When everyone is screaming how much Trump is literally making the sky fall 24/7 on all media and water coolers, none of the legitimate problems pack any sort of punch. Nothing causes panic because panic is the new baseline.
I don't think anyone, myself included, knows how to quantify the risk of something terrible happening due to Trump's unprecedented Presidential demeanor and the associated erosion of institutions and norms. It's quite likely that many people, including the media, overrate that risk.
On the other hand, many of the stories you read in the media are true. Discounting or ignoring them because you associate them with emotionality or hysteria would be fallacious.
I think the article is much more concerned with the fact that, for about 13 years now ("since" the great financial crisis, but starting before it) we have been running economic policy that would have been seen as lunacy in 2000 by ... well, by everyone.
In fact, it pretty much still is.
Free money is to capitalism what "let's just use a random function as a cost function" is to a neural network. It takes away the intelligence, the adaptation. It will explode, slowly. It does not make much sense, however, that the economy takes/took this long to crash as a result.
We should (and do, according to quite a few economic journals, and that's in a way also what this article is complaining about) have an economy that doesn't make sense given the world we live in. That the connection between reality and our economic system acting on reality is getting looser and looser. There must come a point where it suddenly, violently stops working and vast shortages suddenly manifest everywhere. Just like any learning algorithm when you take away it's direction: it goes insane, and not in a way you can debate whether it's insane. Think epileptic seizure, not general weirdness.
Free (or too cheap) debt is free money too. However removing this with current "market" pricing in the US is extremely hard. The market will actively work against any price reductions with all available economical and political pressures. Most developed countries have been running on huge excess public debt already.
And in case of US there is not a lot to cut, unlike EU where a lot of public services got optimized.
Education? Ha. The only budget that could be cut is police, army and intelligence. But not compatible with US ambitions of being the world power.
to be fair, trump is fucking up a lot of you guys' institutions, like foreign policy, immigrant policy, ecological policy, gender & racial (civil) policy, etc.
More importantly, pointing out the damage being done to America's democratic institutions and civil society should not be dismissed as hysterics or simply "panic."
The consequences will be greatest in the long term. That we aren't feeling them yet does not absolve the situation.
Can you give specifics? As far as I know, nothing's changed. They still have democracy in America, and it still works in exactly the same way it used to, doesn't it? They still have civil society don't they? There are occasional riots and ongoing violent crime but that's been the norm for decades at least. Do you predict a transition to a single party system or more crime in the long term because of Trump's actions?
Without specifics and concrete problems, it's just more hysteria like the OP was talking about.
As a single example to start, I would recommend looking into the staffing problems at the the state department. A lot of people don't think about the state department, but they are the first line of diplomacy on the world stage. There are hundreds of positions left unfilled, a severe lack of focus, the requirement of keeping up with major foreign policy pronouncements through twitter by the POTUS and a disengaged secretary of state with very little experience. World diplomacy is the kind of thing that does not blow up overnight, but has a ripple effect for years and possibly even decades to come, as we've seen with our middle east policies.
All of American democracy shouldn't have to crumble into ashes before we express concern.
For some recent historical context, the New York Times http://www.nytimes.com/2013/05/03/us/politics/top-posts-rema... reported in May 2013 that "John Kerry is practically home alone at the State Department, toiling without permanent assistant secretaries of state for the Middle East, Asia, Europe and Africa" and "One of the worst backlogs is at the State Department, where nearly a quarter of the most senior posts are not filled, including those in charge of embassy security and counterterrorism."
The key difference is that the Obama administration was working on staffing the state department (a difficult task to be sure), whereas it's become clear that the Trump administration and Rex Tillerson are doing the opposite, focusing on cuts and issuing a hiring freeze instead.
Tillerson has also proposed a 31 per cent cut to the department’s budget and an 8 per cent staff cut.
So the context you provide requires it's own context.
All of which does not speak to the volatile situation of the commander-in-chief of the most powerful military in the world making improvised foreign policy declarations over twitter.
That might be a problem, but it's not democracy or civil society. Maybe they'll get a worse deal on some international agreements or whatever else could be caused by not enough diplomacy, but there'll still be democracy and as much safety for the people.
Could you name one actual policy or law that has been passed which has made a significant difference, so far, in any of the issues you claim Trump has 'fucked up'.
The only thing I can think of that might actually have caused some issues for some businesses would be the rejection of TPP. And that is something almost all Americans wanted abolished.
Tweets, Executive Orders, and hyperventilating journalists do not actually affect US policy.
Not sure if that’s proximal enough for you. It’s true it will take some time to feel the effects of Trump’s choices. That doesn’t mean they’re not quite harmful some of them.
Purely anecdotal but in my experience of the two big recessions I've lived through, it's not the predictions of imminent doom you should worry about. It's the slew of articles that predict "no end in sight" that seem to come right at the peak. It's likely a coincidental observation on my part but maybe, just maybe it's the heavy hitters seeing a slow down trying to pump confidence back into the markets.
I guess what has changed is the amount of news and media people can have access to nowadays. In good old days, dissenting opinions were pushed into the inner folds of a magazine and all "no end in sight" news on the front page, because everything was about delivering good news and optimism. Nowadays articles exist as a website link ie there is not really a frontpage of sorts and then being negative sells a lot.
Though it will be interesting to put together what the print edition of newspapers are predicting - boom or bust?
Out of curiosity, if you don't mind sharing, roughly how old are you? Or rather when do you mean "old days"? I'm in my early 30's and my earliest memories of the news were Bush Sr. breaking his no tax pledge, which was covered negatively, even though it was sensible, and the shit mess in Iraq.
I used to read print edition newspapers everyday till 2008/10.
Let me clarify what I mean by negativity. Newspapers were (are?) about popular opinion. So, when the markets were doing great, you get all caps, huge typeset about the new highs markets were making. Anyone who questioned that was relegated to inside pages.
Same was true when market tanked. All caps, huge typeset words about "blood in the street" or "Black x day". Anyone who disagreed and said - time to buy stocks was relegated to inside pages.
They were about reflecting or shaping popular opinion. Same was true for Bush Sr and his tax pledge.
Nowadays, I can link to a some blog which says this is a high and market will crash soon. In which case, the metric of waiting for "to the moon" article might no longer hold true.
What you are talking about is sentiment analysis, and you are right that tops often form when everyone is raving about the unstoppable force of the market. I know many traders whose careers are based on mainly on sentiment study; it's not just mere anecdotes.
Do you read this article as "no end in sight" or "eminent doom"? It certainly seems like there are record levels of complacency in some respects and at ~9 years this bull market is long in the tooth.
The 3.4 million American citizens living in Puerto Rico probably don’t feel like everything is normal. The president has mocked them as lazy, criticized them for straining the budget, made a joke (Christ, I hope it was a joke) that all the money being spent is a loan that Puerto Rico will have to repay, etc.
Things probably don’t seem normal for a lot of our allies. Trump has pledged to decertify our nuclear arms deal with Iran, despite the fact that virtually his entire cabinet is begging him to stop. Trump says he wants to decertify the deal because he doesn’t like it, but that’s not how deals work. Once you enter into an agreement, you have to abide by it. If you routinely break your agreements, why would anyone ever enter into an agreement with you? This kind of behavior could damage our ability to negotiate with other countries for decades.
Things probably also don’t seem normal for the 20-30 million Americans whose health insurance premiums are about to go up by 25% because the president defunded ACA cost-sharing payments for no discernible reason. Cutting the payments will increase the deficit, and make life worse for tens of millions of Americans. The only reason I can see for this is that the President wants to undo all of his predecessor’s accomplishments, even if his changes make things objectively worse.
Then we get into bizarre things. I don’t remember previous presidents feuding with sports teams, saying that Neo-Nazis were “very fine people,” nominating a drug czar who was deeply involved in the opioid crisis, or any number of other things that are unimaginable from any other president. None of this is normal.
The only things that are normal are things which generally change slowly. The economy is still strong, unemployment is low, gas is cheap, and the stock market is high. Some of that has to do with big investors and companies expecting hefty tax cuts. Should that plan fail (at least one senate republican has come out against the current tax plan, so they can only afford 1 more defector) then I think we’re going to see a sea change amongst investors and employers.
From about 1965 to 1982, the market had basically 0% return. There were no big crashes (except for 1973), but the market simply "petered out" for about 20 years. On an inflation-adjusted basis, someone who started investing in 1965 wouldn't have broken even until 1995.
I think the same thing often. My life is unchanged by the Trump presidency. Yet, in more pessimistic moments, I have the uncomfortable thought that the president probably does something, and I don't have a lot of hope that Trump will turn out to be an expert at whatever that is.
There's no single reason that can explain the march up, but it's worth noting the meteoric rise of index funds, which now account for over $4T under management [1]. There's just a massive amount of money looking for returns that exceed the almost 0% interest rates that exist today.
Maybe we'll finally find the argument against index funds: when the majority of market power is essentially in auto-pilot, it can't steer out of a crash.
It's crazy to think that we can look at the market and opine over the lack of animal spirits.
Index funds are going to expand until they're a big enough segment of the market that they're worth trying to exploit through predatory strategies. Eg: getting a long position in a stock and taking action to get it included in an index and forcing index funds to buy into your position. Or the opposite - short position and de-listing a stock. Or more complicatedly, manipulating your public float in order to squeeze market-cap indexers.
The last one needs explanation. Suppose indexers think they should own 10% of your company. Issue stock, and "sell" that stock in a self-dealing manner at current market prices. Indexers now should buy stock, since your company is bigger on paper (more shares outstanding at the same price). In the degenerate case, >90% of the stock isn't actually available for sale on the public markets, and the indexers have to buy literally more shares than they can buy.
Note that this pattern of strategies happens organically. Whenever there's a population filled with agents that pay costs to enforce rules, there's a superior local strategy of free-riding on their rule enforcement, since defectors cannot operate in a enforcer-heavy environment. This also is what'll cause a drop in index funds - wide-scale losses due to fraud and prices temporarily disconnected from fundamentals.
> indexers think they should own 10% of your company
i like to believe indexers are not that easily fooled.
broad market indexers (think 2-5k stocks like the russell) normally use an approximation portfolio that holds significantly fewer assets in order to minimize transaction cost. the correlation between a 500-asset portfolio and a 5000-asset portfolio is something like 98%, maybe more. a lot of replication portfolios don't even bother with the underlying nowadays, they just load up on cash settled equity swaps with the dealers and let them deal with the basis.
and narrow market indexers track indices that won't bother including corporates with tiny floats.
There's an interesting argument that index investing helps take the dumber investors away from active investing, making the animal spirits smarter on average.
I think it's less about animal spirits and more about granularity. If I only own index funds, I am forced to panic sell the whole market. If I instead own 10-20 stocks, I'm only affecting a fraction of the market.
In the dot com bubble, not everything popped. Many stocks went up as people fled tech and went into "safer" sectors. So it does seem that broad index hegemony has the potential to exacerbate a nasty crash.
Inevitably the markets will crash, new articles will come out detailing the "death of index funds" after five plus years of low or negative returns, capital will flow out due to the new index fund "retirement crisis", and we'll be back to where we started.
The world financial system is printing money, they are moving trillions around several nations to hide the fact that this money does not exist.
How would you know how much value in U$ is hidden in Brazil by international banks? How would you know how much U$ is hidden in Singapore, South Africa, Mexico?
You don't know. The US reserves are audited, the European economies are regulated, but the capital movement around the world is impossible to track.
This money does not exist in reality, there is no record of it anywhere. But does anyone care? Has anyone read the Panama papers? Billionaires and world leaders are hiding trillions in bank accounts that you can open remotely, without hassle. This money is unaccounted for.
Banks are free to move as much money as they please around the world, they just print money and move it.
The trillions in funds around the world do not exist. The markets are rigged.
> How would you know how much value in U$ is hidden in Brazil by international banks?
What on earth are you talking about? Are you saying the U.S. Treasury doesn't know how many dollars it has printed? Or the Federal Reserve doesn't know many dollars banks hold with it in reserve? Or how many dollars the banks it has under its jurisdiction have created? Note that apart from cash, the latter two categories are digital and intensely tracked.
> You don't know
Are you presuming or asking? $1.58 trillion of which $1.53 trillion are Federal Reserve notes and the rest coinage [1]. While estimating the exact amounts in any given country is not easy [2], just as estimating the exact number of dollars any person knows is far from definitive, the aggregates are tightly controlled.
When was the last time you moved a trillion printed dollars?
"Printing money" today means moving virtual money around.
Banks can make money appear in Cayman Islands. "Here is a billion dollar SWIFT money order", that is it. There is no billion printed dollars. They "print" money at will.
There are three types of money: central bank reserves, physical currency and commercial bank money. The U.S. government (Fed and Treasury, respectively) directly controls the first two down to the cent. Commercial banks "make" the final one, but to get the right to do that they have to agree to Federal Reserve jurisdiction (internationally, this happens with central banks entering into swap agreements with the Fed, i.e. opening "accounts" with the Fed into which the Fed deposits U.S. dollars whose--since this needs to be said--quantities it gets to track).
If rando Brazilian bank says "I have a billion U.S. dollars" and doesn't tell the Fed, they counterfeited. They can spend it in Brazil if nobody checks (hint: everyone checks, this is what the SWIFT and Fedwire protocols were designed to facilitate). But if they try to wire those funds to anyone else (or any other Fedwire or SWIFT member), the books won't balance and the message will be rejected. Someone will then have to (a) get real dollars to cover their crime or (b) risk having themselves, and/or their central bank, booted from the Fed's international system.
You are confused there are settlement accounts that are used to settle the transfers. So if you are doing a transfer from Chase account to CIBC FirstCaribbean International Bank account (for simplicity's sake we will assume that CIBC FirstCaribbean has a direct relationship with Chase) the appropriate debit and credit will be reflected in appropriate nostro and vostro settlement accounts. The SWIFT message is just a mechanism to exchange information but the actual money movement happens between settlement accounts.
To be completely fair, the risk of nuclear war shouldn't be priced into the US equity markets. If a catastrophic nuclear war happens, the only way selling stocks can help you is by excessive short-term spending on frivolous luxuries. The risk/reward profile simply doesn't make sense for even a significant risk to substantially alter investor behavior.
Nope. The market is adaptive, though. Every time someone sells on a piece of news that "should" be ignored, it trains the rest of the market to "buy the dip".
For Vanguard Group Inc., whose trillions of dollars in low-cost and index-tracking funds are both credited and blamed for the current market mood—because so many retail investors have decided just to buy a diversified fund and forget about it—the new mindset is a sign of a job well done.
I had wondered if they would bring this up. It's my understanding that an unprecedented percent of the market is plain old passive index funds.
This is, arguably, evidence that people are becoming more intelligent about investing. In particular they're realizing that they (and others) are nowhere near the brilliant investors that they think or present themselves to be. I think the most clear evidence of this was the bet between Warren Buffet Ted Seides, investment author and managing partner of a private investment firm. Buffet bet $500k that an S&P 500 index fund would beat the average of any collection of five managed funds (such as hedge funds) chosen by Seides.
That bet started in 2007 and Buffet won, trivially. The S&P index was up 85% in that time. And the managed funds were up 55%. Perhaps more importantly, that excludes management fees. Managed funds often demand quite ridiculous fees with hedge fund managers often taking a large percent of all profits just for themselves. When accounting for the fees of the funds Seides chose, the return for an investor in his managed funds would have seen just 22% versus the 85% for an index fund.
As time goes on people are beginning to understand variance. Take 'x' hot managed funds and in any given year some percent of them are going to outperform the market as a whole by a ridiculously large amount. And the next year some small percent of those that did this last year will again do the same the next year. And so on. The problem is that it seems as we extend to the time frame onward, the number of individuals or organizations that can genuinely beat the market approaches 0 -- and becomes a pretty good proxy for illegal behavior such as insider knowledge. The only thing that masks this is that each year as we lose 100 'underperforming' managed funds they're replaced by 110 new hot, amazing funds being managed by the next big thing.
Most of the time, it's the best way to invest. Fund managers are so wealthy, often not because they make great picks, but they use manipulative tactics to get people to invest with them. Most of them can't beat the market.
What happens when everyone is in an index fund though? The efficient market hypothesis goes right out the window in that case. I can imagine a crash happening because of that maybe. It feels the same with the last thing that caused the crash. Everything thought house flipping was "easy money" so everyone did it. The second everyone does it, it's not valuable anymore.
When everyone is in an index fund, the market becomes less efficient and several profitable opportunities are overlooked (and conversely, failing companies take longer to be recognized as failing). That means bigger returns for active investors who are both confident and right. Eventually the market equilibrates as people start realizing certain active investors are consistently beating the market and shift cash from index funds into their funds.
It's unlikely to result in a crash, though, rather a period of sustained underperformance and a few people getting fantastically wealthy. You could argue that the tech-billionaire phenomena is the primary capital markets example of this: there's a widespread belief that founding a new business is foolhardy and you're better off working for an established company, so people who buck this belief and are right end up making a lot of money off it, which draws a lot of people away from employment and into entrepreneurship, which drives down average returns to entrepreneurship as most of the new startups wash out and fail to beat the market.
Well, it can be foolhardy depending on how much you gamble and how competitive and with how high barriers of entry the market you want to compete in is. Also how local.
Real economics are never quite as easy as a single equation. A more proper model would be similar to weather modelling.
You may be right, but I think we aren't there yet. We've got too many active trading firms delivering little value. As more money moves into index funds and ETFs, only the best active traders will survive.
As well, I've also been lead to believe that many hedge funds aren't simply trying to make the most money, but are trying to ensure a safety net. They are promising they won't lose more than X% no matter how crazy things get. There's value in that.
> As more money moves into index funds and ETFs, only the best active traders will survive.
That’s probably fine. I don’t see why active traders should get any money at all from outside sources other than venture capital here and there when they have a proven opportunity to scale that’s bigger than their market cap can fund. And those opportunities should be an easy sell to almost anyone with restless cash.
Why should good traders be rewarded with sales? Good traders can make their own money. The only traders who need sales to survive are bad/exploitative ones.
Vanguard also has actively managed low fee ETFs, such as their Value factor funds which are picked based on metrics similar to those recommended in the book Intelligent Investor. The idea is to simply automate time tested stock picking of fundamentally undervalued stocks vs a completely blind index. With management fees well below .5%, they have my attention.
Its hard to find a bond fund that has averaged that low over a medium timeframe (5-10 years). Hell, my government-insured checking account has payed 2% for years.
I think this is likely due to some kind of skewed market internally and probably that many countries hold US assets and debts that are being engineered in to a position of a new normal (or baseline). Real growth in the US is falling over time has been falling at least since the mid 80s.
What irks me, is that with increased TSA, border, immigration, political, weather and gun control problems is why the US attracts anyone at all, or even foreign money. I have a hunch that by painting a positive picture in the media and misreporting or under reporting real situations leads to a perception that the US is a great place when looked at externally
I'm more worried about the lack of incentive for the 1% to maintain global stability if the markets doesn't react proportionally to the geopolitical issues.
>“Is the risk priced into the market appropriate to what the real risk is?” says Winer, the firm’s director of equities. “To me, it isn’t. People have grown more complacent and certainly more speculative, and it’s a little bit frightening.”
I think this is it. We're collectively ignoring a lot of risk (remember "No one defaults on their mortgage!") and it's going to bite us eventually.
This bull market, like all those before it will end. However, timing the market is impossible and a fools errand. Unless you’re close to retiring you’re better off riding it out. Here’s to hoping the market let’s us down easy this time...
Companies are growing their revenues, and are making healthy profits.
A good chunk of those profits are paid out as dividends.
If dividend yield is much higher than those tiny interest rates, why wouldn't you borrow money, invest, and enjoy dividends?
It's the rational thing to do, and hence, demand for stock is up, stock price is up.
But as long as the corporations keep distributing, it makes sense.
The crash will come when the federal deficit is reduced. Trump and his right hand man Paul Ryan are working on that now... While the tax cuts would help increase the deficit, they are taking it away by cutting spending.
i told a friend the other day, if the US really is at the precipice of nuclear war with Best Korera and i can get gas for 2.25, maybe the world isn't is such bad shape after all.
When you have an economy whose volume is 99% speculation, its function becomes a self-fulfilling prophecy up until the point where real resources that feed and house people start drying up.
Further, the US government can literally inject money at will into the market. That is what is happening when you have interest rates less than or equal to 0. They're saying "we don't really need money back until it starts helping you make money from the various levels of abstraction (options, futures, etc.) that enable literal money creation."
Money is being printed by banks and it is being moved around the world so no one notices in national audits.
China is printing money, US banks are printing money.
World debt is bigger than world economies, the US owes more than it produces, banks are free to simply borrow and speculate more and more.
Only the average citizens keep adding and subtracting money. Banks do not worry about money, they can print as much as they need, either by borrowing or by moving vapor money around the world to mask the true origin.
The world financial system is rigged. Money does not matter higher up, they are simply inventing value out of ether. 99,99% of the world works day in and out to support this rigged system.
The US mint prints money, not banks. China’s central bank prints money, yes. The US has debt, also true. Why do any of these things which have been happening for the past 30+ years (with the exception of china’s Central bank printing money) indicate that the “system is rigged”?
That is, surprisingly, not true. Literally printed money makes up a tiny minuscule fraction of all money in existence. We live in a debt based economy and banks are legally allowed to create money through debt. This is a product of fractional reserve banking.
Imagine we live in a world with a total of $100 in existence, owned by Bill. Bill deposits that $100 in a bank. With fractional reserve banking in our current system the bank only needs to keep 10% of deposits on hand. So they can legally lend out $90 of that money, even if they don't have the money to cover it. So Travis takes a loan from the bank of $90 and spends it buying stuff from Slim. Slim then spends that $90 deposits it at bank B. Bank B then keeps his $90 and lends out $81, and so on.
Think about what's happening there. You started with just $100 yet now Bill has his $100 but Slim also has $90. In the end, with a 10% fractional reserve requirement, Bill's $100 of "real" money will end up being turned into $1000. Of course in this process of this you also end up creating $1000 of debt - but that debt is not directly tied to the money it created. E.g. Slim's money is, from his perspective, debt free.
Now factor in the issue that banks not only lend out money they don't actually have, but they also charge interest on that money. Bill's $100 of "real" money will create not only $1000 of other new "real" money, but well over $1000 + interest of debt. In other words, if all money was collected into a pot, it would no longer be even remotely close enough money to pay off all debts. So old debts are only being paid off by new debts which in turn are only payable by even more debts.
This is one reason I'm not entirely sure how private banks actually make sense. This system empowers banks, private for profit institutions, to enormously profit from activities that would be of dubious legality for private individuals. Even our language has adopted this bizarre notion. For instance a 'run on the bank' has a very negative connotation today -- in reality it's just people withdrawing the money they deposited, only to find it's no longer there. And that's totally legal.
If you spoke to a supporter of what you describe they would no doubt point to the extra economic activity created by the new money that would otherwise not be there - if we strictly only lend against deposits this would mean we would all be far poorer than we are now. As long as we all believe in the new money and expect our creditors to pay us back as promised, the sleight of hand works.
That's what a supporter of the current system would say. Personally I think the whole setup stinks and any benefit the average person gets is merely a side effect of a system designed for the benefit of the rich.
It is rigged in that it's propped up by a systemic weakness directly created by public policy. "Rigged" is a semi-accurate description but still controversial because for many it implies a Dr. Evil scenario (hence the voted indignation) but the sooner people wake up to what's happening the softer the landing can be.
I would really like to invest in stocks, but I'm afraid of current valuations and cannot possibly time such an odd and manipulated market. I'm afraid of many bonds as well. Where to invest? Real estate? Maybe just carefully select stock-by-stock case-by-case? I know index funds are weird right now. Ugh.
Everyone except banks hurt in 2008. Banks then went in buying everything cheap. The people could not buy at all, since everyone was robbed. But banks were bailed out, so they had the money to buy cheap stocks around the world after the crisis they themselves created.
Is it not obvious? The crashes and the pumps are architected by banks. The people who lost homes got hurt, but banks didn't. Banks made trillions of $ from the 2008 crisis.
In 2009, I bought a house from a bank for $50k less than the balance they foreclosed on, and I expect they had no recourse against the borrower. In aggregate, there were a lot of bank losses. Banks didn't expect the downturn either, or they wouldn't have made so many loans with essentially no standards. (Admittedly, they also weren't expecting to keep loans on their own books for very long)
That's a big if, though, depending on your (or "you" in aggregate) market power. And if you've got less than $1K in savings, you probably don't have a lot.
There's too much money at play for there to not be a conspiracy - of some sort. I think it's pretty hard to argue that our economy is not highly skewed towards protecting the wealth of the very rich.
I understand that perspective and I don't disagree. That certainly is the case; Many are there because they understand the financial system better than anyone else. I don't mean to suggest that there is a grand organized conspiracy. That said, I do believe there is a strong network of bankers that promote their self interest.
How do you feel about bitcoin then? This is happening in plain view... you don't need to assign motives and mix in nation states, bitcoin is the most obvious example of pure speculation and literally is printed money with no attachment to fiat....
Seems a bit Orwellian to suggest that bitcoin is money printed from thin air. Yes, bitcoin was instantiated at some point, but at that point it had pretty much zero value. It has a fixed rate of issuance which will eventually end, and no one can change that. It is the opposite of fiat in that respect.
Actually, developers can change the limited issuance. Some group of developers, and their interested backers, will probably hard fork in 2024 and change the protocol to permit more to be mined. There will be inevitable "that's not Bitcoin" debates, but there will be a chain with old and new bitcoins on it for a little while anyway.
That's theoretical at the moment, and it's probably unlikely that it would win out as all the current holders of bitcoin would lose value. Even if it did though, it would be based on market consensus rather than a secret meeting room.
Bitcoin supply is finite. When you say "literally printed money"; you couldn't have come up with a poorer choice of words when discussing a digital currency with limited supply.
If you look at any crypto exchange, you will see BTC-fiat currency pairs for USD, EUR, CNY, JPY, etc. Not sure what more of an "attachment to fiat" you could ask for.
- speculation, as you say (sells outside a window)
- savings (sells after a period of time)
- float to cover transactions (sells continuously but also buys continuously, netting out to a stable holding)
They are all somewhat interrelated... speculation decreases savings value if it has volatility on a timescale bigger than typical vests. Float is constituted in part by the other two, although much of its cap is pure in/our money transfers. Speculators get most of their value from other speculators, but also react to changes in the float and savings market.
And any individual transaction will usually be some combination of the three. A saver might also be hoping for some return on top of the storage value. Someone who is moving money overseas might leave it in BTC for some additional time if they don’t have a better place to store that money.
Still, the mix of those motivations will lead to very different trading profiles. And only a small portion of those decisions are deterministic on the spot price of BTC, which is why calling them “100% speculative” is wrong.
Ask the people who lost homes in 2008 if it works.
99,99% of world wealth is held by less than 1000 people.
Can you wrap your head around that? Less than 1000 people control all the wealth for the other 7 billion people who happen to be alive on this planet.
The environment is a wreck, the world is being destroyed, entire coral reefs are dying, we are pouring radiation into the sea, there are artificial islands of trash in the ocean.
We as a species will not last more than 100 more years on this planet.
What exactly "works" in your opinion? You have an iPhone built by slaves in China? Is that it? What works?
"The ocean's dying. The plankton's dying. It's people. Soylent green is made out of people. They're making our food out of people. Next thing they'll be breeding us like cattle... for food. You've gotta tell 'em."
The thing is..owning capital isnt what it used to be with jewels piling up. Credit allows debt backed by that physical collateral to be used for someones tractor to be built. These people may be 'worth' a lot of money but their wealth is actually more diversified and illiquid than the average person's capital. I think its an important distinction because we can easily lose sight when we don't realize that one person's wealth isn't a zero sum loss for the rest of us. In a credit debt economy, we still lose but not binary..more like a percentage. Their money is out there doing work, helping other people. They can call it back eventually..but if someone is so rich they never actually recall their 'floating' assets, is it economically scientific to consider those assets equal to cash under a mattress? I feel like we need a new measure for almost perpetually floating assets so we dont consider ownership as relevant.
Just take a look at the massive rise in quality of life across the world. Your alarmist post is bunk. Life is getting better for everyone all the time.
This is such an empty, meaningless statement that only serves to deflect from the systemic greed and exploitation in the global financial system.
A man whose standard of life was increasing at (for example) 0.01% suddenly finds it increasing at 1.0%?
Or a family of 7 in some famine-stricken, war-torn nightmare now has half a bag of rice instead of a third?
At the same time your share in the overall wealth, prosperity and power of your nation is decreasing and being consolidated in the hands of fewer and fewer people.
A gradually increasing quality of life is something that should be an absolute minimum expectation for society, short of the effects of natural disasters and war. This is not something you should be proud of or use as an excuse to avoid the discomfort of recognising the abuses and excesses of the obscenely wealthy.
Sure the GDP of any given nation might be rising, but that only tells you how wealthy it is, not who actually benefits from that wealth.
You have traded your right to the prosperity of your nation for a an absolute minimum baseline of what will keep people docile and subservient.
And this;
> Life is getting better for everyone all the time.
