13 ms·

The last few years of zero interest rates has meant that a lot of people made a shitload of money . There is plenty of cash and liquidity around.28 year old FAA

by nus07 4y ago

The last few years of zero interest rates has meant that a lot of people made a shitload of money . There is plenty of cash and liquidity around.28 year old FAANG engineers with 600k in savings and a house (as an oldie I am in awe). Inflation is here to stay for the next 5 years at least no matter what the Fed does about it . Plenty of people sitting on cash and multiple houses at 2.x% mortgages . They have plenty to splurge on that trip to Aruba.

supernovae 4y ago
I find this disappointing because it basically says "anyone who works for a W2 will cause inflation if they are successful" That shows to me that capitalism is broken if success means inflation. We should be able to swim in cash reserves and safety and not be penalized for it.
- BurningFrog 4y ago
  The argument is about zero interest rates, not success or capitalism.
  - TheOtherHobbes 4y ago
    But perhaps those are somehow related.
    - FollowingTheDao 4y ago
      Oh, they are perfectly related.
    - Bloating 4y ago
      as opposed to China's economy, by example?
- JumpCrisscross 4y ago
  > it basically says "anyone who works for a W2 will cause inflation if they are successful" Then take comfort in that armchair analysis being wrong. If it were true, if FAANG employees’ pay were driving inflation, we’d expect to see local inflation correlate with FAANG employment. It does not. In fact, almost the opposite is true, with inflation in the interior outpacing that on the coasts [1][2]. (Shipping.) [1] https://www.bloomberg.com/news/articles/2021-11-11/inflation-pressures-are-highest-in-u-s-midwest-and-south-map https://www.bloomberg.com/news/articles/2021-11-11/inflation... [2] https://www.jec.senate.gov/public/index.cfm/republicans/analysis?ID=6D33DAC5-A69A-4577-AB51-878AFEC69ADF https://www.jec.senate.gov/public/index.cfm/republicans/anal...
  - abduhl 4y ago
    Isn’t this a result of inflation in the interior finally catching up to the ridiculous pace that the coasts have had as coastal money flees inward due to WFH and unaffordable housing prices?
  - helen___keller 4y ago
    My armchair analysis is that we have heavy inflation in what were low-mid CoL cities as the big money remote workers cash out of the coasts for cheaper locales Or in other words, the rest of the country catching up to the big cities No idea if this is the truth of course
    - JumpCrisscross 4y ago
      > we have heavy inflation in what were low-mid CoL cities as the big money remote workers cash out of the coasts for cheaper locales Internal migration is too slow and too small to explain the interior’s price shocks. Also, it’s not like the coasts are withering away. Real GDP growth in California and New York was better than the national trend in Q1 2022; the interior saw the worst of the real economic shock [1]. [1] https://www.bea.gov/news/2022/gross-domestic-product-state-1st-quarter-2022 https://www.bea.gov/news/2022/gross-domestic-product-state-1...
      - 4y ago
- lotsofpulp 4y ago
  I would not describe it as broken. It could simply be a consequence of the parameters of nature not offering humans unlimited energy and resources.
  - Frost1x 4y ago
    While I agree with the premise of finite energy and resources here, I don't agree that current systems are an inherent consequence of it. It's the way we as societies have allowed things to be structured. They don't have to be structured in such a way. Energy and resources have various allocation models that can be adopted, we just seem to be moving right back to the darwinistic models more and more which makes me question the stability of societies in general, especially as allocation systems tend to deviate away from natural allocation systems yet remain darwinistic. If we continue along competitive models for allocation to the end, we're right back where humans started before forming societies except in an articicial darwinistic model which I'd say people are increasingly rejecting, so we need to start thinking a bit more about more equitable allocation systems than we currently have. Right now, I'd say the general population is pretty fed up with existing allocation systems.
    - lotsofpulp 4y ago
      > While I agree with the premise of finite energy and resources here, I don't agree that current systems are an inherent consequence of it. It's the way we as societies have allowed things to be structured. They don't have to be structured in such a way. Yes, I do not see a problem with capitalism coexisting with a wealth transfer mechanism to constantly “reset” the game a little bit to prevent extreme disparities. Well, other than the fact that humans would have to allow it to occur.
      - Bloating 4y ago
        Any attempts to do that generally end-up with the smaller business owners being "reset" by the .1%, while the W2 class drink kool-aid
    - andsoitis 4y ago
- sudden_dystopia 4y ago
  That is not at all what is going on here…it’s not the people with all the money, it’s the underlying monetary policy(little to no interest rates for a decade combined with money printing) that led to those people having that money. If a tech company couldn’t borrow cheap money early on, they couldn’t afford those wonderful compensation packages.
  - deleted 4y ago
    [deleted]
  - Retric 4y ago
    Google’s profits have vastly outstripped the money invested into it. They could have borrowed at 20% and still been wildly profitable.
    - NhanH 4y ago
      The argument is that without cheap money, Google/FB's customers wouldn't have the cash to plow into ads.
      - Retric 4y ago
        Apple, Netflix, Amazon, and Microsoft aren’t advertising supported and while Google does profiting from cheap money Google’s margins are insane. So, they can take a significant reduction in revenue without changing their business model. I keep getting YouTube adds for the same kind of things I have seen on TV. Tide pods, dish soap, toilet paper etc alongside Door Dash’s attempt to recruit workers. They would definitely make less money without door dash but not enough to matter. Much like how startups keep splurging on Super Bowl commercials but the Super Bowl would still make lots of money without them.
- cloutchaser 4y ago
  The moment a centralised institution controls interest rates, and has the ability to buy government debt (in other words finance government spending without the market buying bonds), you are NOT talking about capitalism, but about government controlled markets.
  - andsoitis 4y ago
    > finance government spending without the market buying bonds According to https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124 https://www.thebalance.com/who-owns-the-u-s-national-debt-33...: “The public holds over $22 trillion of the national debt. 3 Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.”
    - ghostwriter 4y ago
      > The public holds over $22 trillion of the national debt. This is amazing. A very few seem to realise that it says the public buys and holds a promise on a future productive capacity of that same public. It's as if I paid another person for the privilege of promising myself to behave and work for that person overtime in the future.
    - cloutchaser 4y ago
      Ok, but the fed bought bonds on the market and artificially drove down interest rates doing so. And also financed part of government debt. I don’t see how the holdings of it matter, that’s completely different to the bonds being sold on the open market, which the fed was buying
- ghostwriter 4y ago
  Since when capitalism is defined as a system where governments intevene into the market forces to bail out losers by unbacked printed money?
deleted 4y ago
[deleted]
cableshaft 4y ago
Yeah I'm in my 40s and I don't have that much in savings. Of course, working in failed tiny startups without 401k plans for most of my 20s didn't help. I've been doing my best to make up for lost time the past few years, but I've still got quite a ways to go before I get to that point. But 600k in the bank is still not the norm for Americans, only a small percentage of them. Most are really struggling right now.
- teekert 4y ago
  Having it as debt instead of in the bank sounds even better as inflation eats your debt away.
  - HideousKojima 4y ago
    Only if your wages go up as well
  - cableshaft 4y ago
    Who keeps 600k in the bank? I could have it in stocks and be making around $16k/year in dividends right now (that's just me picking a stock at its current price and dividend, I'm sure it would have been over time otherwise), while riding out the recession.
    - d_k_f 4y ago
      If you believe that the stock market is going to go downhill as well, investing in a stock is only worthwhile if it loses less than it pays in dividends. I guess that a lot of people are on the fence about whether they should short stocks since "everything is going down" or just sit on their cash reserves, eat the inflation and hope to buy in again once the bottom has been reached.
      - cableshaft 4y ago
        Or you can stop trying to time the market and keep buying through the downturn. Might make less money that way, but you also don't risk totally mistiming the bottom, like a lot of people likely did back in March 2020 during what ended up being the shortest recession ever. Granted I think this recession is likely going to be significantly worse and longer than that one. I'm still taking advantage of the the 25% discount on stocks and buying, though. Also I suspect we're in for some terrible shit in the next 5-15 years with the way the environment is heading (the physical environment, i.e. lack of water, topsoil, ocean acidification, etc), but I also suspect we're in for at least one more solid bull run before that happens.
yunohn 4y ago
> 28 year old FAANG engineers with 600k in savings and a house This is truly such an exxagerated strawman. It’s such a minuscule number of people, and they’re definitely not 28. Plus, the sky high salaries are for senior engineers, not juniors.
- carbadtraingood 4y ago
  I know plenty of folks who this describes? FAANG workers who got in at 20, no kids, own homes and have hundreds of thousands in the bank.
  - yunohn 4y ago
    Plenty == affect the global/USA economy? Have you considered you live in a bubble? FAANG don’t even employ enough people for this to make a dent on anything other than housing prices in FAANG commute localities.
    - trgn 4y ago
      The FAANG example was exaggerated, but the core point still stands. Across the board, labor in US has seen sharp income increases the last couple years, and families have had elevated savings rate for a lot longer. Plus, nobody was spending anything in the beginning of COVID. That latent spending power of households is now being deployed, and huge contributor to inflation.
      - rightbyte 4y ago
        I don't see how Covid savings would increase the price of butter and meat really. Inflation is all over the board and escalated in January (?).
        slaw 4y ago
        It is just Fed printing money like there is no tomorrow.
- 4y ago
danaris 4y ago
It may be "a lot of people" in an absolute sense, but it's still only a small fraction of the population. Specifically, the fraction that was already very wealthy. The poor are getting worse off, with wages not rising nearly fast enough to keep pace with inflation (not to mention being basically sacrificed to keep the great money machine running during COVID). And they're already starting to do something about it: the unionization push is accelerating (I saw several weeks ago a figure that at the beginning of the year, there were zero unionized Starbucks, and at the time of that posting, they had just unionized the 150th), and if inflation continues at this rate—or higher—without some significant changes in wages, etc, we might start to see bigger problems before long.
abeppu 4y ago
Others are discussing that the 28 yo FAANG engineer is such a small population that it's not relevant to the larger picture, which may be true, but misses the larger point that _lots_ of people had extra money of which the FAANG engineer is just one example. Home owners refinanced. Parents got the child tax credit. Federal and state-level stimulus checks. And businesses took 75% of PPP dollars for purposes other than wages. https://www.stlouisfed.org/publications/regional-economist/2022/jul/was-paycheck-protection-program-effective https://www.stlouisfed.org/publications/regional-economist/2...

by nus07 4y ago

supernovae 4y ago

I find this disappointing because it basically says "anyone who works for a W2 will cause inflation if they are successful" That shows to me that capitalism is broken if success means inflation. We should be able to swim in cash reserves and safety and not be penalized for it.

BurningFrog 4y ago
The argument is about zero interest rates, not success or capitalism.
- TheOtherHobbes 4y ago
  But perhaps those are somehow related.
  - FollowingTheDao 4y ago
    Oh, they are perfectly related.
  - Bloating 4y ago
    as opposed to China's economy, by example?
JumpCrisscross 4y ago
> it basically says "anyone who works for a W2 will cause inflation if they are successful" Then take comfort in that armchair analysis being wrong. If it were true, if FAANG employees’ pay were driving inflation, we’d expect to see local inflation correlate with FAANG employment. It does not. In fact, almost the opposite is true, with inflation in the interior outpacing that on the coasts [1][2]. (Shipping.) [1] https://www.bloomberg.com/news/articles/2021-11-11/inflation-pressures-are-highest-in-u-s-midwest-and-south-map https://www.bloomberg.com/news/articles/2021-11-11/inflation... [2] https://www.jec.senate.gov/public/index.cfm/republicans/analysis?ID=6D33DAC5-A69A-4577-AB51-878AFEC69ADF https://www.jec.senate.gov/public/index.cfm/republicans/anal...
- abduhl 4y ago
  Isn’t this a result of inflation in the interior finally catching up to the ridiculous pace that the coasts have had as coastal money flees inward due to WFH and unaffordable housing prices?
- helen___keller 4y ago
  My armchair analysis is that we have heavy inflation in what were low-mid CoL cities as the big money remote workers cash out of the coasts for cheaper locales Or in other words, the rest of the country catching up to the big cities No idea if this is the truth of course
  - JumpCrisscross 4y ago
    > we have heavy inflation in what were low-mid CoL cities as the big money remote workers cash out of the coasts for cheaper locales Internal migration is too slow and too small to explain the interior’s price shocks. Also, it’s not like the coasts are withering away. Real GDP growth in California and New York was better than the national trend in Q1 2022; the interior saw the worst of the real economic shock [1]. [1] https://www.bea.gov/news/2022/gross-domestic-product-state-1st-quarter-2022 https://www.bea.gov/news/2022/gross-domestic-product-state-1...
    - 4y ago
lotsofpulp 4y ago
I would not describe it as broken. It could simply be a consequence of the parameters of nature not offering humans unlimited energy and resources.
- Frost1x 4y ago
  While I agree with the premise of finite energy and resources here, I don't agree that current systems are an inherent consequence of it. It's the way we as societies have allowed things to be structured. They don't have to be structured in such a way. Energy and resources have various allocation models that can be adopted, we just seem to be moving right back to the darwinistic models more and more which makes me question the stability of societies in general, especially as allocation systems tend to deviate away from natural allocation systems yet remain darwinistic. If we continue along competitive models for allocation to the end, we're right back where humans started before forming societies except in an articicial darwinistic model which I'd say people are increasingly rejecting, so we need to start thinking a bit more about more equitable allocation systems than we currently have. Right now, I'd say the general population is pretty fed up with existing allocation systems.
  - lotsofpulp 4y ago
    > While I agree with the premise of finite energy and resources here, I don't agree that current systems are an inherent consequence of it. It's the way we as societies have allowed things to be structured. They don't have to be structured in such a way. Yes, I do not see a problem with capitalism coexisting with a wealth transfer mechanism to constantly “reset” the game a little bit to prevent extreme disparities. Well, other than the fact that humans would have to allow it to occur.
    - Bloating 4y ago
      Any attempts to do that generally end-up with the smaller business owners being "reset" by the .1%, while the W2 class drink kool-aid
  - andsoitis 4y ago
sudden_dystopia 4y ago
That is not at all what is going on here…it’s not the people with all the money, it’s the underlying monetary policy(little to no interest rates for a decade combined with money printing) that led to those people having that money. If a tech company couldn’t borrow cheap money early on, they couldn’t afford those wonderful compensation packages.
- deleted 4y ago
  [deleted]
- Retric 4y ago
  Google’s profits have vastly outstripped the money invested into it. They could have borrowed at 20% and still been wildly profitable.
  - NhanH 4y ago
    The argument is that without cheap money, Google/FB's customers wouldn't have the cash to plow into ads.
    - Retric 4y ago
      Apple, Netflix, Amazon, and Microsoft aren’t advertising supported and while Google does profiting from cheap money Google’s margins are insane. So, they can take a significant reduction in revenue without changing their business model. I keep getting YouTube adds for the same kind of things I have seen on TV. Tide pods, dish soap, toilet paper etc alongside Door Dash’s attempt to recruit workers. They would definitely make less money without door dash but not enough to matter. Much like how startups keep splurging on Super Bowl commercials but the Super Bowl would still make lots of money without them.
cloutchaser 4y ago
The moment a centralised institution controls interest rates, and has the ability to buy government debt (in other words finance government spending without the market buying bonds), you are NOT talking about capitalism, but about government controlled markets.
- andsoitis 4y ago
  > finance government spending without the market buying bonds According to https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124 https://www.thebalance.com/who-owns-the-u-s-national-debt-33...: “The public holds over $22 trillion of the national debt. 3 Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.”
  - ghostwriter 4y ago
    > The public holds over $22 trillion of the national debt. This is amazing. A very few seem to realise that it says the public buys and holds a promise on a future productive capacity of that same public. It's as if I paid another person for the privilege of promising myself to behave and work for that person overtime in the future.
  - cloutchaser 4y ago
    Ok, but the fed bought bonds on the market and artificially drove down interest rates doing so. And also financed part of government debt. I don’t see how the holdings of it matter, that’s completely different to the bonds being sold on the open market, which the fed was buying
ghostwriter 4y ago
Since when capitalism is defined as a system where governments intevene into the market forces to bail out losers by unbacked printed money?

deleted 4y ago

[deleted]

cableshaft 4y ago

Yeah I'm in my 40s and I don't have that much in savings. Of course, working in failed tiny startups without 401k plans for most of my 20s didn't help. I've been doing my best to make up for lost time the past few years, but I've still got quite a ways to go before I get to that point. But 600k in the bank is still not the norm for Americans, only a small percentage of them. Most are really struggling right now.

teekert 4y ago
Having it as debt instead of in the bank sounds even better as inflation eats your debt away.
- HideousKojima 4y ago
  Only if your wages go up as well
- cableshaft 4y ago
  Who keeps 600k in the bank? I could have it in stocks and be making around $16k/year in dividends right now (that's just me picking a stock at its current price and dividend, I'm sure it would have been over time otherwise), while riding out the recession.
  - d_k_f 4y ago
    If you believe that the stock market is going to go downhill as well, investing in a stock is only worthwhile if it loses less than it pays in dividends. I guess that a lot of people are on the fence about whether they should short stocks since "everything is going down" or just sit on their cash reserves, eat the inflation and hope to buy in again once the bottom has been reached.
    - cableshaft 4y ago
      Or you can stop trying to time the market and keep buying through the downturn. Might make less money that way, but you also don't risk totally mistiming the bottom, like a lot of people likely did back in March 2020 during what ended up being the shortest recession ever. Granted I think this recession is likely going to be significantly worse and longer than that one. I'm still taking advantage of the the 25% discount on stocks and buying, though. Also I suspect we're in for some terrible shit in the next 5-15 years with the way the environment is heading (the physical environment, i.e. lack of water, topsoil, ocean acidification, etc), but I also suspect we're in for at least one more solid bull run before that happens.

yunohn 4y ago

> 28 year old FAANG engineers with 600k in savings and a house This is truly such an exxagerated strawman. It’s such a minuscule number of people, and they’re definitely not 28. Plus, the sky high salaries are for senior engineers, not juniors.

carbadtraingood 4y ago
I know plenty of folks who this describes? FAANG workers who got in at 20, no kids, own homes and have hundreds of thousands in the bank.
- yunohn 4y ago
  Plenty == affect the global/USA economy? Have you considered you live in a bubble? FAANG don’t even employ enough people for this to make a dent on anything other than housing prices in FAANG commute localities.
  - trgn 4y ago
    The FAANG example was exaggerated, but the core point still stands. Across the board, labor in US has seen sharp income increases the last couple years, and families have had elevated savings rate for a lot longer. Plus, nobody was spending anything in the beginning of COVID. That latent spending power of households is now being deployed, and huge contributor to inflation.
    - rightbyte 4y ago
      I don't see how Covid savings would increase the price of butter and meat really. Inflation is all over the board and escalated in January (?).
      - slaw 4y ago
        It is just Fed printing money like there is no tomorrow.
4y ago

danaris 4y ago

It may be "a lot of people" in an absolute sense, but it's still only a small fraction of the population. Specifically, the fraction that was already very wealthy. The poor are getting worse off, with wages not rising nearly fast enough to keep pace with inflation (not to mention being basically sacrificed to keep the great money machine running during COVID). And they're already starting to do something about it: the unionization push is accelerating (I saw several weeks ago a figure that at the beginning of the year, there were zero unionized Starbucks, and at the time of that posting, they had just unionized the 150th), and if inflation continues at this rate—or higher—without some significant changes in wages, etc, we might start to see bigger problems before long.

abeppu 4y ago

Others are discussing that the 28 yo FAANG engineer is such a small population that it's not relevant to the larger picture, which may be true, but misses the larger point that _lots_ of people had extra money of which the FAANG engineer is just one example. Home owners refinanced. Parents got the child tax credit. Federal and state-level stimulus checks. And businesses took 75% of PPP dollars for purposes other than wages. https://www.stlouisfed.org/publications/regional-economist/2022/jul/was-paycheck-protection-program-effective https://www.stlouisfed.org/publications/regional-economist/2...