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Comment by lkrubner | Hacker News Reader

The Florida Land Boom of the 1920s was a bubble:

https://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920s

But after 1935, Florida took off and grew like crazy. Even if you bought at the peak of the bubble, by the 1940s you had still gained some value.

The USA stock market went through one of histories greatest bubbles from 1927 to 1929. Afterwards, it took the stock market 24 years to recover. But by the mid 1950s, the stock market was rising to new heights.

The DotCom boom was clearly a bubble in 1999, but eventually many of the ideas became far more valuable than the heights of 2000.

If the bubbles form because investors are looking too far forward into the future, eventually the future does arrive, and then you see a period of sustained growth. That is exactly what happened in Florida, with the bubble in the 1920s, and sustained growth beginning 15 years later, at the end of the 1930s, and lasting for several decades.

My point is, if you wait long enough, the economy will often grow beyond even stupidly famous disasters. To be sure, you can probably find better investments. Buying into the stock market in 1929 and then waiting 24 years to get back to that level is not great for growing your wealth. But given time, many assets do grow beyond even the bubbles.

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You're forgetting to adjust for inflation. The 1927 bubble - adjusted for inflation - took closer to the late 1990s to get a reasonable return (when you were going into the second biggest bubble of all time). Nearly every investor would've died by then.

Adjusting for inflation using shadow stats, you'd still have lost money.

With the Florida land bubble - you're also forgetting property taxes.

>Adjusting for inflation using shadow stats, you'd still have lost money.

That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades.

That actually makes some sense.

"continual decline" is an understatement of how big the decline supposedly is. I calculated the actual decline in my other comment[1]. In short, if their figures are to be believed, the US economy contracted 67% in real terms between 2000 and 2020. That would put US GDP per capita between Guyana and Argentina. Even if you believe the "US is in decline narrative", it's hard to believe that it's been declining to the level of Guyana or Argentina.

[1] https://news.ycombinator.com/item?id=31085430

I don't know enough to debate the numbers, but if we're making external comparisons, my first question is whether the calculations for Argentina/Guyana have been altered to match the US shadowstat alterations.

That fixes the problem of "US declining to Argentina levels", but now you have a new problem: did the world economy contract by 67% between 2000 and 2020?

Why would inflation for the world match the US?

Theoretically, everything can be expressed in dollars - and GDP often is - but I think you're oversimplifying things.

> Why would inflation for the world match the US?

It's not, but the GDP figures I was looking up was in USD, so it should be factored in.

>but I think you're oversimplifying things.

Perhaps, but can you think of a plausible model for why our GDP would have dropped 67% in real terms, but somehow our living standards haven't dipped to that of a developing south american/african country? The only explanations I can come up with are:

1. the real GDP drop doesn't exist, or at least is vastly overstated

2. every other country (or at least the worldwide average) GDP dropped by approximately the same amount, so comparatively speaking we're still in the same place relative to other countries

Living standards aren't really that low in Argentina or Chile. They're obviously much higher in the US, but we also have 10x more public debt per Capita, and 5x more private debt per Capita.

That could explain a large portion of the gap...

What stats support that?

Doesn't look like it's in decline here: https://fred.stlouisfed.org/series/GDPC1

Or here: https://tradingeconomics.com/united-states/gdp-constant-pric...

This isn’t adjusted by the 1980s measure of inflation, that measure is no longer used and is very flawed.

Please re-read my comment. I'm not saying that GDP has actually been declining, I'm just saying that if we take nominal GDP and deflate using shadowstats' figures, the US economy would have been contracting. That's an absurd statement, which probably means the shadowstats' inflation figures are off.

Ah I see what your saying. I wasn't aware of shadowstats. Thanks for the clarification.

For others: http://www.shadowstats.com/alternate_data/inflation-charts

Shadowstats is a nonsense website you don't need to link to.

Is there something better that provides this type of alternate calculated information?

That would explain why so much of the country looks like it's been in continual decline for the past few decades.

Here's the shadowstats chart: http://www.shadowstats.com/alternate_data/gross-domestic-pro...

That's actually more reasonable than what you'd get if you combine their inflation figures[1] with nominal GDP[2]. Eyeballing their inflation chart (actual figures are paywalled), it looks like we've been experiencing 9% inflation since 2000. Between Q1 2000 and Q1 2020, nominal GDP per capita went up 82% (ie. 1.822x), but 9% growth for 20 year works out to be 460% growth (ie. 5.604x). In other words, the economy contracted by 67% in real terms. Maybe they realized that's too ridiculous even for conspiracy theorists, and revised their figures accordingly?

[1] http://www.shadowstats.com/imgs/sgs-cpi.gif?hl=ad&t=16497710...

[2] https://fred.stlouisfed.org/series/A939RC0Q052SBEA

Why would you link to GDP PER CAPITA? Are you ignoring that population has grown since 2000?

GDP since 2000 went from 10.5T to 24T (2.285x). Adjusted for 3% inflation, that's a 26% increase.

Your point remains.

4% inflation would mean a 4% increase over 20 years.

5% inflation would mean a 14% DECREASE over 20 years.

6% inflation would mean a 29% DECREASE over 20 years.

7% inflation would mean a 41% DECREASE over 20 years.

8% inflation would mean a 51% DECREASE over 20 years.

The problem is - the way people experience inflation is dramatically impacted by whether they had a 30-year fixed mortgage.

If your house PRICE went up 400% since 2000 and your housing cost went DOWN 20% since 2000 - inflation would obviously seem low.

If your rent went up 400% since 2000, it obviously feels different.

67% of people are homeowners - and the Fed's measure of inflation seems largely targeted to this group of people. The true rate of inflation is almost certainly higher - but probably nowhere close to ShadowStats.

> Why would you link to GDP PER CAPITA? Are you ignoring that population has grown since 2000?

1. using country level GDP gets you a 63% drop, hardly any better

2. The argument I was making was with respect to living standards (ie. there's no way that our income/living standards dropped 67% in 20 years). In that context it makes sense to use GDP per capita rather than GDP for the entire country. If US population grew 50% over some time period, and GDP only grew 25%, that's actually bad because that means the average person is actually worse off than before.

Hasn't it?

Looking around that makes sense. Actual production shrank and almost no one can afford housing until they're middle aged. Walking down city streets the buildings that aren't boarded up and decaying only have "for lease" signs in the windows.

>Actual production shrank

It did? According to https://fred.stlouisfed.org/series/USMANNQGSP, it's been steadily going up. The only thing that's shrinking is its proportion of GDP. https://fred.stlouisfed.org/series/VAPGDPMA

> and almost no one can afford housing until they're middle aged

...except that shadowstat's inflation figures outstrips even housing prices[1]. Eyeballing their chart, we've been experiencing 9% growth between 2000 and 2020, translating to a 460% increase. By comparison the housing price index has only gone up 184%

[1] https://fred.stlouisfed.org/series/CSUSHPISA

> you'd find that the US economy has been on a continual decline for the past few decades.

That claim sounds reasonable given what I've observed happening in this country over the last few decades. Without question people seem to struggle much more to obtain the same level of lifestyle as many enjoyed decades ago.

You seem to claim that this is such an obvious falsehood that there's no more room for discussion, but I think there's much more room for discussion that you are implying.

When you say that you've observed what has happened over multiple decades, are you observing people within your own social circle and are those people from a diverse and representative background or are they from a narrow demographic? It's true that the relative economic status of white men has declined over the last few decades, but the economic status of women or men from other ethnic groups has grown significantly in that time.

https://www.census.gov/data/tables/time-series/demo/income-p...

And even then your premise is still largely false. The median and average economic outcome of white men has increased perfectly reasonably since the late 1970s. That includes both income and net wealth figures. The American white male is economically better off than the white male in: Britain, Sweden, Germany, France, Spain, Italy, and so on.

It's primarily the labor-heavy working-class white male (in the white male demographic) that has been brutalized by changes in the US and global economy. They have been left behind to drown in a pool of fentanyl.

(Disclaimer: I'm not from the US.)

> It's primarily the labor-heavy working-class white male (in the white male demographic) that has been brutalized by changes in the US and global economy. They have been left behind to drown in a pool of fentanyl.

That sounds like most people are actually more negatively affected by the economy compared to decades prior.

No, not "most". It's 30% or 40% of people. That's not "most". In particular, it's not enough to dominate the statistics.

Let me say very clearly: It's far too many people. I don't care if it's less than a majority, and I don't care if it swings the overall statistics. It's still too many people that are being economically destroyed.

What needs to change so people (not just white working-aged males) aren't destroyed?

Enforce balanced trade in the global economy.

I love hacker news, complaining about semantics when someone says most people are having their lives ruined with the clap back that it's only 40% is the best possible reply!

Most people merely struggle to pay rent which is fueled by insane zoning which people use as a cudgel to beat other residents up to get them to pay up insane prices for housing.

Outside of housing everything is dirt cheap nowadays.

the US economy has been on a continual decline for the last few decades, it's jsut been cleverely masked.

that sounds quite reasonable to me, considering the vast decrease in material living standard in the US for the last several decades. there was an interview with someone who lived through the 70s that was saying a painter back then could afford to buy his own home, have a wife that didn't work and six kids! today, a single painter can barely afford to rent a single bedroom, let alone support a whole family and have a house.

Houses today are much larger and more expensively built than in the 70s.

I don't know when this practice died out, but it used to be routine for homeowners to take in boarders.

Not just that, but our lifestyles have changed entirely. How many outfits did people own? How many cars? How often did they eat out? What kind of entertainment did they enjoy, and how often?

People could generally meet their basic needs because those were the only things they spent money on. Life was exceedingly bare-bones. Houses were small. Your life revolved around your job. You cooked all your own meals. You entertained yourself. The list goes on.

All of that said, house prices are alone just bad example. If you went somewhere with cheap land and no red tape, you could get a 70's house at 70's prices (adjusted for inflation) still.

I watched "Apollo 10 1/2" recently. It's about what life in America was like in the late 1960s.

One thing is that mom cooked all the meals. People rarely ate out. I know that was true in my family at the time. Eating out was a major, major treat. Entertainment was going out the door and joining up with the neighborhood kids. The house was tiny.

It all was perfectly normal.

Yeah, I rode in the back of a pickup with my friends on the freeway, too. No seats, no seatbelts. Nobody thought anything of it. It was fun, too.

People rarely ate out because most people were single income families and there was one adult that had time for food preparation. Today prepared foods and eating out are a necessity rather then a convenience for most couples.

Food has also gotten much cheaper relative to what it was in the 1970’s. Some would argue that it has also reduced in quality.

People in the 1970’s bought different things than people do today. In the 1970’s people bought more formal clothing (e.g. suits) and formal dinnerware than people today. They bought more wrist watch’s and slide rules.

But if you add up all the plusses and minuses the two income family today has less disposable income then the single income family in the 1970’s when you exclude the cost of transportation, healthcare, childcare and housing.

It turns out one of the biggest drivers of home prices is school quality and income potential. So two cars for two jobs in a place you can find them and housing and childcare to ensure that children are safe.

only the newer ones are much larger. the ones built in the 60s are still the same size they've always been. the point is # of hours worked to afford a house of a given set size is higher today than it was in the 70s. same is true for cars too and they haven't improved much: i know i'm cherry picking here but look at a corrola from today, the mpg is 35mpg, the same as it was 40 to 50 years ago. the new one is heavier than ever, loaded with safety features rarely used, nullifying most of the mpg tech increases.

There's a neighborhood near mine, where all the houses were built by the same outfit with 3 distinct floor plans. I'd guess it was built in the 1960s.

Most of the houses have had additions built in by now, and extensive revisions and upgrades.

Houses are larger but most of the housing stock is much older than in the 1970’s. Most of the 1970’s housing stock is still around, it isn’t like we tore it all down in the last 10 years and built new, larger housing.

The starter homes of the US Boomer generation are out of reach of the Millennials even though they are the same houses but now 50 years old.

Having your spouse not work is a sign of poverty. It means that if they worked, they wouldn't be able to bring in enough income to pay for childcare.

It is possible that you're just so rich their income wouldn't contribute to the family, but income is always useful - otherwise neither of you would be working.

You're not comparing the same houses.

There are plenty of homes in the US that can be afforded on a single salary of a blue collar laborer.

Are these in the highly desirable coastal cities? Of course not.

People used to move to LA post-WW2 because it had cheap and plentiful land. It no longer does.

> That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades.

Today families need dual incomes just to purchase a modest home and carry health insurance. How is this not a decline in standard of living from a few decades ago?

Where's our new airports? New rail transit systems? New infrastructure? Everything in this country is old and getting older.

Inflation is and always will be relative value story. Some airports are crumbling, some are newer. Today we have iPhone's, virtual doctor's appointments and no horse manure in the street.

And 40 years ago we had real doctors actually available for patients, no horse manure in the street, and no capitalist manure wired into our pockets 24/7 controlling our information flow thru a select set of international media conglomerates.

What's your point.

I’m skeptical that the things you don’t like about 2022 are because 1982 was strictly better. Seems much more likely that we simply have a different set of compromises and priorities, with some things better and some things worse and no easy way to untangle the complex interdependencies into sweeping linear statements like “decline”.

> 1982 was strictly better

> sweeping linear statements like "decline"

Who are you talking to? When did I make any statements of that nature?

I was pointing out the provided example was stupid. Smart phones are "cool" and all, but it'd be a tough sell to argue successfully that connectivity has increased societal cohesion, education, information dispersal, or any of the other virtues you might hope for.

Instead, iPhones and virtual doctor appointments are like bandaids on a societal-wide decline, where increased privatization combines with government inflation to create a caste system they disguise as capitalism. Inflation-adjusted salaries are lower than ever across the board, housing prices are skyrocketing both absolutely and as a function of salary-years, corporate control of information has reached unprecedented levels, and the "relative value story" of now vs 40 years ago makes it pretty clear it's tougher to have a good life now even if you can have fancy toys to interact with corporate-controlled data-mined ad-laced entertainment

I’m responding to the thread. Decline is mentioned a few posts up. Regardless of all the bad things you list, I would still prefer to live in 2022 than 1982 because I believe those bad things are stated hyperbolically and where there are genuine negatives they are more than compensated for by other factors. Are things perfect? No, let’s keep working on this and make 2062 even better.

> Are things perfect? No, let’s keep working on this and make 2062 even better

The naivety is almost making me feel better, but I don't think you understand what capitalism has done to our world's power structures if you think we stand a chance to change anything

What’s your plan?

Originally, my plan was to earn enough to secure a house & future as a working person, and then try to join politic and change the discourse.

Now, my plan is to accept that even with a good salary securing a future at good QOL costs a lifetime, so I will try to enjoy myself and hopefully buy a home that doesn't get burnt down in the increasingly frequent and devastating forest fires of my native home.

Hooray for 2022!

Problem is that wages did not increase with economic growth. Those that benefit the most are a small minority, so yes, now both parents would need to work to achieve the same.

Name one new airport.

They just finished rebuilding SLC. It was a huge project. It is spacious and bright and modern. It reminds me some of the newer airports in Asia.

Cool, thank you for showing me a new airport for me to gawk at. I feel better that the US is getting at least some new infrastructure.

Except the military. They have a lot of shiny new toys.

For those who don't know about shadow stats, here's a good explanation of the issues with it, and why their numbers are off https://fullstackeconomics.com/no-the-real-inflation-rate-is...

> Based on my conversations with Williams, I think I now understand what he’s doing: he’s misinterpreting a cumulative 20-year change in the measured price level as a change in the measured annual inflation rate. And that caused him to overestimate that annual change by at least an order of magnitude.

Hmmmmmmmmm

I bet you're not adjusting for dividends though-

I remember vaguely a chart of total inflation-adjusted return, including dividends. Forgetting dividends leads some people to be much more pessimistic than they should.

If I can find the dang chart I'll post it.

Here's one: https://static.seekingalpha.com/uploads/2010/7/13/saupload_r...

Is total return here increase in price + dividends or are the dividends also being reinvested?

Total return reinvests, yes.

https://en.wikipedia.org/wiki/Total_return

They're using an absurdly wrong inflation metric ("shadow stats"), so all bets are off. Adjusting for dividends is polishing a turd.

Try: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t...

and turn on or off "Reinvest Dividends" to compare

You can't just adjust for inflation like that because there's nowhere you can put your money and get inflation-rate returns. 1 dollar in 1920 is still 1 dollar now. The closest safe rate you can get is a savings account or CD but that is much lower than inflation.

Or i-bonds or tips or the various currency swaps… it’s insane to say 1920 $ is the same now as then.

Gold is pretty good

I care about purchasing power over time. If inflation is going to mean that regardless of how I invest, tomorrow I will be able to buy less, then I would buy more today.

I know there are limits, like in 1920 I couldn't buy a 1gbps internet connection or a Moderna vaccine. But despite inflation's flaws, it is useful as part of a discount rate for measuring returns.

Goods don’t rise and fall in lockstep but standard figures aren’t bad.

In 1929 pig iron was 18.43$ per ton, it was $640-650 per tonne on March 7. Inflation calculator suggests it should be ~309$/ton which is fairly close across 92years but low. It also spiked to 1000+$/ton a few months later. https://www.usinflationcalculator.com/

Gasoline on the other hand was 0.21$/ gallon in 1929 plug into the inflation calculator and you get $3.53 much closer.

Chicken was 42¢/lb in 1929 New York same inflation number gives $7.06/pound today which is high.

What really messes things up is when goods stop representing the same thing across time. A new house in 1929 house was likely though not guaranteed to have indoor plumbing but AC was rare even though both where available back then. Of course 1929 AC was often focused on humility control not just temperature so again not apples to apples but in the other direction. Look for a comparable home base on floor space, number of bathrooms etc and housing prices are rising much slower than many charts suggest.

All models are wrong, but some are useful.

We all know that efficiencies have driven down the cost of many manufactured goods (like TVs) and scalable services (like ATMs and online banking)

We also all know that cost disease has driven up non-scalable services (healthcare, higher Ed, govt) and supply-constrained good/assets (price of land)

The basket is still useful for understanding whether an investment clears your hurdle :)

I am not convinced things break down that simply. Healthcare is probably the best example of something that isn’t compared Apples to Apples across time. The cost of an X-Ray, cast, and some pain killers isn’t seeing nearly the cost increase those charts suggest.

> Adjusting for inflation using shadow stats, you'd still have lost money.

Major red flag -- shadow stats is a hyperinflation fantasy. Of course it looks like you'd lose money if you think inflation is orders of magnitude higher than it actually was.

thank you for this clarity. it is very helpful.

People who believe shadow stats don't know how exponential functions work. If you add 3% on top of an exponential function that new function will diverge exponentially from the original.

The evidence for shadow stats should be going up every year but we haven't seen that at all.

The 1929 crash took just under 5 years to recover if adjusting for deflation and dividend yield (averaged 14% in that period). Nominal value took much longer but real value bounced back quick.

https://www.nytimes.com/2009/04/26/your-money/stocks-and-bon...

I think you make a good general point and I will agree, but it needs to be said that not every bubble will recover, for example the tulip bubble, beanie babies and so on.

Crypto, NFT .. who knows, only time will tell who was right.

Don't forget the Japanese stock market that could never recover from the bu bubble in the 80s.

Technically it did recover. The price hasn't but if you factor in dividends (ie. total return), you'd be up 32.228% between 1989 and 2021.

Adjusted for inflation it's a huge loss. Sure it beat holding cash though, holding cash is for sure the worst thing you can do.

I think crypto has already proven itself. Every time it's increasing people say it's a bubble, then it retraces and they say "see!", and then it recovers and excels and they repeat. Only the delusion would disagree.

Not proven yet. Still needs another decade and the illusive good use cases. We need to see the pandemic impacts abated to see if "crypto" holds value.

Pornhub's premium service already uses crypto and has since the credit card monopolies threw them out in 2020. I just checked - the only other way to pay is by ACH.

If porn is the bellwether, then use cases have arrived.

Or more likely, crypto has found yet another morally repugnant use.

The CC companies withdrew from PornHub because their business model was paying for the production of child pornography.

Crypto pops up its ugly head yet again. Not a coincidence given the other "killer apps" are extortion, money laundering and greater fool farming.

Not everything is a buy and hold trade.

The tulip bubble ended because the bubonic plague killed all the speculators and didn't even affect the spot market of tulips, so we don't even know what would happen. Worst bubble example.

There were several great, rational, trades with beanie babies as well that has nothing to do with the latecomers that hoarded them and acted surprised and delusional when they were holding the bag.

Out of all the famous bubbles, I think equities bubbles are more useful examples of irrecoverable irrational exuberance than any commodities/product bubble.

Bubbles don't form because investors look too far in the future, bubbles form because investing turns into speculation and people stop evaluating value at all and just have a case of FOMO. At that point most speculators are buying with intent to flip in a short time period. On top of that, bubbles often carry high leverage, so its not like you lose what you have, you lose what you have and then also go into massive debt(person buys $1m house with 50k down and it goes underwater, or person uses 10x leverage to trade options on tech companies and they tank).

Sure, the people that are able to cling on and wait it out for 2 decades might say 'this wasn't so bad after all!' but the people who lost their jobs or lost their families, went into bankruptcy, etc...well...you won't hear from those very often and if you do, you'll probably just say 'better luck next time'.

This also assumes you put no new money in the market and ignoring dividends. Buying the dip in the 30s, 40s would have cut this time to breakeven significantly. Also, we're talking a once in a 100+ year event. We may never see a repeat of a similar sized crash again in our lifetimes.

> Also, we're talking a once in a 100+ year event.

The 2008 financial crisis was also a once in a 100+ year event.

So was the 2020 Covid-19 pandemic.

And the 2022 Russo - Ukrainian war.

And now I wonder what "once in 100+ year event" we'll have next year.

> And the 2022 Russo - Ukrainian war.

That is absolutely not a once per century event. WWII was 80 years ago.

It isn't even the first Russian invasion of Ukraine in the last decade.

yeah , foreign conflicts are not uncommon, the market historically does fine

the market recovered within a year after covid began.

2008 was closest to 1929.

>the market recovered within a year after covid began.

The market only "recovered" because the government intervened and infinite money got printed and poured onto it. Otherwise it would have crashed.

The greatest wealth transfer in history is not "the free market recovered" but a rigged game.

Poverty in the US went down in 2020. CARES act wasn't a "wealth transfer", but you can claim rich people made all the money if you quote stock market gains starting at the bottom of the crash in March.

What actually happened is Gates and Bezos lost half their wealth, but everyone's still complaining! Just get all the other rich guys to get divorced.

"Scientists have calculated that the chances of something so patently absurd actually existing are millions to one. But magicians have calculated that million-to-one chances crop up nine times out of ten."

- Mort, by Terry Pratchett

Which actually plays out often, birthday-paradox style.

If it was a one in 100 years event or a one in 200 years event, it was still pretty mild as far as crises go. If your horizon is 50 years, there is a real risk that you will experience something far worse in your lifetime.

You should also add the survivorship bias caveat. If the bursting bubble wipes out the company you're invested in, you never get your money back.

Yes, this is an important point. Just looking at a stock market index over time doesn’t reveal the full picture because most investors in a bubble don’t buy the index. That would be boring and they’d miss on the imminent gains on the hot stocks! So instead they pick.

If you picked ten stocks in 1928, many of them were bankrupt or near zero in five years. Same for dot-com stocks in 1999.

So now you have maybe 10% left of your original capital. You could go conservative, invest it in the index and wait. Assuming a 8% annual gain it’s going to take you 30 years to make back the money you lost (not accounting for inflation). Or you could continue picking stocks and maybe increase the risk level to make the 10x gain you need to get even.

The average bubble investor probably isn’t successful even over a period of decades.

> if you wait long enough, the economy will often grow beyond even stupidly famous disasters.

The only essential axiom you need for this to be true is infinite growth on a finite planet.

Unfortunately it looks, from multiple perspectives, like we are hitting the limits of growth.

There's a reasonable argument to be made that the true bubble we're in is an "industrial civilization bubble". All of that growth you're seeing can be boiled down to expending vast amounts of non-renewable energy. As we approach the environmental limits of that behavior, the trend you've observed over the past 250 years might not hold true.

"They hated PheonixPharts because he told the truth"

But while your point stands, there are some wrinkles when we're considering things on a human scale. We probably can have (for human purposes) infinite growth in PDF's, MP3s, apps and browser games... we just won't want to pay for them with the same currency that pays for scarce resources. And while exponential growth is impossible, there is more solar radiation hitting the planet every year and will be for a time span close enough to infinity for planning purposes. So steady growth might be possible indefinitely (again, for human purposes).

Maybe in 50 years we could be mining asteroids and getting all our energy from the sun which could allow growing without any limits for a long time.

You have convinced me that hostile aliens exist. They won't hunt humans to extinction, no they will legally acquire the rights to earth so that they can maintain infinite economic growth.

"In the long run, we are all dead." - Keynes

Intergenerational projects are worth pursuing. Those projects require intergenerational value.

Going back to the moon, going to mars, making cities more livable, building Cathedrals, healing cultural trauma, making healthy families, creating better ways of life, enhancing health and lifespan, teaching and learning how the world works, figuring out consciousness, determining the secret to a good life, eliminating pain and creating ideal adventures… that is all possible with enough dedication on a long enough timescale and with enough forward thinking and endurance/adjustment.

I get that ending deprivation in the now is important, but I can’t help but feeling we’ve been sacrificing the future to a decades long hedonic treadmill to satisfy base and immediate needs rather than future oriented striving.

I fear it's inherent to our current interpretation of democracy. Individuals have very few incentives to look past their own lifetimes (and those incentives are almost entirely summed up as "their children"), which tends to downplay even projects that are only multiple decades. If it doesn't improve my life in 5-10 years why would I care one way or the other?

And if someone tries to propose something longer term, it'll get shot down by someone who says "how about not and we spend the money on partying instead" or the equivalent.

More and more I feel that we have to "sneak" long-term projects past people without them noticing.

Sneak in a negative interest rate on cash and a land value tax while you are at it.

You know, a positive interest rate implies that people would rather have something now than later. A 0% interest rate implies people value the future and present equally. A negative interest rate implies that people have more financial capital than they know what to do with which means it must be invested into capital with a long lifespan.

the reason bubbles form is because investors have no alternative (TINA - there is nothing else). In times of extremely high inflation (5% - 10%), you can't be in bonds or cash. So, this forces everyone into equities. Even at just 10% inflation, you'd loose half your cash in just 7 years.

and the CPI figures underestimate inflation by at least 2-3% with all their hedonistic adjustments. it used to be that economists would get a basket of goods to measure inflation. there's hardly any need for that anymore. Now that housing makes up 60%+ of everyone's (at least the latest generation of house buyers/renters) expenses, you just use housing as a proxy for inflation.

> Now that housing makes up 60%+ of everyone's (at least the latest generation of house buyers/renters) expenses

Is that actually true for the median US resident? I have a really hard time believing it. I can believe it's the case in SF and some other big cities maybe.

not the median. But, the average person buying in at today's prices, is going to be pretty close to that. I saw one statistic that said 25% of millenials were living at home. and those that weren't, were spending 40% to 50% on housing. of course someone buying now, is even worse of than that 40% to 50%.

I think a better measure might be # of hours worked to afford 1 sq ft. (1970 vs 2022)

I find it amusing that nobody really cares about inflation and only about the artificially induced housing shortage which has nothing to do with economics and instead is all about urban planning. People used to build cities like NYC but now they refuse to do that.

But with even a small amount of leverage, you'd be completely wiped out. With 2x leverage and a 50% drop in the asset price, you're broke: there is no "just ride it out."

The stock market is one thing, but anyone with a mortgage is leveraged to the tits, which is why real estate is so cyclical and the downturns can be so devastating.

Is that 24 year figure ignoring dividends?

This is partly due to survivorship bias. I bet that anyone who bought Argentinian stocks in 1927 never recovered their investment. A lot of the dotcom investments simply failed and disappeared. And I'm sure there are examples of land booms that never recovered either.

depends.. sure the nasdaq and some companies like amazon did great after the tech bubble crash. but alot died never to be seen from again.

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