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Comment by 0c3ca83 | Hacker News Reader

A collapse would be nice too.

Not sure if you're joking, but I go back and forth between this thought. Finance is not my forte, far from it for sure, but there's a part of me that hopes a collapse can at least open the door for future opportunity. A "reset" if you will. The younger generations are up against a massive wall when it comes to acquiring wealth (or even a reasonable means of living at this point), it would be nice to give them an equal chance. I know this is very likely a naive take, but it's the only hopeful aspect of a collapse I can accept.

Unfortunately this is not what happens. The Big Short is a good (and fun!) primer about collapses:

https://www.youtube.com/watch?v=0k5aVLi_yhM

When the market crashes, a lot of people lose jobs, and a lot of people die. Everyone suffers but those with money suffer the least, by far.

Not quite. Poor people suffer more in real terms, but rich people suffer more in nominal (dollar) terms. Nominal inequality gets reset.

Don't let the term "nominal" undersell this: it's nominal inequality that locks working people out of assets and imposes upon them the need to service the (otherwise) exponentially growing profit expectations of their economic complements. At no point in the cycle is it better to be poor than rich, but the contractionary quadrant is the one where the gap shrinks.

Not sure it works like that: https://pmc.ncbi.nlm.nih.gov/articles/PMC9122750/

Inequality declined temporarily during the recession, but reached new highs during the recovery.

2008 decreased inequality for a very short time, but inequality increased overall. The rich have the available assets to profit from instability and are able to ride out unemployment, for the poor a crash and losing their job can be existential.

> Nominal inequality gets reset.

Why would it? The wealthy people who haven’t allocated their capital to those assets that are depressed from a recession can reallocate to the depressed assets and end up even wealthier on the rebound. People with no money at all don’t have that opportunity to invest.

The stock market is $80T, cash is $20T. The former cannot "weather the storm" in the latter in aggregate, even though I'm sure there are individuals who successfully timed the market.

> At no point in the cycle is it better to be poor than rich, but the contractionary quadrant is the one where the gap shrinks.

How would this give young people a chance? If they have cash to buy up assets cheaper then so do older rich people.

Please see my comment here, I think it answers your question: https://news.ycombinator.com/item?id=50385037

It really doesn't. You could've bought any $1-5 stocks in that time. You happened to buy the ones that made you money.

Your anecdote about getting lucky doesn’t answer the question, sorry. Rich people have money to buy cheap assets when shit hits the fan, unemployed people do not.

There's not much incentive for institutional change when everyone's making money. Yeah, it'll hurt folks a great deal short term. But may be better for our kids long term.

That's what people said in 2008, instead, wealth was incinerated, the most vulnerable got hurt the most, while the already wealthy got bailed out and bought back assets at bargain bin prices. The wealth owning class would love a collapse.

Oddly enough, 2008 is exactly what inspired my comment and it's based off my exact experience back then. I couldn't afford investing in the market, I couldn't afford a home, and the interest on car loans were higher. All of that changed after the 2008 collapse. First I should mention that I was laid off and unemployed during some of it, so there was a huge negative impact for sure. What followed after though was amazing. I was able to invest in some $1-$5 stocks in the market that were previously not obtainable to me. This investment actually took me/my wife from being in debt living with my in-laws to completely out of debt and into our own place. Once I finally got employed again, I was able to save up enough just in time to buy a home at near the bottom with low interest. Car loans were also low interest. It was life changing and for the better in my situation.

This is actually kind of inspiring. Obviously, I still feel concerned about the parallels between the 2008 housing crisis and the current tech bubble bursting. But as someone who also wants to get into investing but feels to broke to do so, now I know I just have to wait until the world is burning (kidding, lol). All jokes aside, this is still interesting. Especially as someone who will live through both.

The inflation being caused by all the "crowding-out" caused by AI overinvestment is currently incredibly harmful.

That really needs to unwind.

However much potential energy has been stored in it, is going to turn into kinetic energy in the subsequent correction/crash.

The best time for this to happen is as soon as possible, causing the least amount of damage.

I pretty much expect the damage to be immense, though, but that is going to be unavoidable at this point. However big the bubble is, it needs to pop.

In retrospect, we will find that there were truly idiotic decisions made in blowing up the bubble, and in the aftermath the wrong people will almost certainly get hurt, because that is just what we do these days.

You think a large scale market collapse would be good? Large scale job loss and bankruptcy?

At the very least we could buy hardware again at rational prices.

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