Stock, the economy and the Fed for 2023

[We'llBeDoneIn15Minutes]

Yea I agree with you 100% Im just pointing out the crazy theory our government uses to justify the out-of-control spending.

Oh ok. Yeah I've heard it mentioned. Does sound like a crazy justification.

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[We'llBeDoneIn15Minutes]

There's no alternative to the dollar for the foreseeable future. There just isn't.

Yes I agree with this, but I don't agree this is some kind of protection for the dollar. I don't care how many pesos I can get for a dollar. I care how much food, gas, etc I can get for a dollar. The escalation of debt and the resulting inflation of the currency (printing money) will raise the prices of everything and your dollars will be worth less. Maybe can get more foreign currency, but less of what you really want. When we see $10 for a gallon of gas or $50 buying half as many groceries, we won't get a feel good sense from saying, But down in Mexico you should see how many pesos it now costs for a gallon of gas! The endless printing of money will screw us. The world switching to another currency would simply be additional pain.

 

[We'llBeDoneIn15Minutes]

It's not secrecy, just incompetence.

Last time I deployed I was the officer in charge of a forward surgical team. We got there and first thing was an inventory of all the gear. Supposedly completely new set packed up in the US and shipped directly to us. About 20% of it was just not there. Not just talking about missing lap sponges, but durable equipment like oxygen concentrators, all the infusion pumps, etc.

We ordered replacements individually and utimately an investigation was done.

Turns out that there was just one E5 enlisted guy at some logistic hub in the US who checking the packing manifests and he was overworked or something, so he just signed the stuff off as complete.

"$10K for a toilet seat = secret slush fund" is a throwaway gag line from a movie, not reality.

When you do see ridiculous line item costs for seemingly silly items, it's always because they're actually nonstandard parts for some niche application. Low volume production, certified materials or nonstandard materials so they don't produce toxic gases when they get hit by artillery rounds, etc. It seems excessive but it's why our subs aren't made out of carbon fiber tubes because some internet clown saw a cheaper option.

There's no conspiracy, guys. The people in charge aren't that smart. The lost money really actually was left on a pallet in a ditch in the desert because it was spaghetti night and a cook needed room on the truck for some tomato sauce.

Just comes down to no profit motive and lack of competition. Government will always be more inefficient than private industry and I shake my head everytime I see people wanting to give government more control of the economy.

 

[We'llBeDoneIn15Minutes]

The point I’m trying to make is that all the talk about national debt this and deficit that is silly and pointless. There is zero political will to do anything about it…absolutely zero. It’s probably more of an absolute zero than 0 degrees Kelvin. Why bother talking about it? The three biggest expenditures are Medicare, social security, and defense. Which politician is going to campaign on cutting those? How about increasing the national revenue by increasing taxes? I think all the debt talk is stupid until we can have frank discussions about doing something about it. That’s not going to happen, so why bother? It’s like another thing to have manufactured outrage about.

Ron Paul is about the only guy I can think of that ran an honest campaign of how the debt has to be addressed. Reading back on the 2012 he did much better than I remembered. Received 20s-30s% of primary popular vote in a number of states and "Paul accrued the most second place popular vote finishes in the primaries." That's not too bad for a guy that won't give in to the government giveaway culture and gives a small glimmer of hope, but then again Ron Pauls come around once every generation or so at best. We should have listened to him. Well, not we, because I did haha.

 

[TeslaCoil]

Ron Paul is about the only guy I can think of that ran an honest campaign of how the debt has to be addressed. Reading back on the 2012 he did much better than I remembered. Received 20s-30s% of primary popular vote in a number of states and "Paul accrued the most second place popular vote finishes in the primaries." That's not too bad for a guy that won't give in to the government giveaway culture and gives a small glimmer of hope, but then again Ron Pauls come around once every generation or so at best. We should have listened to him. Well, not we, because I did haha.

I love ron paul. I went and met the man when he came to my city. Got to shake his hand. Smart guy. Too smart and too much of a straight shooter to get any attention. Just shows you the sorry state of affairs.

 

[pgg]

Yes I agree with this, but I don't agree this is some kind of protection for the dollar. I don't care how many pesos I can get for a dollar. I care how much food, gas, etc I can get for a dollar. The escalation of debt and the resulting inflation of the currency (printing money) will raise the prices of everything and your dollars will be worth less. Maybe can get more foreign currency, but less of what you really want. When we see $10 for a gallon of gas or $50 buying half as many groceries, we won't get a feel good sense from saying, But down in Mexico you should see how many pesos it now costs for a gallon of gas! The endless printing of money will screw us. The world switching to another currency would simply be additional pain.

I think you're overlooking something fundamental.

Of course you care about what you get for a dollar. But surely you realize that what you get for a dollar depends very much on exchange rates and demand for those dollars elsewhere in the world.

What we've been getting for our dollars, from the rest of the world, since the end of WWII, is an avalanche of scarce and valuable goods. We've been burning middle eastern oil, wearing southeast Asian textiles, driving Japanese and German cars, outsourcing some mining and pollution and manual labor to Africa. All paid for with dollars. The big picture is that we have been getting real stuff and they've been getting dollars (or the promise of future dollars in the form of US Treasuries).

Ask yourself, if you were an alien watching those primitive tribes of monkeys on earth scurry around, who was on the winning end of that deal. Is it sustainable? No. But even if the dollar collapsed tomorrow (it won't) we'd still have the stuff and the things we built with the other stuff, on our nice temperate non-polluted continent with a big moat to the east and a big moat to the west and friendly people to the north and more friendly people to the south, and the capacity to feed, power, and protect ourselves with ease. We're in an enviable position.

 

[We'llBeDoneIn15Minutes]

I think you're overlooking something fundamental.

Of course you care about what you get for a dollar. But surely you realize that what you get for a dollar depends very much on exchange rates and demand for those dollars elsewhere in the world.

What we've been getting for our dollars, from the rest of the world, since the end of WWII, is an avalanche of scarce and valuable goods. We've been burning middle eastern oil, wearing southeast Asian textiles, driving Japanese and German cars, outsourcing some mining and pollution and manual labor to Africa. All paid for with dollars. The big picture is that we have been getting real stuff and they've been getting dollars (or the promise of future dollars in the form of US Treasuries).

Ask yourself, if you were an alien watching those primitive tribes of monkeys on earth scurry around, who was on the winning end of that deal. Is it sustainable? No. But even if the dollar collapsed tomorrow (it won't) we'd still have the stuff and the things we built with the other stuff, on our nice temperate non-polluted continent with a big moat to the east and a big moat to the west and friendly people to the north and more friendly people to the south, and the capacity to feed, power, and protect ourselves with ease. We're in an enviable position.

I get all that. I'm saying it's no protection to the effects of our out of control debt and money printing and resulting higher prices. Many people, not yourself, think we are immune to the results of wild monetary inflation simply because the world uses dollars. If that were the case let's just print everyone a million bucks 🤷‍♂️

Again, I know you understand that, but it amazes me how many don't, that the dollar being the reserve currency offers some kind of wild protection from debt and the Fed. It doesn't. But yes, I agree we used to steal the world blind by being the "lender" getting everyone else in a debt trap they couldn't get out of that we now find ourselves in as a struggling "borrower."

 

[gasdoc77]

I think you're overlooking something fundamental.

Of course you care about what you get for a dollar. But surely you realize that what you get for a dollar depends very much on exchange rates and demand for those dollars elsewhere in the world.

What we've been getting for our dollars, from the rest of the world, since the end of WWII, is an avalanche of scarce and valuable goods. We've been burning middle eastern oil, wearing southeast Asian textiles, driving Japanese and German cars, outsourcing some mining and pollution and manual labor to Africa. All paid for with dollars. The big picture is that we have been getting real stuff and they've been getting dollars (or the promise of future dollars in the form of US Treasuries).

Ask yourself, if you were an alien watching those primitive tribes of monkeys on earth scurry around, who was on the winning end of that deal. Is it sustainable? No. But even if the dollar collapsed tomorrow (it won't) we'd still have the stuff and the things we built with the other stuff, on our nice temperate non-polluted continent with a big moat to the east and a big moat to the west and friendly people to the north and more friendly people to the south, and the capacity to feed, power, and protect ourselves with ease. We're in an enviable position.

I don't disagree with your points.
But similarly to the 2 compartment model in pharmacokinetics (envisioning propofol), those dollars can only redistribute for so long to more and more remote regions globally before the saturation point is reached in the second compartment (the first compartment being stateside), beyond which printing=inflation.

Now if some event causes the world to rush to exit dollar positions, we could see an influx (return) of those dollars seeking real goods and services. I would fear that THEN we might see sudden and hard(er) to control inflation.

 

[gasdoc77]

The thing is there is a credible economic theory, I forget the guys name that came up with it, but basically what it says is that a government can essentially keep borrowing indefinitely with no ceiling as long as it has the economic strength to back it up.

I think Paul Krugman (Nobel winning economist) suggested as much in his book Depression Economics. He makes a case that inflation is and must be never ending and propels spending, fueling an economy based on consumption. Therefore, given a long enough timeline dollars will be what pennies once were (hence the push for digital dollars and separating people emotionally from their spending habits and/or savings).
By being digital, central banks can inflate in perpetuity.

 

[anbuitachi]

sp500 coming down. time to buy the dip

 

[Dr. Rude]

I get all that. I'm saying it's no protection to the effects of our out of control debt and money printing and resulting higher prices. Many people, not yourself, think we are immune to the results of wild monetary inflation simply because the world uses dollars. If that were the case let's just print everyone a million bucks 🤷‍♂️

Again, I know you understand that, but it amazes me how don't, that the dollar being the reserve currency offers some kind of wild protection from debt and the Fed. It doesn't. But yes, I agree we used to steal the world blind by being the "lender" getting everyone else in a debt trap they couldn't get out of that we now find ourselves in as a struggling "borrower."

It does offer some protection. Just not perfect protection. Also nothing is forever. There are massive inflationary and massive deflationary pressures in our system. The Fed has been walking a tight rope. I wouldn't be surprised to see interest rates double from current levels. I also wouldn't be surprised if they return to the lows of just a few years ago. The level of Fragility has gone up. How and when it fractures...Nobody knows. History suggests that it will at some point.

 

[PpfSuxTube]

Anyone interested in Apple? Down 10% in August, now at significant support levels in 177 ish.

 

[Dr. Rude]

Anyone interested in Apple? Down 10% in August, now at significant support levels in 177 ish.

Sure. They have a $3 trillionish market cap. Was $1 trillion five years ago. They are worth more than the entire Russel 2000 combined. Sounds like a deal.

 

[anbuitachi]

Anyone interested in Apple? Down 10% in August, now at significant support levels in 177 ish.

people rushed to apple bc its a safe stock. a 3T company is not going to grow 20% a year. jsut not happening. but apple is a safe bet over long term in terms of it going up.

 

[We'llBeDoneIn15Minutes]

sp500 coming down. time to buy the dip

I think for very short term you might be right. My concern is matching the 2021 highs soon. That's a dangerous looking double top considering we are at historic levels, par with 1929 and only lagging 2000 (by this one metric. Buffett also has an indicator flashing the same warning regarding validation. I don't think any metric says the market is currently a deal).

The ai insanity smells a lot like 1999 and seems to be unraveling. I'm talking the stock bubble, not the industry. The Internet in 2000 was still in its infancy similar to ai today, but the stock bubble was already imploding. I don't make predictions of exact peaks, inflection points etc, but I can say with certainty a number of these stocks up 10x, 20x, 50x and higher in a short period and going to see periods of 10-20+ years of zero growth regardless that they are still great growing companies. The companies will need time to catch up to the stocks. I can't tell you which stocks and where the peaks are exactly, but it will happen.

Qualcom went up over 20 fold from 98 to the 99 peak. If you bought at the 99 peak you would have seen that same price in year 2020.
Microsoft went up over 20x from 94 to 99 and wasn't until 2016 before exceeding that 1999 peak.
Examples are numerous, and it's a guarantee that great companies will still take many years to catch up to badly inflated stock values.

Buying tech at the 2022 lows would have been a good idea. I bought a significant amount but capped my gains with covered calls. I made 20-25% of the lows where some of those ran up 50%. I'm ok with being conservative like that, Pigs get slaughtered haha.

NVDA in the 400s? That's a hard pass for me. NVDA went up 15 fold from 99 to 01. You could still buy the 01 peak price in year 2015. Since then it went up about 100x. A HUNDRED FOLD, are you kidding me? The train has long left the station and as Pops always said, don't be the last man onboard. Yes sure, wish I had bought it, and no I can't tell you this is the peak and the beginning of a ten to twenty year flat stock price, but the easy money is long gone and the risk/reward balance has shifted significantly 100x later.

But that's just all me and how I roll haha. As we approach the 2021 highs I'll be going more and more treasuries. Have already started.

 

[anbuitachi]

definitely a dangerous game. there is still 4.5 Trillion on the sidelines. today it feels like its getting more and more difficult to deploy money and make good returns. I do think the AI rush is too crazy and will moderate over time. People seem to think its a gold mine, but forget other things, like cost of running AI is significantly more than not. Other companys will innovate and eventually compete with nvidia. i dont know if in 10 years nvidia will still have as much of a monopoly on high end chips as it does today.

see my technical analysis of sp500 below

 

[PpfSuxTube]

definitely a dangerous game. there is still 4.5 Trillion on the sidelines. today it feels like its getting more and more difficult to deploy money and make good returns. I do think the AI rush is too crazy and will moderate over time. People seem to think its a gold mine, but forget other things, like cost of running AI is significantly more than not. Other companys will innovate and eventually compete with nvidia. i dont know if in 10 years nvidia will still have as much of a monopoly on high end chips as it does today.

see my technical analysis of sp500 below

View attachment 375615

If that happens we're all boned anyway...

 

[Dr. Rude]

If that happens we're all boned anyway...

Nah. Bear markets are when stocks return to their rightful owners.

 

[anbuitachi]

If that happens we're all boned anyway...

i barely have any money so it'll be great for me to enter

 

[gcc322]

Is everyone dumping their I-bonds? Measly interest rate over the last 6 months.

 

[Dr. Rude]

Is everyone dumping their I-bonds? Measly interest rate over the last 6 months.

Trimming em. I have been buying them for a long time. TIPs are a better deal currently.

The I Bond exit ramp is now open; proceed with caution

Time redemptions to take full advantage of the recent 6.48% variable rate. By David Enna, Tipswatch.com First off, before I start talking about redeeming investments in U.S. Series I Savings Bonds,…

tipswatch.com

 

[anbuitachi]

Trimming em. I have been buying them for a long time. TIPs are a better deal currently.

The I Bond exit ramp is now open; proceed with caution

Time redemptions to take full advantage of the recent 6.48% variable rate. By David Enna, Tipswatch.com First off, before I start talking about redeeming investments in U.S. Series I Savings Bonds,…

tipswatch.com

how much better are tips than treasuries?

 

[Dr. Rude]

how much better are tips than treasuries?

TIPs are treasury instruments. Like I bonds their yield is affected by inflation.

TIPS

Market Data Center on The Wall Street Journal.

www.wsj.com

The yield in the table is a REAL yield. All are above IBonds currently available fixed component of 0.9%.
Most of the Bonds available for the last decade have a real yield of 0.0%.

 

[anbuitachi]

TIPs are treasury instruments. Like I bonds their yield is affected by inflation.

TIPS

Market Data Center on The Wall Street Journal.

www.wsj.com

The yield in the table is a REAL yield. All are above IBonds currently available fixed component of 0.9%.
Most of the Bonds available for the last decade have a real yield of 0.0%.

i mean a 10 year real yeild of 1.67% is that better than a 10 year treasury bond that currently is at like 4.1% . 10 year treasury carries less risk imo.

 

[Dr. Rude]

i mean a 10 year real yeild of 1.67% is that better than a 10 year treasury bond that currently is at like 4.1% . 10 year treasury carries less risk imo.

depends on what inflation turns out to be. Think of TIPs as having an insurance component. They SHOULD return less than Nominal Treasurys. Insurance should cost something. You are paying for insurance from unanticipated inflation.

10-Year Breakeven Inflation Rate

View the average 10-year expectation for the inflation rate among market participants, based upon Treasury securities.

fred.stlouisfed.org

Today, The market is pricing inflation to be 2.36% over the next ten years. If it is less than that, a nominal 10 year Treasury will beat a 10 year TIPs when held to maturity. It is known as the breakeven inflation rate. Roll the dice, move your mice.

 

[GravelRider]

Ron Paul is about the only guy I can think of that ran an honest campaign of how the debt has to be addressed. Reading back on the 2012 he did much better than I remembered. Received 20s-30s% of primary popular vote in a number of states and "Paul accrued the most second place popular vote finishes in the primaries." That's not too bad for a guy that won't give in to the government giveaway culture and gives a small glimmer of hope, but then again Ron Pauls come around once every generation or so at best. We should have listened to him. Well, not we, because I did haha.

Ron Paul had plenty of whack-a-doodle ideas. He wasn’t the complete straight shooter of memory. He also dabbled in conspiracy theories. Ron Paul caught some fire at a time when the economy was collapsing due to Wall Street greed and we were embroiled in a never-ending war in Iraq. His Libertarian talking points resonated with young people who were disenchanted with government and the rich. He’s like the less successful Bernie Sanders of the right…he makes some good points and observations about the current state of affairs, but can’t help himself from going off the rails into that aforementioned whack-a-doodle territory.

 

[HemeOncHopeful19]

Ron Paul had plenty of whack-a-doodle ideas. He wasn’t the complete straight shooter of memory. He also dabbled in conspiracy theories. Ron Paul caught some fire at a time when the economy was collapsing due to Wall Street greed and we were embroiled in a never-ending war in Iraq. His Libertarian talking points resonated with young people who were disenchanted with government and the rich. He’s like the less successful Bernie Sanders of the right…he makes some good points and observations about the current state of affairs, but can’t help himself from going off the rails into that aforementioned whack-a-doodle territory.

To be fair… is there any single politician or human being that if you heard their stance on everything you would not find some “whack-a-doodle” ideas?

 

[Dr. Rude]

To be fair… is there any single politician or human being that if you heard their stance on everything you would not find some “whack-a-doodle” ideas?

Partially true. Ron Paul, Donald Trump, and others are outliers. Not completely sure that they are sane or their outrageous speech is just something that they use to get the spotlight and attention drawn to them.
Nicki Haley, Mitt Romney, Chris Sununnu, John Kasich, et al. While clearly sane are less interesting and also get less attention drawn to them.

 

[HemeOncHopeful19]

Nicki Haley, Mitt Romney, Chris Sununnu, John Kasich, et al. While clearly sane are less interesting and also get less attention drawn to them.

Gee I wonder why outsider candidates seem to have more attention drawn to their fringe ideas while nobody focuses on the fringe ideas of more establishment candidates 🤔

 

[Dr. Rude]

Gee I wonder why outsider candidates seem to have more attention drawn to their fringe ideas while nobody focuses on the fringe ideas of more establishment candidates 🤔

Because that is what our reptilian overlords want.

 

[GravelRider]

Gee I wonder why outsider candidates seem to have more attention drawn to their fringe ideas while nobody focuses on the fringe ideas of more establishment candidates 🤔

By definition, “outsider” candidates have more fringe ideas, right?

 

[We'llBeDoneIn15Minutes]

Ron Paul had plenty of whack-a-doodle ideas. He wasn’t the complete straight shooter of memory. He also dabbled in conspiracy theories. Ron Paul caught some fire at a time when the economy was collapsing due to Wall Street greed and we were embroiled in a never-ending war in Iraq. His Libertarian talking points resonated with young people who were disenchanted with government and the rich. He’s like the less successful Bernie Sanders of the right…he makes some good points and observations about the current state of affairs, but can’t help himself from going off the rails into that aforementioned whack-a-doodle territory.

Regarding Austrian Economics, which really is just basic economics and has nothing to do with the country, he is dead on accurate as it gets. It's a massive insult to compare Ron Paul, one of the smartest politicians we've ever had, to Bernie Sanders, an anti-capitalist sycophant that other than a few short lived odd jobs has spent an adult lifetime getting rich off of the government dole promoting socialism.

 

[We'llBeDoneIn15Minutes]

By definition, “outsider” candidates have more fringe ideas, right?

That seems like it could be a definition, but it doesn't necessarily equate with whack a doodle ideas. Whack a doodle lost your mind insanity ideas that are more mainstream, and therefore I guess, not fringe, would include socialism, open borders, a crime free for all, and the idea that if Shaq puts on a wig and wears a dress he should be allowed in the wnba. Now that makes the"fringe" guys look like geniuses 🤷‍♂️

 

[GravelRider]

That seems like it could be a definition, but it doesn't necessarily equate with whack a doodle ideas. Whack a doodle lost your mind insanity ideas that are more mainstream, and therefore I guess, not fringe, would include socialism, open borders, a crime free for all, and the idea that if Shaq puts on a wig and wears a dress he should be allowed in the wnba. Not that makes the"fringe" guys look like geniuses 🤷‍♂️

Here we go with the woke stuff again. Move on, dude.

 

[GravelRider]

Regarding Austrian Economics, which really is just basic economics and has nothing to do with the country, he is dead on accurate as it gets. It's a massive insult to compare Ron Paul, one of the smartest politicians we've ever had, to Bernie Sanders, an anti-capitalist sycophant that other than a few short lived odd jobs has spent an adult lifetime getting rich off of the government dole promoting socialism.

I think Ron Paul was a whack-a-doodle. That’s my opinion, and I’m sticking to it. He wasn’t even a great Libertarian and was inconsistent on multiple fronts. I read his book way back when and came away thinking he was more cranky and tantrumy than he actually appeared in public. I’m happy you found a politician you can identify with, though.

 

[We'llBeDoneIn15Minutes]

Here we go with the woke stuff again. Move on, dude.

Oh ok. My bad. Anything else not in agreement with you is whack a doodle 🥱

Woke is mainstream, otherwise so much of it wouldn't be the current rule of the land, and therefore by the definition you laid out, not fringe 🤔

 

[We'llBeDoneIn15Minutes]

He was more cranky and tantrumy than he actually appeared in public.

Seriously, WGAF 😆

 

[nimbus]

Visualizing the $105 Trillion World Economy in One Chart

How much does each country contribute to the $105 trillion world economy in 2023, and what nations are seeing their nominal GDPs shrink?

www.visualcapitalist.com

Animated: Global Debt Projections (2005-2027P)

The surge in global debt poses significant risks to government balance sheets. Here's where it's projected to reach over the next five years.

www.visualcapitalist.com

 

[anbuitachi]

Visualizing the $105 Trillion World Economy in One Chart

How much does each country contribute to the $105 trillion world economy in 2023, and what nations are seeing their nominal GDPs shrink?

www.visualcapitalist.com

Animated: Global Debt Projections (2005-2027P)

The surge in global debt poses significant risks to government balance sheets. Here's where it's projected to reach over the next five years.

www.visualcapitalist.com

isnt it about the balance in debt, and not total debt itself that truly matters. if USA owes china 10T, and china owes usa 10T, i think its not that bad. Its when there is significant imbalance that create problems.

its like how salaries have gone up significantly over the past 30 years. but debt has gone up as well so we look at percentages.

 

[We'llBeDoneIn15Minutes]

Animated: Global Debt Projections (2005-2027P)

The surge in global debt poses significant risks to government balance sheets. Here's where it's projected to reach over the next five years.

www.visualcapitalist.com

"In the U.S., public debt-to-GDP is set to reach a record 134% by 2027. The sharp rise in interest rates is increasing net debt servicing costs, which stood at $475 billion last year. Over the next 10 years, net interest costs on U.S. debt are projected to total $10.6 trillion."

Half a trillion thrown away on interest. As irresponsible and unsustainable as the people we have all known somewhere in our lives with so much credit card interest they can never get their head back above the water. What cost a trillion dollar check in 08 to keep the ponzi afloat has exponentially become larger and larger. Now a trillion is barely buying a few months time.

The fact that total debt interest will grow indefinitely while trying to keep a stable money supply seems to me only 2 answers, you have to continually inflated the money supply (inflation) and hope the economy keeps up, and then use up your economic gains just to stay level, or you have to let defaults happen which for some strange reason we grew into this mentality that we should bail out bankruptcies. The math of it is nothing is ever bailed out, the debt is simply passed on to someone else. So all we have done is take a really big problem in 08 and have turned it into a massive growing snowball exponentially larger than 08.

I don't see huge defaults or responsible government ever taking place. Blade Theory will continue indefinitely for as long as possible, ie the defaults will insidiously take place through "bailouts" with resulting monetary inflation everytime there is a crisis.

Basically... It's a sh** show.

 

[We'llBeDoneIn15Minutes]

Animated: Global Debt Projections (2005-2027P)

The surge in global debt poses significant risks to government balance sheets. Here's where it's projected to reach over the next five years.

www.visualcapitalist.com

It does give a rough idea of the world economies but really impossible to compare countries by GDP since a dollar of various GDP components are not all equal in their measure of the strength of the economy. $1000 of casino revenue is simply a transfer of money while using resources to provide some minimal entertainment value contribution for the guys with blood shot eyes and drinks at the poker table at 4am, while $1000 of actual production, ie roads, bridges, schools, cars, homes, essential services etc, provides actual strength to the economy and wealth of a nation. We are called a "consumer economy" which directly implies there's a lot of fluff in our GDP numbers.

 

[We'llBeDoneIn15Minutes]

Strikingly similar pattern.... 🤔 😳

 

[RadOncDoc21]

Strikingly similar pattern.... 🤔 😳

Up up down down left right left right B A start?

 

[nimbus]

It does give a rough idea of the world economies but really impossible to compare countries by GDP since a dollar of various GDP components are not all equal in their measure of the strength of the economy. $1000 of casino revenue is simply a transfer of money while using resources to provide some minimal entertainment value contribution for the guys with blood shot eyes and drinks at the poker table at 4am, while $1000 of actual production, ie roads, bridges, schools, cars, homes, essential services etc, provides actual strength to the economy and wealth of a nation. We are called a "consumer economy" which directly implies there's a lot of fluff in our GDP numbers.

I guess blackjack dealers, surf instructors, Ferrari dealers, plastic surgeons and cosmetic dermatologists could all be considered fluff but they would beg to differ. As we all know from the pandemic, essential is in the eye of the beholder. Ever talk to an avid snowboarder or cyclist? Music or movie buff? A gamer or social media addict? Is a smartphone essential or is it a “consumer” product? Did K-pop culture and Korean beauty products add to the wealth of Korea? We are beyond the age of subsistence so people need a way to pass their time during their existence on earth.

 

[We'llBeDoneIn15Minutes]

I guess blackjack dealers, surf instructors, Ferrari dealers, plastic surgeons and cosmetic dermatologists could all be considered fluff but they would beg to differ. As we all know from the pandemic, essential is in the eye of the beholder. Ever talk to an avid snowboarder or cyclist? Music or movie buff? A gamer or social media addict? Is a smartphone essential or is it a “consumer” product? Did K-pop culture and Korean beauty products add to the wealth of Korea? We are beyond the age of subsistence so people need a way to pass their time during their existence in earth.

The list of luxurious fluff sounds quite devine. I might catch a polo match this weekend followed by mud facials at a spa resort. Still doesn't add much of anything to the overall wealth and economic strength of a nation is all I said. When the trade deficit and debt balance that floats this "consumer/service economy" comes due we'll realize the hole is deep.

 

[nimbus]

The list of luxurious fluff sounds quite devine. I might catch a polo match this weekend followed by mud facials at a spa resort. Still doesn't add much of anything to the overall wealth and economic strength of a nation is all I said. When the trade deficit and debt balance that floats this "consumer/service economy" comes due we'll realize the hole is deep.

What is the alternative to a “consumer/service economy”? All of us here are service workers and we’re unlikely switch to factory or field work. We spend almost 20% of our GDP on healthcare which is a service. In addition, our desire for “fluff” fuels capitalism in the USA and all first world countries. Capitalism would collapse without consumers.

 

[We'llBeDoneIn15Minutes]

What is the alternative to a “consumer/service economy”? Our desire for “fluff” fuels capitalism in the USA and all first world countries. Capitalism would collapse without it.

I don't think you have to do anything but let markets work. Don't set false interest rates. Don't have a Fed inflate our way out of debt. Let defaults happen. Don't allow trade deficits or governments to spend money they don't have short of true emergencies etc. Excess fluff would work it's way out of the system the same way if you gave someone an endless credit limit and then took away the card. Excess fluff beyond our means is the consequence, not the cause of anything.

 

[GravelRider]

I don't think you have to do anything but let markets work. Don't set false interest rates. Don't have a Fed inflate our way out of debt. Let defaults happen. Don't allow trade deficits or governments to spend money they don't have short of true emergencies etc. Excess fluff would work it's way out of the system the same way if you gave someone an endless credit limit and then took away the card. Excess fluff beyond our means is the consequence, not the cause of anything.

Modernity is fueled by debt and credit. I think all this talk about how we (as a society) should only spend the “money” that currently exists really underestimates the importance that debt plays in economic growth. All of the advances of the modern age over the past century or so simply would not exist without debt. Our entire capitalist system is based on the belief that future resources and economic growth or creation will be more abundant in the future compared to the present.

Now, if you are saying that the current capitalist system is not sustainable because we are approaching a point where we’ve exhausted the ability to produce and create new resources and economic growth, that would be a different discussion. Or you could be arguing that humanity was better off in the pre-modern, pre-capitalist eras where the obsession with economic growth did not exist. However, our current world as we know it would not exist without debt.

 

[We'llBeDoneIn15Minutes]

Modernity is fueled by debt and credit. I think all this talk about how we (as a society) should only spend the “money” that currently exists really underestimates the importance that debt plays in economic growth. All of the advances of the modern age over the past century or so simply would not exist without debt. Our entire capitalist system is based on the belief that future resources and economic growth or creation will be more abundant in the future compared to the present.

Now, if you are saying that the current capitalist system is not sustainable because we are approaching a point where we’ve exhausted the ability to produce and create new resources and economic growth, that would be a different discussion. Or you could be arguing that humanity was better off in the pre-modern, pre-capitalist eras where the obsession with economic growth did not exist. However, our current world as we know it would not exist without debt.

I didn't mean to imply all debt is bad. I agree with you that debt that fuels innovation and investment can be very good and an efficient use of resources. An affordable mortgage is also often worthwhile debt. Educational debt that's pays more return than cost falls into that as well. $80,000 a year on an art history or philosophy major when your family is pay check to paycheck, or blowing up your credit card on a trip and high end shoes when you can't afford the interest... probably not the smartest debt in the world.

We can talk about how government once built a really awesome bridge somewhere (most likely for too much money), but overall the entity with the least efficient use of money is likely to be government spending, and I'd have a very hard time believing anything good comes from letting governments frivolously bury their nation in debt.

 

[rowsdower88]

I didn't mean to imply all debt is bad. I agree with you that debt that fuels innovation and investment can be very good and an efficient use of resources. An affordable mortgage is also often worthwhile debt. Educational debt that's pays more return than cost falls into that as well. $80,000 a year on an art history or philosophy major when your family is pay check to paycheck, or blowing up your credit card on a trip and high end shoes when you can't afford the interest... probably not the smartest debt in the world.

We can talk about how government once built a really awesome bridge somewhere (most likely for too much money), but overall the entity with the least efficient use of money is likely to be government spending, and I'd have a very hard time believing anything good comes from letting governments frivolously bury their nation in debt.

Philosophy degrees earn more typically than any other humanities degree. I've seen graphs suggesting they earn more on average than Chemistry degrees. Most people aren't spending $80k/yr on them. You could do much worse than major in philosophy.