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Option 3, nothing changes: people (and institutions) still have income they need to put /somewhere/, and continue putting it in 401ks and index funds because th

Option 3, nothing changes: people (and institutions) still have income they need to put /somewhere/, and continue putting it in 401ks and index funds because that's the system. Stonks continue to go up, completely unmoored from any behavior in the actual world.

surgical_fire 1y ago
"I know the game is rigged, but it's the only game in town"
DebtDeflation 1y ago
That sounds a lot like the "everyone has to live somewhere and historically house prices never decrease" argument circa 2006-2007. Equities are not the only asset class in existence and in any market people can sell just as easily as they can buy. Not to mention, in addition to the GFC, it took the stock market until 1954 to recover the 1929 highs and in Japan it took until 2024 to recover from the 1989 crash, so there are clear examples where the stock market doesn't always go up for very long periods of time.
- pas 1y ago
  ... and let me recommend this blog post about how the housing bubble was exaggerated, and it the bubble is real, the money manifesting as demand for housing is really there (of course coming from the economic growth and brutal amounts of wealth transfer from will-be-owners to was-owners) https://www.fullstackeconomics.com/p/the-2000s-housing-bubble-was-greatly-exaggerated https://www.fullstackeconomics.com/p/the-2000s-housing-bubbl... housing related supply-side problems are simply very hard to address whereas everybody and their dog is pumping money into the market (cheap loans to help families, singles, poor people, cheap loans to developers, and anyone who wants, because it's low risk anyway, and companies are doing CoL adjustments, and then there are spillover effects from big metro areas, and foreign investors ...) and US population was growing, and construction starts were and are still low (historically but compared to the "pent up" demand) https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST of course the problem is that simply pouring money into housing without transportation infrastructure just leads to even more problems, so it's really a problems bubble! (always has been.)

surgical_fire 1y ago

"I know the game is rigged, but it's the only game in town"

DebtDeflation 1y ago

That sounds a lot like the "everyone has to live somewhere and historically house prices never decrease" argument circa 2006-2007. Equities are not the only asset class in existence and in any market people can sell just as easily as they can buy. Not to mention, in addition to the GFC, it took the stock market until 1954 to recover the 1929 highs and in Japan it took until 2024 to recover from the 1989 crash, so there are clear examples where the stock market doesn't always go up for very long periods of time.

pas 1y ago
... and let me recommend this blog post about how the housing bubble was exaggerated, and it the bubble is real, the money manifesting as demand for housing is really there (of course coming from the economic growth and brutal amounts of wealth transfer from will-be-owners to was-owners) https://www.fullstackeconomics.com/p/the-2000s-housing-bubble-was-greatly-exaggerated https://www.fullstackeconomics.com/p/the-2000s-housing-bubbl... housing related supply-side problems are simply very hard to address whereas everybody and their dog is pumping money into the market (cheap loans to help families, singles, poor people, cheap loans to developers, and anyone who wants, because it's low risk anyway, and companies are doing CoL adjustments, and then there are spillover effects from big metro areas, and foreign investors ...) and US population was growing, and construction starts were and are still low (historically but compared to the "pent up" demand) https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST of course the problem is that simply pouring money into housing without transportation infrastructure just leads to even more problems, so it's really a problems bubble! (always has been.)