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I feel like this is a symptom of our broken economic system that has allowed too much cash to be trapped in the markets, forever making mostly imaginary numbers
by jandrese 2y ago
I feel like this is a symptom of our broken economic system that has allowed too much cash to be trapped in the markets, forever making mostly imaginary numbers go up while the middle class gets squeezed and the poor continue to suffer.
A fundamental feature of a capitalist system you can use money to make more money. That's great for growing wealth. But you have to be careful, it's like a sound system at a concert. When you install it everybody benefits from being able to hear the band. But it is easily to cause an earspittig feedback loop if you don't keep the singers a safe distance from the speakers. Unfortunately, the only way people have to quantify how good a concert sounds is by loudness, and because the awful screeching of a feedback loop is about the loudest thing possible we've been just holding the microphone at the speaker for close to 50 years and telling ourselves that everybody is enjoying the music.
It is the job of the government, because nobody else can do it, to prevent the runaway feedback loop that is a fundamental flaw of capitalism, and our government has been entirely derelict in their duty. This has caused market distortions that go beyond the stock market. The housing market is also suffering for example. There is way too much money at the top looking for anything that can create a return, and when something looks promising it gets inflated to ridiculous levels, far beyond what is helpful for a company trying to expand their business. There's so much money most of it has to be dumb money.
- danlugo92 2y agoOr you could, you know, like just stop printing money and the problem goes away.
- jandrese 2y agoHow does not printing money make any difference here? It's not like people put trillions of cash into nVidia. The cap is just outstanding shares times what they were last sold for, if someone buys at a higher price suddenly lots of phantom money appears and everybody who owns shares gets richer on paper.
- lvl155 2y agoTINA. Government forced everyone to save for retirement this way. There’s way too much capital trapped in SPY and that’s going to create distortions in price discovery and these abrupt corrections in individual stocks.