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> Because the rate of increase of asset prices is quicker than that of other prices, namely labor. This totally depends on the asset and is nowhere near as str

by KK7NIL 2y ago

> Because the rate of increase of asset prices is quicker than that of other prices, namely labor. This totally depends on the asset and is nowhere near as straightforward as you make it seem. For example, companies who mainly sell to consumers and require constant capex will generally be negatively impacted by inflation. Your idea that the government will hold up the stock market just doesn't up to historical data. 2020 was the big exception (and the most recent in memory, hence why you and others are so focused on it) but the inflation that caused has lead to economic hardship across the board. I agree with you that there's a political force trying to prop up the US stock market, but I'm not sure it's as simple as "old people and their 401k's!"

lotsofpulp 2y ago
2020 was far from an exception. https://www.thoughtco.com/government-financial-bailout-history-4123193 https://www.thoughtco.com/government-financial-bailout-histo... Push comes to shove, the only question about whether or not a bailout will happen (since there is no technical hurdle to issuing more money, just changing numbers in a database) is are the parties receiving a bailout sufficiently influential. And I argue that people exposed to SP500, whether it be by holding it directly or facing the prospects of higher taxes because the government pension fund holding SP500 is not meeting its returns, are now sufficiently influential that it is a given that leaders won’t allow the broad market to be negative for more than a couple years. 2020 isn’t even the most recent one. Here’s a multi employer pension fund bailout from Mar 2021: https://www.nytimes.com/2021/03/07/business/dealbook/bailout-pensions-stimulus.html https://www.nytimes.com/2021/03/07/business/dealbook/bailout... As an aside, the irony of this specific bailout is the main beneficiary, Teamsters’ union, came out in support of Trump after Democrats saved them.

by KK7NIL 2y ago

lotsofpulp 2y ago

2020 was far from an exception. https://www.thoughtco.com/government-financial-bailout-history-4123193 https://www.thoughtco.com/government-financial-bailout-histo... Push comes to shove, the only question about whether or not a bailout will happen (since there is no technical hurdle to issuing more money, just changing numbers in a database) is are the parties receiving a bailout sufficiently influential. And I argue that people exposed to SP500, whether it be by holding it directly or facing the prospects of higher taxes because the government pension fund holding SP500 is not meeting its returns, are now sufficiently influential that it is a given that leaders won’t allow the broad market to be negative for more than a couple years. 2020 isn’t even the most recent one. Here’s a multi employer pension fund bailout from Mar 2021: https://www.nytimes.com/2021/03/07/business/dealbook/bailout-pensions-stimulus.html https://www.nytimes.com/2021/03/07/business/dealbook/bailout... As an aside, the irony of this specific bailout is the main beneficiary, Teamsters’ union, came out in support of Trump after Democrats saved them.