4 ms·

If you want a wider context, take your favorite index, switch to log scale, and adjust for inflation. Then you'll have a pretty useful visualization of real ret

If you want a wider context, take your favorite index, switch to log scale, and adjust for inflation. Then you'll have a pretty useful visualization of real returns. If you take S&P 500, you'll see a period of sustained growth from the late 1940s until the mid-1960s, followed by a period of poor returns until the early 1980s. At least according to one interpretation. Then there is a period of growth until 2000, followed by poor returns in the 2000s. We are currently in another period of growth that started in 2009. The risk people are afraid of is not a simple crash (like in 2008 or 2020) but a lost decade or 15 years. It's a plausible scenario, as such things do happen. On the other hand, the current period of growth is the shortest of the three, so maybe the growth is still sustainable and there are many good years ahead of us. And for an even wider context: The US has been stable and prosperous for over 150 years. That's a long time by the standards of historical empires. Maybe Pax Americana is over, and we are now starting the decline towards our version of the Crisis of the Third Century. If you are working age, there is a nontrivial chance of that happening in your lifetime.

VirusNewbie 4y ago
I'm not even arguing that growth will continue. I'm arguing that a correction is happening, it's probably a good thing some capital is being wiped out, but we aren't in a scenario where we'll likely see cascading failures across the entire financial system. If by the end of the year things are 'reset' to ~2019... that sucks for some investors, it sucks for people who got options grants in the last couple years, it might negatively affect the job market some, but it's not doom and gloom. Four years ago was a perfectly workable amount of capital, reasonable valuations, decent salaries, etc.
7speter 4y ago
Plenty of working age people who have already been experiencing a lost decade
markvdb 4y ago
Two Pax Americana timescale elements: - Technological progress has increased worldwide interdependence, to the point of destroying resilience. The world is one vulnerable system now to a much larger extent than any time in the past. Think Ukrainian grain exports to the North Africa. Hundreds of millions have grown to rely on that. Hardly even technologically possible 100 years ago. - Physical limitations to economic growth. Technological progress has made humans increasingly expert at exploiting natural resources on an ever larger scale. The same cannot be said of management of negative externalities. In other words, we can probably manage peak oil. Peak water? Less so. Global warming? Do you see a way out of that?
- pas 4y ago
  The grim part is that global warming is still too cheap, so people don't take it seriously. Even the regions that are most affected by it and could do things to better prepare, are carrying on as business as usual. Yes, heatwaves kill a few hundred people, but apparently that's "fine". Ambitionless short-term local-maximum thinking rules the world.

VirusNewbie 4y ago

I'm not even arguing that growth will continue. I'm arguing that a correction is happening, it's probably a good thing some capital is being wiped out, but we aren't in a scenario where we'll likely see cascading failures across the entire financial system. If by the end of the year things are 'reset' to ~2019... that sucks for some investors, it sucks for people who got options grants in the last couple years, it might negatively affect the job market some, but it's not doom and gloom. Four years ago was a perfectly workable amount of capital, reasonable valuations, decent salaries, etc.

7speter 4y ago

Plenty of working age people who have already been experiencing a lost decade

markvdb 4y ago

Two Pax Americana timescale elements: - Technological progress has increased worldwide interdependence, to the point of destroying resilience. The world is one vulnerable system now to a much larger extent than any time in the past. Think Ukrainian grain exports to the North Africa. Hundreds of millions have grown to rely on that. Hardly even technologically possible 100 years ago. - Physical limitations to economic growth. Technological progress has made humans increasingly expert at exploiting natural resources on an ever larger scale. The same cannot be said of management of negative externalities. In other words, we can probably manage peak oil. Peak water? Less so. Global warming? Do you see a way out of that?

pas 4y ago
The grim part is that global warming is still too cheap, so people don't take it seriously. Even the regions that are most affected by it and could do things to better prepare, are carrying on as business as usual. Yes, heatwaves kill a few hundred people, but apparently that's "fine". Ambitionless short-term local-maximum thinking rules the world.