Message from @Zyzz
Discord ID: 396326551966449676
Yup. And it seems to be this was done on a broader scale during ZIRP
e.g. the subprime auto loans mentioned above
yup although companies are much better managers of money than individuals so my hope is they will be able to handle their maturity schedule and not overleverage themselves especially not after 2008/2009
many companies had issues with having enough cash
right on. thanks for your perspective!
It's hard to find sober opinions on the data
sure thing man
>i think the next recession will probably be more akin to 2009 because the boom will have gone on for ~11 or so years. will it be as bad? i dont think so
I think it'll be worse. The big banks are still insolvent, they still have assets on the books that are recorded at historical value, not marked to market. They do have a lot of cash on hand that hasn't moved in a decade. If they start spending it for some reason, that could really ramp up the velocity of currency and destroy purchasing power.
These historically low interest rates will always result in malinvestments. People are getting loans for things that they don't deserve, low-NPV business ideas are getting funded because investment capital has no stable option for return, they're forced to chase returns in risky areas just to avoid the decay of purchasing power.
Why did the FED, in 2006, stop reporting on the M3 total supply of currency?
These historically low interest rates will always result in malinvestments. People are getting loans for things that they don't deserve, low-NPV business ideas are getting funded because investment capital has no stable option for return, they're forced to chase returns in risky areas just to avoid the decay of purchasing power.
^i deff agree with that
And nobody wants bonds at the current artificially low rate, so the fed is printing money and buying bonds with it. Crazy stuff.
if the fed unwinds their MBS portfolio itll be interesting what it does to long rates
They are stealing purchasing power from savers and forcing that money into bonds.
10-30yr bonds specifically
And there's so much money sloshing around in the stock market because all kinds of cattle are herded into it. Every schmo in corporate america gets like 10% of their pay tied up in government regulations forced into the stock market with the "5% contribution, 5% match" 401k nonsense. The corporations do it because the government taxes them less on payroll if a portion of it is forced into the market. And tax breaks on normal IRAs also forces more people into the market that otherwise would not be in the market.
"I'm gonna steal your money unless you put it in the stock market" is what the government is doing over and over.
They say they need tax breaks to drive saving, but only if it's channeled into the stock market, then they say they need lower interest rates to drive spending. It's nonsense.
In the short term, the US will probably be ok, but in the medium and long term, what would you two say is the “best show in town” for passive investment? Is Europe really in better shape? What about world stocks overall? @Zyzz @Tanner - SC
good question. i lack trust in china although it seems like their economy has the best potential for growth and to become a superpower
i think europe falls tbh. you cannot import low IQ people and expect your human capital to remain as great as it was in previous generations
my mom was on the phone with someone from verizon yesterday. she said it was some haitian woman. needless to say but the lady was as dumb as a box of rocks. my mom was on the phone with her for 2+ hours trying to get something done that should have taken perhaps 30 mins. as soon as she got off the phone with the haitian woman she tells me about it. those are the types of people who are replacing us
perhaps switzerland will do well in the long run. also australia/new zealand maybe
i am waiting for the moment when soverign debt investors start looking at a countries demographics and demographic projections (by race), look at avg IQ by race, and consider those varibles when pricing a country's debt
They probably already are
ok well in 20yrs the risk premium on US treasuries will go way up
So on the question of where to put money for long term investment, will we beat the rest of the world or will the rest of the world as a whole beat us? In your opinion of course, just want to see your perspective as someone on the ground
the US has had tremendous growth since 1980. it will be hard to top that over the next 40 years. and that includes the financial crisis. the US is a mature/developed economy so we have that working against us as well
there are certainly other parts of the world where it'll be far easier to have +4% GDP growth simply if their govts would get out of the way
Argentina used to be one of the world's best economies in the early 20th century (look at demographics and you'll see why). It fell in the 60's due to corruption from the Peron family and hasnt really recovered
if argentina's govt could get out of its own way they most certainly have the human capital to grow at an above avg rate over the next few decades
the question is what will cause these countries to implement the needed reform to have fully functioning economies
Thanks for the analysis 👍🏻
I'm a firm believer in keeping a portion of your assets outside of the banking/equity system.
@Tanner - SC what do you own outside of the banking/equity system? Gold? RE?
@ThisIsChris ^ "govt student loan portfolio $1.37 trillion"
@Zyzz that is bad for students, but is that bad for the overall economy in terms of stock market or whatever? This is going to sound supremely Jewish, but only looking at it autistically from an investment standpoint, it looks like this student loan debt will pressure people to take jobs on terms they might otherwise turndown or renegotiate because they are more at the mercy of their student loan payments. This lack of negotiating power on the part of labor would be beneficial for companies. Thus while student loan debt is bad for working people, I'm trying to understand if it is bad from the POV of hurting investments like stocks
@ThisIsChris I think you are right. The only impact this has is people with debt will not be able to consume as much (need to pay debt) and will be unable to buy homes (which isn't always a bad thing). They will just end up renting rather than buying a home. From an investors standpoint, this will not cause a bubble as they are not allowed to discharge debts in bankruptcy and there are plenty of ways for lenders to garnish wages.
I can see people with debt having less flexibility which will lead to them taking less risks from an employment standpoints (turning down job offers, quitting jobs, entreprenuerial endeavors, etc.)