5 ms·

I actually feel really prepared for this one. 2007 made me nervous, but not this one. I feel secure in my employment and I finally have a real emergency fund ev

I actually feel really prepared for this one. 2007 made me nervous, but not this one. I feel secure in my employment and I finally have a real emergency fund even if I lose my job. I'm not optimistic about long term though. The infinite growth delusion seems like it will break in my lifetime, retirement is scary

mrcheesebreeze 4y ago
thats why if you have reserve funds they need to not be in us banks, they can close down and go out of business in a recession. Take physical wealth and move somewhere else if a really bad one happens.
- pwinnski 4y ago
  That is not true, though? Or rather, banks can indeed shut down, but that's what the Federal Deposit Insurance Corporation is for. The FDIC insures up to $250,000 per customer, per bank. So there is not much safer place to keep emergency funds than a US bank.
  - mrcheesebreeze 4y ago
    actually banks are one of the worst ways to store money for real emergencies. In the event of a bad recession you will quickly find the banks are more fragile than you thought. Multiple times in history people who thought the banks couldn't fail saw they crashed hard. Furthermore as other posters said, inflation can make you money worthless quickly. If you want an emergency fund, and I mean societal collapse proof funds, get physical wealth and store it. Silver and gold have been useful in times of war, people who lived through the bosnian genocide said they used physical wealth that was still useful to get necessities. I am not trying to be a prepper nut, but its good to prepare somewhat for a bad recession or a problem with violence that could happen. just get a little, a few bars, and you are set incase anything goes wrong. It'll never go bad in value, it'll never be irretrievable due to financial problems, it'll never be destroyed by rot.
  - s1artibartfast 4y ago
    That doesn't help much if the cost of bread is more than $250,000
samsonradu 4y ago
Too young to understand what happened in the 2008 GFC but I doubt the 'feeling prepared' part works like this. First of all, the recessions tend to last longer than most people expect/plan for. Statistically, it will turn out their 'secure' jobs will be less 'secure' than expected. Meanwhile their emergency funds will start shrinking (slowly at first, then all at once) due to loss of purchasing power & eventual job loss. However, I'm optimistic on the long term because I think only recessions can correct the (massive) mis-allocation of capital that we experienced the past decade due to ultra-low interest rates.
- PretzelPirate 4y ago
  This seems too pessimistic without knowing specifics about the original commenter’s situation. I have no debt, a fully paid off house, and plenty of cash which has left me feeling confident about any upcoming recession. Could I get fired from my well-paying job tomorrow, the recession lasts for 5 years, and the food supply runs out so we all starve to death? Sure, but it’s probably not worth calling out. I was in college during the 2008 recession and fully supporting myself. I was able to get by with less than I have now because I didn’t have a ton of debt.
  - samsonradu 4y ago
    I used the word ‘statistically’ to underline the fact that it will not happen to everyone, and specially not to the commenter in particular.
- jghn 4y ago
  IMO at some point these sorts of disaster scenario thought experiments wind up in a place where if it happens, we're all pretty screwed anyways. Do I have sufficient funds to survive for a while in a typical recessionary environment? Yes. If the shit really hits the fan, markets crash to next to nothing, real estate craters, etc and this lasts for multiple years well yeah. I'm in trouble. But that'll be true of just about everyone and we're probably looking at general societal collapse at that point.
  - 4y ago
kiba 4y ago
Infinite growth forever is a truism that isn't very useful. Growth can continue indefinitely, but we will hit limiting factors relating to how we structured our economy.
- Shikadi 4y ago
  Why do people believe this? The earth has limited resources
  - twelfthnight 4y ago
    One explanation is technological progress. You can imagine if we were to figure out a good way to make space travel cheaper, for example, we'd no longer be limited to earth's limited resources. Of course, in the _long long_ term, entropy increase and indeed we do run out of the ability to grow or even maintain.
  - jpadkins 4y ago
    why do you believe wealth or value is limited by natural resources? That hasn't been the case for a very long time. I'd say the limiting factor on wealth is smart, productive people's time (given we are in the information age, and the bottleneck for value creation is specialized humans, not raw resources).
    - Shikadi 4y ago
      So you think smart, productive people's time is infinite? People require resources to live
  - lesuorac 4y ago
    The earth having limited resources is just the inverse of the market can stay irrational longer than you can remain solvent. Eventually we'll hit that limit [1] but the idea that its going to happen soon is undefended. The issue right now for growth is that we can't mine the earth's resources fast enough right not that we've used it up. [1]: https://en.wikipedia.org/wiki/Heat_death_of_the_universe https://en.wikipedia.org/wiki/Heat_death_of_the_universe
lumost 4y ago
Owning a house with a reasonable monthly expenditure, having a nest egg to withstand a year of unemployment all make for great downturn protection. One concern with this recession is that there is a risk that low interest rates distorted prices in irrational ways. Historic examples from the communist block do not look kindly on rapid price reallocation. Nest eggs don’t last long in a market losing 25% YoY with 10% inflation. Housing has become a dragon which either requires high inflation, government policy intervention, or a severe crash to correct.
symlinkk 4y ago
What do you consider to be a real emergency fund?
- nh23423fefe 4y ago
  1 year cash, 1 more year tied up in stock i could sell. before i was at like 3 months of cash
worker_person 4y ago
It's a cycle. We are reliving what happened under Carter now. A pro growth (low taxes, low regulation) president will come into power in 2 years. We will have a decade or two of amazing growth. People will forget basic economic principles again, raise taxes and regulations over spend like crazy and then it will fall apart again.
- s1artibartfast 4y ago
  Hopefully the next prez has a mind for more spending controls and wiser investment than the last few. You don't need austerity, but you need to make sure there are returns on investment opposed to just throwing money at problems and seeing what sticks. Because unfortunately, money always sticks
sinenomine 4y ago
> The infinite growth delusion seems like it will break in my lifetime, retirement is scary I don't think the illusion of growth is a problem per se. Growth, or at least stability, could be achieved relatively straightforwardly, if only the underlying social dependency ratio weren't growing. It grows though, at least in developed countries, and to any moderately longtermist person this feels like an obvious bomb slowly ticking away, until no time is left anymore. If no systemic fix is going to be implemented, some generations will end up holding the proverbial bag, and for now it seems that this burden will fall upon the millenials and zoomers when they hit retirement age. Especially the childless.
- wizofaus 4y ago
  Perhaps but I'm willing to bet for the majority of those living in rich/developed countries it'll initially just be a slight (but noticeable) drop in living standards - we'll find ways of pushing the costs of our current lifestyles on to future generations (and to those in less-developed parts of the world) for a while yet. And it's not actually impossible that the right sort of technological innovations will end up cancelling out most of those costs - but at some point even the cost of those innovations may well be more than we're able/willing to pay.

mrcheesebreeze 4y ago

thats why if you have reserve funds they need to not be in us banks, they can close down and go out of business in a recession. Take physical wealth and move somewhere else if a really bad one happens.

pwinnski 4y ago
That is not true, though? Or rather, banks can indeed shut down, but that's what the Federal Deposit Insurance Corporation is for. The FDIC insures up to $250,000 per customer, per bank. So there is not much safer place to keep emergency funds than a US bank.
- mrcheesebreeze 4y ago
  actually banks are one of the worst ways to store money for real emergencies. In the event of a bad recession you will quickly find the banks are more fragile than you thought. Multiple times in history people who thought the banks couldn't fail saw they crashed hard. Furthermore as other posters said, inflation can make you money worthless quickly. If you want an emergency fund, and I mean societal collapse proof funds, get physical wealth and store it. Silver and gold have been useful in times of war, people who lived through the bosnian genocide said they used physical wealth that was still useful to get necessities. I am not trying to be a prepper nut, but its good to prepare somewhat for a bad recession or a problem with violence that could happen. just get a little, a few bars, and you are set incase anything goes wrong. It'll never go bad in value, it'll never be irretrievable due to financial problems, it'll never be destroyed by rot.
- s1artibartfast 4y ago
  That doesn't help much if the cost of bread is more than $250,000

samsonradu 4y ago

Too young to understand what happened in the 2008 GFC but I doubt the 'feeling prepared' part works like this. First of all, the recessions tend to last longer than most people expect/plan for. Statistically, it will turn out their 'secure' jobs will be less 'secure' than expected. Meanwhile their emergency funds will start shrinking (slowly at first, then all at once) due to loss of purchasing power & eventual job loss. However, I'm optimistic on the long term because I think only recessions can correct the (massive) mis-allocation of capital that we experienced the past decade due to ultra-low interest rates.

PretzelPirate 4y ago
This seems too pessimistic without knowing specifics about the original commenter’s situation. I have no debt, a fully paid off house, and plenty of cash which has left me feeling confident about any upcoming recession. Could I get fired from my well-paying job tomorrow, the recession lasts for 5 years, and the food supply runs out so we all starve to death? Sure, but it’s probably not worth calling out. I was in college during the 2008 recession and fully supporting myself. I was able to get by with less than I have now because I didn’t have a ton of debt.
- samsonradu 4y ago
  I used the word ‘statistically’ to underline the fact that it will not happen to everyone, and specially not to the commenter in particular.
jghn 4y ago
IMO at some point these sorts of disaster scenario thought experiments wind up in a place where if it happens, we're all pretty screwed anyways. Do I have sufficient funds to survive for a while in a typical recessionary environment? Yes. If the shit really hits the fan, markets crash to next to nothing, real estate craters, etc and this lasts for multiple years well yeah. I'm in trouble. But that'll be true of just about everyone and we're probably looking at general societal collapse at that point.
- 4y ago

kiba 4y ago

Infinite growth forever is a truism that isn't very useful. Growth can continue indefinitely, but we will hit limiting factors relating to how we structured our economy.

Shikadi 4y ago
Why do people believe this? The earth has limited resources
- twelfthnight 4y ago
  One explanation is technological progress. You can imagine if we were to figure out a good way to make space travel cheaper, for example, we'd no longer be limited to earth's limited resources. Of course, in the _long long_ term, entropy increase and indeed we do run out of the ability to grow or even maintain.
- jpadkins 4y ago
  why do you believe wealth or value is limited by natural resources? That hasn't been the case for a very long time. I'd say the limiting factor on wealth is smart, productive people's time (given we are in the information age, and the bottleneck for value creation is specialized humans, not raw resources).
  - Shikadi 4y ago
    So you think smart, productive people's time is infinite? People require resources to live
- lesuorac 4y ago
  The earth having limited resources is just the inverse of the market can stay irrational longer than you can remain solvent. Eventually we'll hit that limit [1] but the idea that its going to happen soon is undefended. The issue right now for growth is that we can't mine the earth's resources fast enough right not that we've used it up. [1]: https://en.wikipedia.org/wiki/Heat_death_of_the_universe https://en.wikipedia.org/wiki/Heat_death_of_the_universe

lumost 4y ago

Owning a house with a reasonable monthly expenditure, having a nest egg to withstand a year of unemployment all make for great downturn protection. One concern with this recession is that there is a risk that low interest rates distorted prices in irrational ways. Historic examples from the communist block do not look kindly on rapid price reallocation. Nest eggs don’t last long in a market losing 25% YoY with 10% inflation. Housing has become a dragon which either requires high inflation, government policy intervention, or a severe crash to correct.

symlinkk 4y ago

What do you consider to be a real emergency fund?

nh23423fefe 4y ago
1 year cash, 1 more year tied up in stock i could sell. before i was at like 3 months of cash

worker_person 4y ago

It's a cycle. We are reliving what happened under Carter now. A pro growth (low taxes, low regulation) president will come into power in 2 years. We will have a decade or two of amazing growth. People will forget basic economic principles again, raise taxes and regulations over spend like crazy and then it will fall apart again.

s1artibartfast 4y ago
Hopefully the next prez has a mind for more spending controls and wiser investment than the last few. You don't need austerity, but you need to make sure there are returns on investment opposed to just throwing money at problems and seeing what sticks. Because unfortunately, money always sticks

sinenomine 4y ago

> The infinite growth delusion seems like it will break in my lifetime, retirement is scary I don't think the illusion of growth is a problem per se. Growth, or at least stability, could be achieved relatively straightforwardly, if only the underlying social dependency ratio weren't growing. It grows though, at least in developed countries, and to any moderately longtermist person this feels like an obvious bomb slowly ticking away, until no time is left anymore. If no systemic fix is going to be implemented, some generations will end up holding the proverbial bag, and for now it seems that this burden will fall upon the millenials and zoomers when they hit retirement age. Especially the childless.

wizofaus 4y ago
Perhaps but I'm willing to bet for the majority of those living in rich/developed countries it'll initially just be a slight (but noticeable) drop in living standards - we'll find ways of pushing the costs of our current lifestyles on to future generations (and to those in less-developed parts of the world) for a while yet. And it's not actually impossible that the right sort of technological innovations will end up cancelling out most of those costs - but at some point even the cost of those innovations may well be more than we're able/willing to pay.