This is not a bad bet at all. The dominant ideology in Washington seems to be laissez faire when big businesses are doing well and bailouts when they aren’t. It must be nice to play with a stacked deck like that.
Inflationary expectations and wage growth remain low and the Fed has plenty of tools to tame it (interest rates, a huge balance sheet), so the question really is now: where is the inflation going to come from?
If it really is the case that 30+ million Americans can be out of a job and the stock market reaction is to continue climbing on the assumption that the fed will continue to grow the balance sheet, doesn't that point to a fundamental decoupling between the value of the currency and real-world value? I mean are we really going to live in a society where the government pays companies so that their stock price can remain stable, even when demand for their products no longer exists because their customers are all out of work? It seems like a paper economy which essentially only serves to bail out investors.
I'm not sure what the catalyst would be for that kind of a system to come crashing down, but I just don't understand how it could be sustainable.
Unfortunately media has everyone misdirected to worry about guns/race instead of demanding the government serve the people instead of corporations.
It’s possible that the scale of the current corporate welfare program + health pandemic + inaccessible healthcare + unemployment leads to faster and larger response from the plebes.
The revolution, as they say, will not be televised.
To the last sentence, yes, a totally blatant wealth transfer scheme. Anecdotally, I think many of those suddenly "engaging" are just playing into the game - getting their dopamine and ego fix by showing dumb gains on nominal investments thinking that they too are wealthy and smarter than the next one :/
Of greater long term concern though is the decreasing transparency into which companies are benefiting disproportionately from government intervention.
These fed manipulations will lead to an even more dysfunctional marketplace down the road because once the water is tainted - we don't know how much, where, or with what exactly. It's impossible to go back to safe and clean drinking water again from this source.
Historically, the real value of the "stock market" has been that of a place for informed decisions based on consistent measurement and analysis of commonly reported variables regarding the well being of corporations. There's a reason a public company must abide by certain rules and regulations to go and remain public...it's so that investors can expect a certain amount of disclosure to actually make decisions on whether or not to invest. While public disclosure requirements have not changed lately (to my knowledge) - there is no way for the feds bailout factors to be decoupled from earnings.
I would argue that aspect, which represents a huge value proposition of the "stock market" to investors of all sizes near and far, is quickly disappearing. I'm not sure what this means for the future.
The wealthiest already have huge amounts of money saved and invested in the markets. Adding to the money supply primarily benefits those who already have the most money. So something like 80% of new money winds up in the hands of the top 1%, who save it, consume no extra (aside from stocks), and have no impact on the basket of goods.
I think this also partly explains the high P/E ratios we’ve seen over the past decade+.
Nothing in economics is that simple. But this feels reasonable to me. Anything I’m missing?
But for the later, it will come from the reduced value of the dollar. Which (for more than a decade) has been muted by the reserve currency status of the USD.
It is another one of those cases of Goodharts law. The way they are measuring inflation is no longer capturing the drop in the value of money.
If you believe economic fundamentals support historically-high valuations, I think it does deserve an explanation.
Forward P/E at highest levels in 18 years: https://markets.businessinsider.com/news/stocks/stock-market...
That may not be for awhile, but the more debt the government takes on the more likely it is to happen. (The US government can literally print money to pay debt, but that devalues the dollar, aka inflation.)
How long will the USA be the most trusted economy?
Our entire economy is like a mining company that steadily mines a gold seam, paying out healthy dividends and executive bonuses all the while and then as soon as the seam is mined out declares bankruptcy leaving toxic waste cleanup and employee pensions for the government to take care of. We don’t just allow ourselves to be exploited by sociopaths, we actively seek it out.
Why would anyone, including other libertarians, be charitable toward them?
If Libertarianism isn’t implemented fully then it will almost for sure devolve into cronyism. It can only work if there is no way to influence government or courts to do things your way. It also can’t really deal with things like pandemics or probably even war. In a pandemic you would have a lot of people die before the truly free market figures out which treatments work and which are scam.
libertarianism for YOU
socialism for ME
What we have is, those in power take from those that aren't.
Libertarian thinking on antitrust is that it's unnecessary because there is no such thing as a natural monopoly; monopolies are the result of government regulation. Eliminate the regulations that privilege certain businesses over others, and competition will ensure an efficient market.
In reality what we have in the US is a political class which constantly molds regulation to further benefit the shareholders of big businesses. Sometimes they remove regulations to this end, but much more frequently they create or alter them. There's no philosophical bent behind this at all, it's just the strong using government as a tool to oppress the weak (exactly what libertarianism warns us about).
Nobody has ever pandered to libertarians when trying to justify their policies, so I have no idea why people like to blame them.
To me a sign that the libertarians are on to something is that no government has ever dared to try it. Governments are comprised of powerful people and if they did they would lose all that power...
The political class you are talking about serves specific masters. They also mold ideological discourse which is where modern libertarianism comes from in the first place. Go check who's funding all of these libertarian speakers and institutes.
The size and scope of government continues to increase every year, so I don't see how anyone could call that libertarian.
Furthermore, libertarianism ends up being quite left-brained which makes for a quick short circuit to authoritarianism via logical contradiction. The Party entertains these to gain sponsors the same way the reds and blues do, and there is little doubt it would take on the same corrupt role as the other teams if given a whiff of power.
Basically my take-away was: don't bet against the house, even if it's crumbling. Because they won't agree you've won the bet until they resell it off to some other sucker; or they'll declare bankruptcy and you won't get paid; or they'll get bailed out and you'll be wrong even though you were right. [I'm not a finance person, so this is all a layperson's interpretation.]
> You still believe in the system, don't you
Why do individuals think they should receive the same treatment as key infrastructure companies?
"Save the ship if it sinks, let it float if it goes."
Someone has to pick favorites. Everyone loves fast travel. It enables business.
No brainer.
They need a bailout every 10 years, otherwise, they're autonomous. While far from perfect, they're better than the government could do if they had to develop their own systems for handling travelers.
Pennies.
The same is true of most industries, bailouts protect investors not economic capacity, but there are exceptions. I don’t like it but there are very few big banks, and it’s just not possible for fresh investors to rapidly buy up the assets of a failed bank and start a new bank. The heavy regulation of the industry is a serous obstacle to that kind of renewal and this is a dangerous problem.
Ship breaking is big business.