Guest Post by Hardscrabble Farmer
So let me see if I understand the parameters of this problem:
Money is infinite since it is created out of thin air by the machinations of the Federal Reserve.
Shouldn’t the pie be infinite as well? This is a pie=money metaphor, isn’t it?
If the pie/money supply is shrinking, then wouldn’t the share the 1% hold be shrinking at the same rate as the shrinking pie/money supply the 99% control?
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And here’s another one- I serve as a custodian of a trust so I get to see what’s what. The beneficiary of the trust is a hard lefty, Trump hating, progressive of the first order. They have made as much in the past year than in the previous eight and you know what? They haven’t given any back in protest, they haven’t closed the Trust or frozen it based on Paul Krugman’s insightful analysis of January last and they haven’t voiced concern that they now have too much and that it would be better to redistribute it to the DACA Dreamers/SJW’s/BLM/PussyHatters/fill in the blanks.
Isn’t that odd? I mean it’s one thing to extol the virtues of #nevertrump#metoo#causeoftheday but it’s another when you suddenly find yourself moving up into the land of the 1%, youknowwhumsayin?
Here’s the thing. No one stopped anyone in the 99% from investing in the same stocks and bonds that have returned fortunes to the 1% did they? I mean anyone can open an E*trade account with $100 and an Igadget so what’s the reason for sitting in the ashes and scraping your sores with pottery shards after a year of 35% returns? And let’s get over this puerile fantasy that the 1% are sleeping on mattresses stuffed with thousand dollar bills- their money is invested in companies that manufacture, invent, innovate, lend, explore, research, build, develop and pay employees the whole time.
What they do with their money helps drive the economy, not kill it. You can be jealous if you want, you can be envious and greedy and seethe with desire for what other people have, but you can’t be dishonest about the positive impact those fortunes have on society at large unless you are a complete and flaming hypocrite.
I don’t care about money the way a lot of people do even though I use it just like everyone else. I just have fewer needs that I can’t meet on my own and I place far more trust in the stability of family and long term friendships and the rewards associated with those things than in financial instruments, tranches, derivatives, bonds and notes, but that’s just me.
I don’t understand why so many people focus much time and energy on some theoretical balance sheet that is marked in dollars and cents in order to find their place in the world and determine their worth, but then I don’t understand Bronies, Trekkies, African violet aficionados, Dispensationalists, Tide Pod Challenges and a host of other odd, if somewhat harmless obsessive behaviors that dot the landscape of the post-modern world. My opinions count about as far as I can see out of my window in the morning sunlight, so there’s that too.
Wealth is what you think it is- where your treasure is there too will be your heart. The future is uncertain and the end is ALWAYS near as the bard of Venice once croaked and it’s just as true today as it was then.
Sadly, modern telecommunications and media have just expanded our radius of envy without a commensurate expansion of our comprehension.
HSF nails it. Introspection is as hard as milking cows.
HSF made a slight error; the market is immensely different than it was before the Great Recession. It is no longer a ‘level playing field’ (at least it was somewhat level).
Read through the entire comments and your understanding will improve.
“Here’s the thing. No one stopped anyone in the 99% from investing in the same stocks and bonds that have returned fortunes to the 1% did they? I mean anyone can open an E*trade account with $100 and an Igadget so what’s the reason for sitting in the ashes and scraping your sores with pottery shards after a year of 35% returns? And let’s get over this puerile fantasy that the 1% are sleeping on mattresses stuffed with thousand dollar bills- their money is invested in companies that manufacture, invent, innovate, lend, explore, research, build, develop and pay employees the whole time.”
Maybe that was true in the old days, but now it is just a casino with, free gov. money, high frequency trading, and derivative betting etc, etc.
Dio…………….quite true
With QE’s, ZIRP, and especially in April 2009 CONgress mandated the Financial Accounting Standards Board (FASB) suspend Mark-to-Market Accounting to allow Banksters to value their diminished mortgage assets to lofty (fantasy) levels.
Normal ‘Price Discovery’ was eliminated (and remains so today).
Retail ‘investors’ have markedly declined; most of the market activity is hft.
Quit yer bitchin about me bitchin.?
It’s easier to blame your failure on someone else than it is to accept it is the result of your own actions.
Especially if that someone else is more successful than you are as a result of their own actions.
Keep sucking that bankster cock.
That sorta reinforces my point, doesn’t it?
No, it doesn’t.
Personally, I don’t care how successful someone else may be and if you are referring to monetarily, it is a low bar for your admiration.
People who spend their time looking for ways to succeed, succeed.
People who spend their time looking for reasons they have to fail, fail.
It’s your choice which one your are.
Is money being made off of other’s suffering? Has health care et al been made demonstrably expensive? Has NIMBYism caused undue issues?
Making as much money as possible is always good, so quit yer bitchin.
If we had a free market, honest money, eliminated anti competitive practices and treated corporations as originally intended, you wouldn’t hear a peep out of me.
I keep telling my kids ‘it’s not what you earn it’s what you spend that matters’. Most people with ‘money problems’ that I know don’t have an earning problem, they’ve got a spending problem.
I think you should invest in what you understand. People lose their shirts in things they generally don’t understand because someone else does well in it and they want a piece.
Do what you understand and spend less than you earn. You’ll always have money when you need it if you do.
That is really good advice. One caveat; just about everything is an investment now.
I’ll continue sound life rules. Hell, even in my darkest days, I lived by a simple rule of spending less than you make.
That is my message to my kids. It isn’t what you make but what you keep that counts.
Jeannie- I would go with Dr. Seuse,
” Be who you are and say what you feel, because those who mind don’t matter, and those who matter don’t mind.”
Stock market up 44% y/y. Pension funds going broke, why?
That’s a damn good question.
Most Pension Funds are MANDATED to buy mostly Bonds – historically they have been the safest and also provided good returns.
Haven’t you known about the 30 year Bond Market Bull Run?
You are correct sir, running with the Bond Bulls was a safe game for three decades, but it appears the goring is lurking just just around the turn…
Because the governments promised more than they have in the pension fund. It’s called maff.
Why do you feel the need to lie on every comment? The market is up 26% y/y.
From what I understand, it is up 44% since Trump was elected, and that isn’t the same as y/y since y/y includes the period of almost a year while Obama was in office not just since Trump was elected.
Near 100% salary and free health care for life and
a continuation for spouse after a death = a promise
no one could keep.
Since pension protections are written into some state constitutions, it will be interesting.
Will the working Joe be fucked again? Of course.
Well said, HSF.
Money is a tool. Debt is a tool. Just like a hammer can be used to murder someone, it’s not the tools fault if its used in abusive ways.
I see your point, Diogenes, and agree what a nightmare that has become, but what is the reality if those ‘1%’s took their money (in whatever form we would be talking) and went home? I mean, if it suddenly just was gone; every dollar, krugerrand, yen, investment strategy and stock portfolio, or what have you?
We are, with a nod to the vagaries of chance, what we decide to become. Just because we might have believed a lie, and acted on faulty premises, doesn’t change the fact that we, individually and corporately, are where we are because of our decisions. My, yours, our hearts – emotions, decisions, desires, behaviors – as you said, HS, will ALWAYS show what we value.
Sometimes that’s a hard truth to accept, but the exceptions are rare.
I’ve had several opportunities in my life to have a whole lot more money than I have, but I chose the path I walked, except for a very few instances. And those still showed what I held more important.
Sure sounds like a lot of power to give a small group over our economy. What could go wrong?
SOME of the 1% did NOT earn their money by hard work and investing in American Companies. They earned it by gaming the system.
” More importantly, the NYSE helps finance new investment. When a large company wants to expand, it prints up new shares of stock and then tries to sell them. If successful, the company gets money (fresh capital) that enables it to expand its operations. This is what Snap Inc. – maker of the Snapchat app – did on March 2, when it raised $3.4 billion in its initial public offering.
However, this is not what most stock trading is about. Virtually all the activity on the NYSE involves someone who already owns part of a company (represented by stock certificates) selling it to somebody else.
In this way it is very much like a used car dealership. Used car dealers buy old cars and resell them. Similarly, stock markets are places where someone sells her part ownership in a company to a dealer, who then finds someone else to buy it.
That is it. Ownership of a company changes hands, with the exchange serving as the middleman or used car dealer. Other than at the dealership, which makes some money on the trade, no jobs get created and no production takes place.”
I love a good rant. I’ve heard we have a few Yorkie lovers but African Violet aficionados? What provoked this outburst? Some fool libtard got oodles of money and didn’t even thank HF (or Trump) for his time. He didn’t share with the Bulldyke Beer Fund or the Gay Men’s Fertility Bank. The tables turn when the shoe is on the other foot.
I believe you need to reach a certain level of wealth to be able to invest in the stuff most likely to return serious wealth. Yes, this year looks different , but the accredited investor has a big leg up on quality of advice and access to investments. Not to mention access to credit. Very few of us reach that level and so we are the fodder for mutual funds etc. with all the management fees. Only one year out of ten produces a real yield over inflation.The game is rigged.
You know, there are plenty of wealthy people pointing out the rigged system also. Why deny it?
Of course you do the best you can for you and yours. Of course you should have a work and thrift ethic. I’d bet there isn’t a single platformer who wouldn’t agree. I’ve never heard anyone on this site say….”you know, this is bullshit that people are rich and I’m poor”. I’ve never seen/heard that written here. What I have seen is a lot of black and white thinking/ethics/advice etc.
Yep, some things are black and white. The Bible shows us. When people can’t afford Jack or shit working a full time job and dying in the streets because they have no roof over their head or health care or etc, I’m sure we’ll see plenty of people sipping single malt saying things like…”muh integrity”.
HSF, what do you do when one of your cows gets a little lean? Leave it in the field to die? Shoot it? Call the vet? Feed it?
There’s got to be some middle ground somewhere or am I high?
The pie = money analogy is common, but deeply flawed. Money has always been dis-associated from “pie” (which is the beauty of it!).. but this sleight of hand has reached its natural limits.
When money was invented, it was used to get resources from Outside The System, while pretending they came from Inside The System. This was unethically promoted as some sort of inherent natural property of money, and people labor under that illusion even today.
Investors in the East India Company or United Fruit or Exxon or whatever could keep importing profits from Outside The System as long as there was Somewhere Else to get energy and resources from. This is beginning to not be the case any longer. Whether you think we are past Peak Oil or not, we are definitely past Peak Energy per Capita. Well-being in the aggregate is thus on a downhill slide from which we will not recover.
There’s also a lot of miscomprehension around what “production” is. News Flash: it is consumption. When you have consumed something, for the most part it’s no longer there to consume again. The fact that somebody produces a lot of washing machines just guarantees that fewer washing machines will be able to be made in the future, yet we are in a headlong race to burn all that’s burnable, eat all that’s edible, birth all that’s birthable, and drive around in circles at NASCAR to boot just to piss off liberals. This may be normal, but it is not sustainable. There is no going back to “true” capitalism, or “real” money or any of that.. because those mechanisms and that math were only ever based on resources which were assumed to be infinite, because for a time they effectively were.
People whine about “the Fed” and interest rates, saying rates “should be” higher? Why should they be higher, when real growth (not bitcoin growth) is effectively negative? It’s only because we don’t have good mechanisms (other than inflation) to express negative growth in our monetary system.
As the world gets tapped out, there are fewer and fewer enterprises which remain remunerative. What’s left now are the Rackets, as Kunstler calls them: the Teslas, the medical-industrial complex, the education racket.. but those are showing signs of cracking also.
LLPOH listed a bunch of successful young people he knows, but I wonder what the demand will be for “event planning”, building skyscrapers, or even surgery, when we truly get it through our heads that oil extraction is declining at something like 7-10% per annum.
The condition of peak resources breaks money and breaks all the stories of industrial civilization and its progress. This is not an opinion; it is a fact outside of anyone’s politics, religion, or philosophy.
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HSF: “the 1% are … invested in companies that manufacture, invent, innovate, lend, explore, research, build, develop and pay employees the whole time.”
But what percentage of that activity is truly necessary? 5% of it? It’s clear that you are invested mainly elsewhere, on the front lines of the solar economy, and with good reason.
Hmm, I’m pretty sure this is food for me to “thought” over.
The answer is, you still, no matter what, must do what is best for you and yours + help others.
It’s not as simple at what’s being presented here. Most people are not cut out to be entrepreneurs. Most people are also not cut out to be in a high skill set, heart surgeon, specialized engineer, etc. They are clock punchers. the jobs out there are not keeping track with inflation, not even close. Despite those little bonuses that companies have thrown out this year. Much of that is in lieu of a much more expensive wage increase. So, yes, you could have invested the $20 you saved at the end of the month in all the same things as the rich. And if the average lifespan ever increases to 300, you can enjoy those earnings.
This will not last forever. It’s a short lived era. And thankfully so. Savers are robbed every day by this artificial interest rate environment.
It’s not artificial, imo.
It’s only with the greatest of adroitness that they are keeping the whole game afloat.
The broad term “1%” used by lefties/liberals/progressives is designed to turn this country into a class war.
The real issue are the ones who write legislation our politicians then pass in to law, screwing over the rest of the industry. Its about as anti-free market or competition as things can get.
I used to bitch about 0.001%, but even that doesn’t quite catch it all.
Corruption. Both of morality and of legality. Thats what we should be against. Not that things will change. Governments always end as corrupt as the ones they are supposed to imprison.
What do you mean *turn* this country into [one with] a class war? There’s always been a class war. As Warren Buffett concluded, the rich won. The American middle class is a complete historical anomaly, based on the consumption of fossil fuels, and we will be back to our regularly-scheduled feudal programming anon., *if* we are lucky, that is.
Where would this website be without its hairs to split?
I can hardly wait for Llpoh to show up and give his “I am wolf, you are sheep” diatribe once again.
All of you fuckers who rationalize that the current economic system is fair should just go ahead and change your town’s name to Pottersville right now.
And what prevented the proles from raking in the big returns from Wall Street this past year? Do you think it might correlate with their discretionary income after the monthly bills are paid?? But of course it’s their own fault that they don’t have money to invest because they failed to learn a new skill, like designing bridges by attending MIT! I suppose that is the likely explanation. Or else the lazy fuckers should have worked two jobs! That’s why God invented daycare. But the dumbshits ignored the memo, so it’s all on them.
Charles Hugh Smith has long proclaimed that one of the biggest deceptions sold to the young is the proclamation: “You, too, can be Bill Gates!”. The young lap that one up as the Potters steal their future. But still the hucksters offer Bezos and Gates as proof-positive that all is still well.
You will always have the poor among you.
Look(!) how the wealth has been hoarded in the Last Days!
Look(!) at the wages you failed to pay the workers!
You failed to argue the case of the poor in such a way as to win it!
HSF, micro-mining of Scripture works both ways.
1) I have done no such thing.
2) I already covered this. Wealth isn’t being “hoarded” it’s being invested and put into numerous vehicles for wealth expansion, clearly or they wouldn’t have increased their wealth as it was pointed out in the OP. Hoarded wealth can’t grow, it remains static. And if any of the contentions made earlier in this thread about the loss of purchasing power and inflation hold true, then hoarding leads to a LOSS of wealth, C’nest pas?
3) Is your contention that employers are not paying wages to their workers? That’s against the law and it isn’t happening. Your scripture doesn’t say ‘Look(!) at the wages you paid that weren’t as much as some people would have preferred to have been paid if they hadn’t already accepted the pay rate you offered at time of employment’ which is what you really mean, so who’s scripture mining?
Come on Vodka, you are a better debater than this.
HSF: “Wealth isn’t being “hoarded” it’s being invested and put into numerous vehicles for wealth expansion, clearly or they wouldn’t have increased their wealth as it was pointed out in the OP.”
This sounds a lot like Jimmy Stewart’s speech to the holders in the Savings and Loan… “You’re thinking of this place all wrong..! .. the money’s not here…”
Too bad that houses aren’t inherently productive entities, nor are NFL teams or iPhones or F-35s or washing machines or 95% of “The Economy”.
I have recently discovered that this site is composed of a bunch of arrogant asses with very little humility. Lloph being an excellent example. These masters of the universe can’t even concede that bad things could happen to good hardworking people. At least Stucky has some humility and is able to admit flaws and bad things that has happened in his life. 2008 destroyed a lot of hardworking people’s lives. My life was adversely effected, however, thanks to my wife, we were able to survive until I found other employment. I have never taken a dime from any government program. Yet we are supposed to thank the banksters who got bailed out for their casino losses? I agree with vodka’s points. Also HSF I am tired of you acting like you are some infallible taoist sage, you are not. All of you who walk on water, and whose shit doesn’t stink, death is coming for you too.
At least he didn’t bury his talent.
Noth’in wrong with a little midnight gardening…just another form of “diversification”.
Actually, investing in the stock market does not contribute anything to the economy. It is a common misperception. The investment part of the equation in GDP is only for investment in plants ( factories or offices ) and equipment, not the stock market. They would contribute by starting a company and hiring people.
So if someone increases their holdings from stock market investment and then takes that money and buys land and livestock and equipment and builds new barns and opens a business to sell the products he now produces, like maple syrup and high quality beef, and pays the property taxes on that land that is used to pay teachers and policemen and librarians and fix the local streets, then none of that is part of the economy?
Do tell, AI.
I think you’re misconstruing what she said. I’m pretty sure the both of you are saying the same thing. Interestingly, at least in this historical moment, the stock market is no different than printing money. Value out of thin air with out backing. Or at least backed by profits. Am I missing something?
There’s still a dire misunderstanding of “The Economy” going on here, people!!!
Production = Consumption
HSF: You rightly intuited that the stock market is full of malinvestment and that it was time to put your nominal wealth into something tangible over which you have some control, based on the real solar economy (the only economy that is sustainable).
The BAU “Economy” as we know it—and to which most commentators here make reference and appeals—is a polluting waste machine. We “make” money from it, pretty much in accordance with the degree to which we ultimately despoil our world, drain the oil-reserve bank account, and eat the seed corn. Capitalism and Money are Technologies which allow this corrosion process to maximize. They are mechanisms, catalysts, which have emerged out of the differential of energy gradients, which ‘beg’ to be broken down. Our civilizational “oxidation” processes release energy but cause us to find ourselves with material in a lower, unusable, state as a result.
Retreating to more local systems with reduced complexity indicates a couple of things: #1, it *hurts* “The (BAU) Economy” by removing a degree of excess waste: the rentiers and middlemen, processors and packagers, etc., but #2, it is itself a reflection of the exhaustion of current methods and resources in feverish attempts to sustain “economic growth”.
At the same time smart people like HSF are Dis-Intermediating, a crippled fossil-fuel based system is—of necessity—doing its own disintermediation, by cutting out its own middlemen (who also happen to be consumers). So the question is: De-Growth and Dis-Intermediation are happening.. on a personal level, are you going to go willingly or be dragged into it and surprised by it?
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Money is not wealth. It is a *claim* on future wealth. It’s a giant IOU (or YouOweMe) we irrationally expect the next generation to be able to cover.
If you think the current system of monetary musical chairs combined with 250,000 new people (births minus deaths) arriving on the planet each day is a prescription for preserving future wealth.. well, then play your cards that way.
There’s only so much longer, though, that we can keep “fixing streets” as though that were a productive exercise rather than an expression of consumption. See Bastiat and the “broken windows” theory. Most modern economic activity has to do with breaking windows.
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
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GDP is almost entirely a measure of WASTE. All the nostrums about “Smart Growth” or “Sustainable Growth” are ridiculous and offensive to the intellect.
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Money is to The Real Economy as Mathematics are to the Real World.
In mathematics, we can posit and actually utilize, things which Do Not Exist. A perfect circle, infinity.. these are things which can only exist IN OUR MINDS. So, too, Infinite Growth on a Finite Planet only exists in the minds of politicians and economists, bankers and financial advisors.
I recommend reading Frederick Soddy, esp. a book called “Wealth, Virtual Wealth, and Debt”. A Nobel Prize winner in Chemistry, Soddy explored the disconnect between money systems and the actual earth resources and processes which supposedly underlie them. I have what seems to be a rare copy of “Money Versus Man” and I would like to finish transcribing it at some point.
Until I can share that with TBP’ers, I will leave you with the epigraph to Money v.Man Soddy employed, by John Ruskin:
“Consumption absolute is the end, crown and perfection of production; and wise consumption is a far more difficult art than wise production.
“Capital which produces nothing but capital is only root producing root; bulb issuing in bulb, never in tulip; seed issuing in seed never in bread. The Political Economy of Europe has hitherto devoted itself to the multiplication… of bulbs. It never saw or conceived such a thing as a tulip.
“This being the nature of capital it follows that there are two kinds of true production, always going on in an active State; one of seed and one of food; or production for the Ground, and for the Mouth; both of which are by covetous persons thought to be production only for the granary; whereas the function of the granary is but intermediate and conservative, fulfilled in distribution; else it ends in nothing but mildew and the nourishment of rats and worms.
“The wealth of the nation is to be estimated only by what it consumes.
“As consumption is the end and aim of production, so life is the end and aim of consumption.
“THERE IS NO WEALTH BUT LIFE.
“Unto this Last. John Ruskin. 1862.”
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To the extent that we invest in dead things, and dead-making things, we will increasingly reap ill-being and death. To the degree we invest in soil, water and life, like HSF, a few of us might have half a chance.
I was with you HSF, 100% with you.
Right up until you disrespected Bronies, that is!!! The Mane Six will not stand for such an insult!
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He’s with her.
LMAO Brilliant! And kinda disturbing to look at – unless it’s a joke. Sadly, I doubt that it is.
Thanks for killing my appetite right at lunch time there, HSF.