Higher-income people are worried about the economy
axios.com
axios.com
In each event I was significantly more impacted by the media salivating about the potential for a coming economic collapse than I was actually living through them.
Certainly my companies were impacted negatively at the outset of each, but emerged stronger to take advantage of the clear skies and sunny days that proceeded each event.
We've been playing on easy mode for the past 10 years in many ways - it's difficult to truly innovate without challenge, and today I embrace the potential for the board to shift, to find new opportunities to innovate, and to embrace change.
I'm sorry to say that it makes the most sense to simply not worry about it, unless it's your job to.
We tend to forget that dictatorship is the default human civilization. It also happens to be the "normal" structure of the family, even in liberal countries, for the simple reason that kids are, by definition, incompetent. So I'm not sure if it makes sense to "stamp out dictatorship" when so many people legitimately want to live under one. So that leaves getting rid of nukes - a problem most of us assumed would solve itself over time after the fall of the Soviet Union. This backsliding is worrisome, but the path to success remains the same. But when the next Soviet Union falls, we should pursue denuclearification much much more seriously.
Totally agree with the main point of denuclearization, it needs to be pursued even more aggressively in the future. The current 12,000 nukes is yes way lower than Cold War, but it's an insane level / irrational overall.
- Monarchy/Dictatorship: Power in the hands of one, one person is authority
- Oligarchy/Republic: Power in the hands of a few, aristocrats are authority
- Democracy: Power in the hands of many, majority is authority
- Anarchy: Power in everyone's hands, everyone is authority (or no one is depending on how you look at it)
In reality, society only works when there's a power hierarchy; it's the natural order of things. The more power is equally distributed amongst people, the more dysfunctional/less orderly/more bureaucratic society becomes. When you're in complete Anarchy, might/ability is what ultimately determines the outcomes in conflicts, and those who wield it typically end up becoming the "authority". Hence, over time, Anarchy will naturally develop into the other more stable forms of government. Notice however, all forms of government have the following issue: when there's a conflict in wants between people, someone (ie authority) will have their way, someone won't. You can't get rid of this reality, no matter how you structure government, which is to say: oppression is unavoidable so long as there exists conflicts in what people want.
Thus, I honestly don't see why people think a dictatorship is necessarily more oppressive than other forms of government. Some people are quite happy with their dictators, even if there's other people living under the same dictator that aren't; but this is true of any form of government. And it's not hard to see why there can be people happy with their dictators, as dictatorships are highly efficient and effective at carrying out policy. If your dicator is competent & beneveloent towards your wishes, it's arguably the best - most effective form of government. But understandably, if your dicator is not competent or benevolent to you, its among the worst...
Hardly ever true. Most dictatorships are unstable and unable to do anything more than a bare minimum.
Hierarchy is not the same as dictatorship. Dictatorships means unlimited power. There is also hierarchy in democracies, but it is more about the separation of power, rather than of concentration.
Dictatorships are only as effective as their leaders competence, so you can make that argument. But relavtive to other forms of governments, dictatorships are efficient and effective at carrying out policy simply because there is minimal questions, debates, delibrations over decisions and conflicts. In democracy, you MUST debate, vote, count votes, and come to an agreement about a topic amongst many people, before you can enact policy. This is often a lengthy (ie inefficient/bureaucratic) process. In dictatorships, this is a shorter process, as one man decides, and it's do as your told, no questions asked. In this aspect, dictatorships are faster at enacting/delivering policy.
>Hierarchy is not the same as dictatorship
A heirarchy is a system or organization in which people or groups are ranked one above the other according to status or authority. Dictatorships are a heirarchy, namely a heirarchy consisting of 1 man having unlimited authority over everyone. But not all heirarchies are dictatorships, as you can have many other possible forms of heirarchies.
You're conflating effectiveness at "making good policy" with effectivness in "delivering policy". I never said they were most effective at "making good policy" but in "carrying out policy" (meaning time to deliver policy).
>So no, there is no law of nature decreeing dictatorships are more efficient or effective than other forms of government
And again, I never made that claim (if you mean efficient/effective at making good policy). I said they were when it came to delivering policy (whether that's good or bad policy) and it depends on their competence. IF their leaders are competent (in making good policy and decisions), they naturally are more efficient and effective governments. This holds true, because, of the words 'if' and 'competent' and the reasons I explained prior.
As far as waiting for input vs skipping input goes, it's a double edged sword not a one way street. Extra time spent in gathering input means slower to act. Slower to act means missed action/opportunities, which is a terrible aspect to have in an immediate crisis. This is exactly the reason why the executive branch of the US functions more similarly to a dictatorship than a democracy - it's so that it can respond faster in times of crisis. It's because dictatorships are actually better in this aspect, when compared to other forms of government.
Otherwise very nicely put, but surely there is a useful distinction between "not getting what you want" and "oppression"! I think we can all agree that even losing the vote on every issue is far preferable to losing the ability to vote on any issue. But that's not true if, by losing a vote, or a court case, or an administrative decision, you consider yourself 'oppressed'. You lost, true. Maybe unfairly. But that's necessary but not sufficient to prove oppression! Like, if I could wave a magic wand and grant all American voters the (apparent) super-power of gracefully losing, I would.
If every loss is oppression, then winning becomes a moral imperative, possibly requiring escalation to violence. No-one wants to live in that world, so we need to give people a way to take their licks at the polls and then work together to solve the world's problems. And you know what, if you want to go to war over abortion, have at it, but do you really want to die on that hill? Aren't there issues that are more urgent, and more clearly dire than abortion? Or gay people? Or racist people? Aren't we ALL kind of in the same boat with respect to climate change, nuclear armaggedon, income inequality and the backsliding of democracies into autocracies? And aren't all of these at least 5 orders-of-magnitude more important than whether or not a trans woman can compete in NCAA sport?
(Why don't we hear our senators debating the important issues of the day? Why aren't they erudite men, well versed in many fields of endeavor, hosting daily podcasts of debates, singly and in groups? Is this not their job? And isn't it our job to second-guess all of them mercilessly??)
Wants themselves do have ranks, as does the amount of oppression felt by not getting them. As you can imagine, there are likely some people who want 2nd vacation homes, but would prefer not having a 2nd home over not having food if they were ever forced into a situation where they had to compromise. But it's not as black and white as you'd might think. People don't all share the same wants, let alone to the same degree. There are people in this world who would prefer to own 3 homes not caring that there are homeless people wanting just 1 (greed). There are people out there who prefer to go without buying food, dumpster dive, and work minimum wage jobs despite having better offers, all in order to save up to buy a house (I personally know a guy - and this is pride). People who like to go without food (ie fast) for weeks (me). And yet, people who prefer to remain homeless, people who want to help the homeless, and people who don't want to help.
>If every loss is oppression, then winning becomes a moral imperative, possibly requiring escalation to violence
Whether something is a moral imperative is subject to opinion - whether you personally deem it so. But yes, especially at some extreme point, that is reality, and you cannot escape it. This is exactly the sort of thing political philosophers such as Hobbes and Locke argued in their social contract theories. It's why when loss is deemed to be so terribly bad under tyrannical governments, that there are violent revolutions. It's the reason for wars. It's literally what lead to the foundation of the United States.
That said, you can learn to go without most wants. It's what Buddhist monks teach and practice. Additionally, wants have ranks, as I mentioned above. So winning is not always a moral imperative for everyone in every case. Some people simply don't care that much about certain topics, and don't care if they lose the outcome.
>No-one wants to live in that world
Yes, that's why true Anarchy doesn't last long. Anarchy, or the state of nature, can often be brutally violent. Wild animals often kill each other just for fun, it's called surplus killing. Power hierarchies naturally form within same species, just to avoid constantly having to violently fight to determine the outcomes for conflicts. The suffering of being subjugated is often preferred to the suffering of being violently maimed (or mere risk of it) by your neighbor, but pushed to a point it can obviously flip, leading you back into a revolution. As you put it, no one wants to live in that violent world, (at least not very long), so a hierarchy eventually forms in order to avoid having to live in it.
>Aren't we ALL kind of in the same boat with respect to climate change ...
Yes and no depending on how you look at it. Do we all have opinions on those topics? Yes. Do they affect us in some way? Yes. Do we all share the same opinions over them? No. Do we all rank those issues at the same level of importance? Probably relatively to some degree, but ultimately no.
> I honestly don't see why people think a dictatorship is necessarily more oppressive than other forms of government.
To be honest, that isn't too creative of you.
We sort of see this in democracies when the simple majority want to force a large minority to do or not do things (sometimes contrary to law). We want a dictatorship, just so long as it's one that we agree with.
Edit: why downvote?
Overall we didn't had much time not under some form of emergency powers. Terrorism, war, insurrections... there is always a reason the be afraid.
In the end, it probably doesn't matter; the Fermi paradox strongly implies no civilization makes it out of their tiny radio bubble alive. Consider that our own radio waves have only traveled 122 light-years into the void, and already our civilization has been at risk several times from nuclear weapons, and is now at risk because of climate change and biosphere degradation. A civilization desiring interstellar contact must prioritize it's own longevity above all else. That humans might be the first in our galaxy does not bode well for humanity's chances! Which brings me to my own favorite tool to disspel fear: zoom out, remember it's all temporary at some timescale, and enjoy the good stuff while it lasts.
Are there actually people that think this would work on a large scale in the US?
On the other side, isn't Switzerland sort of close to direct democracy, at least in the way they require referendums?
If Ukraine had kept their nuclear weapons, do you think Putin would even consider invading? I don't think so.
A better solution to denuclearization, in my opinion is to adopt a "No First Use" policy [1]. I suspect internally the US and NATO do follow this policy but will not disclose it publicly for strategic reasons.
[1] https://acoup.blog/2022/03/11/collections-nuclear-deterrence...
An order from the US president to launch nuclear weapons can only be rescinded by the US president: https://asia.nikkei.com/Politics/Nuclear-button-U.S.-has-no-...
This is well known, there was a submarine captain who was dismissed for inquiring about it in the US Navy.
War is not peace, cold or otherwise.
Well, I'm not sure about that. I feel that we are all responsible for our government to some degree. If the gov is really doing evil things without accountability, then it is the people's responsibility to change it.
The problem is that it is very easy to move from democracy to dictatorship, and very hard to move from dictatorship to democracy, with the latter transition almost always requiring the use of force. Its a big, gigantic step. It's starts when Russian mothers and fathers, Russian neighbors and shopkeepers, start whispering about really taking up arms against Putin.
This is a very problematic line to cross, mainly because people are stupid and will trigger 'a revolution' about anything and everything. The information landscape is treacherous for false positives, now more than ever. Consider the example of the pitiable 1/6 insurrectionists. Every one of them thought they were defending their country against a threat. But they were all badly wrong, and now they suffer for it. But the instinct to put their lives on the line for their constitution is, in my old-fashioned belief system, admirable. They just got tricked into fighting for the wrong side.
The editors of the Daily Mail and The Sun, donors like the Elliotts, and whoever has financial kompromat.
Plenty of people should worry about it. People have to physically remove themselves from these environments in order to seek opportunities for their own children and assure their long term opportunities. Millions of people are being displaced today by the whims of a Russian dictator, and we should assume dictatorship is good and well?
I saying, choices in aggregate matters.
The people who want to live under a dictator do it either because they're greatly benefiting from the status quo (these tend to be an elite minority) or those who have been brainwashed by a state-controlled media and education system to not realize how oppressed they are.
Free access to the internet lets people see outside their tightly controlled propaganda bubble, which is why totalitarian regimes such as China try to censor it. They are afraid of the internet for good reason: because once people start to find out what really happened in their country (like at Tiananmen Square) they'll start to wonder if their own government is as benevolent and if the outside world is so horrible as state-controlled media and education tells them. That could contribute to the overthrow of the old regime.
Free access to information is only one piece of the puzzle, but revolutions and deposing of dictators can and has happened.
Unfortunately, what replaces dictators is sometimes just as bad or worse than the dictator. See the results of the Communist overthrow of the Russian Czar for one example, and the military's control of Egypt after the revolution that overthrew Mubarak for another.
To be truly successful revolutions can't just replace one elite with another, but have to really empower the people.
Unless you are able to directly exercise nonzero control over the foreign policy of a nuclear power, the threat of a nuclear apocalypse is sufficiently far removed from anything you can do anything about, that it's tantamount to worrying about a large asteroid impacting the earth. It would be devastating, sure, but it's not productive to genuinely concern yourself with it, because it's unlikely you'll survive and there's not much you can do to change the likelihood of the event or your survival.
Your best bet is to move somewhere in the southern hemisphere, such as New Zealand. Hey ... that's where a lot of the mega rich have been buying property of late ...
New Zealand will probably not be hit in an exchange. It would be a safer place to live in event of nuclear war.
There are basic rules of human decency which we as a species have agreed to in the form of human rights, people may choose an alternate mode of government to democracy (and this is always a choice on some level, no dictatorship can rule an entirely unwilling populace), but nothing they choose can morally deny them their human rights.
So pull the damn manufacturing back to your own shores and start having a bit a self-sufficiency!
Shifting things halfway around the world to save 2 pennies was never a good idea.
And, we have learned NOTHING. How many hospitals are back to buying masks from solely from Asian suppliers again?
Is it really, despite being horrific?
One essentially mobster is accosting another country with soldiers seemingly reluctant, in what might be no more complex than a clear mobster survival ploy in a country plagued by poverty for all but his cronies.
I ask that because it seems reminiscent of Slobodan Milosevic 23 years ago in Serbia.
thanks for the thoughtful response.
The risk here is that the Russia and China will use their military power to stamp out democracy for an undefined sphere of client states. History through the cold war shows that tolerating this behavior simply invites further escalation.
I see the spread of disinformation and propaganda as something that will inoculate the populace ultimately.
I think Russia (and China) has done the West a favor. Hopefully the West will start offering integration into our economies as a reward for democratic reforms instead of as an incentive, because god knows that hasn't produced the desired result.
That's not my understanding.
I'm far from an expert, but from what I've read there was a radical change in the US military from a focus on large-scale warfare to small-scale warfare focused on urban combat and quick responses to multiple small threats.
There are also way, way less nuclear weapons (on both sides) than there used to be. I think there were something like 30,000 nuclear weapons in the US at the peak of nuclear proliferation, and now there are closer to 5,000 (and roughly the same in Russia).
So the military posture of both countries has definitely changed.
Unfortunately, it seems we're headed back towards a Cold War, if not a hot war... so the arms race is likely to heat up and preparations for large-scale combat will likely increase.
This will make the world a much more dangerous place.
It just wastes money and deludes trigger happy people in to believing a war between nuclear powers can be "won".
The 1998 Russia crisis is particularly interesting:
- Russia was put under FMI (IMF) leadership with huge monetary injection,
- Financial games made that this money didn’t help the populace but only helped to create a new billionaire class in Russia.
- We have a dozen thousand Russian multimillionaires here on the French Côte d’Azur (Nice) coming from that period; and the other half of the oligarchs created the Putin regime.
Talk about a grave crisis, Ukraine is a ripple effect of the IMF stuffup.
Capitalist economy is fundamentally predicated on confidence cycles, so anything hitting that confidence will inevitably speed up the coming of the next downturn. However, the downturn would eventually come anyway.
> the 2008 they talked so much about was way smoother than the 1995-1998 crisis
That really depended on where you were and a bunch of other factors. Entire neighbourhoods in the US were gutted by repossessions, in London we had meaningless riots, in the arts sector they saw budgets slashed, etc etc.
> Ukraine is a ripple effect of the IMF stuffup.
Undoubtedly. Also of the post-2001 US doctrine on the use of force in international relations. And a bunch of other things. Nothing ever happens just because somebody woke up that day feeling like starting a war.
Now, there are less greenfield spaces, more competition, and less barriers to get started. Much much harder to start a successful business today.
1990 had none of that.
Maybe blockchains and NFTs are the 2020s version of the internet as far as greenfield goes. I'm not convinced, but then I've always been too cynical for my own good.
Google: 1998, Salesforce 1999, Overstock 1999,, Bet365 2000, Grubhub 2001, Etsy 2002, Logmein 2003, Shopify 2004
Nothing around 1990. Amazon, Ebay, Expedia etc in the mid 90s sure.
1998 and 1999 did better than 2000, but from 1990-1995 there are 9 on the list, from 2000-2005 there are 19 on the list, from 2010-2015 there are 14.
Starting in 2000 put you in a great position to capitalise on the real growth of the internet when mobile devices came on.
Pre-2015 there were a lot of opportunities to get a running start without much investment. A cool new web-thing would spread organically, could be coded pretty fast, etc.
Now, it's easier to raise money and use that to build a business. A not uncommon strategy is paying Google and Facebook $200 to acquire a $100. It loses money, but shows growth.
For some people, the new way is easy mode. For a lot of people, the ability to raise, pay yourself a real salary and also recruit a well paid team is easy mode. For some people, three dudes and some ramen is easy mode.
1. Everyone using FB ads and the days of FB ad arbitrage and cheap ad prices were going away
2. Cloud computing started to become more mainstream and building your own product became even easier
3. Instagram and YouTube started to really take over peoples attention and the days of getting attention by simply building something cool was disappearing.
All decisions made by the Fed are made using comprehensive and sophisticated simulation tools, including tools that I'm under NDA and can't talk about. (However, I can say that the Fed is a customer, as that is publicly available information) Only a small fraction of this tooling is available publicly in the form of, FRB/US - https://www.federalreserve.gov/econres/us-models-package.htm , FLARE - https://www.federalreserve.gov/econres/notes/feds-notes/test... and whatever ABBA is, https://search.usa.gov/search?affiliate=ofr&query=agent-base...
When the policy makers are running millions of simulations with real-time transaction data + inputs, what utility does all of the fretting and "analysis" in the media have?
The system has become extremely dense and opaque, and what is in the public realm seems to be decoupled from the policy making + expertise. At best, the public can learn from footnotes that the Fed intends to (and has) pursued simulations to track, forecast & calibrate its policies,
> 29 To facilitate analysis of settlement disruptions, systems may need to develop the capability to simulate credit and liquidity effects on participants and on the system resulting from one or more participant defaults, or other possible sources of settlement disruption. Such simulations may need to include, if appropriate, the effects of changes in market prices, volatilities, or other factors.
Tools are only as good as the people who use them. We need more transparency into the decision making aids, as well as greater access to help people understand how the economy is managed as a system.
But until then, all this media doom and gloom isn't helping.
If we had more eyes + more critiques, we could debug their thinking & see where it's going.
That being said, the policy makers and the economists at the Fed are far more capable than most people think. They've gotten a lot right, and proven most naysayers wrong. But the question is, how long will that record last?
The Fed is rather transparent (both with policy thinking and data), and I can't think of any area with more eyes and more critiques than US monetary policy.
I should say "trust" in the sense that I trust my doctor to be infinitely more knowledgeable than myself with regards to health, to the point that I am able to confidently outsource my decision making to him. Not "trust" in the sense that you would blindly trust a family member or friend.
Who is "us" in this case? A lot of people lost their homes/savings. The primary entities saved were the same ones that caused the crisis in the first place. I think it's fair to argue that in the short term a collapse of several major banks might have hurt "the working class" worse. But the in the medium to long term I'm not sure that pulling out all the stops to fix the financial industry's fuckups was the right call.
Not OP, but I'm guessing he's referring to people who rely directly or indirectly on the financial sector. Basically a vast majority of the worlds population.
> A lot of people lost their homes/savings.
Yes, agreed. Unless you are saying things couldn't have been worse for them, but I don't think you are based on the rest of what you wrote...
> The primary entities saved were the same ones that caused the crisis in the first place.
Was this the fed's decision?
> But the in the medium to long term I'm not sure that pulling out all the stops to fix the financial industry's fuckups was the right call.
I'd suggest that lack of prosecution and public take-overs were the biggest problem. From my perspective, the fed did what it needed to do within it's power. They couldn't let the major banks go under without systemic consequences. But you're right we should have prosecuted those liable, and failing too-big-to-fail institutions should have been publicly taken over and (arguably) re-privatized after the crisis. We didn't let markets work how they were supposed to.
This is what it took to reverse 2008's recession. Every time I read this single page document I get a little shiver.
Item #2 is by my interpretation has "any and all means" finality.
("2 Take all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding.")
Not really surprising given the sharp disconnection of a large chunk of the world's economy and the blockading and shelling of a smaller part.
Granted, from a resource point of view, they are important.
Sure, but they always are - as they should: they are the first to be affected and the last to see the effects of recovery.
Are they? Financial markets are usually hit first. Low-income people don't have financial assets. They're hit the hardest, because losing a job and losing money in a retirement account are night and day. And they're hit the longest. But they aren't hit first.
No, because they spend everything they get. When they cease to get money because a company lost X money and needs to close Y positions so that the balance sheet isn't so red for the next shareholder meeting, the low-income folk end up ceasing to pay for food or housing, with the usual side-effects.
I know a couple people who had to radically downsize (as in 4-dorm to 2-dorm rental and 1-job to 2-jobs each) in 2008, and, guess what, none of them was in finance.
OTOH, another friend of mine was forced to sell one of his boats. He may have been hit first, as in he had to start thinking about which assets he would need to sell, before the low-income ones, but, definitely, their lifestyle didn't change before the others.
My dads good friend was a playboy, after getting out of Vietnam he went hippie, partied hard, lived fast. Then he hit the stock jackpot, riding Intel and Microsoft, etc in the 80s and 90s and cashing out with ~$20M.
Then he retired, moved to a golf course in South Carolina and turned into an ardent conservative defender of traditional values.
I tell the story as it illustrates the transformation - face death and risk at war, come back and embrace life, accumulate wealth and return to fear… guilt about what you have been able to do, fear of losing what you have.
We’re all animals at the end of the day, it’s difficult for us humans to process what life hands to us sometimes, good and bad. Deep down, the insecure business guy knows that he is mortal, and knows that a misstep can be fatal.
It's just a very solipsistic generation culturally.
When they were in their 20's they thought everyone should pay attention to them and that their drug use and weekend music festivals were unusually profound.
When they were in their 40's they thought everyone should pay attention to their property tax bills.
When they got to their 60's and 70's they thought everything should just stay exactly the same as the way they remember it and that everyone should consider their fears and confused elderly outbursts as valid expressions of reality.
Not sure it's generalizable.
You were able to tap into the thoughts of the younger ages, but failed for the 60's and 70's.
We tend to idolize the distant past more because we’re at arms length, and we miss what’s around us because we lack perspective.
The boomer guy who will let the world burn to protect his property values is the same as the old Italian guy holdout in the declining urban neighborhoods that I grew up with in the 80s.
Also, I think it actually doesn't all go in an instant. I've worked with local businesses that are over a hundred years old and seen many market turns both positive and negative. During recessions they'll make a reduction in employees or other costs and be able to stay open on that until profits rise again... or worst case, they sell the business or real estate and pocket a huge amount of money even though it closed.
The folks that have it all go in an instant are the ones living paycheck to paycheck who get laid off at the first sign of trouble. Their losses insulate the businesses and owners.
These data define "higher-income people" as those earning more than $100k. That's a very broad spectrum.
You NEED a strong economy to stay above water on the debt — you took out $200k in college + law school loans to accelerate your career and if you can't get a high-income job in your specialty you simply can't fall back to a low-income job without being in crushing debt forever.
Given the desire and investment in project/process, we could probably take half of the $100k+ workforce and replace with automation and a dumber, cheaper workforce. Economic crises often drive those decisions.
High income people are the least safe - $300k doctors are being treated like factory workers and replaced by $125k nurse practitioners.
That's basically what i'm doing. I was at first automating a secretary's job, now i'm automating my "SRE and security manager" job. With some resistance, so i'm starting with the most boring part of his job, but my goal is to automate him away. It's my secret, secondary job description. I hope i do that within a year.
However, not everyone wants that, yet is forced to pay for it through zoning rules requiring them. Tall multi-storey townhomes are a great middleground that reduces land costs and retain many of the benefits of SFHs, yet are literally illegal to build in much of the US.
A ton of land in competitive markets is being wasted through zoning, to many people's [And the climate's] detriment.
Housing developers are sitting on huge swathes of land that have planning permission (every council has a housing development plan), but by building slower, and with no real penalties for not using the land (LVT or similar) they can pad their profit margins by trickling properties onto the market.
I'm currently building a house and the problem is getting people to come out and do the damn work. Not sure what complaining to a politician is going to do about this. Even white collar workers are hard to get. I went through three architects.
There are plenty of housing developments going up. Just not a large enough pool of people to work in them.
Mostly, not entirely. Furthermore, this housing crunch has been decades in the making, not something that's suddenly happened, as evidenced by prices spiraling out of control. It's no surprise that trying to build a new home during a worldwide labor and supply chain crunch is especially difficult.
Complaining to a politician may not provide immediate relief now, but in the long term if supply was able to meet demand, prices should stabilize.
The best time to plant a tree was 20 years ago, the second best time is today.
I have years worth of zillow pricing emails in my inbox, if I go back to '18, YoY price increases were like <1% in most zip codes and 2-3% in the nicer ones. Recent emails have prices going up 20%+ all over town.
For a very very large portion of the population it's land use and zoning rules that are constraining supply and causing everyone else to pay more than they otherwise would.
The problem with buying is that it’s a single large transaction that you can’t spread over time. Over time ownership turns a profit, but if the time span is less than seven years, you may end up buying at the peak and having to sell near a bottom.
("But you could have invested that money instead and the market's gone crazy over that same time span, so maybe you actually lost money, opportunity-cost wise!" sure, but not really, since rent exceeds TCO for houses in my area so I'd have just bled money to that in exchange for no equity whatsoever and probably living somewhere worse)
For another data point, the Manhattan apartment which I'm renting was recently sold. The previous landlord had purchased it in 2016 for $200k higher than the sale price now, over five years later.
I'm renting because I know I'll be moving again within the year. If I had bought a place in NYC when I moved here, I'd have lost a lot more money than I've paid in rent.
Your outcome is pretty close to a best case scenario. And I'm happy for you that things went so swimmingly.
People stop thinking about opportunity cost when it comes to housing for some reason because they just can't stop thinking of paying rent as "throwing away money," without understanding that you're always throwing away money.
To take a simple example, let's say that you have $500k in cash.
Scenario 1: you pay $50k per year in rent from salary, park that $500k in a $2M investment property that returns $85k in rental returns. In this scenario, your returns are property appreciation and rental income. Your costs are mortgage, property tax, home insurance, home repair, and the rent you pay.
Scenario 2: you pay $0 per year in rent from salary, park that $500k in a $2M property that you live in that returns $0 in rental returns (because you live there). In this scenario, your returns are property appreciation. Your costs are mortgage, property tax, home insurance, home repair.
It's entirely possible, and common, for these scenarios to work out to be exactly the same. If you prioritize the purchase of properties that yield very high rents compared to the property value, it's very common for the numbers to work out in favor of owning investment property. And that can include "throwing away" money on rent.
TL;DR: you're never not renting. Even if you pay $0 in rent, the price you pay is the opportunity cost of not renting your house, and not maximizing returns on the money you've parked in it.
I'm also not very concerned about housing. Even though I definitely overpaid, living through 08 gave me the mentality that houses are places you live, not investments you make.
I follow a couple of markets pretty closely and hardly see any houses that are bought and sold within a short time.
The traumatic psychological fall out from that completely destroyed any innate faith I could have in markets and I still suffer from it today regardless of how illogical it is. I basically lived the "...And it's gone" meme.
Faith is a bad advisor. I had a similar experience in 2000 (was a millionaire for a while, then abruptly returned to middle-class). Brazilian economy also provided me numerous opportunities (such as when BRL and USD were untied and, suddenly, my friends who were leasing cars in USD had to pay twice as much) to lose faith in markets and capitalism overall.
On the bright side, we don't need faith. We just need to learn to use markets to our benefit.
That’s an absurd anecdote.
Of course, if you're too uppity to live in places like San Leandro, that's a you problem.
To illustrate how out of touch someone like you who obviously lives in a house bought by some other person is, please consider that the actual median home price in L.A. is $950k, double what you mentioned, while the actual median household income is $65,290, only a fraction of what you cited.
Incumbent land speculators are taking literally all of the money out of the California economy.
Case in point: Ten years ago I pointed some people living in the higher cost big city complaining about the high cost of housing in the city to a home for sale in a small town for $80,000; something they considered cheap. At the time the prices were stagnant, though. Their response: "Why would I want to own that? That would be awful." A similar home in the same neighbourhood just sold for $436,000 after two days on the market. Now that price is rising, making it look like a way to get rich, everyone suddenly wants to own it. It is still every bit as awful to own the house, but the quest for riches offsets that.
Should housing lose its ability to make people rich, interest will quickly wane. People will move on to the next get rich quick scheme.
Owning provides both of these and renting does not.
How does anyone think anyone except those of us making high wages can make it? People are treading water at this point.
[EDIT] Necessarily exceeds, I guess I should say. My food budget exceeds half of either of those, but that's mostly laziness and luxury. I could easily cut that a ton and barely even suffer for it.
Also, "getting nervous" is better terminology than "worried," since absolute consumer confidence is still higher among the higher-income group, it just decreased at a greater rate recently.
I believe the government absolutely blew its load propping up lots of entities during the early pandemic who actually did not need propping up at all (in retrospect). In an idealized case, the government would go around and ask everyone "Hey, if you didn't actually need that money, could you give it back?" and people would honestly return it. Obviously not going to happen though.
Regardless of the semantics, I am very much of the opinion that we are in for some rough ass times.
Recession+inflation=stagflation. Not sure what you call it when you add in energy crisis, risk of WW3, a push for a new global hegemony, an increasingly hawkish Fed, extreme political divisions, a looming food/fertilizer crises, and a globe still snarled by covid.
Being wealthy means just a probable less hard landing, the probable capacity of accepting new skyrocketing costs for a long period of time, still being able to access/source what I need for a more or less comfortable life and maybe also being able to invest in the meantime for a future perhaps not marginal profit, but even if all that happen respect of today I'll still get less because the whole society have less.
Just imaging being wealthy today in France and tomorrow being even very rich in Turkmenistan. Oh you are much more rich in relative sense but what can Turkmenistan offer? Perhaps in a far future with new technologies and space explorations things will change but that surely might happen far beyond my life expectancy.
That's is. That's the basic law of nature, no matter morality, no matter feelings, no matter what. We face a scarcity crisis that will led to social unrest and wars. The most optimistic scenario is bad so it's normal to being worried, because even the most optimistic scenario means at least a very bed decade, perhaps two or three decades, plus a not so quick recovery that probably still demand years.
Depending on which institute you track the current estimates looking 12 months out are between 5 and 10%. So I think you should update your assumptions.
For instance:
https://seekingalpha.com/news/3810284-theres-a-10-change-of-...
I educate myself about nuclear and general War situation.
Oh, and who ends up winning elections and whether people where I live buy Russian propaganda is suddenly important, so I opposed that instead of being silent and keeping good relationships.
Besides, a nuclear attack would already be covered under the much larger war mentioned, which is something that was deemed less concerning.
The direct damage would be massive but not civilization-destroying.
Also, Russia's rockets still seem to be working pretty well as evidenced by the fact that they were used to send American astronauts to space for the last 10 years[1].
[1] https://en.wikipedia.org/wiki/Soyuz_(rocket_family)#ISS_crew...
The higher income class is de facto in power in our democracies. No conspiracy here, just a class phenomenon. The poor don't vote ; the popular and middle classes tend to elect people from the higher income class. Their economic success give them credits for handling things.
The higher income class doesn't care about 1/ the health of people 2/ if the wages are enough to have a modest but at leat descent life 3/ the environment
They care about 1/ their own wealth, health 2/ having no social constraints whatsoever (in the name of freedom, which is a right for all but they are the ones who have the means to act as free persons) 3/ order: they want a super policed society. So the poor are over-repressed by the police but they escape the law (connections, bribery, very good lawyers).
On climate disruption and biodiversity annihilation, our "elite" reveals that they don't even care for their grandchildren. The 0.1%, the top of the income elite, do care and buy large pieces of land in New Zealand with 100% self-sustainable houses and food production. And armed security and heliports.
>They also tend to be older, and may remember living through inflation decades ago. "Young people don't know, and they'll soon find out."
How has consumer confidence been affected in older middle and lower class folks?
Broadly the same negative sentiment, according to the University of Michigan US consumer sentiment survey data broken down by age, income, education, region and gender.[1] I believe updated data will provided on March 25th in two days' time.
The Federal Reserve Economic Data (FRED) consumer sentiment and consumer inflation expectation data series[2] charts the UMich's surveys.
[1] https://data.sca.isr.umich.edu/charts.php?demographic=income...
[2] https://fred.stlouisfed.org/searchresults/?st=university%20o...
The Fed can only choose one of those "problems" to solve -- let asset prices fall and tame inflation, or prop up asset prices and let inflation run wild.
It's 0.6% and 0.8% MoM so far [1], so if we're simply summing up an approximation for YTD and extrapolating to March, I'd suggest -(7% + 0.6% + 0.8% + 0.8%) for -9%.
[1] https://tradingeconomics.com/united-states/inflation-rate-mo...
That might be where people are starting to escape the working class and enter the middle class, but certainly not "rich" or "high" class, as the article suggests. If your family has a net worth of $2-4 Million and are making $100-200k/yr, then you might... own one Arby's franchise.
I like Arby's and kinda wish I had that for lunch, but folks who own one Arby's are not exactly major competitors in the world of capitalism (in an individual sense). They're the middle class (to the extent that one even exists). Those are people who - together with many other small businesses - could form a community that shapes the market and provides a strong stabilizing force... but they're still "consumers."
In the Covid pandemic most of the QE stimulus was to enable low interest debt in order to allow Congress to give it out to "the people" via government stimulus checks. "The people" then proceeded to buy stuff that normal people buy - i.e. consumer staples/discretionary goods which is stuff tracked by CPI.
Financial Crisis bailouts went to big corps who bought out over-leveraged competitors, questionable startups (Uber, WeWork - basically anything Softbank related), etc. which aren't tracked by CPI measures.
It did, compared to what would have existed without the stimulus.
But the underlying economic problem it addressed wasn't like the pandemic and the control measures directed at it, particularly in the rapidity with which things could spring back from it. What caused visible inflation wasn't the stimulus, but the rapid rebound in the underlying economy, which wasn't a direct product of the stimulus, though the stimulus mitigated second-order damage that might have prevented the rebound.
The slower emergence from the conditions prompting the Obama-era stimulus meant that slowly-tapering monetary response could buffer most net inflation effects.
The size of the bailouts - excuse me stimulus packages - in the last 2 years make 2008 look like a joke in comparison, and it looks like every few months a new “stimulus” will be passed that is larger than any 1 of the 2008 bailouts.
If the Fed chair hands me a $100T check and I hide it under my mattress then it has no effect on prices. That check has to get put to use in order for it to start having effects on prices. I have to start buying properties and stuff and then the people that I buy the properties from go and put that money to use.
That is extreme but its an example of how money actually has to get used to have an effect on prices.
And we're seeing companies and the 1% and 0.1% sitting on massive piles of wealth. They invest that into safe short-term securities which pushes down interest rates. You see bubbles in things like certain rare baseball trading cards.
What we haven't seen is wage-price inflation, because that doesn't translate down into the broader real economy. We aren't fixing all the infrastructure and potholes in the nation and putting middle class people to work, who would then go out an buy groceries, middle class houses, etc. SWEs, of course, have been the exception to that rule. But the wage-productivity coupling broke back in 1980s when "inflation" (wage inflation) was put under control.
What is strange about the past year or two though is that there's now real upwards pressure on wages outside of tech workers. Don't know how much of that is due to COVID and long COVID removing workers from workforce and how much of that is workers looking at the pandemic and deciding that they weren't going to put up with any more bullshit HR cheerleading. The direct stimmy checks and eviction freeze may have helped with that as well -- although I think the indirect effect there was that many people were able to take a sabbatical and "just learn to code" and therefore hop up the wage ladder. I don't think we printed enough money there to really matter that much, but we gave everyone a 6+ month break so they actually spend some time jumping up the ladder rather than coming home from work too tired every day.
The fact that we now see some hard signs of wage-price inflation in the data is the thing which is going to really freak the Fed out, and ultimately they're going to hit the brakes hard, once enough of the pandemic/ukraine supply-shock is in the rear view mirror. It actually is "different this time" because of the rise in wages across the board. The next crisis I think is going to be due to the Fed stomping on the brakes (and possibly the crypto ponzi imploding). Then they'll flip back to ZIRP again, but I think they may not be able to print enough money to get out of the next crisis (which is the problem of "pushing on a string" which everyone has totally forgotten that Keynes used to talk about).