200 karma · joined October 7, 2015
Unfortunately this "nonsense" is the explanation that any economist would give you.
Maybe you can be the first one to propose a revolutionary alternative theory, but I haven't read it :)
Exactly. That's precisely the question.
If you lend money 1) you bear the risk of not seeing you're money back 2) you're not able to spend that money during the loan period.
Even if you don't care about risk and don't want to spend that money 3) you'd still be greedy enough to want something back, right?
So let's imagine all 3 points disappear:
1) There is practically no default risk. 2) You could still purchase something by exchanging your credit with goods (and everybody would accept for its nominal value without any discount). 3) This credit certificate you hold in your hands turns out to be very convenient to use. It's so much easier to trade and everybody accepts it and trusts it, why not to use this as "money"? And why to ask something back when it's already providing me more utility then "money" with no disadvantages?
So in reality you have a lot of "loans" that end up being called quasi-money exactly for the reasons above.
Some countries issue government-bonds with negative interest rates, not only because they are considered very safe investments but also because banks use those type of bonds for their operations making them convenient to hold.
Like I've said, it's a quantitative difference not a qualitative one. Money = loan with negative interest rate.
In fact, you can see money as a credit towards an extremely trustworthy debtor.
So trustworthy that everybody will accept that credit on its face value in exchange for any sort of goods.
What's the characteristic of a risky loan, it comes with a very high interest rate right?
So what happened when the risk is the lowest possible? The interest rates goes to zero or even negative.
That's money, a government-bond of a very stable country with little debt is quasi-money. The difference is only quantitative, makes sense?
That way holding cash is better than buying a government bond but you're still loosing purchasing power holding cash, so why not spending it?
The real problem is when holding cash increases your purchasing power over time.
> So the investment early in time is made when prices are lower and the revenues are made later when prices are higher and thus you make higher revenues relative to what you paid for your investment. Inflation helps you here!
You reason as if you make the first investment and then that's it. It's not what really happens in most businesses.
Imagine you make an investment every year which produces the revenue for the year after.
Agreed. But not because of what you are implying: "...people transfer their savings to cash, the world switches from producing real stuff...". That is rather a risk resulting from deflation.
I agree because higher inflation can help an economy plagued with insolvent debt to "assimilate" it gradually and create new room for healthy debt.
> Not true, inflation means that revenues are constantly rising faster.
That's precisely what I'm denying: there's often a significant delay between the outflows of money and the inflows they generate (typically in high fixed-costs businesses).
If you're expanding production every year and you see the added revenue only the year after it's not difficult to see how inflation would have a negative impact (even if constant!).
That's because even at 1%-2% inflation a year is difficult to spark the so-called thesaurisation phenomenon you're implying.
In general I agree with you, I'd just change "low inflation" with "deflation".
On the "money" being neutral with constant inflation. Yes, sure. It's the business dynamics that are not neutral. Quick example:
- Say you have 10$ costs and 10$ revenue every year.
- One year you expand production and you have to pay an additional 10$: so 20$ costs and 10$ revenue for that year.
- With 0% inflation you have a 10$ loss (20-10), while with 10% inflation you have (20 * 1,1 - 10) = 12$ (about 11$ on constant prices terms) in loss (revenue won't grow till next year).
You have a positive gain of that type in case inflation grows more than expected. Enough to offset the negative impact given by the delay costs-revenue? Probably not in most cases.
In fact the positive effect applies to debt made in the past which precisely because of inflation is likely to be lower than the new debt you need to take on (on which the negative effect applies).
Of course also the opposite could happen: inflation grows less than expected after you took on a lot of debt.
So for a capital intensive business it'd just be better to operate in a context of constant low inflation.
If every time you want to expand you need to make significant investments (and there will always be a delay before it starts making money), inflation will affect your costs way before it will affect your revenue.
Even worse, because fixed assets need to be replaced due to obsolescence every once in a while, you'll end up increasing your costs way more than you're increasing your revenue just to maintain the current production level.
TL;DR: The more the delay between investment and revenue generation and the more capital intensive it is, the worst.
Southern Italy was for the most part a feudal system controlled by a traditional aristocracy.
The unification prompted by one of the Northern Italian states meant the wiping out of the existing Southern Italian aristocracy.
Northern Italian bourgeoisie and aristocracy became the new ruling classes of the new unified Italy.
Although they tried to replace the Southern Italian aristocracy with a new class of bureaucracy, the traditional feudal structure of the South and the sudden void of power made it easier for an organization like Mafia to arise.
The real advantage of bitcoin is a bit of a paradox.
Precisely because it has no value (and it's unsuitable as a currency) it can work as a pure game of musical chairs which can in theory go on indefinitely (technical limits aside).
This is the real problem, not it being fiat money. This is what makes it a terrible currency for trade and a great one for speculation!
Yeah many people tend to believe that "everything has changed" every once in a while.
There are records of claims like that since the mid 17th century and continously thereafter.
The way I see it things tend to repeat themselves and never really change in the stock market. A more historical point of view could be eye-opening, at least it was for me.
> That doesn't seem to be where the value is pegged.
It is in a way or the other. In case of Apple there's a pretty direct evidence, in other cases it's more indirect.
You could see it as a floor price. Companies can be valued way more than the value they produce/own but it's difficult that they are valued less than that.
Cannot say the same of a token.
> The same way you can sell the token to another speculator.
The whole point here is that you DO NOT have to necessarily rely on other people expectations to make/loose money with a stock.
You DO have to with a token. That's the difference between speculation and investing.
Why is that? Say a company keeps on generating profits and making buybacks yet the price keeps on falling: it won't be long before it gets noticed by people with enough resources who can take control and distribute dividends.
This inefficiency is so easy to exploit that de facto the market just aknowledges the value pushing the price up.
Yes of course you can also treat a stock as a token and just speculate on it, just base your decisions on what other people will think that the others will think that you'll think etc.
But you don't have to ! You do have a choice, which a token doesn't give you.
A company uses its cash reserves (generated by operating profits or assets sales) to purchase back some of its own shares.
As the same 1 share entitles you to a bigger percentage of the business (the number of total shares has decreased), the stock price is pushed up.
After that you can immediately put money in your pocket by selling the appreciated shares you own.
To give you a specific example Apple has a buyback program open since a while. But it's a common practice really.
Owning a stock entitles you to a share of current/future assets/profits of the business.
Even in the case the business is not making money you can still hope for future profits or at the very least in the remunerative sale of an asset.
And no, you don't necessarily need dividends, cash on the balance sheet is very real and there's plenty of ways it can end up in your pockets other than dividends.
Anyway, dollar-cost-averaging looks like a great strategy if you are very bullish on a asset which also happens to be quite volatile.
Although not sure why you see it that way, seems easier to explain the other way around to me.
For instance for Germany (and maybe Austria?) major factor could be aversion to nationalism?
the more cultural/social homogeneity the more willingness to fight a war for your country.
See Italy, Spain, Belgium for instance: people from different area of those countries really feel belonging to different cultures. Contrari to the Nordic & Easter European ones. In Germany is more of a historical thing instead.
So I don't think their attitude is conservatorism or lack of vision, judging from the business results of the last years I bet they'll jump on the EV bandwagon as soon as it starts making money.
Really? That's 3 clicks a way with a well-designed UI.
And what if I have those 3 fields in different tables? Even more verbosity...
P.S: My job has nothing to do with designing UIs, just to dispell any doubt :)
NLP interfaces in reporting work for simple things, when you want to start doing more advanced things they become incredibly verbose and inconsistent.
That's where a well designed UI really shines...and will continue to do so.
I don't know, I find this quite unfair to say to be honest.
Once you make an agreement, as non-sensical as it can be, you should hold your end up. Especially if you are an important institution.
The agreement here concerns the taxi licenses (and the fact that you can sell them). It's a bit selfish and narrow-minded to scrape off all that was agreed upon (leading people to pay 200k+ euros !) because "modernity" has arrived.
A better solution would be to legalize services like Uber and charge them a royalty fee for a certain number of years. The collected money should serve as a reparation to current owners of taxi licenses.
What is the advantage of building a replica of the S&P500 with individual stocks rather than having it done with an index fund? Isn't the second option much cheaper?
Secondly, isn't finding a subset of the S&P500 and trying to replicate it still an active strategy?
If it's so easy why not to identify directly which stocks to invest in?
If you can predict which investors will perform well, then just try to predict which stocks will perform well directly.
There's a lot of confusion in the article.