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The most surprising thing to me about this is just how... common these market moves are. Seeing so many big swings, even in the early days of the country, reall

The most surprising thing to me about this is just how... common these market moves are. Seeing so many big swings, even in the early days of the country, really drives home the idea that actually, things aren't as bad as they always seem when you're going through them.

riffic 2y ago
business cycles are natural and periodic like a pendulum swing.
- PheonixPharts 2y ago
  There's another name [0] for the "business cycle" and it doesn't rely on superstition either. Unfortunate that theory predicts those crises will trend getting worse and worse until the eventual breakdown of the system. 0. https://en.wikipedia.org/wiki/Crisis_theory https://en.wikipedia.org/wiki/Crisis_theory
  - pictureofabear 2y ago
    This sounds a bit like a blind squirrel finding a nut or the no true Scotsman fallacy. If the system doesn't break, then clearly the crisis wasn't big enough just yet... but eventually it's going to break!
- kjkjadksj 2y ago
  Its why the rich always get richer too. They have the capital to buy into inevitable downturns and ride the bull run into orders of magnitude increases of wealth. Everyone else just loses their job and has to pay for rent and food out of savings and loses their generational wealth in the process.
  - WalterBright 2y ago
    The money the rich people have to buy into the dips has dipped right along with it.
    - kjkjadksj 2y ago
      Its still money to buy
      - WalterBright 2y ago
        If there was nobody to buy on the dips, the dips would go all the way to zero.
  - refurb 2y ago
    > Its why the rich always get richer too. But even the non-rich acquire more wealth over time as well.
  - onetwothree4 2y ago
    I think rich get richer because of a bunch of reasons but not really because of “buying when there is blood on the streets” or “timing the market” if you prefer. Reasons include: * Children inherit wealth and knowledge of how to build wealth * The children are doing this rather than trying to leetcode to get their first job (or rack up debt to get qualified for it etc.) * Connections * Compounding (despite corrections) * Political influcence * Can afford to hire tax/law people to avoid tax * Tax law favours the rich. You pay no tax on a billion in capital gains if you never sell and if that yields you 50m you pay tax on that but let’s say it is half so 25m that is 2.5% of the wealth but if it goes up 75m over the same period that is tax free so you paid 20% tax on the increase in net worth. Compare that to a worker. And this is without doing any tax avoidance! * To avoid tax at all in the previous example get the corp to buy back shares instead of paying dividends then live off borrowed money.
    - chasd00 2y ago
      > * Children inherit wealth and knowledge of how to build wealth that knowledge is so important. When i was a kid all I was told over and over was "get a good job in an office so you don't have to work like i do". This was coming from blue collar oil and ranch hands in West Texas so that's what i did and it's worked out pretty well for me. However, I'm teaching my kids how to build wealth and that a well-paying job is an income stream to assist with that but not the whole answer.
- aaron_m04 2y ago
  I would call it natural in the same sense that arsenic, cyanide, and rabies are natural.
  - kwere 2y ago
    downturns are more due to the different timescale between investments and business cycles / market saturation. Current Market returns are due to previous allocated capital, investor chase past results hoping the trends continues, but market saturation or other shocks happens, scaring investor who rush to liquidate their positions, cratering the prices. Companies to keep certain profitability levels in the short term cut costs to the extreme, slowing growth/expansion and laying off workforce. IMHO to contain bubbles and busts, a lot more business/market data should be aviable to make informed investment decisions and make long term investment fiscally advantageous compared to shorter holdings
  - riffic 2y ago
    I posit that treating economic cycles as something that needs to be cured is itself a harmful idea. the stressors actually strengthen which is why I brought up Taleb.
  - WalterBright 2y ago
    Artificial control over the economy (central economic planning) has never worked.
- throw0101d 2y ago
  > business cycles are natural and periodic like a pendulum swing. But how long the downturns last is a policy choice: > I would summarize the Keynesian view in terms of four points: > 1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond. > 2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain. > 3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down. > 4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses. * https://archive.nytimes.com/krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2015/0...
  - its_ethan 2y ago
    > But how long the downturns last is a policy choice Maybe I'm projecting, but you say this like it's just a fact and that there are no tradeoffs. Keynes was a smart guy, but his word isn't gospel. It's not as simple as printing money to reduce interest rates and then magically depressions end. Printing money and lowering rates can easily lead to inflation (which would make everyone even worse off than they already are) if other underlying issues aren't addressed. We're literally seeing that in real time with economic policies form 2020-today. So yea policy can influence how long they last, but that goes for both directions (shortening or lengthening/making worse). Striking the right balance to like "optimally" shorten/ease a depression is incredibly hard, and (shocker) tends sows the seeds of future economic downturns. There is very likely no policy that eliminates the cyclic nature of markets/economies; it's inherent to (essentially required for) how they function.
    - arbitrary_name 2y ago
      >inflation (which would make everyone even worse off than they already are) Is this true though? Doesn't inflation just redistribute wealth rather than destroy it? We measure inflation through change in prices which are just a measure of supply and demand (dis)equilibrium, I thought.
- WalterBright 2y ago
  They are natural, but are not cycles nor periodic. They are a chaotic system, like predator/prey relationships.
  - riffic 2y ago
    the phenomenon is literally named "a business cycle" and here's its ensuing wikipedia article but of course some rando on orange site knows all https://en.wikipedia.org/wiki/Business_cycle https://en.wikipedia.org/wiki/Business_cycle you could be right too, rando, I'm willing to accept a little column A, a little column B.
    - WalterBright 2y ago
      Oh, I know it's called the business "cycle". Cycles are periodic and predictable. Business conditions are not. If it is a cycle, you can make an easy fortune on the stock market.
      - riffic 2y ago
        periodic yes, predictable, maybe? Like I can say with absolute certainty that there will be yet another period of growth and yet another recession. All of this has happened before and all of this will happen again.
        WalterBright 2y ago
        Being cyclical requires periodicity, and your saying does not imply a period.
        riffic 2y ago
        the quote implies a certainty.
  - j7ake 2y ago
    Predator prey relationships are not chaotic…
jimmytucson 2y ago
My takeaway was the exact opposite: in the 1930s, things really were as bad as they seemed, and the U.S. was justified in taking extreme measures to avoid it happening again.
- willmadden 2y ago
  >and the U.S. was justified in taking extreme measures to avoid it happening again What part of the chart shows this?
- WalterBright 2y ago
  All the country had to do was to stop doing the things that caused the Depression: 1. pegging the dollar to gold 2. inflating the dollar 3. having the Fed set the money supply by fiat rather than the pre-1914 way of letting the market forces do it
  - deepsun 2y ago
    4. Spending the tax money like crazy, to give the poor some money to buy things. Hoover Dam, Golden Gate Bridge etc are nice takeaway of that generosity frenzy. Too bad during COVID gov just gave cash, not getting any infrastructure in return.
    - tim333 2y ago
      For better or worse the policy was stay home and isolate rather than come together and build stuff.
    - chasd00 2y ago
      COVID wasn't a lack of employment problem, everyone had jobs, the government decided to pay people to stay home. It was a handout specifically aimed at not building anything at all.
  - WalterBright 2y ago
    The government persisted with the failed policies, lengthening and deepening the Depression. Central economic planning simply never is able to do better than free market forces.
zelcon 2y ago
This time is different

riffic 2y ago

business cycles are natural and periodic like a pendulum swing.

PheonixPharts 2y ago
There's another name [0] for the "business cycle" and it doesn't rely on superstition either. Unfortunate that theory predicts those crises will trend getting worse and worse until the eventual breakdown of the system. 0. https://en.wikipedia.org/wiki/Crisis_theory https://en.wikipedia.org/wiki/Crisis_theory
- pictureofabear 2y ago
  This sounds a bit like a blind squirrel finding a nut or the no true Scotsman fallacy. If the system doesn't break, then clearly the crisis wasn't big enough just yet... but eventually it's going to break!
kjkjadksj 2y ago
Its why the rich always get richer too. They have the capital to buy into inevitable downturns and ride the bull run into orders of magnitude increases of wealth. Everyone else just loses their job and has to pay for rent and food out of savings and loses their generational wealth in the process.
- WalterBright 2y ago
  The money the rich people have to buy into the dips has dipped right along with it.
  - kjkjadksj 2y ago
    Its still money to buy
    - WalterBright 2y ago
      If there was nobody to buy on the dips, the dips would go all the way to zero.
- refurb 2y ago
  > Its why the rich always get richer too. But even the non-rich acquire more wealth over time as well.
- onetwothree4 2y ago
  I think rich get richer because of a bunch of reasons but not really because of “buying when there is blood on the streets” or “timing the market” if you prefer. Reasons include: * Children inherit wealth and knowledge of how to build wealth * The children are doing this rather than trying to leetcode to get their first job (or rack up debt to get qualified for it etc.) * Connections * Compounding (despite corrections) * Political influcence * Can afford to hire tax/law people to avoid tax * Tax law favours the rich. You pay no tax on a billion in capital gains if you never sell and if that yields you 50m you pay tax on that but let’s say it is half so 25m that is 2.5% of the wealth but if it goes up 75m over the same period that is tax free so you paid 20% tax on the increase in net worth. Compare that to a worker. And this is without doing any tax avoidance! * To avoid tax at all in the previous example get the corp to buy back shares instead of paying dividends then live off borrowed money.
  - chasd00 2y ago
    > * Children inherit wealth and knowledge of how to build wealth that knowledge is so important. When i was a kid all I was told over and over was "get a good job in an office so you don't have to work like i do". This was coming from blue collar oil and ranch hands in West Texas so that's what i did and it's worked out pretty well for me. However, I'm teaching my kids how to build wealth and that a well-paying job is an income stream to assist with that but not the whole answer.
aaron_m04 2y ago
I would call it natural in the same sense that arsenic, cyanide, and rabies are natural.
- kwere 2y ago
  downturns are more due to the different timescale between investments and business cycles / market saturation. Current Market returns are due to previous allocated capital, investor chase past results hoping the trends continues, but market saturation or other shocks happens, scaring investor who rush to liquidate their positions, cratering the prices. Companies to keep certain profitability levels in the short term cut costs to the extreme, slowing growth/expansion and laying off workforce. IMHO to contain bubbles and busts, a lot more business/market data should be aviable to make informed investment decisions and make long term investment fiscally advantageous compared to shorter holdings
- riffic 2y ago
  I posit that treating economic cycles as something that needs to be cured is itself a harmful idea. the stressors actually strengthen which is why I brought up Taleb.
- WalterBright 2y ago
  Artificial control over the economy (central economic planning) has never worked.
throw0101d 2y ago
> business cycles are natural and periodic like a pendulum swing. But how long the downturns last is a policy choice: > I would summarize the Keynesian view in terms of four points: > 1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond. > 2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain. > 3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down. > 4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses. * https://archive.nytimes.com/krugman.blogs.nytimes.com/2015/09/15/keynesianism-explained/ https://archive.nytimes.com/krugman.blogs.nytimes.com/2015/0...
- its_ethan 2y ago
  > But how long the downturns last is a policy choice Maybe I'm projecting, but you say this like it's just a fact and that there are no tradeoffs. Keynes was a smart guy, but his word isn't gospel. It's not as simple as printing money to reduce interest rates and then magically depressions end. Printing money and lowering rates can easily lead to inflation (which would make everyone even worse off than they already are) if other underlying issues aren't addressed. We're literally seeing that in real time with economic policies form 2020-today. So yea policy can influence how long they last, but that goes for both directions (shortening or lengthening/making worse). Striking the right balance to like "optimally" shorten/ease a depression is incredibly hard, and (shocker) tends sows the seeds of future economic downturns. There is very likely no policy that eliminates the cyclic nature of markets/economies; it's inherent to (essentially required for) how they function.
  - arbitrary_name 2y ago
    >inflation (which would make everyone even worse off than they already are) Is this true though? Doesn't inflation just redistribute wealth rather than destroy it? We measure inflation through change in prices which are just a measure of supply and demand (dis)equilibrium, I thought.
WalterBright 2y ago
They are natural, but are not cycles nor periodic. They are a chaotic system, like predator/prey relationships.
- riffic 2y ago
  the phenomenon is literally named "a business cycle" and here's its ensuing wikipedia article but of course some rando on orange site knows all https://en.wikipedia.org/wiki/Business_cycle https://en.wikipedia.org/wiki/Business_cycle you could be right too, rando, I'm willing to accept a little column A, a little column B.
  - WalterBright 2y ago
    Oh, I know it's called the business "cycle". Cycles are periodic and predictable. Business conditions are not. If it is a cycle, you can make an easy fortune on the stock market.
    - riffic 2y ago
      periodic yes, predictable, maybe? Like I can say with absolute certainty that there will be yet another period of growth and yet another recession. All of this has happened before and all of this will happen again.
      - WalterBright 2y ago
        Being cyclical requires periodicity, and your saying does not imply a period.
        riffic 2y ago
        the quote implies a certainty.
- j7ake 2y ago
  Predator prey relationships are not chaotic…

jimmytucson 2y ago

My takeaway was the exact opposite: in the 1930s, things really were as bad as they seemed, and the U.S. was justified in taking extreme measures to avoid it happening again.

willmadden 2y ago
>and the U.S. was justified in taking extreme measures to avoid it happening again What part of the chart shows this?
WalterBright 2y ago
All the country had to do was to stop doing the things that caused the Depression: 1. pegging the dollar to gold 2. inflating the dollar 3. having the Fed set the money supply by fiat rather than the pre-1914 way of letting the market forces do it
- deepsun 2y ago
  4. Spending the tax money like crazy, to give the poor some money to buy things. Hoover Dam, Golden Gate Bridge etc are nice takeaway of that generosity frenzy. Too bad during COVID gov just gave cash, not getting any infrastructure in return.
  - tim333 2y ago
    For better or worse the policy was stay home and isolate rather than come together and build stuff.
  - chasd00 2y ago
    COVID wasn't a lack of employment problem, everyone had jobs, the government decided to pay people to stay home. It was a handout specifically aimed at not building anything at all.
- WalterBright 2y ago
  The government persisted with the failed policies, lengthening and deepening the Depression. Central economic planning simply never is able to do better than free market forces.

zelcon 2y ago

This time is different