8 ms·
This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that a
by enraged_camel 5y ago
This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. I find it deeply concerning that every warning sign is summarily dismissed as "transitory" and the government and the Fed continue to drive full speed ahead.
- babaganoosh89 5y agoThat's what 0% interest rates are like. Limitless amounts of money as long as the economy has enough confidence to use it.
- sschueller 5y agoYet I can't get a 0% interest load anywhere. How does this benefit anyone other than large institutions?
- adammunich 5y agoNow you know what OP meant by “fake”
- deleted 5y ago[deleted]
- xxpor 5y agoNo, but you can get a ~3.5% 30 year fixed mortgage for the same reason.
- iso1631 5y agoAnd if the inflation hawks are right, that's a great deal - the capital you owe, and the interest you need to pay, will vanish within a couple of years and you'll still own the house. Banks clearly don't think there's much risk of long term high inflation.
- new_realist 5y agoThe bankers are not the ultimate buyers of mortgage bonds. The Fed is. So, these low interest rates are not a predictor of lack of inflation, but a reflection of policy. The government is taking this risk.
- sschueller 5y ago"The government is taking this risk" meaning the Tax payer. Which is you and me but not people like Bezos or Musk.
- xxpor 5y agoThat's not how a sovereign budget works.
- conanbatt 5y agoIf inflation goes up and ratings go up, mortgages get expensive, and then housing more unaffordable. Your debt is liquified but your house value also goes into the crapper.
- new_realist 5y agoOver 30 years, though, your salary will go up with inflation, but your fixed rate mortgage payments will not.
- conanbatt 5y agoAnd what happens to the 30% house value down at 5x leverage?
- NegativeLatency 5y agoBanks have overhead, and want to turn a profit. Also “the system” isn’t setup to be nice to you.
- post_break 5y agoI got 0% on a $5,000 line of credit recently. Refinanced my house at 2.5%, etc.
- deleted 5y ago[deleted]
- thesagan 5y agoAlthough you're being downvoted, this is a growing sentiment among researchers and others near the field. There are calls to improve measurements of a society's wealth, as well as individual. Current headlines use the broad statistics, such as the most exclusive unemployment stats, that don't really capture what's happening on Main Street. The reporting on the economy barely pokes at issues and are generally just looking for general correlations, such as "Stocks do X as Y does that," or "GDP is doing X while Y is doing Z."
- iudqnolq 5y ago> Current headlines use the broad statistics, such as the most exclusive unemployment stats, that don't really capture what's happening on Main Street. You probably know this, but just to clarify economics has many more complicated statistics than those that make it into newspaper headlines. For example, the "unemployment number" is technically U1. U2, U3, U4, etc. capture different nuances.
- thesagan 5y agoYep, that's exactly what I was hinting at.
- znt 5y agoIt is fake. The thing is is your average American would never even consider the ultimate possibility of a foundational collapse of their economy and currency. And it's not just the average American. Nearly all hedge funds etc have USD as their basis. Bitcoin, Gold, Stocks, real estate etc has a value tag that's denominated in Dollars. You open up your portfolio and be happy when the USD value goes up in a nice green color. But what happens when USD gets diluted and debased so much that it's not possible to stop anymore. Are we not past point of no return already? Debasement of currency marked the end of the Roman empire, why would American empire be any different? Because US has nukes? Because they can force the rest of the world to keep using USD at gunpoint? For how long?
- thereare5lights 5y ago> Debasement of currency marked the end of the Roman empire, why would American empire be any different? The fall of the Roman Empire had so many causes that to attribute it to one thing is misleading at best.
- deleted 5y ago[deleted]
- runawaybottle 5y agoLife is relative. Every economy worldwide has been using monetary easing.
- chollida1 5y ago> Nearly all hedge funds etc have USD as their basis. This is false, many have CAD, EUR, and other currencies as their basis. > Bitcoin, Gold, Stocks, real estate etc has a value tag that's denominated in Dollars. This is false as well. You can measure BTC,Gold, stocks or realestate in any currency you want. Do you really think Canadians denominate their real estate in USD? Why would BTC, Gold or stocks be any different. The US denominates BTC, Gold, Stocks and real estate in USD. The reset of hte world uses their own currency.
- csomar 5y ago
- bob33212 5y agoIt is fake in the sense that billions of dollars are being minted by crypto without any real use case other than theoretically fixing the financial system "someday". But fake stuff has always been a big part of the economy. Realtors extract 6% of most real estate transactions, but provide minimal "real" value, for example. The important thing is that inflation isn't running away and also businesses are not shutting down rapidly, causing a cascading effect of more businesses to shutdown and fire even more employees.
- lotsofpulp 5y ago> billions of dollars are being minted by crypto This makes no sense, if only because the US government is the only entity that can “mint” US dollars. More directly, just because the brokerage website says you have $x worth of an asset based on multiplying quantity of the asset times most recent sale price of a unit of that asset, unless you can trade it and deposit the cash into your account, you do not have $x.
- bubbleRefuge 5y agoGood point. I think the financial community has created a false sense of legitimacy for bitcoin by quoting its prices on front pages, displaying performance graphs, etc, as if BTC were as legit as stocks, bonds, and other financial instruments.
- logicalmonster 5y agoNo running away inflation? According to what? CPI? Many people who live in the real world know that CPI is a garbage measure of inflation and life is increasing in price faster than they say. CPI doesn’t even measure the right thing: inflation is a monetary, not a price phenomenon. It’s not things getting more expensive, it’s the value of money growing less. But they don’t publish the m2 money stock charts any more. Wonder why?
- emkemp 5y ago"But they don't publish the m2 money market stock charts anymore. Wonder why?" Because they moved savings deposits into M1. So the old M1 and M2 charts are retired and replaced with M1SL and M2SL.
- throwawaycities 5y agoNot sure why you are down voted, everyone (when it benefits them) takes credit for the “greatest economy the world has ever seen” and “record stock market”, simultaneously they ignore record wage stagnation, record income gaps, record homelessness, record student loan defaults, record debt defaults of nearly every kind, record young people living at home to record high ages…I’d say record high unemployment, to which someone would inevitably point to the unemployment numbers and claim it’s actually record low unemployment, which, to your point highlights the farce and disconnect from reality. The FED is sitting on trillions of taxpayer bailout money from the CARES Act, yet if you took about 1/8th of that money, government could wipe the entire student loan debt, but then you’d hear the media talking point screaming how we can’t afford it.
- adflux 5y agoCancel a debt and you won't immediately see "number go up". Hence probably even less attractive from a political standpoint
- jandrewrogers 5y agoCanceling debt creates a taxable event for the person with the debt under the tax code. Transferring money to a person and then voiding the liability is indistinguishable from unearned income, and is taxed as such. People aren't going to be very happy when they get hit with an unexpected $10k tax bill due immediately. Similarly, the people with the largest student loan debt tend to be affluent. Gifting the affluent more money than a poor person who could not afford school may be able to save in their lifetime is a bad look politically, and would be deeply unfair.
- cwkoss 5y ago> Similarly, the people with the largest student loan debt tend to be affluent. I question this. I'd assume the largest student loan debts are held by the middle class, because the affluent didn't take out loans because they paid for their education with cash.
- 5y ago
- foogazi 5y ago> This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. opinion - feels - seems ? Do you have any sources for your unpopular opinion?
- Geee 5y agoThis is what happens when a central authority is controlling the economy. Everyone should know that free markets can allocate resources better than any central planner, but still somehow those economists think that we need central bank policies to control the whole thing. Central planning might be appeling idea especially for those who benefit from it, and provides unlimited avenues for complex economic theories, but it just doesn't work in the long run.
- j1vms 5y ago> economists think that we need central bank policies to control the whole thing (...) but it just doesn't work in the long run. Roughly speaking, a central authority might work in certain scenarios, for a short time, to prevent situations where market participants might otherwise panic. In the long run, the problem is the same authority does not have to all "local", decision-making information available to the individual market participants, and that might prevent the economy from reaching an optimal configuration.
- bubbleRefuge 5y agoNot a central planned economy. The fed sets interest rates to attempt stabilize the economy in terms of unemployment rates and price stability. The congress spends money in a Keynesian fashion to smooth the business cycle. Other than that, the economy goes where the actors in the economy, the corporations and consumers, want it to go within the rules.
- andrekandre 5y agoEveryone should know that free markets can allocate resources better than any central planner for the most part yes, but market failure is a thing... 1929 being the best example... and what the fed is doing is reacting to trends to prevent the system from tilting out of control, not centrally planning things (when the fed starts making 5-year plans then we can talk)
- Geee 5y agoGreat Depression was caused by the Fed and government policies: https://mises.org/library/great-depression https://mises.org/library/great-depression
- imtringued 5y agoWhen interest rates hit 0% your money is fake and you haven't realized it yet. This isn't the fault of the Fed.
- 8note 5y agoAs long as you can use it to buy things and pay taxes, your money is real.