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Not that I disagree with you, but me and many others are planning our retirements accounts around assumptions of 8-9% growth. Stock market returns and real econ

Not that I disagree with you, but me and many others are planning our retirements accounts around assumptions of 8-9% growth. Stock market returns and real economic productivity aren't the same thing, but I think it would be deeply challenging for us to change course. Low growth creates a lot of new issues which are debatably worse than the axles-on-fire problem, but this is a conterfactual argument.

mschuster91 4y ago
> Not that I disagree with you, but me and many others are planning our retirements accounts around assumptions of 8-9% growth. Actions have consequences. When the entire retirement plan of everyone in the country able to set money aside in a 401k (which isn't applicable for a lot of low-wage employees) is tied to the stock markets, politics is effectively held hostage by the companies in the S&P 500 - politicians simply can't risk enacting any policy that could send these stocks tanking. The US is in for a really, really wild ride for the next decades as a lot of things that have to be done simply to keep the planet able to support human life will be things that massively complicate or, in the case of anything fossil fuel related, make impossible the business of a lot of large companies, which will send their stocks tanking.
- quacked 4y ago
  When I was young, I assumed the 401k had been around forever. But it was introduced in 1978! We're nearing the end of the 50-year period that the guys who invented it would really need to get staggeringly rich off of the concept, and now that they're getting ready to die everyone's overreliance on the system they set up is causing total gridlock in American life. You can't do ANYTHING that threatens the stock market. The President can't give good advice like "save your money and don't go into debt on new cars" because if people stop spending, everyone's retirement accounts stagnate. (Edit: as a matter of fact, recently the President has been actually advertising going into debt for new cars. And it works! My poor-with-finances brother wants to buy a $38,000 truck, and he's got less than $500 in savings and rents an apartment.) I'm between 25-30 and I'm not even remotely planning on having enough money when I retire. My plan is to have kids, teach them to be clever and resourceful, and then live with them. If they won't have me, I'll live as a pauper in the grand new order when I have to retire. Greater men than I have died penniless.
  - colpabar 4y ago
    This is very interesting - did you read this in a book or a blog or something? I’d love to add it to my list.
    - quacked 4y ago
      Honestly, I'm kind of drawing my own conclusions about the financial system based on what I've read. I'm also almost embarrassed to reveal my reading list, as it reveals me as a dilettante, with an undergraduate-sophomore understanding of economics. However, I am very happy and presently financially secure with a good life, so at least my choices about spending aren't completely stupid. I would say these are the sources from which I draw a lot of my opinions about the financial system: - Max Dama on Automated Trading (57-page PDF written by a quantitative trader) - Out-Sourced Profits: The Cornerstone of Successful Subcontracting by Dr. J. L. Hart-Smith (memo written by a Boeing employee about why Boeing was failing to make money and simultaneously driving down quality in the airliner industry) - The Big Short by Michael Lewis - Hipsters on Food Stamps Parts I-III by The Last Psychiatrist (blogger whose blog, "The Last Psychiatrist", is my favorite source of writing and whose advice I orient most of my life and behavior around. Many of his other articles touch on the credit-based financial system) - WTF Happened in 1971? (Website showing trends in American life after the gold standard was abandoned in 1971, it's not necessarily well-researched and they draw a lot of conclusions that more experienced researchers would contradict) - Wikipedia (some great reads on the history of the joint-stock corporation, dollar, credit card, 401k, home loan, auto loan, credit score, etc.) There's a lot of other things I've read, but they're not explicitly about the financial system. I feel very strongly about the structure of civilization and the process of creating engineered goods, and I find that most of my complaints about problems with those two things in modern times resolve back to "the people incentivizing work to happen in modern civilization are amoral, corrupt, and actively destroying the historical incentives that people had to work towards ends that could be described as 'common good'". This leads to my constant sniping about the credit system and 401ks.
      - fxtentacle 4y ago
        Thanks for sharing this list :) The beginning of https://thelastpsychiatrist.com/2012/11/hipsters_on_food_stamps.html https://thelastpsychiatrist.com/2012/11/hipsters_on_food_sta... seems very promising ...
phkahler 4y ago
>> many others are planning our retirements accounts around assumptions of 8-9% growth. Another aspect of retirement should be figuring out how to lower the cost of living. Unfortunately the notion that housing should be a sort of investment goes directly against that. It can't be affordable and also be a good investment.
- bombcar 4y ago
  There is one way to be both without causing disaster - defeat the devil of depreciation. If you "invest" in your home/property by making it more durable and better you can have it go up in value and down in costs without needing infinite appreciation of land and structure. For example, if you can spend $20k (random amount) and forever cut your heating bill in half, that's an investment that will continue to pay dividends "forever".
  - treeman79 4y ago
    If housing is being constructed at the rate of X per month. And population is increasing at X*2 per month. Nothing else matters. House prices will go up overall. Basic supply and demand.
    - bombcar 4y ago
      Yeah, I was pointing out you can have an "investment" even if all the other supply issues are solved (enough houses are built to satisfy demand, etc, real appreciation is basically zero).
    - ClumsyPilot 4y ago
      In the past 30 Years Berlin had housing go up in value 10x but population went up 1%. Look it up The current financial system created the housing criss.
      - Steltek 4y ago
        In my town, population went down but children-per-family decreased even more, effectively raising the number of households/family-units that needed separate homes. A raw population count is not always what it seems.
bombcar 4y ago
Is that 8-9% growth before or after inflation? Because if it's before, that's going to end up being only 3-4% at best. More and more I think people need to plan for retirement around expense reduction versus capital growth.
- conductr 4y ago
  Depends but stocks are generally inflationary
- lotsofpulp 4y ago
  I assume, in the long term, SP500 returns are equal to inflation.
  - bombcar 4y ago
    I think in general the accepted wisdom is that long-term returns of the entire market are "somehow" roughly equal to the actual value created - which ends up being roughly equal to GDP growth (after inflation is factored out). Which means it has been astronomical during the last 100 years as the last century was the "rise of America".
- berniedurfee 4y ago
  Learn to fish.
jakelazaroff 4y ago
You’re setting up a pretty direct moral quandary here. How many human beings should we be willing to poison to keep the stock market going up?
- paulmd 4y ago
  With apologies to Patrick McKenzie: the optimal amount of dead kids is non-zero, and I think the revealed preference of america as a whole is that we are comfortable with quite a lot of dead kids if it brings political stability and a modicum of personal comfort. School shootings, policing, our medical system, our political system itself (the uneven distribution of power between states), all of these suffer from the fundamental problem that we've got a system that's a solid 3/10 and we have no institutional interest in improving that. And yeah those systems grind up some dead kids every day and we shrug and move on. Thoughts and prayers is the meme, right? Nobody wants to mess with the rail system because it will make the amazon packages stop. Let alone if there's a feeling (or a reality) of tipping back into the supply-chain issues of 2020 again. Can you imagine the reaction to a rail strike during midterm elections? People would legitimately have flipped their shit and voted in some completely vile motherfuckers who promised to at least make the amazon packages keep coming. So the union had to eat shit, and now your kids have to eat shit, because the union wasn't wrong about what they were saying, but it was all a complete political loser two months ago. Name a single ohio republican who wouldn't have leapt on the "biden picks the union over america and christmas". And it works - people keep voting for this, based on actual revealed preference through voting patterns, people feel it's way more important to keep fighting the war on egghead intellectuals, this year's installement of the war on LGBT, and the war on climate science than to fret about some dead kids. Biden's doing a good job of understanding what america really wants - which is my god damn amazon packages to show up. America is open for business, people want Norfolk Southern jobs and Duke Coal jobs and whatever else, and we're far too scared to make even those small leaps let alone reforming our whole healthcare system or retirement or redistributing power between states to something a little more sane. Those are truly big changes and we're not even willing to handle the little stuff. Jumping to the next thing is always scary, whether it's a job or anything else, even if the train is on fire it's the train on fire we know. Everyone has lingered too long in a job that was failing or with a partner that wasn't going to work out, but it's safe. And America is the same way, by geographic and political coincidence we are essentially immune to external geopolitical pressure so there's nothing that's going to push us down. Which has allowed us to ignore underlying problems that would have pushed down other countries. A system that's designed to gridlock is fundamentally broken, people say "when you're not in power you'll appreciate it!" no actually I want someone always to be in the driver seat and empowered to make decisions, and we can go from there to making the political system actually represent what people want. Excessive checks-and-balances and a division between the executive branch and the legislature and not inherently positive things with no downsides, the PM being the leader of the ruling party is an overall positive feature of parliamentary systems. The underlying problem is that this is not an issue the heartland of america wants to address, and the american system has (by historical circumstance and coincidences of fate) distributed a disproportionate amount of power to the heartland. The heartland wants to fight LGBT and thumb their nose at egghead intellectuals who want you to buy smaller cars to fight climate change, and they certainly don't want the unions to "win". That is what actually motivates people's votes. Again, name an ohio republican who would have "supported Biden and the unions" two months ago during midterms. It's fucking hard to make a system work when a group that has at least 49% of the power at all times is intent on being a deadweight or outright contrarian, if someone is willing to let your kids die to make bigger gains in midterms, and people keep voting from them, what exactly do you do about that? And not just on the trains either, it's all across american society. But pulling the lever and diverting the trolley would decrease the political power of some farmers in Iowa, and deep down America is just not comfortable with that. "States should be equally represented" because haphazard admission of states across 200 years is a sacrosanct political bond even if it leads to 30% of the population controlling a supermajority of the political power. And if they do dumb shit with it oh well, shikata ga nai. The rest of the country has tried, we really have. What more can be done, could be done, that the heartland would possibly accept? The war on intellectuals and sexual freedom is just way more personally compelling than some dead kids who you probably didn't even know anyway. People just want their amazon packages to show up. More kids will die next week, they always do. Shikata gai nai - thoughts and prayers. Nothing that can be done, says only country where this happens regularly.

mschuster91 4y ago

> Not that I disagree with you, but me and many others are planning our retirements accounts around assumptions of 8-9% growth. Actions have consequences. When the entire retirement plan of everyone in the country able to set money aside in a 401k (which isn't applicable for a lot of low-wage employees) is tied to the stock markets, politics is effectively held hostage by the companies in the S&P 500 - politicians simply can't risk enacting any policy that could send these stocks tanking. The US is in for a really, really wild ride for the next decades as a lot of things that have to be done simply to keep the planet able to support human life will be things that massively complicate or, in the case of anything fossil fuel related, make impossible the business of a lot of large companies, which will send their stocks tanking.

quacked 4y ago
When I was young, I assumed the 401k had been around forever. But it was introduced in 1978! We're nearing the end of the 50-year period that the guys who invented it would really need to get staggeringly rich off of the concept, and now that they're getting ready to die everyone's overreliance on the system they set up is causing total gridlock in American life. You can't do ANYTHING that threatens the stock market. The President can't give good advice like "save your money and don't go into debt on new cars" because if people stop spending, everyone's retirement accounts stagnate. (Edit: as a matter of fact, recently the President has been actually advertising going into debt for new cars. And it works! My poor-with-finances brother wants to buy a $38,000 truck, and he's got less than $500 in savings and rents an apartment.) I'm between 25-30 and I'm not even remotely planning on having enough money when I retire. My plan is to have kids, teach them to be clever and resourceful, and then live with them. If they won't have me, I'll live as a pauper in the grand new order when I have to retire. Greater men than I have died penniless.
- colpabar 4y ago
  This is very interesting - did you read this in a book or a blog or something? I’d love to add it to my list.
  - quacked 4y ago
    Honestly, I'm kind of drawing my own conclusions about the financial system based on what I've read. I'm also almost embarrassed to reveal my reading list, as it reveals me as a dilettante, with an undergraduate-sophomore understanding of economics. However, I am very happy and presently financially secure with a good life, so at least my choices about spending aren't completely stupid. I would say these are the sources from which I draw a lot of my opinions about the financial system: - Max Dama on Automated Trading (57-page PDF written by a quantitative trader) - Out-Sourced Profits: The Cornerstone of Successful Subcontracting by Dr. J. L. Hart-Smith (memo written by a Boeing employee about why Boeing was failing to make money and simultaneously driving down quality in the airliner industry) - The Big Short by Michael Lewis - Hipsters on Food Stamps Parts I-III by The Last Psychiatrist (blogger whose blog, "The Last Psychiatrist", is my favorite source of writing and whose advice I orient most of my life and behavior around. Many of his other articles touch on the credit-based financial system) - WTF Happened in 1971? (Website showing trends in American life after the gold standard was abandoned in 1971, it's not necessarily well-researched and they draw a lot of conclusions that more experienced researchers would contradict) - Wikipedia (some great reads on the history of the joint-stock corporation, dollar, credit card, 401k, home loan, auto loan, credit score, etc.) There's a lot of other things I've read, but they're not explicitly about the financial system. I feel very strongly about the structure of civilization and the process of creating engineered goods, and I find that most of my complaints about problems with those two things in modern times resolve back to "the people incentivizing work to happen in modern civilization are amoral, corrupt, and actively destroying the historical incentives that people had to work towards ends that could be described as 'common good'". This leads to my constant sniping about the credit system and 401ks.
    - fxtentacle 4y ago
      Thanks for sharing this list :) The beginning of https://thelastpsychiatrist.com/2012/11/hipsters_on_food_stamps.html https://thelastpsychiatrist.com/2012/11/hipsters_on_food_sta... seems very promising ...

phkahler 4y ago

>> many others are planning our retirements accounts around assumptions of 8-9% growth. Another aspect of retirement should be figuring out how to lower the cost of living. Unfortunately the notion that housing should be a sort of investment goes directly against that. It can't be affordable and also be a good investment.

bombcar 4y ago
There is one way to be both without causing disaster - defeat the devil of depreciation. If you "invest" in your home/property by making it more durable and better you can have it go up in value and down in costs without needing infinite appreciation of land and structure. For example, if you can spend $20k (random amount) and forever cut your heating bill in half, that's an investment that will continue to pay dividends "forever".
- treeman79 4y ago
  If housing is being constructed at the rate of X per month. And population is increasing at X*2 per month. Nothing else matters. House prices will go up overall. Basic supply and demand.
  - bombcar 4y ago
    Yeah, I was pointing out you can have an "investment" even if all the other supply issues are solved (enough houses are built to satisfy demand, etc, real appreciation is basically zero).
  - ClumsyPilot 4y ago
    In the past 30 Years Berlin had housing go up in value 10x but population went up 1%. Look it up The current financial system created the housing criss.
    - Steltek 4y ago
      In my town, population went down but children-per-family decreased even more, effectively raising the number of households/family-units that needed separate homes. A raw population count is not always what it seems.

bombcar 4y ago

Is that 8-9% growth before or after inflation? Because if it's before, that's going to end up being only 3-4% at best. More and more I think people need to plan for retirement around expense reduction versus capital growth.

conductr 4y ago
Depends but stocks are generally inflationary
lotsofpulp 4y ago
I assume, in the long term, SP500 returns are equal to inflation.
- bombcar 4y ago
  I think in general the accepted wisdom is that long-term returns of the entire market are "somehow" roughly equal to the actual value created - which ends up being roughly equal to GDP growth (after inflation is factored out). Which means it has been astronomical during the last 100 years as the last century was the "rise of America".
berniedurfee 4y ago
Learn to fish.

jakelazaroff 4y ago

You’re setting up a pretty direct moral quandary here. How many human beings should we be willing to poison to keep the stock market going up?

paulmd 4y ago
With apologies to Patrick McKenzie: the optimal amount of dead kids is non-zero, and I think the revealed preference of america as a whole is that we are comfortable with quite a lot of dead kids if it brings political stability and a modicum of personal comfort. School shootings, policing, our medical system, our political system itself (the uneven distribution of power between states), all of these suffer from the fundamental problem that we've got a system that's a solid 3/10 and we have no institutional interest in improving that. And yeah those systems grind up some dead kids every day and we shrug and move on. Thoughts and prayers is the meme, right? Nobody wants to mess with the rail system because it will make the amazon packages stop. Let alone if there's a feeling (or a reality) of tipping back into the supply-chain issues of 2020 again. Can you imagine the reaction to a rail strike during midterm elections? People would legitimately have flipped their shit and voted in some completely vile motherfuckers who promised to at least make the amazon packages keep coming. So the union had to eat shit, and now your kids have to eat shit, because the union wasn't wrong about what they were saying, but it was all a complete political loser two months ago. Name a single ohio republican who wouldn't have leapt on the "biden picks the union over america and christmas". And it works - people keep voting for this, based on actual revealed preference through voting patterns, people feel it's way more important to keep fighting the war on egghead intellectuals, this year's installement of the war on LGBT, and the war on climate science than to fret about some dead kids. Biden's doing a good job of understanding what america really wants - which is my god damn amazon packages to show up. America is open for business, people want Norfolk Southern jobs and Duke Coal jobs and whatever else, and we're far too scared to make even those small leaps let alone reforming our whole healthcare system or retirement or redistributing power between states to something a little more sane. Those are truly big changes and we're not even willing to handle the little stuff. Jumping to the next thing is always scary, whether it's a job or anything else, even if the train is on fire it's the train on fire we know. Everyone has lingered too long in a job that was failing or with a partner that wasn't going to work out, but it's safe. And America is the same way, by geographic and political coincidence we are essentially immune to external geopolitical pressure so there's nothing that's going to push us down. Which has allowed us to ignore underlying problems that would have pushed down other countries. A system that's designed to gridlock is fundamentally broken, people say "when you're not in power you'll appreciate it!" no actually I want someone always to be in the driver seat and empowered to make decisions, and we can go from there to making the political system actually represent what people want. Excessive checks-and-balances and a division between the executive branch and the legislature and not inherently positive things with no downsides, the PM being the leader of the ruling party is an overall positive feature of parliamentary systems. The underlying problem is that this is not an issue the heartland of america wants to address, and the american system has (by historical circumstance and coincidences of fate) distributed a disproportionate amount of power to the heartland. The heartland wants to fight LGBT and thumb their nose at egghead intellectuals who want you to buy smaller cars to fight climate change, and they certainly don't want the unions to "win". That is what actually motivates people's votes. Again, name an ohio republican who would have "supported Biden and the unions" two months ago during midterms. It's fucking hard to make a system work when a group that has at least 49% of the power at all times is intent on being a deadweight or outright contrarian, if someone is willing to let your kids die to make bigger gains in midterms, and people keep voting from them, what exactly do you do about that? And not just on the trains either, it's all across american society. But pulling the lever and diverting the trolley would decrease the political power of some farmers in Iowa, and deep down America is just not comfortable with that. "States should be equally represented" because haphazard admission of states across 200 years is a sacrosanct political bond even if it leads to 30% of the population controlling a supermajority of the political power. And if they do dumb shit with it oh well, shikata ga nai. The rest of the country has tried, we really have. What more can be done, could be done, that the heartland would possibly accept? The war on intellectuals and sexual freedom is just way more personally compelling than some dead kids who you probably didn't even know anyway. People just want their amazon packages to show up. More kids will die next week, they always do. Shikata gai nai - thoughts and prayers. Nothing that can be done, says only country where this happens regularly.