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If someone is consistently profitable/market making/etc., then they are making the market less volatile than it would be if it consisted solely of retail gamble

If someone is consistently profitable/market making/etc., then they are making the market less volatile than it would be if it consisted solely of retail gamblers like those described in the article. But the same can be said of popular stocks, which are actually more volatile than the most liquid cryptos nowadays (GME, AMC, etc.). The problem, to me, isn't that people are allowed to invest their money freely in digital markets (regardless of asset). The problem is that so much money has been injected into assets that people feel (correctly) that they are falling behind if they don't try to play the game. The hidden inflation tax really harms people who lack a high degree of financial literacy or who lack the discipline required to make balanced, long term investments (i.e. a vast majority of people). For most of human history, saving was the key to building upper middle class wealth. Now, good luck with that as M2 grows by 20+% in a year and CD's are paying record low interest rates.

lottin 5y ago
An inflation rate of ~2% doesn't really harm anyone, especially not the lower end of the socio-economic spectrum. I think the problem is rather the fact that many people have unrealistic expectations. If the economy is growing at a rate of 1% annually, meaning the entire wealth produced in the country during a whole year grows by 1%, why do people think that their personal wealth should grow by 10%, 20%, 30% or more? It's not gonna happen.
- lend000 5y ago
  SPX grows 8% a year (6% when adjusted for GDP growth), US real estate increases 3.8%, and bank interest rates pay FAR less than even "reported" CPI, which is a joke of a metric almost entirely weighted by oil prices, which are not determined by a free market [0]. And that's before the insane levels of money printing and spending we've seen this year, which show no signs of being undone, even as the country opens back up. Inflation isn't 2%. People like you lose a lot of relative wealth to the "smart money" by thinking that's true, and it isn't fair to have a system that exponentially benefits financially smarter investors (an inflationary environment). Barring an improbable windfall or significant income growth, a responsible, hardworking person can't meaningfully improve their financial situation by saving all their money in the bank, which is a sad reality. Asset inflation benefits the wealthy, while bear markets improve wealth inequality, and printing money and QE reduces the corrective measure to wealth inequality to instead reduce the short term pain [1]. Consumer inflation is a tossup. [0] https://www.usinflationcalculator.com/gasoline-prices-adjusted-for-inflation/ https://www.usinflationcalculator.com/gasoline-prices-adjust... [1] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:1989.3,2020.4;quarter:125;series:Net%20worth;demographic:networth;population:1;units:levels https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
  - lottin 5y ago
    > Inflation isn't 2% Okay, then what is it? Obviously you have taken the trouble to measure inflation because you know it's not 2%. So tell us, what is the inflation rate? And show us your calculations please.
    - lend000 5y ago
      Here's a good approximation [0]. Didn't mean to insult your intelligence. That's just consumer inflation, by the way. Asset inflation is a different beast that is better measured in terms of wealth inequality. I'd recommend you digest the links in my original post if you're interested in the topic. [0] https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/

lottin 5y ago

An inflation rate of ~2% doesn't really harm anyone, especially not the lower end of the socio-economic spectrum. I think the problem is rather the fact that many people have unrealistic expectations. If the economy is growing at a rate of 1% annually, meaning the entire wealth produced in the country during a whole year grows by 1%, why do people think that their personal wealth should grow by 10%, 20%, 30% or more? It's not gonna happen.

lend000 5y ago
SPX grows 8% a year (6% when adjusted for GDP growth), US real estate increases 3.8%, and bank interest rates pay FAR less than even "reported" CPI, which is a joke of a metric almost entirely weighted by oil prices, which are not determined by a free market [0]. And that's before the insane levels of money printing and spending we've seen this year, which show no signs of being undone, even as the country opens back up. Inflation isn't 2%. People like you lose a lot of relative wealth to the "smart money" by thinking that's true, and it isn't fair to have a system that exponentially benefits financially smarter investors (an inflationary environment). Barring an improbable windfall or significant income growth, a responsible, hardworking person can't meaningfully improve their financial situation by saving all their money in the bank, which is a sad reality. Asset inflation benefits the wealthy, while bear markets improve wealth inequality, and printing money and QE reduces the corrective measure to wealth inequality to instead reduce the short term pain [1]. Consumer inflation is a tossup. [0] https://www.usinflationcalculator.com/gasoline-prices-adjusted-for-inflation/ https://www.usinflationcalculator.com/gasoline-prices-adjust... [1] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:1989.3,2020.4;quarter:125;series:Net%20worth;demographic:networth;population:1;units:levels https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...
- lottin 5y ago
  > Inflation isn't 2% Okay, then what is it? Obviously you have taken the trouble to measure inflation because you know it's not 2%. So tell us, what is the inflation rate? And show us your calculations please.
  - lend000 5y ago
    Here's a good approximation [0]. Didn't mean to insult your intelligence. That's just consumer inflation, by the way. Asset inflation is a different beast that is better measured in terms of wealth inequality. I'd recommend you digest the links in my original post if you're interested in the topic. [0] https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/