pashamur

It’s a real thing:

https://en.m.wikipedia.org/wiki/Paradox_of_thrift

You get ahead by saving, but everyone can’t do that all together or the economy collapses.

Note that this is showing household incomes, not individual incomes. Household used to mean 1 working family member, now it's closer to 2 due in large part by more women joining the workforce. If you had a traditional family with one working spouse, they would definitely be falling behind.

If you look at the source below for men's wages (for example), the real wage has fallen by 3% for the median male since 1979 (and by 10% real decline for the bottom 10%). That's not even accounting for the fact that housing should make up a higher % of the consumption basket for the lowest-paid workers (as compared to CPI).

https://sgp.fas.org/crs/misc/R45090.pdf

Most likely under-reported COVID deaths. Having looked at the Russia data at least, many deaths (earlier on) were marked with "pneumonia" and they didn't even bother testing for COVID.

Isn't there always a contracting option where you can take on as many jobs as you'd like?

The other reason that prices are way cheaper second hand is that the buyer is taking the risk of buying a lemon - versus some sort of guarantee (usually) when you buy new. The seller has more information about the object in question than the buyer (i.e. wifi card on laptop is flaky, for example), so buying secondhand implies more risk, which drops the exchange price.

I think that this affects the price of new vs used moreso than the experience of purchasing it.

Basic economics assumes a functional and competitive market. The majority of markets in America no longer fit this criteria - today's corporate environment is closer to neo-feudal than capitalist; if we want to return to "true" capitalism, we need a lot stronger anti-merger and monopoly busting efforts.

I highly recommend listening to "Bullshit Jobs" by David Graeber on the observed inverse relationship between pay and [actual] value (if we're talking about societal value, for example). There are exceptions to the rule, but the correlation is quite strong.

Yes, chess masters at the top actually have groups of coaches (if they're preparing for an important match). Sometimes up to 5-10 people. Though it might not be so much coaches as "preparation team" - one of them might be the lead coach, one responsible for openings, one responsible for mental game, etc etc.

Novel writing is more subjective - if it were a clearly competitive endeavor with objective rules, I'm sure that the top performers would have coaches as well.

Jim Browning (the renowned anti-scammer) recently fell for one of his own, where someone tricked him into disabling his Youtube account.

So if the situation is right, almost anyone can fall for it (Gorilla on basketball court experiment)

The poorer/richer argument only makes sense in the context of a specific consumption basket. If your main goal in life is to buy as many bananas as you can (for example), then you would measure the house appreciation in bananas. Can you get more bananas for your house now (at $1M - 250k) than you could when you got it? Then you're "richer", otherwise you're not.

Usually we use CPI as a proxy for it. However, most people when evaluating houses ignore the implied rent paid; owning a house means not having to pay rent - and that has a specific price on it, depending on your local rental market. So in a relative sense, you owning that house makes you richer relative to the people that did not own a house (who did not get the same nominal appreciation at all and are much worse off), and leaves you at the same place with other people owning the house. You're unlikely to be worse off (on a relative standing) than if you hadn't gotten the house. So I'm not sure richer/poorer makes sense without considering the alternatives (i.e. renting & investing)

Big crashes (and fast-drop bottoms) happen not because of panic selling, but because of forced selling (covering margin calls, getting liquidated, etc). Panic selling usually leads to slow grind downs.

Shorts usually cover once the rebound starts, not when things are free-falling (their trailing stops get triggered, etc)

I posted an interview about the open-pricing surgery center of Oklahoma which actually goes into how a free market healthcare system would work.

A free market system would make for even more uneven differentiation in health care quality - with some people not being able to receive care at all at the end of the day. Yes, on average we would have better health outcomes (same as most people would have better outcomes on average if you didn't require car insurance, since most people don't end up using it), but the few outlier cases would be significantly more tragic than they already are.

I wonder if the TSA has some signaling effect though apart from the actual efficacy of the security theatre. Even if it catches things rarely, the fact that it exists makes people more aware and potentially look out more for abnormal behavior in airports (and catching some things some times still probably acts as a deterrent - at least more so than not having the security theatre around)

Yeah, you pretty much nailed it - this article gives context, but it's pretty much as you said, most people are not adjusting by inflation & interest rate: https://realestatedecoded.com/the-shocking-truth-about-house...

Think of houses like bonds that pay a coupon (rent). If risk free rate goes down, the coupon is worth more in comparison so house price goes up.

The only downside is that when you buy a house that is cheap with a high interest rate you can benefit from refinancing if the rate goes down (and deduct your mortgage interest, which used to be significant tax savings). When you buy an expensive house at a low rate, you get no such benefit (although if inflation does pick up, the fact that you are implicitly short the borrowed dollars might still work in your favor).

Grandparent might mean median individual income instead (since household income graphs can be skewed by more people working - Elizabeth Warren writes about this in the Two Income Trap):

https://fred.stlouisfed.org/series/MEPAINUSA672N

No, we simply change the game. Why is their labor not worth the new minimum wage? Is it outsourcing? Foreign tariffs or import controls. Is it robots/automation? Tax robot productivity and provide a general UBI with the output.

Why is the livable wage so high - is the problem affordable housing? How about we provide guaranteed government backed housing loans directly through a federal agency (no intermediation), and force the rate on secondary mortgages and investment mortgages up significantly making investing in real estate less appealing?

The market is already not a free one - we know this ever since the FED started bailing out corporations in the 80s. If we are already moving towards a centrally planned system, why not drop the façade and at least do it in a way that benefits the underclass as opposed to the bankers.

I'm going to refer to Lyn Alden's guide here (https://www.lynalden.com/inflation/), but not all inflation damages the lower class.

In fact, the wealth gap was smallest (relatively) at the end of the 1940s and 1970s, both decades with the most inflation in the 20th century. It all depends on the power of labor vs capital. That's why capital has fought so much against unions - if you bring back unions, inflation can return and it can benefit the lower classes at the expense of the rich.

This depends on how the money is distributed - if we have stimulus checks (and eventually everyone has an account at the FED), for example, it's not true that well-connected interests get access to that money first.

Of reported cases*, which is very different than actual cases.

CDC actually has a page where they estimate the true number of cases of COVID in the US, and they put it at ~115 million. So that would be 578k deaths / 115M cases, or a fatality rate of ~0.5%, which is roughly in line with what you could have expected based on the early studies from the cruise ships where there was free spread of covid in a contained space.

If medical facilities had been overloaded, we certainly could have seen more fatalities, but beyond protecting the hospitals from running out of beds (which was worthwhile), the other interventions didn't seem to do much.

https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/burd...

1) 20 years is a small sample size

2) The US has enjoyed the status of the world's reserve currency since 1945, which literally means the gains of the U.S. stock market are partly financed by the whole world (note that we used to have a net surplus with other countries pre-1970, but now run a deep deficit and have off-shored our domestic manufacturing base - as a result of needing to get dollars out into the system)

3) Most stock market analyses on the US stock market are done in this 1945-now period when the US has been dominant on the world stage; it's a long time in an individual's life but a short time historically. If that changes, I expect lots of things that were "always true" to no longer be true anymore.

More reading: https://www.lynalden.com/fraying-petrodollar-system/

The most important concept to understand about today's market is not short squeeze - it's gamma squeeze (which can lead to shorts being squeezed). It's about how traders got their hands on an unusual amounts of leverage (when you buy a call option, the market maker that sells it to you has to buy 5-10x the amount of stock in $$ value that it cost you to buy the option in order to hedge, and the closer the stock gets to your option price, the more hedging stock they have to buy)

GME, Tesla, all of the high-flyers and all the craziness of the last few months were driven by gamma squeezes and the YOLO call option buying of /wsb (with some hedge funds obviously jumping on board)

There is a good article by Lyn Alden on this, but basically, the difference is how the QE is targeted. In 2008, the QE was done in order to get rid of toxic assets and recapitalize the banks - most of that money stayed locked up in the financial system and never made it out (banks had reserve requirements changed and tightened credit, which shrank the money supply - the QE was done to counteract that).

This time around, the banks are well capitalized and the QE is targeted at monetizing the federal deficit (federal government issuing treasuries in order to finance relief packages and the like and FED buying them), so the money is actually going to make it into the broad money supply, which might lead to inflation (though hyper-inflation is probably an overstatement at this point).

Basically Lyn compares what happened in 2008-2009 to 1929 - which was a banking crisis; whereas what happened in 2020 is closer to 1940-1945 / late 1960's in terms of the FED monetizing the debt. We had inflation in the late 1940's and in the 1970s, so it's possible we'll see something similar.

https://www.lynalden.com/quantitative-easing-mmt-inflation/

I think that's the appeal of Bitcoin and/or Gold: it's both cash in that it might act as a safe haven in the case of an asset crash and would retain it's value during hyperinflation (since you can't print more of it).

Though bitcoin has really been untested as a safe asset and currently behaves more like a speculative one.

Not sure whether it makes sense to average all returns and call it "negative expected returns" across the board. As with any game that mixes luck & skill (like poker), trading has a variety of expected returns. My guess (based on poker) is that a large part of people are small losers or break-even (in poker because of rake, in trading because of trading fees), some are big losers (in poker called whales), some are small winners (regs), and some are big winners (truly good players / traders).

It's not easy figuring out in the beginning which bucket you fall into, but if you accurately track your poker / trades over time, then with a large enough sample size (assuming proper risk management of course) you should be able to figure it out.

That's not exactly true; market value does not exist in a vacuum, it's the discounted future cash flows of the component companies. You can certainly look at the earnings of the component companies, and see how much growth is being priced in with the current valuations (and whether you think that is reasonable or not over the long term).

Now generally timing the market is not recommended; however, if the market has been going up for 5% a year for the previous 10 years versus going up for 20% a year (assuming same levels of inflation), it paints a very different picture, so at least in broad strokes you should be able to estimate where we are in a market cycle (telling the difference between 1998 and 2000 might be hard, but telling the difference between 1998 and 1994 should be fairly straightforward)

http://people.stern.nyu.edu/adamodar/pdfiles/invphiloh/valua...

This is just the latest version - there was the crypto bubble in 2017, then the MJ bubble in 2018 (and XIV volatility collapse), now this.

I think crypto proved to us that you don't need any sort of fundamentals - price action beats all (and defines the narrative) in the short term. We've also become a meme-based and tweet-based economy (and Donald Trump / the pandemic surely help speed that along)

You can actually buy the call back whenever as long as someone is selling (which market makers generally are) to exit the position - you don't have to wait until expiration.

There is a good section on this in the book How Democracies Die where they go into detail as to why fascists could not come to power in America before Donald Trump. Basically their argument was that the party structures performed gatekeeping functions and that populists could not even get nominated to a party ticket (even with massive popular support, comparable to that of Donald Trump - they give the example of Henry Ford).

Those gatekeeping functions were lessened after the violent Democratic national convention of '68 (where there was a clash between pro-war and anti-war factions) and primaries became a thing that actually mattered (in 68 Humphrey was selected by backroom insiders who did not participate in a single primary in that cycle, leading to public outcry). However, the gatekeeping effects persisted because of the control the parties still had over advertising channels and the media; that control fell apart post-2000, which setup the conditions that enabled a populist like Donald Trump to actually be elected to the presidency.

So it's not free speech that kept fascists out of power in the U.S., it's institutional gatekeeping (in the 30's and 40's).

Hey, I wanted to respond to your comment from 18 days ago but responses there have already been disabled (so I'm hijacking this comment). The question was about "> Housing market returns are very bad. Between 1948 and 2004 the real increase in value in the U.S real estate market was less than 1% a year." versus the "Return on everything" paper from 2018. (https://news.ycombinator.com/item?id=25585224)

On page 85 of the paper, they actually point out that the real capital gain is ~0.7-0.9% per year on average (with a huge standard deviation of 8%, since it's very market specific), which seems to agree with the submitted article, but that the rest of the return, 5.33% (stddev: 0.8%) comes from rental yield (of course in the case of your own house that becomes money saved from not paying rent). Those two added together are what give the total rate of return on housing.

I think we're in agreement then that the U.S. is more lenient with its bankruptcy laws than Europe (on the whole, although as you pointed out it varies by country)

Other reasons for the U.S. salaries not mentioned yet:

0) Banning of non-competes in Silicon Valley (!!) and ease of incorporation / listing on markets back in the 90's and before

1) Foreign investment in the U.S. (Saudi, Chinese, Russian money due to favorable treatment, anonymity (!)) and presence of U.S. dollar worldwide as a reserve currency - lots of that money ended up in Silicon Valley (Softbank etc). This especially matters since a lot of the compensation is in RSUs and the U.S. stocks have benefitted from above.

2) DotCom bubble because of (1) inflated salary expectations; U.S. had a head start over other countries also because of the DotCom bubble.

3) Personal bankruptcy laws are more lax than Europe I believe (although I'm not positive), since you can discharge all personal debt in a bankruptcy, cost of risk is lower (leads to more risk taking).

4) Gap between EU/US salaries has varied depending on exchange rate. Generally the way the world economy is set up tends to strengthen the dollar (everyone needs them to transact oil and pay foreign obligations after 1971/1974). That might be changing though; with a weaker dollar salary gap will naturally shrink.

5) As people mentioned before: vacation, school, healthcare cost differentials (though my hunch is that this is a small effect if any)

6) U.S. is a unified market of ~300 million people, most speaking English. EU is many smaller distinct markets because of language & cultural reasons (more-so than U.S. states), so more effort required for growth.

Probably some other reasons that slipped my mind at the moment.