10 ms·

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,

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.

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.