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Comment by ryandrake | Hacker News Reader

It just feels like the psychology behind a bank run. 1. Convince people their bank is in trouble. 2. They withdraw all their money. 3. Now the bank really is in trouble.

Or 1. Convince people stocks are going to go down. 2. Mass sell-off. 3. Now stocks really are going down.

I think this is just a self-fulfilling prophecy where business leaders convinced themselves a slowdown is coming, causing them to take actions that will result in a slowdown. A lot of what happens at the CxO level is looking around at your peer companies and imitating what they are doing.

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>Or 1. Convince people stocks are going to go down

Stocks are not the economy.

We literally have a cold war with China escalating, a hot war in Europe (which we aren't directly involved in..yet), all after years of loose monetary and fiscal policy, inflation is at generation highs, with rates rising and housing relating prices crashing, and on and on...

Maybe HN needs some more serious economic analyses posted if people think all of this is caused by a 15% fall in SPX.

At least we can get jobs in the MIC I guess.

MIC?

Guessing "military-industrial complex".

1. Convince people stocks are going to go down. 2. Mass sell-off. 3. Now stocks really are going down.

Pet conspiracy theory: boom/bust cycles are not only inevitable, but desirable to some extent. If the housing and stock markets didn't undergo catharsis every so often, new/beginning investors wouldn't be able to buy in.

The signs are usually telegraphed well in advance, but not by collusion or intent. A self-organizing conspiracy of sorts. It could be interpreted as "herd mentality" but I think that oversimplifies what's really going on, and why.

> Pet conspiracy theory: boom/bust cycles are not only inevitable, but desirable to some extent.

I wouldn’t call this a conspiracy theory at all. The founder of Bridgewater Associates, the largest hedge fund in the world, spent time and money to publish this idea in various forms. I learned about it from here:

https://youtu.be/PHe0bXAIuk0

There’s more to this idea—-the long term debt cycle—-but the premise is exactly what you stated. There are benefits to both the boom and bust phases of the economy.

Or - stocks have been ridiculously overvalued for a while now and are just coming back to earth somewhat. https://www.longtermtrends.net/market-cap-to-gdp-the-buffett...

I'm not saying I know that's what's happening. But I wouldn't be surprised.

Stocks were valued mainly pretty good when you consider interest rates. As rates go up then the expected return on stocks needs to change (we expect more return on them) so the prices fall. For instance, a dividend paying stock will see its price fall when interest rates increase because the dividend yield is a percentage of the stock price. When interest rates are low the yield can be low which means the price of the underlying stock is high. Until their profits catch up with the new reality the stock price will remain lower.

As for high flying tech (cloud, etc) - yeah, probably too much speculation there.

Yup.

Powell has been saying for months he wants people to save and pull cash out of the economy.

This is intentional because DC decided tech workers were undermining Washingtons of course most correct and immutable control over agency.

Why if all these people kept earning and could acquire more assets and live comfortable, politicians and uber rich would have no place in our society.

The fundamentals must be maintained. Fundamentals being we serve their goals, not the other way around.

Somehow, I doubt that Marxism-Leninism and a destruction of social class in America is going to be achieved on the backs of... Comfortable, gruntled white collar employees making 200k-500k/year from selling ads.

Mostly I was agreeing with the analogy of a run on a bank. Fed pulled out of funding the economy as it was. Less money for them to spend on coffees, Ubers, etc.; less to “trickle down” given the uncertainty of grandpa Powell’s intention to bring pain to households (except his own of course; he’s got enough to be insulated from his actions).

If you want to go on a specific tangent involving dead men’s philosophy, be my guest. I was merely attempting to illustrate how apt the bank run analogy is.

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