The Everything Bubble Is Ready to Pop | Hacker News Reader

The Everything Bubble Is Ready to Pop

mauldineconomics.com

19 pointsromanhn25 comments

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What if it is just the USD losing value against assets? You know, inflation not reported correctly.

If "everything" is bubbling, then relatively speaking prices are the same.

This is a great point, one I wish more people would consider.

That'd be asset price inflation [1], not regular inflation (CPI).

[1] https://en.wikipedia.org/wiki/Asset_price_inflation

That would be true if it was only happening in the stock market. But if all assets are inflating: housing, stock market, cars, top wages, etc... then it'll affect consumer good at the other end.

This is exactly the first thing that occurred to me, but I'm far from an economist. It does seem that if literally everything was in a bubble, that would be equivalent to the dollar having less value. It would be wildly out of line with CPI inflation, and I'm not sure what that means. Perhaps consumer goods have just become very cheap.

Alternatively, maybe "everything bubble" means a very high amount of capital investment.

I don't think consumer goods are getting cheaper. The iPhone is getting more and more expensive (even not counting the iPhone X price bump).

But should consumer goods (food/small items) be small in developed economies? Things like Rent, Transport (Car/Travel), Health Care, etc... should weigh more.

Wait, these are all getting expensive or am I wrong?

> I don't think consumer goods are getting cheaper. The iPhone is getting more and more expensive (even not counting the iPhone X price bump).

Oh please. What about food? Fuel/energy? Insurance? Clothing? Any single one of these budgets is bigger for probably all of us than our smartphone budget.

As for myself, all of the above budgets (except for fuel/energy maybe) have gotten slightly cheaper in recent years. (I live in Germany.) And that includes smartphones; the average smartphone is lasting longer and getting cheaper unless you're looking at the flagships whose price is driven entirely by market segmentation.

Interesting observation given that I had fuel/energy get cheaper while the rest not. So it certainly depends on location.

But the point of measuring inflation is to have a specific thing/standard and match it with other years. It would not be fair to say phones got cheaper because you got your new Android-Samsung-Clone from China.

When you say clothing got cheaper, is it the same brand/item/time of the season. Your insurance got cheaper? Is it because you didn't have accidents and you got upgraded?

There's a really interesting book called "Fed Up" written by Danielle DiMartino Booth, who worked inside the Fed for a number of years during the last popping of a bubble.

https://smile.amazon.com/Fed-Up-Insiders-Federal-Reserve/dp/...

She's done a number of interviews on podcasts as well. This one was decent: http://www.jasonstapleton.com/571-author-danielle-dimartino-...

How can there be an "index" bubble like at the bottom of the infographic. Who cares how the funds are invested? It's this exactly equivalent to saying there's a general stock market bubble, which he says earlier? Why does it matter if a large part of that money is being invested by index funds?

You can't loan people huge sums of money with no interest and expect bubbles not to arise.

This infographic was seen recently, previous HN conversation here: https://news.ycombinator.com/item?id=15364537

The housing bubble part of the infographic made me laugh. Saying we’re in another housing bubble because prices have risen dramatically since the bottom of the last crash is laughable. We may very well be, but those numbers are more indicative of a recovery not a bubble, imo. In a lot of markets the median prices still are below what they were at the peak of the bubble 10 years ago, not even factoring in inflation.

We’re probably due for a correction but not related to real estate, though home prices would certainly be affected.

Bubbles can be concentrated more heavily in higher growth areas, and there's been a lot of urbanization in the last 10 years, particularly tech heavy areas. I'm not saying I agree with his prediction, but I wouldn't dismiss it because some markets have lagged relative to others.

If housing prices were indeed inflated then there's little difference between a "recovery" and the bubble inflating again (assuming prices didn't crash to something well below reasonable value).

Seattle home prices, which have seen a staggering 9-10% increase year over year, are actually only 20% higher than the peak of the 2007 bubble. That's 2% average growth per year over the last 10 years, which doesn't seem so alarming.

Edit: source http://seattlebubble.com/blog/wp-content/uploads/2017/09/Cas...

If you smooth out the case shiller over the last 30 years the market on the whole is right where it would have been given typical growth without the crazy manipulation.

Two quotes from his newsletter:

> Passive investing is all the rage. Buy SPY, make regular contributions, retire. That’s today’s wisdom, and it’s completely wrong.

> Think like Warren Buffett for a second

I don't know what he's trying to sell, but I wouldn't take any financial advice from him.

> Think like Warren Buffett for a second

Buffet is actually a fan of S&P 500 index funds, such as SPY:

Buffett wins $1M decade-old bet that the S&P500 would outperform hedgefunds

https://news.ycombinator.com/item?id=15268726

> I don't know what he's trying to sell

He's trying to sell that he can outperform a trivial algorithm. You know, because his income depends on it.

Are there any other sources corroborating this?

I think it's just a prediction. There's always people predicting a downturn when things are frothy in the stock market. Inevitably someone gets it right and looks like a genius when things crash.

Well, normal markets have a sawtooth growth pattern. It's only a matter of time till each of the discussed markets reaches bubble-proportions, then pops. History proves that with both the stock/real-estate markets. But I haven't heard anyone else predicting 5 simultaneous bubbles like this.

There are a lot of people calling bubble right now, but the number of people claiming a thing has 0 effect on how true a thing is.

The better question to ask is: What evidence is there that suggests the metrics discussed have predictive power?

Probably the same evidence for phrenology. I'm just skeptical that there's even 5 bubbles right now.

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