Quite true, but “plain printing money” doesn’t quite get at the dynamics of government and central bank action to prop up capital markets. Its a useful abstraction, but a limited one. Quantitative easing is not “fair”, in the sense that they don’t just put 2x the dollars in everyone’s pocket. The dynamics are tilted with winners and losers, so the net effect is more like a wealth redistribution than straight up printing money and flooding the economy with it. So I generally agree with your perspective, but in my opinion a little more nuance is helpful for me personally. Whether I like it or not, I’ve got debts and assets so I’ve got to deal with it.
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You, uh, realize that people just, created a new kind of pseudo money ex nihilo that has absolutely zero intrinsic value, and they’re adding to the supply all the time, and not only did people buy in, a bunch of other people made literal copycats, and there is no inherent limit to the copycats, and yet people are buying into those, also?
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All of the largest companies in the US mostly benefited from the onslaught of covid as in the revenue of amazon facebook aaple microsoft and google is all eloquently tied together and directly correlated to how much folks sit and stare at their phones. Their valuations combined are still in line with their history and lower than it was in 2008 and 2002 - they are just more massive today.
24Hour fitness pizza gut and many other shit that had to declare BR as a result of covid didn’t move the needle. Covid caused a lot of companies to link together.
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Yes, good post. I am using the catch all “tech company” pretty liberally, and probably unfairly and incorrectly. I’m not going to stop though, lol. I am thinking more of the companies that coming to IPOs with no business model or net income but plenty of “digital” halo effects.
Note my reference to capital incinerating stocks. As far as I know the FAANG stocks all actually have net income so that’s something! I’m not sure I would characterize them as big attractive buy opportunities, a Google search shows a PE ratio of 68. I’m old so I am used to PE ratios in the 20s!
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this is my favorite fake news that is repeated way too often by conservatives. central banks don’t print money anymore. it’s all loans and tax revenue and in fact does get repaid. in the economic sense, what does get created out of thin air every hour of every day is total labor hours worked. and the output of labor accumulates value much greater than depreciation, at least has been since the 90s.
my personal paraphrasing is: essentially late 20th-early 21st century capitalism has been creating and selling higher-end products to billions who are emerging from abject poverty. that value accumulated in the biggest funds (both public and private) in the west. on the surface that appears to look like inflation and we extrapolate that it’s going to make milk and gas too expensive for Karen from bavaria or midwest, but actual inflation on goods has been super low for a really long time now, and the public should probably be more educated on how the government levers actually drive inflation. e.g. trade wars increased prices, monopolies increase prices. gov’t taking on debt, doesn’t appear to increase prices.
a much greater risk (than too much money) is how leveraged you are, and whether the economy can recover from simultaneous shocks. imao it’s pretty clear that even two or three industries going through major contractions or out of business altogether recovers after a few quarters of technical recession. and even if those are severe and getting prolonged, government funding social safeties makes the depressions easier to handle and shorter time to recover.
strictly speaking, failure to spend on social safeties has a greater effect on severity of depression than gov’t debt from the prior decade spent on something random, like an industry that didn’t pan out or a war that turned out too costly.
but fine, i can certainly agree that there’s a lot of nuance to how policies get funded. i personally think spending on weapons is inflationary, because it blows shit up and makes still-standing shit more valuable. but there’s certainly no nuance to a view that gov’t is “just printing money something-something objective reality” whenever any spending is involved.
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i hate to do this but you did say the following
" Objective reality is so that plain printing money is a way into complete destruction of the money concept."
yeah pretty much, they clearly didn’t go as far as they could with that part.
Much like fractional reserve banking, the fact that people have gotten rich off of it does not change the fact that it is absurd.
ok, you did say “propping up the stock market”, but that’s kind of all government spending. like giving people social security checks, aka money for food to be spent at supermarkets, props up supermarket stock. the post you replied to was about QE at some point. even superficially QE wasn’t so much about propping up the stock market as it was propping up activity in the bond market, as companies jointly all decided to stop expansion due to shocks.
as i said, “printing money” is a wonderfully vague turn of phrase that conservatives use to attack everything, so i probably am unfairly associating that with what you said, because you used similar language.
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This is correct, but I don’t think they’re really separable in a full on financial crisis. The locking up of the credit market was bad for both the bond market (defaults) and the stock market (the cascading effect of bond defaults and illiquidity was hammering stocks too). In a total meltdown correlations go to 1 and the policy makers are left trying to bail out capital markets generally.
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Something happen? Market was just sort of bumping along this morning and just started drilling.
Moderna predicting less vaccine effectiveness, which has always been pretty likely. But how much less, no one knows. Great time to buy, imo.
Right, that was all known at the open though. Something seemed to happen at ~10:45am. I wonder if it’s related to Yellen’s testimony. Oh well. Too bad my weekly buys happen after Monday close.
I bought some VTI this morning. Sorry guys.
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Pattern seems to be:
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Powell or Yellen talks
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Not Stonks
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Next day - STONKS
I think the worker has a lot more power than they did 2 years ago so I voted 10% better
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I was in a call today (small discussion with trusted colleagues) and they were complaining about how bold the people that they’re trying to hire are being and how “crazy” the hiring market is. I told them that they should be empathetic to people, especially younger people, and that companies have kind of treated their employees like shit for years and now the shoe is on the other foot. So we may need a new poll - how many days until mosdef gets canned for his dangerous SOCIALISM in the workplace.
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