4 ms·

We are going on over two decades of almost continuous quantitative easing, starting with Greenspan after the dot-com burst, going nuclear under Paulson/Bernanke

by bshipp 5y ago

We are going on over two decades of almost continuous quantitative easing, starting with Greenspan after the dot-com burst, going nuclear under Paulson/Bernanke in 2008/9, and then continuing to increase over the past decade and a half. I don't know what this market is but I have no confidence that the past 50 years of growth can be sustained in this environment. We're already seeing the impact of cheap money everywhere, with an economy built on continuously increasing asset valuations. It's come to such a point that even the slightest economic contraction must be avoided or it risks triggering the same collapse that was avoided by the narrowest of margins in 2008. I don't want to be pessimistic. I want to be optimistic. I'm just running out of ideas for which rabbit can be pulled out of a hat to keep this charade going for another 20 years.

candiddevmike 5y ago
I agree, but I'm not optimistic at all. Mostly because we're seeing these issues without even trying to tackle the real elephant in the room: climate change. Carbon taxes, real costs of energy... So many negative externalities that don't show up on a companies quarterly report but will eventually (hopefully).
- bshipp 5y ago
  > Without even trying to tackle the real elephant in the room: climate change. I've never been a climate change denier but I had secretly hoped it would occur slow enough that our economy could possibly adjust for it, over time. Judging by the weather chaos we've already started to see over the past few years it seems like an impossible dream now. Our economy is predicated on a certain amount of climatic stability over time. a sort of "bounded expected risk". The more investment you have to make into risk mitigation the less you have to invest in productive pursuits. We will be stuck treading water, if we're even lucky, instead of swimming forward.
  - nitrogen 5y ago
    There's still room for innovation in rapid-fire, affordable mitigations for extreme weather. Like levee-in-a-box, bridge-in-a-box, deployable temporary sea walls, etc. Also room to innovate in techniques for detecting and mitigating vulnerable conditions, e.g. land slide risks.
    - gammarator 5y ago
      Those are still new costs, though.
- ttunguz 5y ago
  I'm hopeful that the capital markets will incentivize entrepreneurs to fix this problem much more quickly than most people anticipate
  - bshipp 5y ago
    The issue is, honestly, the free-rider effect. It's too difficult for an entrepreneur to get paid unless they resolve a specific problem in such a way that they can demonstrate value to a customer. The only thing that will generally make money is impact mitigation, because they can sell it to an affected buyer. At least, as a general rule. With government-driven carbon reduction requirements feeding into a trading market it might get to the point that there's enough money to warrant huge investments in sequestration. But I'm not optimistic that capitalism-driven countries will want to impose a high enough cost to spur that kind of investment. At least, they haven't up until this point.
ttunguz 5y ago
The US stock market represents something like 60% of all stock market value, but the US GDP is only 25% of all global GDP. If you are long to stock market, you have to believe that this kind of disproportionate behavior continues because there's a lot of confidence in the US markets and the dollar.
- dragonwriter 5y ago
  > If you are long to stock market, you have to believe that this kind of disproportionate behavior continues because there's a lot of confidence in the US markets and the dollar. Or, the structure of international capitalism means firms in the core extract value from the peripheries. The US stock market isn't “stocks of firms tied only to their operations in the US”.
  - ttunguz 5y ago
    There's a really good article on this from Lynn Alden that I will paste here that talks about how this dynamic actually implies that the US is selling its long-term capital assets in favor of short-term capital goods that depreciate, so it's actually a negative for the US. https://www.lynalden.com/january-2022-newsletter/ https://www.lynalden.com/january-2022-newsletter/
- candiddevmike 5y ago
  How much of that is represented by tech giants? I personally think the US economy is starting to revolve around them too much, to the point where the economy serves their interests, not ours. They're "too much of an inconvenience to fail", they've tied every one of us to their success either through the free/cheap services they offer or their outsized influence on our retirement.
  - bshipp 5y ago
    I remember that song from 2008. I'm still very bitter about it. Fine, be too big to fail. But why do they get treated any differently than a small bank in Kansas that gets upside-down and needs the FDIC to roll in and take it over? As far as I'm concerned, too big to fail means nationalized and broken up until they are small enough to not pose a threat to the entire economy. When nationalized because they are on the brink of failure, investors get shoved to the back of the line after all other claimants and wiped out. I mean, this model has served capitalism well for eons. Why are the self-proclaimed captains of capitalism, Wall Street, the ones who get a free pass to stay in business? Now I'm all angry again.
azth 5y ago
Switching to a usury free economic system is a start.
- satellite2 5y ago
  Free money! Yay
  - azth 5y ago
    That's a straw man. Because money would only be lent for charity, people will actually engage in proper non parasitic financial transactions for business.

by bshipp 5y ago

candiddevmike 5y ago

I agree, but I'm not optimistic at all. Mostly because we're seeing these issues without even trying to tackle the real elephant in the room: climate change. Carbon taxes, real costs of energy... So many negative externalities that don't show up on a companies quarterly report but will eventually (hopefully).

bshipp 5y ago
> Without even trying to tackle the real elephant in the room: climate change. I've never been a climate change denier but I had secretly hoped it would occur slow enough that our economy could possibly adjust for it, over time. Judging by the weather chaos we've already started to see over the past few years it seems like an impossible dream now. Our economy is predicated on a certain amount of climatic stability over time. a sort of "bounded expected risk". The more investment you have to make into risk mitigation the less you have to invest in productive pursuits. We will be stuck treading water, if we're even lucky, instead of swimming forward.
- nitrogen 5y ago
  There's still room for innovation in rapid-fire, affordable mitigations for extreme weather. Like levee-in-a-box, bridge-in-a-box, deployable temporary sea walls, etc. Also room to innovate in techniques for detecting and mitigating vulnerable conditions, e.g. land slide risks.
  - gammarator 5y ago
    Those are still new costs, though.
ttunguz 5y ago
I'm hopeful that the capital markets will incentivize entrepreneurs to fix this problem much more quickly than most people anticipate
- bshipp 5y ago
  The issue is, honestly, the free-rider effect. It's too difficult for an entrepreneur to get paid unless they resolve a specific problem in such a way that they can demonstrate value to a customer. The only thing that will generally make money is impact mitigation, because they can sell it to an affected buyer. At least, as a general rule. With government-driven carbon reduction requirements feeding into a trading market it might get to the point that there's enough money to warrant huge investments in sequestration. But I'm not optimistic that capitalism-driven countries will want to impose a high enough cost to spur that kind of investment. At least, they haven't up until this point.

ttunguz 5y ago

The US stock market represents something like 60% of all stock market value, but the US GDP is only 25% of all global GDP. If you are long to stock market, you have to believe that this kind of disproportionate behavior continues because there's a lot of confidence in the US markets and the dollar.

dragonwriter 5y ago
> If you are long to stock market, you have to believe that this kind of disproportionate behavior continues because there's a lot of confidence in the US markets and the dollar. Or, the structure of international capitalism means firms in the core extract value from the peripheries. The US stock market isn't “stocks of firms tied only to their operations in the US”.
- ttunguz 5y ago
  There's a really good article on this from Lynn Alden that I will paste here that talks about how this dynamic actually implies that the US is selling its long-term capital assets in favor of short-term capital goods that depreciate, so it's actually a negative for the US. https://www.lynalden.com/january-2022-newsletter/ https://www.lynalden.com/january-2022-newsletter/
candiddevmike 5y ago
How much of that is represented by tech giants? I personally think the US economy is starting to revolve around them too much, to the point where the economy serves their interests, not ours. They're "too much of an inconvenience to fail", they've tied every one of us to their success either through the free/cheap services they offer or their outsized influence on our retirement.
- bshipp 5y ago
  I remember that song from 2008. I'm still very bitter about it. Fine, be too big to fail. But why do they get treated any differently than a small bank in Kansas that gets upside-down and needs the FDIC to roll in and take it over? As far as I'm concerned, too big to fail means nationalized and broken up until they are small enough to not pose a threat to the entire economy. When nationalized because they are on the brink of failure, investors get shoved to the back of the line after all other claimants and wiped out. I mean, this model has served capitalism well for eons. Why are the self-proclaimed captains of capitalism, Wall Street, the ones who get a free pass to stay in business? Now I'm all angry again.

azth 5y ago

Switching to a usury free economic system is a start.

satellite2 5y ago
Free money! Yay
- azth 5y ago
  That's a straw man. Because money would only be lent for charity, people will actually engage in proper non parasitic financial transactions for business.