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The money can find a productive outlet, it’s just that for the last 5 years or so, speculative investments (that weren’t productive) had a much higher rate of r

The money can find a productive outlet, it’s just that for the last 5 years or so, speculative investments (that weren’t productive) had a much higher rate of return. Which is too bad as the productive investments like building a solar power plant really benefitted from the low interest rates that drove the non-productive speculative bubble. non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. But that often only happens when you increase interest rates above that which productive investments like solar power plants often need. And so you get contraction as even the productive investments are starved of funding. Oh well, at least the solar power plant hasn’t lost all its value.

mftb 4y ago
This was a really interesting thread. I see what you guys are talking about all around me, the mis-used liquidity or whatever you want to call it. I don't know anything about finance, so I don't know how to respond to the people, but I feel like saying all the time, "Hey you know someday you're gonna need that money."
ripe 4y ago
> non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. To be precise, the investors who are left holding at the end of the cycle get punished. The early investors who got out make out like robbers. This system incentivizes pump-and-dump.
- kurthr 4y ago
  That is "the market" working for you! We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems. If the market was efficient, we wouldn't be complaining about it. Unfortunately, a "free market" and an efficient market (and you could argue whether infrastructure or medicine or income insurance even make sense as markets) are not the same. Most markets that have many individual consumers require regulation to be even close to efficient. Like political and financial enforcement they are too easy to manipulate and the consequences of malfeasance are substantially less than the profits to be made.
  - Robotbeat 4y ago
    What sucks is that fiscal policy, ie government spending, is also often not very efficient. Even when rampant corruption doesn’t destroy efficiency, crushing bureaucracy or just plain incompetence will. (Is the DMV a model of efficiency?) So you need a smart balance. And you need competent, honest people in both business AND government. I don’t think that government necessarily is inefficient. The DMV could be a very efficient place. The fact that it isn’t should cause at least some pause for those advocating more government spending (such as myself). And the same is true for business. Comcast is terrible. But it doesn’t HAVE to be. Rent-seeking and anti-competitive behavior makes it terrible.
    - joebob42 4y ago
      I think by the time you're saying "my system depends on the people in it being honest and competent" you've kind of already lost. Some people are competent, most aren't. Many people are honest, but some aren't. You aren't going to change that so you have to be resilient to it.
      - Robotbeat 4y ago
        Every system works better with honest and competent people. That’s my point! Some systems are more resilient to dishonesty and incompetence than others. I suspect a mixed system is the most resilient. But we CAN change the behavior by choosing to reward competence and honesty by who we elect, who we hire, and who we do business with.
    - SauciestGNU 4y ago
      People keep using the DMV as an example of government inefficiency, but my state has made it run so painlessly I don't think I've spent more than 15 minutes in an office over the last 5 years. I think government can be efficient if you put technocrats in charge of implementation rather than elected officials who are subject to the electoral whims of the uninformed masses. The problem with the above is it weakens democratic institutions by removing the exercise of power from the people the population select to lead. Inefficiency to me can not possibly be more clearly demonstrated than by ape pictures losing hundreds of thousands of dollars for their purchasers. But we also have examples like Uber spending cash on hand to drive competitors under without having a plan to maintain their own services without heavy subsidy.
- stjohnswarts 4y ago
  Always has been.
- formerkrogemp 4y ago
  We don't need solar, wind, nuclear, hydro, water reclamation, on shore chip foundries, manufacturing, battery chargers, non-crumbling bridges, manufacturing, paved raids, public transit, or working airports. We need more crud apps and adtech! More stock options and stock buybacks!
  - sidpatil 4y ago
    What's wrong with CRUD apps? They may be boring to develop, but they tend to be the most useful. Every single one of those industries uses multiple CRUD apps in the course of their business operations. The database is one of the most important technologies of our civilization.
  - sankumsek 4y ago
    I loved me some paid raids! ;) Snark aside, it is bit disheartening to see all this capital being thrown into handwave-y Web3 verticals.
    - formerkrogemp 4y ago
      > I loved me some paid raids! ;) I used to enjoy MMOs too. I stopped playing and took up gardening of all things :). I'm still not sure what the economic value of web2 is yet, but if you find out I'll attend your showHN.
  - cableshaft 4y ago
    You're being sarcastic, but we probably don't need that stuff either. We're eventually going to run out of resources to make all that at some point (we're already starting to run out of sand[1], which we use in modern cement, for glass, and for the silicon in computer chips, for an example -- and before anyone goes 'deserts are full of sand!' they are, but it's the wrong type to make these things). Probably should start putting some energy into getting ready for pre-industrial age living again. [1]: https://www.bbc.com/future/article/20191108-why-the-world-is-running-out-of-sand https://www.bbc.com/future/article/20191108-why-the-world-is...
    - 4y ago
JacobThreeThree 4y ago
Central bank intervention herded all investors into equities which obviously contributed to the post-2008 bull market, but also distorts price discovery. But hey, at least the Fed hasn't started buying equities too, like the BOJ. https://www.bloomberg.com/news/articles/2020-12-06/boj-becomes-biggest-japan-stock-owner-with-434-billion-hoard https://www.bloomberg.com/news/articles/2020-12-06/boj-becom...
naravara 4y ago
Also, arguably the most socially productive outlets would have been public goods, like major infrastructure investments and public education and health initiatives. But that's evidently politically untenable.
cteiosanu 4y ago
Why can't we have preferential interest rates for certain class of projects (infrastructure, renewables) and those types of projects to be backed/insured by government. Like in some countries the first home loan is is backed by the government.

mftb 4y ago

This was a really interesting thread. I see what you guys are talking about all around me, the mis-used liquidity or whatever you want to call it. I don't know anything about finance, so I don't know how to respond to the people, but I feel like saying all the time, "Hey you know someday you're gonna need that money."

ripe 4y ago

> non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. To be precise, the investors who are left holding at the end of the cycle get punished. The early investors who got out make out like robbers. This system incentivizes pump-and-dump.

kurthr 4y ago
That is "the market" working for you! We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems. If the market was efficient, we wouldn't be complaining about it. Unfortunately, a "free market" and an efficient market (and you could argue whether infrastructure or medicine or income insurance even make sense as markets) are not the same. Most markets that have many individual consumers require regulation to be even close to efficient. Like political and financial enforcement they are too easy to manipulate and the consequences of malfeasance are substantially less than the profits to be made.
- Robotbeat 4y ago
  What sucks is that fiscal policy, ie government spending, is also often not very efficient. Even when rampant corruption doesn’t destroy efficiency, crushing bureaucracy or just plain incompetence will. (Is the DMV a model of efficiency?) So you need a smart balance. And you need competent, honest people in both business AND government. I don’t think that government necessarily is inefficient. The DMV could be a very efficient place. The fact that it isn’t should cause at least some pause for those advocating more government spending (such as myself). And the same is true for business. Comcast is terrible. But it doesn’t HAVE to be. Rent-seeking and anti-competitive behavior makes it terrible.
  - joebob42 4y ago
    I think by the time you're saying "my system depends on the people in it being honest and competent" you've kind of already lost. Some people are competent, most aren't. Many people are honest, but some aren't. You aren't going to change that so you have to be resilient to it.
    - Robotbeat 4y ago
      Every system works better with honest and competent people. That’s my point! Some systems are more resilient to dishonesty and incompetence than others. I suspect a mixed system is the most resilient. But we CAN change the behavior by choosing to reward competence and honesty by who we elect, who we hire, and who we do business with.
  - SauciestGNU 4y ago
    People keep using the DMV as an example of government inefficiency, but my state has made it run so painlessly I don't think I've spent more than 15 minutes in an office over the last 5 years. I think government can be efficient if you put technocrats in charge of implementation rather than elected officials who are subject to the electoral whims of the uninformed masses. The problem with the above is it weakens democratic institutions by removing the exercise of power from the people the population select to lead. Inefficiency to me can not possibly be more clearly demonstrated than by ape pictures losing hundreds of thousands of dollars for their purchasers. But we also have examples like Uber spending cash on hand to drive competitors under without having a plan to maintain their own services without heavy subsidy.
stjohnswarts 4y ago
Always has been.
formerkrogemp 4y ago
We don't need solar, wind, nuclear, hydro, water reclamation, on shore chip foundries, manufacturing, battery chargers, non-crumbling bridges, manufacturing, paved raids, public transit, or working airports. We need more crud apps and adtech! More stock options and stock buybacks!
- sidpatil 4y ago
  What's wrong with CRUD apps? They may be boring to develop, but they tend to be the most useful. Every single one of those industries uses multiple CRUD apps in the course of their business operations. The database is one of the most important technologies of our civilization.
- sankumsek 4y ago
  I loved me some paid raids! ;) Snark aside, it is bit disheartening to see all this capital being thrown into handwave-y Web3 verticals.
  - formerkrogemp 4y ago
    > I loved me some paid raids! ;) I used to enjoy MMOs too. I stopped playing and took up gardening of all things :). I'm still not sure what the economic value of web2 is yet, but if you find out I'll attend your showHN.
- cableshaft 4y ago
  You're being sarcastic, but we probably don't need that stuff either. We're eventually going to run out of resources to make all that at some point (we're already starting to run out of sand[1], which we use in modern cement, for glass, and for the silicon in computer chips, for an example -- and before anyone goes 'deserts are full of sand!' they are, but it's the wrong type to make these things). Probably should start putting some energy into getting ready for pre-industrial age living again. [1]: https://www.bbc.com/future/article/20191108-why-the-world-is-running-out-of-sand https://www.bbc.com/future/article/20191108-why-the-world-is...
  - 4y ago

JacobThreeThree 4y ago

Central bank intervention herded all investors into equities which obviously contributed to the post-2008 bull market, but also distorts price discovery. But hey, at least the Fed hasn't started buying equities too, like the BOJ. https://www.bloomberg.com/news/articles/2020-12-06/boj-becomes-biggest-japan-stock-owner-with-434-billion-hoard https://www.bloomberg.com/news/articles/2020-12-06/boj-becom...

naravara 4y ago

Also, arguably the most socially productive outlets would have been public goods, like major infrastructure investments and public education and health initiatives. But that's evidently politically untenable.

cteiosanu 4y ago

Why can't we have preferential interest rates for certain class of projects (infrastructure, renewables) and those types of projects to be backed/insured by government. Like in some countries the first home loan is is backed by the government.