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I'm-a cut through all of this. There's an incredibly simple explanation for what looks like an pan-asset bubble. “If you ask me to give you the one big bargain

I'm-a cut through all of this. There's an incredibly simple explanation for what looks like an pan-asset bubble. “If you ask me to give you the one big bargain out there, I’m not sure there is one.” There is one. Human labor. "Everything" being expensive means that currencies are losing value, which means that wages are declining in terms of what the money buys. Ever look at the S&P in houses? Or in oil? Or in (though I don't find it as useful) gold? That alone makes our 21st-century look like Japan's lost decade (1990s). No, that's not something we could fix by moving to the gold standard. Human labor is just worth less, and capital is worth more. Like most bubbles, the process is actually faster-than-exponential. (Normal economic growth is already exponential.) The meltdown of the middle class is, for example, driving up college tuitions, creating demand for expensive high schools (now that it's extremely difficult to go to Harvard from a public high school, when it wasn't that rare 15 years ago) and, in the few urban areas where unconnected or semi-connected people can find good jobs, pushing rents into the ionosphere (and prices to 40-50x annual rent, which one hopes is due to various money-laundering shenanigan but may be in anticipation of further rent increases). The disintegration of middle-class America is a self-fueling feedback loop as talented people strive to get away from the old order into the new (expensive urban centers, elite universities). The goal (in this forceful middle-class in-pressure toward expensive, elite places) is to get enough connections to people who can keep their own lights on, before things start going out. Some of these changes are good (such as the movement away from environmentally unsustainable suburbs) but most are bad. Our society has stopped valuing labor, whether it's the skilled kind or unskilled. That's why a talentless dickhead with connections gets to be a "founder" and take 40%, doing nothing but monetizing his own social position, while you write all the code and get 1%. Is this a bubble? It sure is. The "crash" will probably be a revolution. It will be global, and it may not be violent here but it will probably be violent in many places. The funny thing about bubbles is that their ends are impossible to predict. This one, especially because it is political and social as well as economic, and a bit unprecedented (the large middle class of the US was unprecedented, much less its destruction) is impossible to time. It could happen next week, or it could be 100 years from now.

ilaksh 12y ago
This is extremely skeptical and critical and I can see why people on Hacker News wouldn't like it. But at the moment I am replying, people are downvoting it, trying to make it go away, without having made a single counter-argument. If someone can refute this viewpoint, I would like to see that. If not, don't shoot the messenger. Being critical and pessimistic is not the same as being wrong, and sometimes the most realistic and important viewpoint is the one that we most dislike.
- a8da6b0c91d 12y ago
  I suspect some downvote him because he consistently posts walls of text with histrionic tone, not any qualms with points made. Calm brevity would be nice.
  - jgh 12y ago
    As much as I dislike most of these kinds of posts I find it hard to dislike most of the things michaelochurch says.
eru 12y ago
What about the global situation?
- VLM 12y ago
  Thats kind of a big topic. I'll take two tiny little subtopics. The "best" greediest smartest whatever-est minds over centuries of human history have never found a way to keep a global reserve currency for longer than a century or so. There's a famous chart of ranges of time where the Spanish had the worlds reserve currency or the English or whatever. And the US dollar is gettin kinda old as global reserve currency. This is very much like the graphs of devastating earthquakes in CA, you can't predict the day and time CA will be pretty well flattened, but pretty much everyone in SFO does die and every building gets flattened "about once a century". Changing reserve currencies happens about the same way. I'd be an idiot to claim it'll happen tomorrow or next year, yet its also a near 100% certainty looking at history that my grandkid will grow up under a new reserve currency. China is getting ready to economically collapse and have their own great depression looking to be about 10x worse than ours, until they have another revolution, so not them, they'll be too busy starving and killing each other. My guess is after the .eu and the euro collapse, the German Mark will be re-issued and become the new global reserve currency that is used for all world trade. Or some game in name only, where the .de totally take over .eu, rather than the current just mostly having control of .eu, and what we will call a euro will really be a German Mark. I'm thinking 5% odds its bitcoin or a derivative digital currency, maybe 55% odds its German Mark or synonym, and the remainder is an unclear mix of a new S.U. currency, or maybe Africa will get itself together (gonna happen sooner or later unless someone stops them). Or the century old battle of hemispheres has the south rising, perhaps some kind of Pan South American euro-like "thing" will arise. At least most of them speak more or less the same language. So we're getting a new reserve currency "within a generation" and it definitely isn't going to be the dollar. This isn't the end of the world, London is still a nice place to visit, but it does mean certain changes will occur. Another topic worth discussion is the end of cheap oil, which has more or less already happened (unless you're getting gallons of gas for 90 cents in the USA?). All the fields worldwide are in decline and discovery and production per dollar invested is in permanent long term decline. So all business models oriented around pumping oil/natgas out of the ground are on borrowed time. Generally any good news as a counterexample is innumerate, either no understanding of quantities (so the lifetime production of a TDP plant is about 5 minutes of USA consumption, awesome) or the standard manipulation of statistics (so production at one well went up 10% month on month last month therefore if you extend that into infinity we're going to have worldwide oil prices of 10 cents/barrel) or just technoutopia, usually horribly out of date "Hey guys, I just heard about this new thing, ethanol plant, and its going to save the world" LOL thats already crashed and burned. There is probably some connection in that the USA .mil will probably hold things together enough to keep the $ as the reserve currency as long as oil tankers import oil into the USA. Once that stops, and it'll stop soon enough on existing trends, the motivation to maintain global conomic control will likely evaporate and thats when we'll get a new global reserve trading currency. Watch for S.A. oil exports to irreversibly start to fall and then expect some financial chaos. Everyone else, .mx, UK north sea, all in decline already (LOL Britain has gone from being a natgas exporter to being an importer in just the last couple years) The middle class is made of natgas, which is interesting. You turn natgas into AN fertilizer and turn that into corn and turn corn syrup into lots of middle class biomass. Also you turn natgas into plastic consumer garbage and that gives the middle class something to advertise, make, ship, retail, purchase, use, aspire to... Without natgas that whole segment of society simply evaporates away. What kind of fish you got when you take the water out of the fish tank?

ilaksh 12y ago

This is extremely skeptical and critical and I can see why people on Hacker News wouldn't like it. But at the moment I am replying, people are downvoting it, trying to make it go away, without having made a single counter-argument. If someone can refute this viewpoint, I would like to see that. If not, don't shoot the messenger. Being critical and pessimistic is not the same as being wrong, and sometimes the most realistic and important viewpoint is the one that we most dislike.

a8da6b0c91d 12y ago
I suspect some downvote him because he consistently posts walls of text with histrionic tone, not any qualms with points made. Calm brevity would be nice.
- jgh 12y ago
  As much as I dislike most of these kinds of posts I find it hard to dislike most of the things michaelochurch says.

eru 12y ago

What about the global situation?

VLM 12y ago
Thats kind of a big topic. I'll take two tiny little subtopics. The "best" greediest smartest whatever-est minds over centuries of human history have never found a way to keep a global reserve currency for longer than a century or so. There's a famous chart of ranges of time where the Spanish had the worlds reserve currency or the English or whatever. And the US dollar is gettin kinda old as global reserve currency. This is very much like the graphs of devastating earthquakes in CA, you can't predict the day and time CA will be pretty well flattened, but pretty much everyone in SFO does die and every building gets flattened "about once a century". Changing reserve currencies happens about the same way. I'd be an idiot to claim it'll happen tomorrow or next year, yet its also a near 100% certainty looking at history that my grandkid will grow up under a new reserve currency. China is getting ready to economically collapse and have their own great depression looking to be about 10x worse than ours, until they have another revolution, so not them, they'll be too busy starving and killing each other. My guess is after the .eu and the euro collapse, the German Mark will be re-issued and become the new global reserve currency that is used for all world trade. Or some game in name only, where the .de totally take over .eu, rather than the current just mostly having control of .eu, and what we will call a euro will really be a German Mark. I'm thinking 5% odds its bitcoin or a derivative digital currency, maybe 55% odds its German Mark or synonym, and the remainder is an unclear mix of a new S.U. currency, or maybe Africa will get itself together (gonna happen sooner or later unless someone stops them). Or the century old battle of hemispheres has the south rising, perhaps some kind of Pan South American euro-like "thing" will arise. At least most of them speak more or less the same language. So we're getting a new reserve currency "within a generation" and it definitely isn't going to be the dollar. This isn't the end of the world, London is still a nice place to visit, but it does mean certain changes will occur. Another topic worth discussion is the end of cheap oil, which has more or less already happened (unless you're getting gallons of gas for 90 cents in the USA?). All the fields worldwide are in decline and discovery and production per dollar invested is in permanent long term decline. So all business models oriented around pumping oil/natgas out of the ground are on borrowed time. Generally any good news as a counterexample is innumerate, either no understanding of quantities (so the lifetime production of a TDP plant is about 5 minutes of USA consumption, awesome) or the standard manipulation of statistics (so production at one well went up 10% month on month last month therefore if you extend that into infinity we're going to have worldwide oil prices of 10 cents/barrel) or just technoutopia, usually horribly out of date "Hey guys, I just heard about this new thing, ethanol plant, and its going to save the world" LOL thats already crashed and burned. There is probably some connection in that the USA .mil will probably hold things together enough to keep the $ as the reserve currency as long as oil tankers import oil into the USA. Once that stops, and it'll stop soon enough on existing trends, the motivation to maintain global conomic control will likely evaporate and thats when we'll get a new global reserve trading currency. Watch for S.A. oil exports to irreversibly start to fall and then expect some financial chaos. Everyone else, .mx, UK north sea, all in decline already (LOL Britain has gone from being a natgas exporter to being an importer in just the last couple years) The middle class is made of natgas, which is interesting. You turn natgas into AN fertilizer and turn that into corn and turn corn syrup into lots of middle class biomass. Also you turn natgas into plastic consumer garbage and that gives the middle class something to advertise, make, ship, retail, purchase, use, aspire to... Without natgas that whole segment of society simply evaporates away. What kind of fish you got when you take the water out of the fish tank?