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Economic Pessimism Growing in U.S.

91 points by harambae 4y ago

fdgsdfogijq 4y ago
Assets grow faster than wages. Thats all you need to know. Either create your own assets (entrepreneurship), put all your money into leveraged! assets (stocks, housing), or prepare to live as a wage slave. This includes highly paid tech employees, you cant escape it. The monetary system works by debasing wages, a secret tax that keeps you working year after year
- throwaway_1928 4y ago
  And assets taxed much lower too, a double whammy.
- FpUser 4y ago
  And politicians never forget to vote themselves salary increase to correct for inflation while saying to us that moderate inflation is good.
  - onlyrealcuzzo 4y ago
    > And politicians never forget to vote themselves salary increase to correct for inflation while saying to us that moderate inflation is good. I dunno about you, but I'm pretty glad that congress doesn't vote on my wage.
    - FpUser 4y ago
      Me neither because I pay myself. But if I were an employee I would not mine my base automatically indexed to inflation. This of course will wreak havoc in the whole system.
  - themitigating 4y ago
    The last pay increase in the senate was in 2008.
    - FpUser 4y ago
      Not talking about the US,
      - caenorst 4y ago
        This post is titled "Economic Pessimism Growing in U.S."...
- onlyrealcuzzo 4y ago
  > Assets grow faster than wages. There is nothing new here. In boom years, they always do. In bust years, they come back down to earth. > Either create your own assets (entrepreneurship), put all your money into leveraged! assets (stocks, housing), or prepare to live as a wage slave. There is also not much new here either, sadly. There was a brief time - pretty unique to the US - between WW2 and early 90s where things were different. This is pretty unique globally, and to the US.
  - fdgsdfogijq 4y ago
    Whats new is how drastic it is. Its not a joke, you need to invest with leverage or all the time you spend working will be for nothing. And you need big leverage.
    - uejfiweun 4y ago
      Could you explain what exactly you mean by "leverage" in this context? Does this just mean take out loans? I feel like interest payments really screw you on most loans.
      - fny 4y ago
        Something to this effect. Use borrowed money to buy more assets. In reality, this is terrible advice if you can't service the interest. It's a scheme that worked in a low rate environment, but likely will no longer be viable.
      - ddorian43 4y ago
        See /r/Letfs and /r/trueHFEA as examples
      - adamsmith143 4y ago
        Some stock brokerages literally let you trade with a multiple of the actual cash you have deposited. E.g. you have $10,000 in a brokerage account with Fidelity and you apply for margin and they let you trade with $100,000 that you can then invest as you see fit. You multiply your possible returns but also your possible losses. If your losses become large enough you can get Margin Called and be forced to repay all of your losses at once. So if you lost all the 100K they gave you, you are now on the hook for those losses.
- ChuckNorris89 4y ago
  >Assets grow faster than wages. How long will this continue though? This can't be sustainable forever. At one point, you won't have any money to buy any assets if your wages are barely covering your food and shelter, and so we'll go back to feudalism where only those few with inherited wealth owned assets and everyone else was a slave for life.
  - mempko 4y ago
    All the important stuff is already owned by the few. It will just get worse. Eventually will lead to a revolution. That's the end game if it keeps going. There needs to be a jubilee and a 'new new' deal to prevent it. However, people in the USA have to acknowledge they are in an empire that's declining. There will be a lot of pain. Look at the British for what that looks like.
    - nightski 4y ago
      I don't feel like that is accurate at all. The most valuable assets by far are successful companies. While it is true that they are owned in large part by a "few" (relative to the total population), that few changes often. We've seen massive changes in wealth in just the past decade alone, particularly in tech.
      - jjoonathan 4y ago
        Yeah, but the systematic problems come from the shape of the pyramid not the identity of the people at the top, so churning them doesn't help.
      - spiralx 4y ago
        The most valuable assets by far - accounting for over half of all wealth - are land in highly desirable locations, because both individuals and companies have to pay rent while the landlord pays basically nothing in upkeep in perpetuity while only facing the unlikely risk that rents might drop to zero if the land becomes undesirable - not very likely if you own part of downtown New York, London or any major city.
- lioeters 4y ago
  ..Almost as if there's an interest in keeping a permanent underclass of "wage slaves".
  - colpabar 4y ago
    Easy with the conspiracy theories! We all know the rich and powerful don't ever work together to accomplish things in secret.
    - aksss 4y ago
      Easy with the sarcasm! We all know the readers and posters don’t always handle it gracefully.
    - ChuckNorris89 4y ago
      Not really in secret, they do it every year at Davos, Switzerland, but it's not public either.
    - yxwvut 4y ago
      Sarcasm aside, there doesn't need to be a conspiracy for a privileged group, acting as individuals, to want to discourage changes that would upset their advantaged position in the status quo (and to use their privileged position to maintain it). They don't need to relish the suffering of others so much as maintain the indifference required to justify their own self-preservation. Virtually every member of the uber-rich buys into the gospel of the benefits of inequality and the necessity of a poor underclass, and votes and lobbies accordingly.
  - eloff 4y ago
    If you didn't do that, who'd pay the taxes or cut your hair?
  - lkxijlewlf 4y ago
    There is: https://www.wsj.com/livecoverage/federal-reserve-meeting-inflation-march-2022/card/powell-says-fed-would-like-to-see-wage-increases-slow-mNOCiu0gOrEGdEk0ZsP4 https://www.wsj.com/livecoverage/federal-reserve-meeting-inf...
- ClumsyPilot 4y ago
  So the econony is promoting unproductive HODL over productive contribution to the real economy
  - mixedCase 4y ago
    HODL is a delayed investment. When the government steals from your cash savings, you merely save somewhere else, but the purpose is the same.
- PragmaticPulp 4y ago
  > put all your money into leveraged! assets (stocks, housing), Spoken like someone who has only operated in the recent bull market. Using a mortgage to buy a reasonable house that you can afford is a good idea. Using leverage to buy as much real estate and/or stocks as you can get away with is a terrible idea with some significant downside risk. Leveraged stock purchases are notorious for working great until the market turns and blows up your account. Even leveraged funds have significant slippage that isn’t obvious to the casual investor who thinks they’re just going to get a clean 2X return. One of my most poignant memories from the 2008 crash was watching a few people I knew go from feeling like they were financial geniuses to bankrupt and struggling. The common theme among all of them was that they were leveraged to the hilt in real estate. They thought it was easy money when it felt like the market could only go up. Then it stopped going up and we all know what happened next.
  - eloff 4y ago
    If you remember just one thing, it's that no asset class goes up forever. Some assets tend to trend up overtime more than others, but they all have times where they go down too. Make sure you can survive that. People buying homes in places that have only gone up in the last 40 years need to consider that that might keep going up for another decade, or they might be cresting the hill before correcting.
    - fdgsdfogijq 4y ago
      This is how you end up a wage slave
    - lumost 4y ago
      Housing has risen some 40% over the last two years, while this is certainly insane. If the trend continues the downside risk either becomes massive - or a mere 30% correction becomes inconsequential to the principal balance.
      - baskethead 4y ago
        My house almost tripled in 8 years. I made $2 million profit from selling my house last year.
- blackbear_ 4y ago
  > Assets grow faster than wages. This is the central theme of Piketty's "Capital" book, for anybody interested in exploring this further. This is also a good start: https://hbr.org/2014/04/pikettys-capital-in-a-lot-less-than-696-pages https://hbr.org/2014/04/pikettys-capital-in-a-lot-less-than-...
  - guerrilla 4y ago
    Not quite, but close. Piketty's thesis is that the rate of return on investment is higher than the growth rate and that this drives inequality. Asset prices growing faster than wages is a partial explanation for that.
- randbox 4y ago
  The annoying part is that there are many changes which federal & state governments can make to the financial system to ensure wage growth better tracks inflation without sacrificing growth. Such as capping federally backed mortgages at 150% of the labor replacement cost of material fixtures whenever that's lower than the comparable sales price. Or replacing federal payroll and income taxes on earnings under $100,000 with a national excess property tax on property comparable sales values minus 50% of fixture labor replacement costs. Or provide local public banks which appraise excess property values separately from labor replacement costs and spending publicly collected interest payments back into circulation on public works.
  - ryan93 4y ago
    Would just reduce incentive to build
- hahaxdxd123 4y ago
  > The monetary system works by debasing wages, a secret tax that keeps you working year after year No. The monetary system works by encouraging capital to be invested in productive uses by debasing it yearly through inflation. If inflation was 0% or negative, the incentive to risk capital is much much lower. The political system of Western countries favouring asset owners is separate.
  - fdgsdfogijq 4y ago
    Whatever you need to tell yourself
  - fennecfoxen 4y ago
    Inflation is not generally not necessary to encourage capital to be invested. Real returns, discounted for risk, encourage capital to be invested. Monetary stability makes many forms of investment less risky! Low real interest rates (which often co-occur with inflationary episodes) discourage many forms of savings (which banks could use to invest.) The link between inflation and overall amounts of investment is not abundantly clear in the general case and it is an open problem that remains under study.
- andrewclunn 4y ago
  "Rent seeking" used to be an economic pejorative. Much like "regulatory capture." Now the system is such that those practices which are considered more corrupt, less productive, and less pro-social are the only ways to "make it" let alone make it big. I don't buy into the notion of rebellion by the "wage slaves" though. They're so at each other's throats, divided by arbitrary identity and cultural distinctions to make any cohesive political change impossible, even in nations where they (supposedly) have the ability to do so via elections. You'll own nothing and you'll (pretend to be) happy... or else. EDIT FOR TYPO
- boringg 4y ago
  This is a bad plan in the current macro. Might need to update your playbook for the updated version of the game that came out in the last year.
  - fdgsdfogijq 4y ago
    Market cycles come and go, the fact still remains. 300k isnt the same as it was two years ago, and its certainly not the same as five years ago. The machine marches on
    - boringg 4y ago
      For example if you want to go buy a rental property [classic "passive" income route - and yes loathe are landlords i know) the price at which you would buy the property currently would put pressure on having unsustainably high rental rates such that you have to make a bet on the price of the asset going up significantly over the next twenty years. Current rental rates (in my city) would require pushing tenants to untenable rates and even then you would only be covering principal payments and maybe property tax. Interest is out of pocket. So you tie up a heavy capital load for twenty years on the hopes of an escalating market. If you end up in a recession you end up holding an overly expensive property that you now have to pay for yourself. I am not saying feel bad for the land lord - I am pointing out that that assets are very difficult given macro conditions to find that look attractive in the medium to long run at current valuations.
- Bubble_Pop_22 4y ago
  > Assets grow faster than wages Sure thing, NIKKEI & NASDAQ investors know this better than anybody else.
- rr808 4y ago
  > Assets grow faster than wages. In the USA over the last 50 years that is true. But it isn't generally true.
- silentsea90 4y ago
  This is why Bitcoin makes so much sense as the base monetary layer. The Fed/Central Banks/Govts printing away to glory will then be like all of us - can't print your problems away and will need to streamline operations to cut graft and inefficiency.
- lamontcg 4y ago
  Right at this moment, as rates are rising and the federal reserve is telegraphing that it is going to tank the economy in order to get wage inflation under control, is probably a bad time to start buying up assets.
deleted 4y ago
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aksss 4y ago
It’s interesting that fuel prices are literally at the bottom of the list. Government/poor leadership is 19%. Inflation, 18%; Economy 12%. Then we’re in single digits: Top of single digits is Immigration at 8% - no clarity on what angle but I think everyone can agree it’s a mess, no matter how you want it changed, which probably accounts for its comparatively frequent mention. Fuel prices are at 3%. Also of note is that 70%+ of respondents thought economy was getting worse, while 20% thought it was getting better. I wonder what those 20% are comparing to? Depths of Covid lockdowns?
- deleted 4y ago
  [deleted]
- onlyrealcuzzo 4y ago
  > It’s interesting that fuel prices are literally at the bottom of the list. Why is it so interesting? The average person's budget is less than 5% gasoline. The reason gasoline is historically this all important thing is because Exxon and auto manufacturers used to be the biggest, most important companies in the US (and to some extent airlines) - not because gasoline is the stable of the American consumers spending.
  - Izikiel43 4y ago
    Gasoline also has an indirect impact on inflation, as the cost of transporting goods increases due to fuel cost rising.
  - aksss 4y ago
    I find it interesting because I would not have expected it to rank at the literal bottom of the list. Many people’s relationship to fuel price is pretty inelastic, so it’s an income hit. As another said, fuel prices impact many other costs, particularly for any margin-based business like groceries. That business doesn’t pay the higher fuel bill; you do. I imagine summer may be helping blunt the impact, but gasoline avg itself is $1.60 above last year - not good. So it’s higher visibility with more immediate practical consequences than some of the other items. That’s why it’s interesting to me. But maybe many people think exactly like you do - a 35% y/y increase to something I spend 5% of my income on directly, how bad can that be?
TSiege 4y ago
Hasn't this been the case for the entire pandemic? Yes people think it's getting worse, but it's largely been economically good for the last 24 months besides inflation
- fullshark 4y ago
  From time series looks like it was recovering after the initial shock of the pandemic then started dropping again July 2021 when inflation issues started to become clearer https://www.nytimes.com/2021/08/11/business/economy/july-2021-consumer-price-inflation.html https://www.nytimes.com/2021/08/11/business/economy/july-202...
  - jeffbee 4y ago
    Related survey from U Mich. https://data.sca.isr.umich.edu/fetchdoc.php?docid=69846 https://data.sca.isr.umich.edu/fetchdoc.php?docid=69846 Consumer sentiment was relatively higher in Spring 2021 and then plummeted to a 10-year low which may have hit bottom in April 2022 or may continue plunging, hard to say.
    - fullshark 4y ago
      Chart 5B is pretty amusing
- w-j-w 4y ago
fullshark 4y ago
Last time it was this low was Feb 2008, remained below -40 for a year after that https://www.history.com/topics/21st-century/great-recession-timeline https://www.history.com/topics/21st-century/great-recession-...
sometimeshuman 4y ago
From a technocentric POV it does feel like a lot of the opportunity has faded. Last decade I built a crypto miner for a few grand and that has made me a crazy return over the years. I posted a hack-a-day project and it got so much attention that I could bootstrap a successful hardware company in the fledgeling home automation market. I started a YouTube channel and bam! thousands of subscribers and checks come in from Google. I taught a few tech lectures and was immediately hired as a consultant from an inbound cold-call even though I was barely competent. Software was "eating the world", find a market space and call it {x}ly.com and you're on your way. There was also an optimistic tide you could ride psychologically to motivate you to pursue a new venture. I would like to work on something new in software because the IC shortage and dealing with CM's in China has become challenging. But everything that seems like a niche surprisingly has established competition. I could compete with {x}ly.com when they were first starting out but if they have been in business for 10 years it seems like they will have extracted not just the value from their target market but neighboring niche markets as well. Perhaps this isn't true but given the pervasive pessimism it feels like software has already ate the world and picked it clean.
- tablespoon 4y ago
  > But everything that seems like a niche surprisingly has established competition. I could compete with {x}ly.com when they were first starting out but if they have been in business for 10 years it seems like they will have extracted not just the value from their target market but neighboring niche markets as well. Perhaps this isn't true but given the pervasive pessimism it feels like software has already ate the world and picked it clean. In school, I recall a professor listed out (I think) 3 types of successful business as an example. The first type was something along the lines of "strong in a national market," but the second was "strong in a local market." I feel like the second kind is becoming more and more nonviable (with globalization, advanced communications), which consequently leads to a lot less opportunity for individuals (even though it may be more "efficient" in some cold and abstract economic sense).
  - minsc_and_boo 4y ago
    That's the pessimistic side of the globalization coin (that the article touches on) but on the flip it is that it creates opportunities. New economies, markets, and other demand that has it's own needs for supply that didn't really exist before. For example, national steel mills put local blacksmiths out of work, but they fueled industrialization, new construction, and entirely new market opportunities.
dqpb 4y ago
The economy is supposed to be a pure meritocracy, where decision making authority is allocated to each person in proportion to the value they produce. Every deviation from this is parasitic to the system.
- vore 4y ago
  Too bad the "value they produce" isn't actually quantifiable, though.
  - dqpb 4y ago
    I disagree, I think there are many tools we could use to quantify it. For example, Reinforcement Learning is primarily about quantifying value. Operations Research also has similar tools for estimating value. And of course, markets themselves estimate value, although a huge portion of our economy is not a market. For example, almost no businesses are internally run as a market.
- dragonwriter 4y ago
  > The economy is supposed to be a pure meritocracy “Supposed” by whom? > where decision making authority is allocated to each person in proportion to the value they produce Seems like a bad idea; if I create a lot of value, all of it for myself, I also get more power to make decisions for others?
  - dqpb 4y ago
    > “Supposed” by whom? It’s fundamentally what a market is. It’s like me saying a sorting algorithm is supposed to produce a sorted set, and you saying ‘“Supposed” by whom?’
    - dragonwriter 4y ago
      > It’s fundamentally what a market is? No, it's not. Fundamentally a market is the aggregate of individual actions to exchange goods at values that seem to make sense based on conditions at the moment of exchange. What you described is approximately a common aspirational view of what hypothetical ideal markets would achieve, not fundamentally “what a market is”. > It’s like me saying a sorting algorithm is supposed to produce a sorted set, and you saying ‘“Supposed” by whom?’ If a “sorted set” was not a well-defined, or even practically operationalizable concept, but merely a thing about which people had conflicting intuitions, and instead of an abstract ideal an “algorithm” was a class of real things that exist in the physical universe, and the ones that you named did not, in fact, produce anything that met most intuitions of what the might fit the ill-defined concept of a “sorted set”, your analogy would be spot on.
bergenty 4y ago
mark_l_watson 4y ago
re: this Gallup poll: we have an expression in the USA that I think covers this: “no shit Sherlock” - that is, the poll results are obvious and predictable. This is just my opinion, so take it with a grain of salt: the Federal Reserve made a very big error in only raising interests rates by 50 basis points. They obviously (to me at least) care much more about keeping interest rates as low as possible rather than fighting inflation. Actually, they did not make an error, they are just purposefully being without heart or compassion. I planned my finances to be relatively immune to massive inflation, but my experience volunteering at a local food bank and getting to know our “customers” has given me at least a little bit of understanding on how vulnerable many people are. So many people I talked with had had solid middle class lifestyles until sometime unexpected happened like a large medical bill. I believe in equal opportunity but to not enforce equal outcomes for people. To some degree equal opportunity means not enriching the asset class and hurting average people with run-away inflation.
- dragonwriter 4y ago
  > I believe in equal opportunity but to not enforce equal outcomes for people. Opportunities are just the forward-looking effects of outcomes.
- danans 4y ago
  > I believe in equal opportunity but to not enforce equal outcomes for people. People always say this, but they don't account for how unequitable outcomes of the past have influenced the unequitable opportunities of the present. For example, we can't hand-wave away the impact that the denial of equal opportunity for home ownership has had on African Americans. It accounts for a huge portion of the black/white wealth gap: https://www.brookings.edu/essay/homeownership-racial-segregation-and-policies-for-racial-wealth-equity/ https://www.brookings.edu/essay/homeownership-racial-segrega... Believing in equality of opportunity vs outcome is a nice sentiment, but without a significant redistribution of resources to actually make it start happening instead of the status quo (massive inequality of opportunity), it's just highlighting and not acting on the perfect while avoiding acting on the imperfect, but good.
  - 4y ago
photochemsyn 4y ago
As far as I can tell, it's the financialization of the economy and the outsourcing of so much manufacturing overseas that's really going doing the most damage... and changing gears would require a vast re-investment of federal dollars in basic public infrastructure, rewriting the trade deals to force sellers who want access to American markets to manufacture their goods within US borders (at US labor prices), and redirecting a significant chunk of the federal military-industrial budget to more productive enterprises (A construction crane, for example, can build other things. A tank, it's just good for blowing stuff up.) The politicians seem like little more than corporate middle managers in a crumbling Empire, regardless of political ideology. They want jobs for their districts and kickbacks for their inner circles, by and large - and the only federal jobs on offer these days seem to be MIC programs of one kind or another. It's understandable, but they have no vision and are mainly just following the herd. The real centers of power appear to lie within the networks of Gilded Age plutocrats, in finance, tech, energy, pharma, retail, ag... and half of them seem to have plans for fleeing the country if things go really sour. Add on top of all that, increasing pressure from climate (record California drought for example), breakdowns in global supply chains (imagine if China takes this opportunity to invade Taiwan, nobody in America will be able to get socks and underwear or toothbrushes). Apparently gun sales are at record highs as well. It's not a very pretty picture. Looks more like sitting on the edge of another 1930s Great Depression than anything else. Much of the younger generation seems to have zero hope of ever buying a home, the largest older generation is all heading for a shaky insecure retirement, and the political leaders are mostly corrupt bumbling incompetents, many of whom should have retired from their jobs over a decade ago. A radical shift in direction is really needed.

91 points by harambae 4y ago

Assets grow faster than wages. Thats all you need to know. Either create your own assets (entrepreneurship), put all your money into leveraged! assets (stocks, housing), or prepare to live as a wage slave. This includes highly paid tech employees, you cant escape it. The monetary system works by debasing wages, a secret tax that keeps you working year after year

throwaway_1928 4y ago
And assets taxed much lower too, a double whammy.
FpUser 4y ago
And politicians never forget to vote themselves salary increase to correct for inflation while saying to us that moderate inflation is good.
- onlyrealcuzzo 4y ago
  > And politicians never forget to vote themselves salary increase to correct for inflation while saying to us that moderate inflation is good. I dunno about you, but I'm pretty glad that congress doesn't vote on my wage.
  - FpUser 4y ago
    Me neither because I pay myself. But if I were an employee I would not mine my base automatically indexed to inflation. This of course will wreak havoc in the whole system.
- themitigating 4y ago
  The last pay increase in the senate was in 2008.
  - FpUser 4y ago
    Not talking about the US,
    - caenorst 4y ago
      This post is titled "Economic Pessimism Growing in U.S."...
onlyrealcuzzo 4y ago
> Assets grow faster than wages. There is nothing new here. In boom years, they always do. In bust years, they come back down to earth. > Either create your own assets (entrepreneurship), put all your money into leveraged! assets (stocks, housing), or prepare to live as a wage slave. There is also not much new here either, sadly. There was a brief time - pretty unique to the US - between WW2 and early 90s where things were different. This is pretty unique globally, and to the US.
- fdgsdfogijq 4y ago
  Whats new is how drastic it is. Its not a joke, you need to invest with leverage or all the time you spend working will be for nothing. And you need big leverage.
  - uejfiweun 4y ago
    Could you explain what exactly you mean by "leverage" in this context? Does this just mean take out loans? I feel like interest payments really screw you on most loans.
    - fny 4y ago
      Something to this effect. Use borrowed money to buy more assets. In reality, this is terrible advice if you can't service the interest. It's a scheme that worked in a low rate environment, but likely will no longer be viable.
    - ddorian43 4y ago
      See /r/Letfs and /r/trueHFEA as examples
    - adamsmith143 4y ago
      Some stock brokerages literally let you trade with a multiple of the actual cash you have deposited. E.g. you have $10,000 in a brokerage account with Fidelity and you apply for margin and they let you trade with $100,000 that you can then invest as you see fit. You multiply your possible returns but also your possible losses. If your losses become large enough you can get Margin Called and be forced to repay all of your losses at once. So if you lost all the 100K they gave you, you are now on the hook for those losses.
ChuckNorris89 4y ago
>Assets grow faster than wages. How long will this continue though? This can't be sustainable forever. At one point, you won't have any money to buy any assets if your wages are barely covering your food and shelter, and so we'll go back to feudalism where only those few with inherited wealth owned assets and everyone else was a slave for life.
- mempko 4y ago
  All the important stuff is already owned by the few. It will just get worse. Eventually will lead to a revolution. That's the end game if it keeps going. There needs to be a jubilee and a 'new new' deal to prevent it. However, people in the USA have to acknowledge they are in an empire that's declining. There will be a lot of pain. Look at the British for what that looks like.
  - nightski 4y ago
    I don't feel like that is accurate at all. The most valuable assets by far are successful companies. While it is true that they are owned in large part by a "few" (relative to the total population), that few changes often. We've seen massive changes in wealth in just the past decade alone, particularly in tech.
    - jjoonathan 4y ago
      Yeah, but the systematic problems come from the shape of the pyramid not the identity of the people at the top, so churning them doesn't help.
    - spiralx 4y ago
      The most valuable assets by far - accounting for over half of all wealth - are land in highly desirable locations, because both individuals and companies have to pay rent while the landlord pays basically nothing in upkeep in perpetuity while only facing the unlikely risk that rents might drop to zero if the land becomes undesirable - not very likely if you own part of downtown New York, London or any major city.
lioeters 4y ago
..Almost as if there's an interest in keeping a permanent underclass of "wage slaves".
- colpabar 4y ago
  Easy with the conspiracy theories! We all know the rich and powerful don't ever work together to accomplish things in secret.
  - aksss 4y ago
    Easy with the sarcasm! We all know the readers and posters don’t always handle it gracefully.
  - ChuckNorris89 4y ago
    Not really in secret, they do it every year at Davos, Switzerland, but it's not public either.
  - yxwvut 4y ago
    Sarcasm aside, there doesn't need to be a conspiracy for a privileged group, acting as individuals, to want to discourage changes that would upset their advantaged position in the status quo (and to use their privileged position to maintain it). They don't need to relish the suffering of others so much as maintain the indifference required to justify their own self-preservation. Virtually every member of the uber-rich buys into the gospel of the benefits of inequality and the necessity of a poor underclass, and votes and lobbies accordingly.
- eloff 4y ago
  If you didn't do that, who'd pay the taxes or cut your hair?
- lkxijlewlf 4y ago
  There is: https://www.wsj.com/livecoverage/federal-reserve-meeting-inflation-march-2022/card/powell-says-fed-would-like-to-see-wage-increases-slow-mNOCiu0gOrEGdEk0ZsP4 https://www.wsj.com/livecoverage/federal-reserve-meeting-inf...
ClumsyPilot 4y ago
So the econony is promoting unproductive HODL over productive contribution to the real economy
- mixedCase 4y ago
  HODL is a delayed investment. When the government steals from your cash savings, you merely save somewhere else, but the purpose is the same.
PragmaticPulp 4y ago
> put all your money into leveraged! assets (stocks, housing), Spoken like someone who has only operated in the recent bull market. Using a mortgage to buy a reasonable house that you can afford is a good idea. Using leverage to buy as much real estate and/or stocks as you can get away with is a terrible idea with some significant downside risk. Leveraged stock purchases are notorious for working great until the market turns and blows up your account. Even leveraged funds have significant slippage that isn’t obvious to the casual investor who thinks they’re just going to get a clean 2X return. One of my most poignant memories from the 2008 crash was watching a few people I knew go from feeling like they were financial geniuses to bankrupt and struggling. The common theme among all of them was that they were leveraged to the hilt in real estate. They thought it was easy money when it felt like the market could only go up. Then it stopped going up and we all know what happened next.
- eloff 4y ago
  If you remember just one thing, it's that no asset class goes up forever. Some assets tend to trend up overtime more than others, but they all have times where they go down too. Make sure you can survive that. People buying homes in places that have only gone up in the last 40 years need to consider that that might keep going up for another decade, or they might be cresting the hill before correcting.
  - fdgsdfogijq 4y ago
    This is how you end up a wage slave
  - lumost 4y ago
    Housing has risen some 40% over the last two years, while this is certainly insane. If the trend continues the downside risk either becomes massive - or a mere 30% correction becomes inconsequential to the principal balance.
    - baskethead 4y ago
      My house almost tripled in 8 years. I made $2 million profit from selling my house last year.
blackbear_ 4y ago
> Assets grow faster than wages. This is the central theme of Piketty's "Capital" book, for anybody interested in exploring this further. This is also a good start: https://hbr.org/2014/04/pikettys-capital-in-a-lot-less-than-696-pages https://hbr.org/2014/04/pikettys-capital-in-a-lot-less-than-...
- guerrilla 4y ago
  Not quite, but close. Piketty's thesis is that the rate of return on investment is higher than the growth rate and that this drives inequality. Asset prices growing faster than wages is a partial explanation for that.
randbox 4y ago
The annoying part is that there are many changes which federal & state governments can make to the financial system to ensure wage growth better tracks inflation without sacrificing growth. Such as capping federally backed mortgages at 150% of the labor replacement cost of material fixtures whenever that's lower than the comparable sales price. Or replacing federal payroll and income taxes on earnings under $100,000 with a national excess property tax on property comparable sales values minus 50% of fixture labor replacement costs. Or provide local public banks which appraise excess property values separately from labor replacement costs and spending publicly collected interest payments back into circulation on public works.
- ryan93 4y ago
  Would just reduce incentive to build
hahaxdxd123 4y ago
> The monetary system works by debasing wages, a secret tax that keeps you working year after year No. The monetary system works by encouraging capital to be invested in productive uses by debasing it yearly through inflation. If inflation was 0% or negative, the incentive to risk capital is much much lower. The political system of Western countries favouring asset owners is separate.
- fdgsdfogijq 4y ago
  Whatever you need to tell yourself
- fennecfoxen 4y ago
  Inflation is not generally not necessary to encourage capital to be invested. Real returns, discounted for risk, encourage capital to be invested. Monetary stability makes many forms of investment less risky! Low real interest rates (which often co-occur with inflationary episodes) discourage many forms of savings (which banks could use to invest.) The link between inflation and overall amounts of investment is not abundantly clear in the general case and it is an open problem that remains under study.
andrewclunn 4y ago
"Rent seeking" used to be an economic pejorative. Much like "regulatory capture." Now the system is such that those practices which are considered more corrupt, less productive, and less pro-social are the only ways to "make it" let alone make it big. I don't buy into the notion of rebellion by the "wage slaves" though. They're so at each other's throats, divided by arbitrary identity and cultural distinctions to make any cohesive political change impossible, even in nations where they (supposedly) have the ability to do so via elections. You'll own nothing and you'll (pretend to be) happy... or else. EDIT FOR TYPO
boringg 4y ago
This is a bad plan in the current macro. Might need to update your playbook for the updated version of the game that came out in the last year.
- fdgsdfogijq 4y ago
  Market cycles come and go, the fact still remains. 300k isnt the same as it was two years ago, and its certainly not the same as five years ago. The machine marches on
  - boringg 4y ago
    For example if you want to go buy a rental property [classic "passive" income route - and yes loathe are landlords i know) the price at which you would buy the property currently would put pressure on having unsustainably high rental rates such that you have to make a bet on the price of the asset going up significantly over the next twenty years. Current rental rates (in my city) would require pushing tenants to untenable rates and even then you would only be covering principal payments and maybe property tax. Interest is out of pocket. So you tie up a heavy capital load for twenty years on the hopes of an escalating market. If you end up in a recession you end up holding an overly expensive property that you now have to pay for yourself. I am not saying feel bad for the land lord - I am pointing out that that assets are very difficult given macro conditions to find that look attractive in the medium to long run at current valuations.
Bubble_Pop_22 4y ago
> Assets grow faster than wages Sure thing, NIKKEI & NASDAQ investors know this better than anybody else.
rr808 4y ago
> Assets grow faster than wages. In the USA over the last 50 years that is true. But it isn't generally true.
silentsea90 4y ago
This is why Bitcoin makes so much sense as the base monetary layer. The Fed/Central Banks/Govts printing away to glory will then be like all of us - can't print your problems away and will need to streamline operations to cut graft and inefficiency.
lamontcg 4y ago
Right at this moment, as rates are rising and the federal reserve is telegraphing that it is going to tank the economy in order to get wage inflation under control, is probably a bad time to start buying up assets.

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aksss 4y ago

It’s interesting that fuel prices are literally at the bottom of the list. Government/poor leadership is 19%. Inflation, 18%; Economy 12%. Then we’re in single digits: Top of single digits is Immigration at 8% - no clarity on what angle but I think everyone can agree it’s a mess, no matter how you want it changed, which probably accounts for its comparatively frequent mention. Fuel prices are at 3%. Also of note is that 70%+ of respondents thought economy was getting worse, while 20% thought it was getting better. I wonder what those 20% are comparing to? Depths of Covid lockdowns?

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onlyrealcuzzo 4y ago
> It’s interesting that fuel prices are literally at the bottom of the list. Why is it so interesting? The average person's budget is less than 5% gasoline. The reason gasoline is historically this all important thing is because Exxon and auto manufacturers used to be the biggest, most important companies in the US (and to some extent airlines) - not because gasoline is the stable of the American consumers spending.
- Izikiel43 4y ago
  Gasoline also has an indirect impact on inflation, as the cost of transporting goods increases due to fuel cost rising.
- aksss 4y ago
  I find it interesting because I would not have expected it to rank at the literal bottom of the list. Many people’s relationship to fuel price is pretty inelastic, so it’s an income hit. As another said, fuel prices impact many other costs, particularly for any margin-based business like groceries. That business doesn’t pay the higher fuel bill; you do. I imagine summer may be helping blunt the impact, but gasoline avg itself is $1.60 above last year - not good. So it’s higher visibility with more immediate practical consequences than some of the other items. That’s why it’s interesting to me. But maybe many people think exactly like you do - a 35% y/y increase to something I spend 5% of my income on directly, how bad can that be?

TSiege 4y ago

Hasn't this been the case for the entire pandemic? Yes people think it's getting worse, but it's largely been economically good for the last 24 months besides inflation

fullshark 4y ago
From time series looks like it was recovering after the initial shock of the pandemic then started dropping again July 2021 when inflation issues started to become clearer https://www.nytimes.com/2021/08/11/business/economy/july-2021-consumer-price-inflation.html https://www.nytimes.com/2021/08/11/business/economy/july-202...
- jeffbee 4y ago
  Related survey from U Mich. https://data.sca.isr.umich.edu/fetchdoc.php?docid=69846 https://data.sca.isr.umich.edu/fetchdoc.php?docid=69846 Consumer sentiment was relatively higher in Spring 2021 and then plummeted to a 10-year low which may have hit bottom in April 2022 or may continue plunging, hard to say.
  - fullshark 4y ago
    Chart 5B is pretty amusing
w-j-w 4y ago

fullshark 4y ago

Last time it was this low was Feb 2008, remained below -40 for a year after that https://www.history.com/topics/21st-century/great-recession-timeline https://www.history.com/topics/21st-century/great-recession-...

sometimeshuman 4y ago

From a technocentric POV it does feel like a lot of the opportunity has faded. Last decade I built a crypto miner for a few grand and that has made me a crazy return over the years. I posted a hack-a-day project and it got so much attention that I could bootstrap a successful hardware company in the fledgeling home automation market. I started a YouTube channel and bam! thousands of subscribers and checks come in from Google. I taught a few tech lectures and was immediately hired as a consultant from an inbound cold-call even though I was barely competent. Software was "eating the world", find a market space and call it {x}ly.com and you're on your way. There was also an optimistic tide you could ride psychologically to motivate you to pursue a new venture. I would like to work on something new in software because the IC shortage and dealing with CM's in China has become challenging. But everything that seems like a niche surprisingly has established competition. I could compete with {x}ly.com when they were first starting out but if they have been in business for 10 years it seems like they will have extracted not just the value from their target market but neighboring niche markets as well. Perhaps this isn't true but given the pervasive pessimism it feels like software has already ate the world and picked it clean.

tablespoon 4y ago
> But everything that seems like a niche surprisingly has established competition. I could compete with {x}ly.com when they were first starting out but if they have been in business for 10 years it seems like they will have extracted not just the value from their target market but neighboring niche markets as well. Perhaps this isn't true but given the pervasive pessimism it feels like software has already ate the world and picked it clean. In school, I recall a professor listed out (I think) 3 types of successful business as an example. The first type was something along the lines of "strong in a national market," but the second was "strong in a local market." I feel like the second kind is becoming more and more nonviable (with globalization, advanced communications), which consequently leads to a lot less opportunity for individuals (even though it may be more "efficient" in some cold and abstract economic sense).
- minsc_and_boo 4y ago
  That's the pessimistic side of the globalization coin (that the article touches on) but on the flip it is that it creates opportunities. New economies, markets, and other demand that has it's own needs for supply that didn't really exist before. For example, national steel mills put local blacksmiths out of work, but they fueled industrialization, new construction, and entirely new market opportunities.

dqpb 4y ago

The economy is supposed to be a pure meritocracy, where decision making authority is allocated to each person in proportion to the value they produce. Every deviation from this is parasitic to the system.

vore 4y ago
Too bad the "value they produce" isn't actually quantifiable, though.
- dqpb 4y ago
  I disagree, I think there are many tools we could use to quantify it. For example, Reinforcement Learning is primarily about quantifying value. Operations Research also has similar tools for estimating value. And of course, markets themselves estimate value, although a huge portion of our economy is not a market. For example, almost no businesses are internally run as a market.
dragonwriter 4y ago
> The economy is supposed to be a pure meritocracy “Supposed” by whom? > where decision making authority is allocated to each person in proportion to the value they produce Seems like a bad idea; if I create a lot of value, all of it for myself, I also get more power to make decisions for others?
- dqpb 4y ago
  > “Supposed” by whom? It’s fundamentally what a market is. It’s like me saying a sorting algorithm is supposed to produce a sorted set, and you saying ‘“Supposed” by whom?’
  - dragonwriter 4y ago
    > It’s fundamentally what a market is? No, it's not. Fundamentally a market is the aggregate of individual actions to exchange goods at values that seem to make sense based on conditions at the moment of exchange. What you described is approximately a common aspirational view of what hypothetical ideal markets would achieve, not fundamentally “what a market is”. > It’s like me saying a sorting algorithm is supposed to produce a sorted set, and you saying ‘“Supposed” by whom?’ If a “sorted set” was not a well-defined, or even practically operationalizable concept, but merely a thing about which people had conflicting intuitions, and instead of an abstract ideal an “algorithm” was a class of real things that exist in the physical universe, and the ones that you named did not, in fact, produce anything that met most intuitions of what the might fit the ill-defined concept of a “sorted set”, your analogy would be spot on.

bergenty 4y ago

mark_l_watson 4y ago

re: this Gallup poll: we have an expression in the USA that I think covers this: “no shit Sherlock” - that is, the poll results are obvious and predictable. This is just my opinion, so take it with a grain of salt: the Federal Reserve made a very big error in only raising interests rates by 50 basis points. They obviously (to me at least) care much more about keeping interest rates as low as possible rather than fighting inflation. Actually, they did not make an error, they are just purposefully being without heart or compassion. I planned my finances to be relatively immune to massive inflation, but my experience volunteering at a local food bank and getting to know our “customers” has given me at least a little bit of understanding on how vulnerable many people are. So many people I talked with had had solid middle class lifestyles until sometime unexpected happened like a large medical bill. I believe in equal opportunity but to not enforce equal outcomes for people. To some degree equal opportunity means not enriching the asset class and hurting average people with run-away inflation.

dragonwriter 4y ago
> I believe in equal opportunity but to not enforce equal outcomes for people. Opportunities are just the forward-looking effects of outcomes.
danans 4y ago
> I believe in equal opportunity but to not enforce equal outcomes for people. People always say this, but they don't account for how unequitable outcomes of the past have influenced the unequitable opportunities of the present. For example, we can't hand-wave away the impact that the denial of equal opportunity for home ownership has had on African Americans. It accounts for a huge portion of the black/white wealth gap: https://www.brookings.edu/essay/homeownership-racial-segregation-and-policies-for-racial-wealth-equity/ https://www.brookings.edu/essay/homeownership-racial-segrega... Believing in equality of opportunity vs outcome is a nice sentiment, but without a significant redistribution of resources to actually make it start happening instead of the status quo (massive inequality of opportunity), it's just highlighting and not acting on the perfect while avoiding acting on the imperfect, but good.
- 4y ago

photochemsyn 4y ago

As far as I can tell, it's the financialization of the economy and the outsourcing of so much manufacturing overseas that's really going doing the most damage... and changing gears would require a vast re-investment of federal dollars in basic public infrastructure, rewriting the trade deals to force sellers who want access to American markets to manufacture their goods within US borders (at US labor prices), and redirecting a significant chunk of the federal military-industrial budget to more productive enterprises (A construction crane, for example, can build other things. A tank, it's just good for blowing stuff up.) The politicians seem like little more than corporate middle managers in a crumbling Empire, regardless of political ideology. They want jobs for their districts and kickbacks for their inner circles, by and large - and the only federal jobs on offer these days seem to be MIC programs of one kind or another. It's understandable, but they have no vision and are mainly just following the herd. The real centers of power appear to lie within the networks of Gilded Age plutocrats, in finance, tech, energy, pharma, retail, ag... and half of them seem to have plans for fleeing the country if things go really sour. Add on top of all that, increasing pressure from climate (record California drought for example), breakdowns in global supply chains (imagine if China takes this opportunity to invade Taiwan, nobody in America will be able to get socks and underwear or toothbrushes). Apparently gun sales are at record highs as well. It's not a very pretty picture. Looks more like sitting on the edge of another 1930s Great Depression than anything else. Much of the younger generation seems to have zero hope of ever buying a home, the largest older generation is all heading for a shaky insecure retirement, and the political leaders are mostly corrupt bumbling incompetents, many of whom should have retired from their jobs over a decade ago. A radical shift in direction is really needed.