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if the wealth never existed then how were some people able to cash out their equities on the basis of the valuation? it was real when it was real and now it’s g

if the wealth never existed then how were some people able to cash out their equities on the basis of the valuation? it was real when it was real and now it’s gone. it isn’t that there is some core of real wealth and the markets are trending towards it but sometimes above or below it. wealth is just what the markets say it is at the moment that they say it, economies are wile coyote running past the edge of a cliff before they look down. that’s capitalism baby

roenxi 4y ago
If I try and sell you the proverbial bridge, maybe I can con you out of a few thousand dollars. But the bridge is going to be less impressive than what I pitch to you. Because I don't actually own a bridge. That is basically what is happening in your scenario - although maybe there was some wealth, it was never as impressive as the parties buying it believed. > wealth is just what the markets say it is at the moment that they say it If you reflect on this carefully you may change your mind. The market makes mistakes too - we just can't tell very easily because in any given case it is much more likely that the market is right than the person disagreeing with it. But in this case, the market is admitting that it was wrong.
notinfuriated 4y ago
If I knowingly create a pallet of fake gold bars and sell them to an unsuspecting idiot for far more than they're worth, then was that "real" wealth? I'm not sure what the distinction between real or fake wealth is here. If someone overvalues an asset, whether through lies or ignorance, does that make a difference? Or it's all real as long as someone else is fooled to purchase the asset? Either way, it's silly for people to talk about accumulated wealth of a nation in a way where trillions can be erased from one day to the next, typically when someone finally realizes that debt valued at X is not actually going to be repaid in full and is therefore only worth Y (less than X). I don't see how that's core to capitalism, and I don't believe the system we've been in has much to do with capitalism other than the relatively free exchange of goods. There should be another name for whatever this system is, which mixes elements of capitalism and socialism, but more finely controlled by spreadsheets handled by large banks. I believe it's been called "financialism" in the recent past. In this system, wealth is some cell in a bank's spreadsheet, and one day they realize they fucked up and it's all "gone. Meanwhile, there was a small minority of other people participating in the market who knew about the fuck-up ahead of time and were able to profit off of it by properly valuating the asset/liability.
- efficax 4y ago
  > If I knowingly create a pallet of fake gold bars and sell them to an unsuspecting idiot for far more than they're worth, then was that "real" wealth? I almost want to say this is an impossible question to answer. At the time it was, until it wasn't. Likewise, suppose I have an art collection. A bunch of Van Goghs. One of them is a forgery but nobody knows it's a forgery. Is it worth millions?
savanaly 4y ago
Deals made on the basis of the valuation of future wealth were always gambles by both sides. The folks who cashed out made a profitable bet on future information and could have just as easily lost out. Their experience has no influence on the real wealth (in goods, not money) of the nation.
eli_gottlieb 4y ago
>economies are wile coyote running past the edge of a cliff before they look down. that’s capitalism baby Please say psyke before I join the communists.

roenxi 4y ago

If I try and sell you the proverbial bridge, maybe I can con you out of a few thousand dollars. But the bridge is going to be less impressive than what I pitch to you. Because I don't actually own a bridge. That is basically what is happening in your scenario - although maybe there was some wealth, it was never as impressive as the parties buying it believed. > wealth is just what the markets say it is at the moment that they say it If you reflect on this carefully you may change your mind. The market makes mistakes too - we just can't tell very easily because in any given case it is much more likely that the market is right than the person disagreeing with it. But in this case, the market is admitting that it was wrong.

notinfuriated 4y ago

If I knowingly create a pallet of fake gold bars and sell them to an unsuspecting idiot for far more than they're worth, then was that "real" wealth? I'm not sure what the distinction between real or fake wealth is here. If someone overvalues an asset, whether through lies or ignorance, does that make a difference? Or it's all real as long as someone else is fooled to purchase the asset? Either way, it's silly for people to talk about accumulated wealth of a nation in a way where trillions can be erased from one day to the next, typically when someone finally realizes that debt valued at X is not actually going to be repaid in full and is therefore only worth Y (less than X). I don't see how that's core to capitalism, and I don't believe the system we've been in has much to do with capitalism other than the relatively free exchange of goods. There should be another name for whatever this system is, which mixes elements of capitalism and socialism, but more finely controlled by spreadsheets handled by large banks. I believe it's been called "financialism" in the recent past. In this system, wealth is some cell in a bank's spreadsheet, and one day they realize they fucked up and it's all "gone. Meanwhile, there was a small minority of other people participating in the market who knew about the fuck-up ahead of time and were able to profit off of it by properly valuating the asset/liability.

efficax 4y ago
> If I knowingly create a pallet of fake gold bars and sell them to an unsuspecting idiot for far more than they're worth, then was that "real" wealth? I almost want to say this is an impossible question to answer. At the time it was, until it wasn't. Likewise, suppose I have an art collection. A bunch of Van Goghs. One of them is a forgery but nobody knows it's a forgery. Is it worth millions?

savanaly 4y ago

Deals made on the basis of the valuation of future wealth were always gambles by both sides. The folks who cashed out made a profitable bet on future information and could have just as easily lost out. Their experience has no influence on the real wealth (in goods, not money) of the nation.

eli_gottlieb 4y ago

>economies are wile coyote running past the edge of a cliff before they look down. that’s capitalism baby Please say psyke before I join the communists.