Are We Living in the Roaring 20s?(awealthofcommonsense.com) |
Are We Living in the Roaring 20s?(awealthofcommonsense.com) |
So nothing conclusive, but if we had conclusive metrics to point to that could indicate an economic bust is coming, we would be able to implement policies to prevent them.
And apparently many people here on HN want to discredit the author's conclusions because they dont agree with them personally.
Purchasing power has climbed, hunger has reduced, I think all of these are important metrics to consider...
I think people are much more polarized and that social media has brought out terrible polarity, but it doesnt necessarily mean the average person is not living better than 30 yrs ago.
I think that's a bit harsh. The author runs a successful podcast, for a number of years now. I value his opinion, he usually backs up his opinion with numbers. I do sympathize with you, in the sense that I'm also earning less than I used to.
I don't know if that's even well-defined based on the evidence presented - "a massive stock market boom".
The (USA) economy is doing OK, especially when compared to other countries that have made other policy choices and are faring even worse. But "stock market go up" is not the same thing at all as "most people doing better".
"High house prices" is also not a unambiguously wonderful thing. e.g. if you need to buy a house.
Likewise Low Unemployment is not great if all the jobs are no-benefits gig work and you need three of them to pay off your massive student or medical debt.
Lack of good consumer sentiment indicates this gap.
And this oversimplifying to the point of meaninglessness is why I'm sceptical of the article's point.
Even if history repeats in cycles for some astrological reason, why would it repeat in a 100 years cycle? Why not a 67 years cycle?
see: why everything costs x.99 units
Yes, the post Flu/Covid effect, insane asset prices, vacations, etc. all line up. Shiller PE is at 34, which is higher than in 1929. I am somewhat optimistic we can experience a softer landing than The Great Depression. The Fed hinting a lower rates might be an indication of them understanding the risks of a crash. The problem is due to the systemic nature of the system, a boom can turn into a bust rather quickly.
They are insane compared to the relative growth, or lack thereof, of median wages, yes. If an assets continues appreciating even past the point it's accessible to the vast majority of the population, "supply and demand econ 101" is no longer working. When that asset is one of the most critical components of life (housing) and on which many lives are built around (be it where one lives and works, or how many kids one can afford to house, or the community one can have), this is unquestionably not good and can have wild ramifications. Disenfranchised young people are a dangerous political force, while population declines could break economic models as we understand them today (it's bordering on the impossible to have infinite growth when the population is declining).
Anyone denying the possibility of another or similar Great Depression would seem to me to have no credibility. But maybe it's because I'm cynical.
Yeah good point, I don't know why anyone would read and then discuss an article on a site dedicated to discussing linked articles. It must be gp who has no credibility - how dare they comment on-topic!
1890 boom "Klondike Gold Rush"
1900 bust "Panic of 1901"
1910 war WW1
1920 boom "Roaring"
1930 bust "Great Depression"
1940 war WW2
1950 boom "Golden Age" [1]
1960 bust [2]
1970 war Viet Nam
1980 boom "Long" [3]
1990 bust [4] [5]
2000 war Afghanistan, Iraq
2010 boom [6]
2020 bust [7]
2030 war [8]
[1] https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_econ... [2] https://en.wikipedia.org/wiki/Recession_of_1960%E2%80%931961 [3] https://www.hoover.org/research/ten-causes-reagan-boom-1982-... [4] https://en.wikipedia.org/wiki/Early_1990s_recession_in_the_U... [5] https://en.wikipedia.org/wiki/Dot-com_bubble [6] https://www.forbes.com/sites/chuckjones/2020/02/17/obamas-20... [7] https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-1... [8] https://www.rand.org/content/dam/rand/pubs/research_reports/...
and so is homelessness. Great. Wonderful.
> People are spending money on food, travel, clothes and technology.
Slaves don't have a choice but to spend their fiat money in a low interest rate world whose present condition of low interest rates exists only because this is the last exercise rep the government can push out before reality and nature come in to remove all the artificial economics implementations. In simple words, real capitalism has not yet been tried and a great reset away from stupidity and liberal-democratic welfare is coming.
Malthus wins in the end, no matter how much you try to delay the inevitable.
Buckminister Fuller is the one with improper calculations. His libertarian's model for addressing effective capitalism (with the goal of central planning for a secessionary, yet still vassal, state) relies on old and obsolete conceptual tools, namely history itself. All geopolitical problems is a scam with at the top of that pyramid scheme suit wearing bureaucrats who are the characters from the 1984 dystopia, with no differences between them. You're kinda blind to your oppression and the totalitarian regime you're running under.
Wow, OG Solarpunk?
While young people never had a chance and it's easier to send the point across.
While there are certainly problems here, higher interest rates drive demand down and lower prices, while lower interest rates drive up demand and raise prices.
Investors tend to look for the best return on investment, the number I often see given is 5%/year. The rent I collect is close to that fraction of the market value of the apartment I own in the UK.
The choice between "rent" and "mortgage" is where the cost of the two is about equal in the first year, which is always a bit unfair on first-time purchasers as (1) they're generally younger and thus earning less money, and (2) the impact of interest payments is always front-loaded towards the beginning of the repayment period.
This in turn means that there's a temptation for very long repayment periods to make it seem easier: in a world of genuinely 0% interest mortgages, paying off a ¤600k over 40 years is clearly easier than paying it off over 20, and lower rates asymptotically approach this.
Conversely, when the interest rate is high enough that (even without paying off the capital and regardless of repayment period) it approximates the rental market rate of the property, this drives down demand. To see why, go back to that previous example of a ¤600k (sale price) property: if the landlord can ask for ¤2.5k/month rent, and the interest rate on a mortgage is 5% AER, then the cost to service the interest without paying capital is the same as you get from the rent — which means investors will ask "why should I buy this?" and renters will ask "why would I want that kind of mortgage?", forcing down the asking prices because the only people still interested are people who can do it without borrowing any money.
Previous generation is what, Gen X? Millenials? Yeah gee they had it so easy. Stop with the "generation blaming" stuff and blaming voodoo on them. Blame the people you vote for and who they kowtow to, nothing will ever change with petty envy and sour grapes for your neighbor down the street, etc.
Now here is where I push back, is complaining about this unfair scenario "sour grapes" or "envy"? This is a winner takes all scenario. This wealthy group can vote for direct wealth extraction from the poor (which they do, again out of simple self interest) by constraining housing supply in an effective monopoly. That isn't fair, it's a moral hazard. It's not "petty" if you are proveably on the wrong side of demographics. Infact talking about it like this is the only way it can be fixed, as people can be informed into voting for the interests of someone other than themselves.
When economies really get tough countries usually go to war, or the country fails entirely.
The politicians are also older people who can't empathize. The young also don't vote.
And if you do buy high now, who are you gonna sell even higher when you retire, since there are so few new kids being born?
When you combine all these factors it's usually not a good place to be either renting or buying in most places.
If the Biden admin wants to win the election, they will have to deal with the fact that foreign workers are pushing out perhaps lazier American workers who are also unwilling to work for devalued wages caused by inflation. Foreign workers are used to inflation and whatever we have is better than what they have at home. The Admin will have to deal with that tension -else they will have more traditional core supporters hold their noses and vote for the other guy once again.
I'm quite certain if we had a Ross Perot running as a third party candidate, he or she would win. Biden is decrepit and can't decide if he's for American workers or foreign workers more. Trump shoots from the hip too much and is too thin skinned and impulsive.
Stating this because supposedly, the middle class is not homeless or starving
No, if the system forces a growing fraction of people to lose we have to be honest about that, pin down why, and ask if it's really truly unsolvable. Hint: food and clothing and house construction have shrunk dramatically over time as a fraction of our economic activity. The first-principles problems did not get harder and we did not get worse at solving them. This hell is of our own design. It will hurt to solve, but it can be solved.
Most adult Gen Zers are tracking ahead of where parents were at the same age - see homeownership rates by age for each generation: https://fortune.com/2024/01/17/redfin-baby-boomers-gen-z-hou...
https://www.populationpyramid.net/united-states-of-america/
Those in their 30s right now are the biggest proportion.
And 20 or 30 years ago, that population pyramid was even more tilted towards people in their 0 to 30s (obviously).
The basis of your first paragraph will be true in the future, but is not yet (unless you define 30s and 40s as old).
The thing that makes the dynamic in your argument true is that young people do not (or cannot) vote and participate in the political process as much as old people can.
We have people who can no longer produce, but want to consume (and their potential beneficiaries) on one side, and on the other we have people can produce. The former group need to collect rent from the latter group, otherwise they offer nothing to the latter group in exchange for their production.
Which is funny when I see young people advocate for income taxes, when they should be advocating for property/inheritance taxes.
You're right that capitalism is when most of the means of production is privately owned (private ownership), but production and income distribution is largely through the operation of markets. More: https://www.britannica.com/money/capitalism#
If rich people own the world and growth = investment returns = how rich people get paid for being rich, do you think they want it to stop? Or will they (and the system they own) do anything to keep it going?
There's a reason why the moralizing lore of capitalism always happens at the bottom of an S curve even though most economic sectors spend most of the time at the top of an S curve. At the bottom of an S curve, a new investment frontier has opened up. By foregoing consumption today and investing, we can enable more/faster/better consumption tomorrow. Investors get part of the windfall, consumers get part of the windfall, everyone wins. However, at the top of an S curve, capital is plentiful and investment opportunities are scarce. The value of investment / foregoing consumption drops to nearly 0, and in practice probably goes slightly negative due to hope springing eternal / boondoggle chasing. That's all ok, the accounting will assign credit and blame in the end, but it's a huge problem if you are rich enough that you obtain your money by investing rather than by working. Suddenly, your source of income (sorry, capital gains, wouldn't want the IRS to tax you like a pleb) has gone away. If there is nothing to invest in, how do you get paid for investing? What to do?
Answer: pull any and every lever to get the growth train going again. But what if the growth is low quality? Doesn't matter. You are here to get paid, not to generate quality growth. Does it cause inflation? Not on your assets -- doesn't matter. Does it cause housing to become unaffordable? Doesn't matter. Does it cause imperial conflict when the overseas growth markets don't like your terms? Doesn't matter. As far as our economy is concerned, the important thing is that the people who literally own our economy get paid, all else is secondary.
NOTE: I'm not nearly as anti-capitalist as you might think. Capitalism is the best system for bringing the maximum amount of resources to bear on new frontiers. In a world that seems to be winner-take-all in so many respects, this may be the horse you want to bet on. Still, almost all of the Big Problems in the world today can be traced directly back to our economic structure. This is not an indictment: it would be true of any economic structure. Still, the question remains of whether what we do is worthwhile and how much we want to do to file down the sharp edges. IMO, it is worthwhile, but we should do more to file down the edges. YMMV.
This might change, fast.
I have two daughters who are in their early 20s. My oldest daughter, 24, has dreamed of buying a home and starting a family with her high school sweetheart of 10 years and her dream has been completely shattered.
The saddest part is, this isn't even just about buying a home. She's not going to start a family until they are no longer living with us and have a house of their own. But the longer it takes for that to happen, the more difficult and risky it becomes for her to start that family and forget about having 3+ children and starting at 35. That's even if there is a correction in the next 10 years.
So her dreams are completely shattered. She's not the only Gen Z out there that had these types of hopes and ambitions throughout their adolescence and early adulthood and are now feeling completely hopeless.
Just recently, here in Canada, there was a leaked RCMP report issued to the government warning it of potential civil unrest due the economic and housing crises: https://www.cbc.ca/news/politics/rcmp-police-future-trends-1...
Yes, it may be true that unemployment is at a low and stocks are up. That means absolutely nothing to young adults in their 20s who are still living with their parents, not by choice but because they have absolutely no hope of ever being able to buy a home of their own.
So I wouldn't be surprised if in the coming years we see record turn-outs of young voters.
So yes, the young have a great party to vote for.
My understanding is that career politicians' take on the youth vote is: "If the stars happen to align, and you play it right, the youth vote can win you an election. But usually not - so you should mostly let your opponent waste his time chasing the youth vote."
You can't bring in enough people for 800,000 homes if you have historically built around 250,000 and the best government in the country manages an 11% increase without inflating rents and making the housing crisis worse. We need to radically slow the insane surge in demand so that building more housing has a chance to keep up. Canada has historically had 2.3 people per home so if we increase builds to 300,000/year we can support bringing in roughly 660,000 people with stable prices. If we bring in 2M everyone can guess what will happen.
A few times, when things looked murkier, I've just contacted the local (city or county) party organization, and quickly gotten answers.
If that didn't work, I'd probably try contacting the League of Women Voters, County Clerk's office, or similar [non-]governmental groups that work at keeping track of such things. And some web searches, looking for primary candidates with on-line campaign info.