5 ms·

I’m a Jack Bogle diehard index investor, but the idea that most economics and finance is BS strikes me as deeply incorrect. Not everything is long term retireme

I’m a Jack Bogle diehard index investor, but the idea that most economics and finance is BS strikes me as deeply incorrect. Not everything is long term retirement investing. Most car and home owners in this country would be SOL without modern finance, for starters, and I suspect a great many vacations would simply never happen if credit cards didn’t exist. Even renters these days live in buildings largely financed by either banks, reits, private equity, etc and underpinned by securitization. And when it comes to business lending the entanglements with corners of financial services that look nothing like mutual funds only get more extensive. Just because you don’t know much about it doesn’t meant it’s nonsense.

kortilla 2y ago
> most economics and finance is BS strikes me as deeply incorrect But it’s true based ok numbers. All of these “professionals” as a whole are not beating passive investors. Modern finance isn’t the reason we have credit cards. Those were common 30+ years ago. Additionally, someone taking a vacation they can’t afford that they finance via credit cards is not an example of success.
- eduction 2y ago
  No, “modern” does not mean “in the last 30 years,” but credit cards have evolved extensively in that time. Without contemporary (vs modern ) credit cards you don’t have airbnb, you don’t have online airline booking, you are not putting things on your visa in other states much less other countries. Credit cards have changed a LOT. If you think debt is the main way credit cards enable travel you are missing a ton. But the fact is that is a key function too, regardless of whether you approve. Most of the country and world are not living as comfortably as folks on this board. Appreciate what we have instead of dismissing a whole industry as useless. It seems useless until it goes away, sort of like the police, competent politicians, etc etc. I’m a passive investor too but there needs to be some ACTIVity happening for those index funds to make money. Startups, restaurants, hair salons, housing developments, and factories don’t get any money without expensive humans you dismiss as useless making decisions in the field of financial services and economics.
  - jltsiren 2y ago
    Incidentally, credit card marketing focused on international usage in my childhood (Europe in the 80s and 90s). There was little need for a credit card in your daily life, as cash and debit cards were cheaper and/or more convenient. But when you traveled internationally, you either had to carry large amounts of cash or some weird stuff such as travelers cheques, which were all inconvenient to convert to the local currency. But if you had a credit card, you could simply withdraw cash with a very competitive exchange rate.
  - ozgrakkurt 2y ago
    You absolutely do not need credit card for travel. Debit card literally does everything credit card can do
    - danielmarkbruce 2y ago
      The original comment almost certainly meant "the real time digital payments system run by banks and the visa/mastercard/amex/etc networks"... "credit card" is synonymous for that in the US, sort of.
    - disgruntledphd2 2y ago
      Most debit cards globally run over credit card rails.
  - kortilla 2y ago
    Electronic payments are not even considered “modern finance” in normal parlance.
danielmarkbruce 2y ago
I studied it, have an advanced degree in it, worked in it for years. The theory is 90% nonsense. There is a large difference between 90% nonsense and 100% nonsense. The basics of microeconomics and the basics of finance are fine. Some of the stuff around real option theory is good. Anything about "advanced asset pricing", "advanced portfolio theory", practically all upper level macroeconomics and a good chunk of microeconomics, is absolutely nonsensical. And the worst type of nonsense - sounds good, doesn't work. The vast majority of finance is basic loans (as you call out). There is no 'sophisticated' financial theory involved, it's very basic. The financial theory required to make corporate loans is also very basic - the complicated part is understanding the business so that one can make decent projections. For example, to make oil and gas loans you better have a very good understanding of oil and gas reservoirs, the engineering involved in drilling, pumping, fracking etc. Hell, the legal side of a corporate loan is more complex than the finance part. Even securitization is quite straightforward - there are just a lot of numbers.
- eduction 2y ago
  Define your terms - what theory are you talking about? You said most financial services and economics is useless but seem to be taking about a specific part of that world. Portfolio theory? Seriously? You’re clearly thinking that consumer retirement investing == financial services. Totally wrong. “ Like, 90% of economics and finance is absolute nonsense.” -you I disagree - you may be bitter from your experience but from where I sit this world falls apart without financial services in particular.
  - danielmarkbruce 2y ago
    Not bitter, I love finance. The specific nonsensical theory I call out there. Those are course names (ie every business school has a course called something like those names). You can disagree, but you seem to have taken none of the courses... the vast majority of financial services are based on very basic financial theory developed 10 thousand years ago. I never said financial services are nonsense - the academic fields are largely nonsense. Respectfully - you have something like Gell-Mann amnesia. Not quite the same, but similar. It seems like you know just enough to be dangerous, maybe enjoy the shallow knowledge, but can't go deep enough to realize the massive amount of nonsense. It's kind of lame to appeal to authority, but go through all Warren Buffett's letters to the shareholders - he also calls out the nonsense.
47282847 2y ago
My European perspective is that the brokenness is on a more fundamental level. My family has for three generations now avoided any and all debt. We earn and we spend what we earn. Yes, under current circumstances this is coming from a place of privilege. But its not too far off from the default in Europe, with free public education and healthcare and public retirement systems. All of them with flaws but actually mostly working. My grandparents did not own a credit card. My parents do not. We rent. We have around 30 paid days off plus “unlimited“ paid sick days and months of paid maternity leave. Just to name a few things that are so standard here that most people just consider them a given and nothing worth even mentioning. I am in my forties myself and expect never to need a credit line on my bank account or card. Each generation has built their own “wealth“ sufficient to live well, with no inheritance or property ownership, and with support from the next generation in the final decade - most of it coming from the public pension system built on the idea of solidarity and community, not individualism. So: No, where I am, credit cards could disappear without much effect. They are far from required. They are a component of a system meant to push you into slavery.
from-nibly 2y ago
Vacations should not be enabled by credit cards.

kortilla 2y ago

> most economics and finance is BS strikes me as deeply incorrect But it’s true based ok numbers. All of these “professionals” as a whole are not beating passive investors. Modern finance isn’t the reason we have credit cards. Those were common 30+ years ago. Additionally, someone taking a vacation they can’t afford that they finance via credit cards is not an example of success.

eduction 2y ago
No, “modern” does not mean “in the last 30 years,” but credit cards have evolved extensively in that time. Without contemporary (vs modern ) credit cards you don’t have airbnb, you don’t have online airline booking, you are not putting things on your visa in other states much less other countries. Credit cards have changed a LOT. If you think debt is the main way credit cards enable travel you are missing a ton. But the fact is that is a key function too, regardless of whether you approve. Most of the country and world are not living as comfortably as folks on this board. Appreciate what we have instead of dismissing a whole industry as useless. It seems useless until it goes away, sort of like the police, competent politicians, etc etc. I’m a passive investor too but there needs to be some ACTIVity happening for those index funds to make money. Startups, restaurants, hair salons, housing developments, and factories don’t get any money without expensive humans you dismiss as useless making decisions in the field of financial services and economics.
- jltsiren 2y ago
  Incidentally, credit card marketing focused on international usage in my childhood (Europe in the 80s and 90s). There was little need for a credit card in your daily life, as cash and debit cards were cheaper and/or more convenient. But when you traveled internationally, you either had to carry large amounts of cash or some weird stuff such as travelers cheques, which were all inconvenient to convert to the local currency. But if you had a credit card, you could simply withdraw cash with a very competitive exchange rate.
- ozgrakkurt 2y ago
  You absolutely do not need credit card for travel. Debit card literally does everything credit card can do
  - danielmarkbruce 2y ago
    The original comment almost certainly meant "the real time digital payments system run by banks and the visa/mastercard/amex/etc networks"... "credit card" is synonymous for that in the US, sort of.
  - disgruntledphd2 2y ago
    Most debit cards globally run over credit card rails.
- kortilla 2y ago
  Electronic payments are not even considered “modern finance” in normal parlance.

danielmarkbruce 2y ago

I studied it, have an advanced degree in it, worked in it for years. The theory is 90% nonsense. There is a large difference between 90% nonsense and 100% nonsense. The basics of microeconomics and the basics of finance are fine. Some of the stuff around real option theory is good. Anything about "advanced asset pricing", "advanced portfolio theory", practically all upper level macroeconomics and a good chunk of microeconomics, is absolutely nonsensical. And the worst type of nonsense - sounds good, doesn't work. The vast majority of finance is basic loans (as you call out). There is no 'sophisticated' financial theory involved, it's very basic. The financial theory required to make corporate loans is also very basic - the complicated part is understanding the business so that one can make decent projections. For example, to make oil and gas loans you better have a very good understanding of oil and gas reservoirs, the engineering involved in drilling, pumping, fracking etc. Hell, the legal side of a corporate loan is more complex than the finance part. Even securitization is quite straightforward - there are just a lot of numbers.

eduction 2y ago
Define your terms - what theory are you talking about? You said most financial services and economics is useless but seem to be taking about a specific part of that world. Portfolio theory? Seriously? You’re clearly thinking that consumer retirement investing == financial services. Totally wrong. “ Like, 90% of economics and finance is absolute nonsense.” -you I disagree - you may be bitter from your experience but from where I sit this world falls apart without financial services in particular.
- danielmarkbruce 2y ago
  Not bitter, I love finance. The specific nonsensical theory I call out there. Those are course names (ie every business school has a course called something like those names). You can disagree, but you seem to have taken none of the courses... the vast majority of financial services are based on very basic financial theory developed 10 thousand years ago. I never said financial services are nonsense - the academic fields are largely nonsense. Respectfully - you have something like Gell-Mann amnesia. Not quite the same, but similar. It seems like you know just enough to be dangerous, maybe enjoy the shallow knowledge, but can't go deep enough to realize the massive amount of nonsense. It's kind of lame to appeal to authority, but go through all Warren Buffett's letters to the shareholders - he also calls out the nonsense.

47282847 2y ago

My European perspective is that the brokenness is on a more fundamental level. My family has for three generations now avoided any and all debt. We earn and we spend what we earn. Yes, under current circumstances this is coming from a place of privilege. But its not too far off from the default in Europe, with free public education and healthcare and public retirement systems. All of them with flaws but actually mostly working. My grandparents did not own a credit card. My parents do not. We rent. We have around 30 paid days off plus “unlimited“ paid sick days and months of paid maternity leave. Just to name a few things that are so standard here that most people just consider them a given and nothing worth even mentioning. I am in my forties myself and expect never to need a credit line on my bank account or card. Each generation has built their own “wealth“ sufficient to live well, with no inheritance or property ownership, and with support from the next generation in the final decade - most of it coming from the public pension system built on the idea of solidarity and community, not individualism. So: No, where I am, credit cards could disappear without much effect. They are far from required. They are a component of a system meant to push you into slavery.

from-nibly 2y ago

Vacations should not be enabled by credit cards.