to own the means of production. Yup. >Dump 100% of federal tax revenue into index funds and let it grow faster than the interest on T-bills issued for expenditures. Churn for ~50 years and start paying UBI from the massive profits. Tax revenue is not 'profit' by the state. That's not how tax nor money issuing works. But to the topic at hand: There are countries that put money into investment funds that will invest into infrastructure and safe long-term assets. But usually not for UBI, but for retirements (e.g. Denmark). >If the market can magically let everyone with enough money invested in their youth retire happily then it follows that letting the government own all the stocks and issue UBI would result in roughly the same outcome. Generally the idea of not having to work at all is still heavily controversial within science. Some believe in UBI, some in job-guarantees and others just in relatively high minimum wage and very strong retirement plans.
- benlivengood 6y ago
  > Tax revenue is not 'profit' by the state. That's not how tax nor money issuing works. But to the topic at hand: There are countries that put money into investment funds that will invest into infrastructure and safe long-term assets. But usually not for UBI, but for retirements (e.g. Denmark). Then ignore taxes and make the ultimate trade on margin; issue T-bills to directly invest the cash. Same effect. Does the imagined collateral backing T-bills even change? It's just based on the assumption that the fed keeps money working properly and has some source of income, right? The threat of inflation rises but only for the same causes as general inflation; recessions and depressions. The ability to directly dump treasury proceeds into index funds would probably have more of a stabilizing effect on inflation than anything. > Generally the idea of not having to work at all is still heavily controversial within science. Some believe in UBI, some in job-guarantees and others just in relatively high minimum wage and very strong retirement plans. 10% growth long term with an inflation target of 2% is exactly the promise of not having to work at some point in the future. The aim is obstensibly retirement but it's pretty clear that if you keep working a little longer the return on investment keeps growing and will be enough to cover not only ones-self but any kids and their kids, etc. Basically I'm calling bullshit on the advice that long term investments are a good use for most individuals' money by contradiction. An assumption of long-term growth is not realistic because either: * The economy needs a working class that can never invest enough money to live off interest and will enforce this with rent seeking, glass ceilings, rampant consumerism, outsourcing, inflation, etc. * The economy will periodically crash and wipe out enough wealth that people have to work again. Full automation is a possibility in my lifetime, but unlikely. It certainly wasn't expected anytime before ~1950 when the advice was still "invest long term".
  - teraku 6y ago
    > Then ignore taxes and make the ultimate trade on margin; issue T-bills to directly invest the cash. Same effect. [...] The ability to directly dump treasury proceeds into index funds would probably have more of a stabilizing effect on inflation than anything. I vehemently disagree. Cash is issued by the central bank. If you put it directly into "assets", then the working class would have no money. It needs to flow through all participants of the economy. At each stage some of it is "saved" by the participant and "lost" by the state until eventually the remainder is supposed to flow back to the state via tax (The reason inequality rises so much nowadays is that most money just stops at Jeff Bezos). > 10% growth long term with an inflation target of 2% is exactly the promise of not having to work at some point in the future. Not sure who promises 10% growth long-term, but 4-6% is possible. First of all, let's take retirement funds out of the equation. Basically, guaranteed payments in your retired stage of life, but in most countries quite low. Now if we assume a long-term growth of ~5% hitting a retirement point is basically a break even of savings+interest versus spend. If you save 50% of the money you make (after taxes), the break even is around 17 years of working [0]. Keep in mind this is very simplified, but at the same time very doable. In fact the whole FIRE movement is behind this and they built a calculator for it [1]. So why don't more people do it? Because you'd have to save a significant amount of your after taxes money (and discipline/frugality) to do so. Most people don't have that. Here in Germany the median after taxes income is 23515€ [2]. If you live in the city, almost half of that is already eaten by rent alone. Then comes food, cloths, transportation, and so on. Which brings me to one of the main drivers for inflation: Rent. At least in the last 20 or so years, inflation has slowed down strongly. The fed and ECB are trying to hit a 2% and 1,8% inflation goal, respectively, and although they print tons of money, they usually undershoot. The only thing really driving inflation is increased rent cost (and other luxury goods which normal consumers don't care about). Everything else pretty much stays the same or goes down nowadays. In essence inflation only occurs when you have too little goods and services for the amount of money in the economy. But since most money, although not flowing back to the state, is stuck with the rich people, the amount of money in average Joe's household doesn't change too much and the buying power stays apprx. the same. That means when investing you have to worry about inflation, but not as much if you consider it for retirement and plan on owning our own house. Especially since inflation is also one of the main drivers for market growth (in monetary value) since the market consists of companies that own infrastructure and assets, thus being valued higher. > The economy will periodically crash and wipe out enough wealth that people have to work again. This only becomes a problem if you need large sums of cash during your withdraw phase or if the crash is sustained over a longer period. Bear markets recover fast (historically). > Full automation is a possibility in my lifetime, but unlikely. It certainly wasn't expected anytime before ~1950 when the advice was still "invest long term". I totally agree with you. But as a Marxist, I feel his most important teaching was that even though we know the goal and we know it's possible, and we know the current state can't continue, we can't just declare an utopia now and tell everybody to suck it and live by it. We need to get there step-by-step. I'm trying to find a nice note to end on, because I agree with your sentiment, I just don't think "we are ready yet", as stupid as that sounds. Let me just say this: I'm not entirely sure if I want a society that does not work at all, it would be nice to know you don't have to work. But I'd already be a million times happier if I only had to work 3 days of the week and be done with it, or have much higher wages, because I'd focus much more on what I really love. But that's just me. [0] - https://www.mrmoneymustache.com/wp-content/uploads/2012/01/mmm-early-retirement-savings-rate.png https://www.mrmoneymustache.com/wp-content/uploads/2012/01/m... [1] - https://networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=25200&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=70... [2] - https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Einkommen-Konsum-Lebensbedingungen/Lebensbedingungen-Armutsgefaehrdung/Tabellen/einkommensverteilung-silc.html https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Einkom...
imwillofficial 6y ago
Because problems don’t change at scale?
Aunche 6y ago
> Churn for ~50 years and start paying UBI from the massive profits. So after 50 years... you basically end up with a corporate tax?
imtringued 6y ago
You could just give them jobs. It would be far more realistic and the government can derive value from the work so everyone wins.

sombremesa 6y ago

> Dump 100% of federal tax revenue into index funds and let it grow faster than the interest on T-bills issued for expenditures. I don't come to HN for comic relief, but there it is.

teraku 6y ago

Few things to unpack here. >Honestly, if the only winning move is to invest for the long term then why even bother with capital markets at all Because they are gamblers, that's why. Most (reasonable) people only invest long-term. >Sounds like a waste of time when what we really want is for people to own the means of production. Yup. >Dump 100% of federal tax revenue into index funds and let it grow faster than the interest on T-bills issued for expenditures. Churn for ~50 years and start paying UBI from the massive profits. Tax revenue is not 'profit' by the state. That's not how tax nor money issuing works. But to the topic at hand: There are countries that put money into investment funds that will invest into infrastructure and safe long-term assets. But usually not for UBI, but for retirements (e.g. Denmark). >If the market can magically let everyone with enough money invested in their youth retire happily then it follows that letting the government own all the stocks and issue UBI would result in roughly the same outcome. Generally the idea of not having to work at all is still heavily controversial within science. Some believe in UBI, some in job-guarantees and others just in relatively high minimum wage and very strong retirement plans.

benlivengood 6y ago
> Tax revenue is not 'profit' by the state. That's not how tax nor money issuing works. But to the topic at hand: There are countries that put money into investment funds that will invest into infrastructure and safe long-term assets. But usually not for UBI, but for retirements (e.g. Denmark). Then ignore taxes and make the ultimate trade on margin; issue T-bills to directly invest the cash. Same effect. Does the imagined collateral backing T-bills even change? It's just based on the assumption that the fed keeps money working properly and has some source of income, right? The threat of inflation rises but only for the same causes as general inflation; recessions and depressions. The ability to directly dump treasury proceeds into index funds would probably have more of a stabilizing effect on inflation than anything. > Generally the idea of not having to work at all is still heavily controversial within science. Some believe in UBI, some in job-guarantees and others just in relatively high minimum wage and very strong retirement plans. 10% growth long term with an inflation target of 2% is exactly the promise of not having to work at some point in the future. The aim is obstensibly retirement but it's pretty clear that if you keep working a little longer the return on investment keeps growing and will be enough to cover not only ones-self but any kids and their kids, etc. Basically I'm calling bullshit on the advice that long term investments are a good use for most individuals' money by contradiction. An assumption of long-term growth is not realistic because either: * The economy needs a working class that can never invest enough money to live off interest and will enforce this with rent seeking, glass ceilings, rampant consumerism, outsourcing, inflation, etc. * The economy will periodically crash and wipe out enough wealth that people have to work again. Full automation is a possibility in my lifetime, but unlikely. It certainly wasn't expected anytime before ~1950 when the advice was still "invest long term".
- teraku 6y ago
  > Then ignore taxes and make the ultimate trade on margin; issue T-bills to directly invest the cash. Same effect. [...] The ability to directly dump treasury proceeds into index funds would probably have more of a stabilizing effect on inflation than anything. I vehemently disagree. Cash is issued by the central bank. If you put it directly into "assets", then the working class would have no money. It needs to flow through all participants of the economy. At each stage some of it is "saved" by the participant and "lost" by the state until eventually the remainder is supposed to flow back to the state via tax (The reason inequality rises so much nowadays is that most money just stops at Jeff Bezos). > 10% growth long term with an inflation target of 2% is exactly the promise of not having to work at some point in the future. Not sure who promises 10% growth long-term, but 4-6% is possible. First of all, let's take retirement funds out of the equation. Basically, guaranteed payments in your retired stage of life, but in most countries quite low. Now if we assume a long-term growth of ~5% hitting a retirement point is basically a break even of savings+interest versus spend. If you save 50% of the money you make (after taxes), the break even is around 17 years of working [0]. Keep in mind this is very simplified, but at the same time very doable. In fact the whole FIRE movement is behind this and they built a calculator for it [1]. So why don't more people do it? Because you'd have to save a significant amount of your after taxes money (and discipline/frugality) to do so. Most people don't have that. Here in Germany the median after taxes income is 23515€ [2]. If you live in the city, almost half of that is already eaten by rent alone. Then comes food, cloths, transportation, and so on. Which brings me to one of the main drivers for inflation: Rent. At least in the last 20 or so years, inflation has slowed down strongly. The fed and ECB are trying to hit a 2% and 1,8% inflation goal, respectively, and although they print tons of money, they usually undershoot. The only thing really driving inflation is increased rent cost (and other luxury goods which normal consumers don't care about). Everything else pretty much stays the same or goes down nowadays. In essence inflation only occurs when you have too little goods and services for the amount of money in the economy. But since most money, although not flowing back to the state, is stuck with the rich people, the amount of money in average Joe's household doesn't change too much and the buying power stays apprx. the same. That means when investing you have to worry about inflation, but not as much if you consider it for retirement and plan on owning our own house. Especially since inflation is also one of the main drivers for market growth (in monetary value) since the market consists of companies that own infrastructure and assets, thus being valued higher. > The economy will periodically crash and wipe out enough wealth that people have to work again. This only becomes a problem if you need large sums of cash during your withdraw phase or if the crash is sustained over a longer period. Bear markets recover fast (historically). > Full automation is a possibility in my lifetime, but unlikely. It certainly wasn't expected anytime before ~1950 when the advice was still "invest long term". I totally agree with you. But as a Marxist, I feel his most important teaching was that even though we know the goal and we know it's possible, and we know the current state can't continue, we can't just declare an utopia now and tell everybody to suck it and live by it. We need to get there step-by-step. I'm trying to find a nice note to end on, because I agree with your sentiment, I just don't think "we are ready yet", as stupid as that sounds. Let me just say this: I'm not entirely sure if I want a society that does not work at all, it would be nice to know you don't have to work. But I'd already be a million times happier if I only had to work 3 days of the week and be done with it, or have much higher wages, because I'd focus much more on what I really love. But that's just me. [0] - https://www.mrmoneymustache.com/wp-content/uploads/2012/01/mmm-early-retirement-savings-rate.png https://www.mrmoneymustache.com/wp-content/uploads/2012/01/m... [1] - https://networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=25200&annualPct=5&withdrawalRate=4 https://networthify.com/calculator/earlyretirement?income=70... [2] - https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Einkommen-Konsum-Lebensbedingungen/Lebensbedingungen-Armutsgefaehrdung/Tabellen/einkommensverteilung-silc.html https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Einkom...

imwillofficial 6y ago

Because problems don’t change at scale?

Aunche 6y ago

> Churn for ~50 years and start paying UBI from the massive profits. So after 50 years... you basically end up with a corporate tax?

imtringued 6y ago

You could just give them jobs. It would be far more realistic and the government can derive value from the work so everyone wins.