5 ms·

I'm 37 now and this idea of "collective psychology" really fascinates me. Mention age because I'm just old enough to start seeing these large-scale "shifts of m

I'm 37 now and this idea of "collective psychology" really fascinates me. Mention age because I'm just old enough to start seeing these large-scale "shifts of mood" over my own life. In hindsight (US perspective here), I can now see how the mid/late-90s were a happy time, 9/11 was a complete "shock", optimism kicked back in around 2005 leading to the 2008 financial crisis (huge run-up in house prices, sloppy mortgage underwriting, etc), but 2008 was a bomb, and now 14 years on, the way I'd describe the last decade is "slow-burn turbulence". We know it's getting more chaotic, we see it, politics is more fragmented, but it's hard pointing to one particular event as "it" the way we could with, say, 9/11. I mention this because I think these cycles have profound effects on economic variables like spending, credit use, etc. Your commend about "spite spending" fits perfectly with this--yes, household balance sheets are deteriorating, but people are just sick of covid, they want to take a vacation, and get outside. I think a similar thing drove housing in the 50s, actually. It's easy to look back on the mid-century dynamic as "boring", "sterile" even, but WWII ended in the mid-40s, and if I'd spent a year of three getting blown up in Europe or Japan, a quiet house in the suburbs is exactly what I'd want.

puranjay 4y ago
I'm 34 and feel the same way. You can feel the zeitgeist change every 8-10 years. Its like the world has a collective consciousness (even though I largely think that's just based on the media you consume.)
- michaelt 4y ago
  The thing is, it's hard to tell apart a change in the zeitgeist and a change in your life. How is eldavido supposed to tell the societal impact of 9/11 apart from the fact he graduated high school that year?
  - puranjay 4y ago
    no way to be objective at all. Its just a "gut feel" and they are usually wrong.
    - eldavido 4y ago
      I'm not saying I can predict this stuff looking forward, that's borderline impossible. But it's more than just a feeling. Keynes was writing in the 1920s/1930s about "animal spirits" driving the business cycle. Read Ray Dalio's stuff on credit cycles. Collective psychology drives a lot of carefully measured phenomena, things like savings rates, credit growth, unemployment, etc. I spend probably 4-6 hours/week reading professionally edited, long-form journalism. In all honesty, I'm not sure it's a great use of time, but I can tell you all about things like the UK's no confidence vote on Boris Johnson, or why the "Red wall" situation in the UK reminds me of Michigan and Pennsylvania in the US, north vs south Europe's views on the EU's 750 billion NGEU stimulus, the performance of Nordic sovereign wealth funds, or why the expiry of the US's child tax credit was catastrophic in terms of poverty reduction. Point being, if you really immerse yourself in good news for a couple decades (I've been reading at this frequency for ~20 years), it trains you toward a healthy baseline of what's "normal" vs. exceptional. I was talking to my wife last week, telling her that at this point, at least as it pertains to economics, I usually know what "normal" means (e.g. GDP growth, unemployment, etc), and I know what's "weird" about the present day, but what I haven't yet figured out is what stays the same over time vs. what changes. Take US interest rates. The 10-year treasury note was around 1.00% 18-24 months ago. That was low. Now it's in the 3s, which is still fairly low. What I can't figure out is whether this "lowness", which is historically bizarre, will continue this way, or if there's some permanent structural change (e.g. more elderly savers relative to young users of capital) that has permanently altered the equilibrium. That does seem pretty hard, though.
      - jakupovic 4y ago
        The change is that we will go through a credit lengthening process, again, as soon as we figure out that tightening, as a policy, doesn't work anymore. If I had to make a guess, I would say 9 months, at most. Why, just my guess, or it ...

puranjay 4y ago

I'm 34 and feel the same way. You can feel the zeitgeist change every 8-10 years. Its like the world has a collective consciousness (even though I largely think that's just based on the media you consume.)

michaelt 4y ago
The thing is, it's hard to tell apart a change in the zeitgeist and a change in your life. How is eldavido supposed to tell the societal impact of 9/11 apart from the fact he graduated high school that year?
- puranjay 4y ago
  no way to be objective at all. Its just a "gut feel" and they are usually wrong.
  - eldavido 4y ago
    I'm not saying I can predict this stuff looking forward, that's borderline impossible. But it's more than just a feeling. Keynes was writing in the 1920s/1930s about "animal spirits" driving the business cycle. Read Ray Dalio's stuff on credit cycles. Collective psychology drives a lot of carefully measured phenomena, things like savings rates, credit growth, unemployment, etc. I spend probably 4-6 hours/week reading professionally edited, long-form journalism. In all honesty, I'm not sure it's a great use of time, but I can tell you all about things like the UK's no confidence vote on Boris Johnson, or why the "Red wall" situation in the UK reminds me of Michigan and Pennsylvania in the US, north vs south Europe's views on the EU's 750 billion NGEU stimulus, the performance of Nordic sovereign wealth funds, or why the expiry of the US's child tax credit was catastrophic in terms of poverty reduction. Point being, if you really immerse yourself in good news for a couple decades (I've been reading at this frequency for ~20 years), it trains you toward a healthy baseline of what's "normal" vs. exceptional. I was talking to my wife last week, telling her that at this point, at least as it pertains to economics, I usually know what "normal" means (e.g. GDP growth, unemployment, etc), and I know what's "weird" about the present day, but what I haven't yet figured out is what stays the same over time vs. what changes. Take US interest rates. The 10-year treasury note was around 1.00% 18-24 months ago. That was low. Now it's in the 3s, which is still fairly low. What I can't figure out is whether this "lowness", which is historically bizarre, will continue this way, or if there's some permanent structural change (e.g. more elderly savers relative to young users of capital) that has permanently altered the equilibrium. That does seem pretty hard, though.
    - jakupovic 4y ago
      The change is that we will go through a credit lengthening process, again, as soon as we figure out that tightening, as a policy, doesn't work anymore. If I had to make a guess, I would say 9 months, at most. Why, just my guess, or it ...