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I think the interesting part about "capital returns" in the past year, is that they're almost all on paper. There's relatively little actual wealth being trans

I think the interesting part about "capital returns" in the past year, is that they're almost all on paper. There's relatively little actual wealth being transferred. Almost nobody is actually realizing returns by pulling money out of the market, because there's nothing meaningful to spend the money on in 2020. Even the people pulling money out to buy a house, are mostly buying reasonably sized homes at inflated prices. Or to pay inflated education costs, which people without such large nominal wealth often wouldn't pay in the first place (or have forgiven via IDR etc). Obviously each of the new tech millionaires with 50+% gains COULD cash out and buy, I dunno, a semi-truck full of flatscreen TVs. But they won't. And if any meaningful % of them did, the paper gains would evaporate in a heartbeat. So I dunno. There's a lot of fake gains showing up in bank accounts, but I'm unconvinced that meaningful wealth accumulation has happened, or that most millionaires are actually converting that wealth into a higher standard of living. I think society is in a holding pattern, with inflated capital investment prices for lack of anything better to spend money on.

fullshark 6y ago
IDK the stock market has millions of sales every day, nearby homes are bought and sold every month. The asset appreciation seems genuine to me. Maybe people didn't consume as much in the past year cause of COVID and that money pumped up the asset prices a bit more than usual but it's not like things are totally detached from the laws of supply/demand.
spaced-out 6y ago
>There's a lot of fake gains showing up in bank accounts Being able to afford a house, or giving your kids a start in life without having any student load debt to pay off are definitely not "fake" gains. >reasonably sized homes at inflated prices How do you know they're inflated? Maybe that's just how much homes in economically productive areas are going to cost from now on. >Obviously each of the new tech millionaires with 50+% gains COULD cash out and buy, I dunno, a semi-truck full of flatscreen TVs. The ones that have sense will buy multiple homes, take exotic vacations, and retire early.
- jbay808 6y ago
  > How do you know they're inflated? Maybe that's just how much homes in economically productive areas are going to cost from now on. My understanding of GP's thesis is that they're inflated because the homes, and even their surrounding neighbourhoods and infrastructure, actually haven't changed meaningfully while the price went way up.
  - bpodgursky 6y ago
    Yes
mrfox321 6y ago
I would argue the gains are "fake" if the inflation of spending of the investor class tracks the market. In other words, we see inflation in private school tuition, homes, etc, that is correlated with this bull market.
- harambae 6y ago
  That's it exactly - the hamster wheel of this whole thing. I've made more money than I expected as a programmer and gotten better investing returns too. And yet the prices of homes keeps going up and inflation in other areas is almost certainly going to follow as monetary velocity is increasing. I've never been a gold bug, but I get pushed a little further in that direction each day.
throw0101a 6y ago
> Almost nobody is actually realizing returns by pulling money out of the market, because there's nothing meaningful to spend the money on in 2020. After a certain point, how much money can one meaningful spend in general? From @aninhumer: > If we suppose that the goal of society is to produce the greatest utility, and that the utility wealth provides an individual is sub-linear (i.e. twice as much money makes you less than twice as happy), then inequality is inefficient resource allocation. * https://news.ycombinator.com/item?id=14505342 https://news.ycombinator.com/item?id=14505342 I think that's partly why we're getting more concentrated wealth generally: the folks at the top had a lot, but they can't spend it all, and so they let it ride and so it compounds.

fullshark 6y ago

IDK the stock market has millions of sales every day, nearby homes are bought and sold every month. The asset appreciation seems genuine to me. Maybe people didn't consume as much in the past year cause of COVID and that money pumped up the asset prices a bit more than usual but it's not like things are totally detached from the laws of supply/demand.

spaced-out 6y ago

>There's a lot of fake gains showing up in bank accounts Being able to afford a house, or giving your kids a start in life without having any student load debt to pay off are definitely not "fake" gains. >reasonably sized homes at inflated prices How do you know they're inflated? Maybe that's just how much homes in economically productive areas are going to cost from now on. >Obviously each of the new tech millionaires with 50+% gains COULD cash out and buy, I dunno, a semi-truck full of flatscreen TVs. The ones that have sense will buy multiple homes, take exotic vacations, and retire early.

jbay808 6y ago
> How do you know they're inflated? Maybe that's just how much homes in economically productive areas are going to cost from now on. My understanding of GP's thesis is that they're inflated because the homes, and even their surrounding neighbourhoods and infrastructure, actually haven't changed meaningfully while the price went way up.
- bpodgursky 6y ago
  Yes

mrfox321 6y ago

I would argue the gains are "fake" if the inflation of spending of the investor class tracks the market. In other words, we see inflation in private school tuition, homes, etc, that is correlated with this bull market.

harambae 6y ago
That's it exactly - the hamster wheel of this whole thing. I've made more money than I expected as a programmer and gotten better investing returns too. And yet the prices of homes keeps going up and inflation in other areas is almost certainly going to follow as monetary velocity is increasing. I've never been a gold bug, but I get pushed a little further in that direction each day.

throw0101a 6y ago

> Almost nobody is actually realizing returns by pulling money out of the market, because there's nothing meaningful to spend the money on in 2020. After a certain point, how much money can one meaningful spend in general? From @aninhumer: > If we suppose that the goal of society is to produce the greatest utility, and that the utility wealth provides an individual is sub-linear (i.e. twice as much money makes you less than twice as happy), then inequality is inefficient resource allocation. * https://news.ycombinator.com/item?id=14505342 https://news.ycombinator.com/item?id=14505342 I think that's partly why we're getting more concentrated wealth generally: the folks at the top had a lot, but they can't spend it all, and so they let it ride and so it compounds.