Also, I know it is hip to say that Wall Street is short-sighted, but in reality it is one of the the few fields where people routinely think decades at a time.

If you run a large pension fund or investment account you were already risk-weighted and if the cash isn't needed for 10+ years you'd much rather own a slice of the world's largest companies ten years from now instead of gold or cash under a mattress.

But then I've always been cynical about the growing divide between the uber-wealthy and the other 99% of this country.

You can pay 10% of the population well enough that they support the top 0.01%, and the top 10% can pay the next 20% to 30% well enough or provide a sufficient probability to move up (or illusion) that they are incentivized to help suppress the remaining 60%.

I think some people don't quite understand what people are capable of when they are truly desperate. Right now, in most of the western world, people aren't at that point. But when they get there, billionaires' ability to hide on islands or yachts or whatever won't stop the inevitable. Any violent revolution is going to be very bad, even for the very wealthy who think they're insulated/protected.

IF you want to stop a revolution in 21st century just shutdown everything and blockade roads. How long till people start dying? A week?

What are the rebels gonna do? Assauls tanks and machine guns? Or starve/freeze/cook to death without electricity/oil/food?

The American delusion of aremd citizens defending constitution is just that - a delusion. In real life army mops the floor with small minority of suicidal rebels, and the rest begrudgingly return to their usual jobs because it's much better than starving and fearing for life every day.

They're talking about holing up in scattered rural dwellings and ignoring the law, with maybe the occasional terror attack mixed in. The Taliban has made a decent go of such a strategy so I don't it's an altogether risible position as you're implying.

I highly doubt average American will be OK with that.

We’ve seen it recently, where a single man shut down CNN and I think some other news stations just mailing poorly-made bombs to the media and politicians. We’ve seen it decades ago with Oklahoma City.

Could a Western population stand up against their government in a real fight? No. Could they inflect the same amount of damage without actually having to stand and fight? We’ve seen it before.

In any case, assassination is probably not the most effective means of wealth redistribution.

But 3 billionaires owning more than the bottom half of the country doesn't have to mean if the bottom half owns nothing:

>> "Their $264.1 billion in holdings outstrips the combined net worth of an estimated 160 million people"

Simply redistributing that would mean that everybody in the bottom half gets $1600. That's not going to fix poverty. It only underscores just how little that bottom half really has.

So that means if you completely equalize the wealth of the bottom 50% of the population after redistributing the wealth of these billionaires, the average person in that bottom half will still only have $3200.

So maybe they can get their car fixed, but they still can't send their kids to college.

Franz Ferdinand’s assassination changed a whole lot of systems.

Wars today are mostly cold or proxy, and rarely direct.

Second, look at history to tell you what will happen if the rich get disappeared. This happened in many communist nations. Doctors, lawyers, professors, bankers, wealthy landowners were mostly murdered and their wealth stolen from them. Did it work well for those nations? Are they thriving today?

That case always struck me as really odd. That guy was under surveillance the whole time and was caught in a sting operation. I think they even helped him build the devices. For what reason did they actually let him mail them? Surely, given that they were in on the entire plot, they could have simply arrested him before the devices were actually mailed.

He only has to take some material step forward in terms of the plot to get arrested for conspiracy as far as the law goes. Letting those reach the mailbox seems like a major failure on their part.

My point being in any destabiliztion event these groups are certainly going to be active, and being that they also have the exact opposite political ethos to the average gulliotine advocate, I'm willing to bet any uprising is not going to be so simple.

Think less French Revolution, and more Autodefensas Unidas de Colombia

Angry masses without a leader are not going to do anything.

Ref: https://en.wikipedia.org/wiki/Hundred_Flowers_Campaign

The counterpoint is the richest Southern families quickly recovered their positions in the years after the Civil War [1]... but that relied heavily on racist policies, and of course these families still owned capital like land.

0: http://www.pewtrusts.org/~/media/assets/2015/07/fsm-irs-repo...

1: https://www.nber.org/papers/w25700?utm_campaign=ntwh&utm_med...

There are a few relationships between IQ and conscientiousness and wealth, but they break down towards the extremes are not strong enough in magnitude to account for even single-quartile mobility.

Source?

It tracks wealth by surnames and argues that the ability to gain (or regain) wealth is inheritable. This thesis is in contradiction to some of the ways I've experienced the world, but it is a source supporting the parent's claim. For my own political inclinations I'd be happy to hear many others that support the opposite claim.

https://press.princeton.edu/books/hardcover/9780691162546/th...

https://archive.org/details/CSPAN2_20151004_190000_Book_Disc...

https://www.worldcat.org/title/son-also-rises-surnames-and-t...

http://gen.lib.rus.ec/book/index.php?md5=76BC054612F39ED6CBD...

https://en.wikipedia.org/wiki/The_Son_Also_Rises_(book)

Like say the Smith family was traditionally privileged and wealthy, but my great-great-grandfather lost his fortune. Am I actually any more likely to rise in fortune than the Jones' family next door that have been generationally poor for hundreds of years? Or does it only seem like that because I have many distant cousin's whose families maintained their advantages?

Second thing is that the fortune is typically not tracked here, because it’s really hard to get any historical data about fortune of any individuals, much less those not so famous. What Clark et al do is track status, and average out: for example, you can look at the people who graduated Oxford hundreds of years ago. As it turns out, their descendants today are overrepresented among UK’s doctors and lawyers. On the other hand, people carrying common job-related last names, like Smith or Taylor, are underrepresented as lawyers and doctors. In fact, in today’s UK, people carrying last names of Norman conquerors are still overrepresented among high status occupations in UK, although not by much, given a millennium of a regression towards the mean.

I recommend reading the book, it’s great.

https://en.m.wikipedia.org/wiki/Tyranny_of_the_majority

https://www.vox.com/the-highlight/2019/8/8/20747198/philadel...

The entire Civil Rights movement is littered with examples of a police state and civilian mobs shooting, lynching, using dogs, water hoses, etc against its own citizens. It doesn’t take much to rile people up against “them” and get people to look the other way or even participate.

I don't know what that means. Guns are highly correlated with leathality and people believe in them completely. Generally, a population may not want to have possession of guns. That quickly changes for a large percentage in survival mode. Effectively, many criminals are perpetually in survival mode.

I would bet if the far right were making this type of threat, it wouldn't be brushed under the rug.

But it's also a reminder that if the powerful people in society offer too much resistance to the change the people need, at some point the only way to get that change is by extreme overreaction.

Personally I'd rather see the revolution happening by the soap box or the ballot box rather than the ammo box, but when media and voting systems get gamed and corrupted while people's rights and needs keep getting trampled upon, at some point a more violent solution may become unavoidable. But that's going to be very hard to steer and have many harmful side effects.

Imagining that the richest can hold a country like the US hostage is preposterous.

Destroying the system would do more damage, but so far it's been their system that enables their accumulation of wealth. There are a lot of poor people who want to destroy that system.

[1] https://www.cbpp.org/research/poverty-and-inequality/a-guide...

[2] https://taxfoundation.org/summary-latest-federal-income-tax-...

what?

There is a far-left opinion that there should be no such thing as a billionaire, that a single human's marginal tax rate should hit 100% at some point. I wouldn't say "never" to the idea at this point.

Bernie supporters are generally the least likely to get their hands dirty and do the kind of work necessary to build and maintain infrastructure. Pretty much everyone I meet that does that kind of work is Republican. Not saying this is a universal truth, but it's a somewhat accurate generalization.

Source for party affiliation by a sampling of occupations:

http://verdantlabs.com/politics_of_professions/

It's not like our infrastructure problems are new, or weren't remarked on before 2016. They've been building for decades. They were there in the Obama administration, and the Bush administration, and the Clinton administration, and the other Bush administration, and the Reagan administration. Do you think the problem through all those years was our critical shortage of leftist construction workers?

If you scroll past the 1:1 comparisons and hit expand all, there's a much bigger list of occupations, many of which would fall under the "people building infrastructure" umbrella.

Looking at those jobs it seems like it leans a bit right, but overall is fairly balanced.

You'd expect most jobs to be roughly 50/50 divided between Republican and Democrat. (Actually, I'd expect a big chunk Independent. What happened to those?) Some lean so strongly to one side that it makes me wonder what's going on there.

Environmentalist strongly Dem and oil worker strongly Rep makes sense. I suppose high-paying jobs with authority like pilot leaning more Rep whereas service-oriented jobs like flight attendant leaning more Dem is also understandable.

But farmers lean Rep, but once they retire they lean Dem. Why? I'm a bit surprised to see stay-at-home moms as well as most religious professions lean strongly Dem. I mean, to me it makes sense that religious people lean left, but it often sounds like many Americans feel exactly the opposite about that. I guess I'm glad to see these stats make more sense than the news.

But in skilled trades, I absolutely don't understand the reason for the large differences. Why would a locksmith or machinist lean to strongly Rep, while sheet metal workers and cartographers lean so strongly Dem? I can't think of any good reason for that difference.

I see a lot of inspectors and rafety/regulation related professions lean somewhat Dem, but safety director leans very strongly Rep.

And what's the difference between a landscape contractor and a gardener? Or a landscaper and a garden designer? Could it be that some people choose to identify by a particular professional label based on their political leaning, rather than the other way around?

And how representative are the various groups? If you asked only 4 horticulturists, it's easy to get 3/4 of them leaning one way or the other. How many book publishers did they ask that all of them are Democrats? Surely there are also Republican book publishers?

Also looking through your other comments, you seem to question peoples' sources on things without providing any for your own.

For posterity, the link was added after I commented and he probably downvoted me.

It's the democratic basis that gives a government its legitimacy.

Obama ordered drone strikes on Americans. Reagan ran Iran-Contra. Kennedy tried to invade Cuba. FDR tried to grow the Supreme Court to 13.

A better approach would be for the federal government as a whole - yes, all three branches - to reign in their power so that there's less power to abuse. The odds of that are zero.

Instead the Us is rife with regulatory capture, unenforced antitrust laws, etc.

If the democracy were representative, and the public informed, things would be better.

What are they going to do if they dismantle, say, Wal-Mart? Now all the people who worked there have no jobs and the people who shopped there have one less source of goods. Sure, we might be fine without it due to the alternatives, but once you go down that road, you find out that you've ripped up a complex system of logistics that moved goods to places that people wanted them and that you don't have any sort of replacement planned.

But that's usually what happens in these revolutions, they rip everything apart and then try to replace it with something better and fail. But next time will always be better, right?

People on the right often claim to be for the free market and for small, decentralized government, but then turn around and love big, centrally planned conglomerates,just as long as they are owned by share-holders and are ruled with an authoritarian hand.

You underestimate, vastly, just what they've done to their supply chain, distribution network and logistics to make it that efficient and therefore cheap for their customers. It's part of the reason people switched from buying from local shops and went to them instead.

I chose them as an example because business people know a lot about what they did and the general public doesn't have a clue. I don't even like Wal-Mart, but I'm also aware of some of the reasons they're so successful. They're literally studied by people who study supply chain management because of what they did, e.g. -

https://www.skubana.com/walmart-leading-way/

I used them because it's fashionable to hate them, but anyone who knew what they had actually built that's not visible to the public would know that it's not something that you can just replace that easily. So that lets me separate the replies according to how informed they are.

Finally, your attempt to connect large companies to "central planning" is at odds with the fact that one works and the other does not. Central planning doesn't work because different people have different needs and no single plan can accommodate so many unique individuals. I don't think you will find many businesses that aren't planned, but they're not managing so many unique needs, either. And in those times when they really do end up in a situation like that, they end up being spun off as separate companies for that very reason.

Eventually, the small stores join up together to bargain for a wholesale price lower than market price to their suppliers, and thus earn a higher margin.

ala, what you see at walmart today.

They have the massive capital to build a megamart anywhere they want, and have it run at a loss for however long it takes to drive everyone out of business. This absolutely kills local businesses and funnels money out of the area, leaving only the low wages paid to the local Walmart staff. And because it's Walmart job or no job, people have no bargaining power.

When small businesses form cooperatives for collective bargaining, they keep ownership local, they keep jobs local, and they keep the stores in the city centres running, which is better for pedestrian and public transit access, not to mention cafe life and local bars/eateries. Compare this to a megamart outside the city where you have no choice but to drive there. You get everything there and have no real reason to go into the city. As a consequence, city life dies out.

Coops and associations work with the local shop owners and communities, whereas megacorps trample and replace them with cookie cutter faceless megamarts.

And no, I don't think the supply chains are actually more robust for local stores. I've had better luck at the local Wal-Mart than at other stores for TP and other hard-to-get items. If anything, early on, some people weren't checking the smaller stores, but after they got wiped out, they've yet to recover and yet Wal-Mart has.

There are still supply chain issues, don't get me wrong, but mostly they're upstream a bit from the customers. Think of things like meat packing plants having trouble finding any way to operate safely or having a lot of production that had to shift from commercial packaging to retail packaging and distribution.

Walmart is so big that it utterly dominates the market, to the detriment of everyone else. But because they're able to sell everything at the lowest price, people go there. It's impossible to compete with Walmart.

It's a clear example of why the invisible hand of the free market is a dangerous myth.

Economy of scale is not at all the same as monopoly power and conflating the two only makes your point more confused.

Finally, the "invisible hand" is really just a survival of the fittest type effect. It's every bit as random and imperfect as that is in nature, but the effects are no less real, or we'd all be peasants living at 1800s level standards instead of typing to each other on a globe-spanning computer network.

If anything, I'd say that Socialism is the dangerous myth. Always promising utopia, as if you can create a utopia with unconstrained mass murder from a Socialist revolution. If we were the right kind of people to live in that utopia, we'd be sharing our stuff willingly right now, not seeing talk of guillotines and forcibly taking stuff, as can be observed in this very story. The proper way to get closer to that would be to encourage people to share and be generous.

As the song says, first it was a tragedy, now it's a farce: https://www.youtube.com/watch?v=QwqnRYPcrl0

They can afford to this due to their enormous size and domination of their suppliers, which means they can sell their wares at lower prices than anyone else. They can afford to bleed money for as long as they have to, in order to win in an area.

That is almost the textbook definition of a local monopoly, facilitated by sheer size and entrenched market position on a larger scale. They are so large that they can have everything in all of their stores, they don't have to worry too much about certain items not being profitable in certain areas, because they're big enough to carry everything everywhere, unlike smaller local stores, who cannot afford the space nor the losses.

Walmart banks hard on the convenience of everything being available in the same store, which is something they can only do because of their sheer clout and economies of scale that only work for really big powerful companies.

The end effect is that Walmat (and other similarly huge chains) drive smaller businesses out of the market, because a free market always rewards those who dominate others, and rewards domination by affording even better tools and methods for dominating competitors. It's a surefire way to make sure the market is owned and run by just a small handful of very large and powerful entities.

A truly free market is one that is sensibly regulated, in order to foster competition and prevent monopolies from taking over, according to Adam Smith, not one that is completely unregulated, as many free market proponents seem to argue for.

So it's not a monopoly at all, they just offer things at cheaper prices and drive more expensive businesses out of business, while many reasonably efficient competitors still exist.

As a consequence of this, local businesses die, jobs are lost and people either have to move away or accept Walmart jobs with well-documented bad pay and bad working conditions.

All of this is a deliberate business strategy by Walmart, because the US political climate and "business-friendly" ideology from both major parties prioritizes giant corporations with enormous lobbying power, over small business owners.

As a further local effect, business life is driven from the city centers to outside the cities, causing fewer people from the suburbs to go into the city centers, leading to urban neglect and decay.

They don't have control over the supply of any particular good, it's not like an ISP where they have covenants with local governments that limit competition, they're not Standard Oil. They're not even at the level of Microsoft, because there's not much they can do to exclude competition.

But I guess some people have tried this tact, before. Here's an article which discusses many of the points you've made and explains why they don't make sense:

https://truthonthemarket.com/2006/07/10/the-unconvincing-ant...

Honestly it seems you either refuse to read what I wrote, or you are invested in a free market ideology. The link you posted is nothing more than a hard-libertarian free market fanatic opinion blog, heavy on snark and lacking in value.

Read about the damage Walmart does to communities and why even their mere presence in the market completely distorts it:

https://money.com/walmart-stores-closing-small-towns/

https://www.citylab.com/life/2012/09/radiating-death-how-wal...

https://popularresistance.org/new-report-wal-mart-destroys-l...

https://m.dailykos.com/stories/2013/03/28/1197622/-The-Walma...

This goes for all megamart chains, Amazon and the like, but Walmart is among the very worst.

That's why I don't see what good "dismantling" them does. Say someone offs Google tomorrow. The website dies and we're left with a bunch of people who have no job and some servers and buildings and whatnot that are less useful to anyone than when you started.

To the extent that consumers do have a choice, that is somewhat true, but the examples of Facebook and Amazon are as much incredible luck of being in the right place and the right time, exponential explosion of brand new modes of communication and commerce, and all kinds of unintended consequences. Again, to say the middle class "signed up" for this is hardly the case.

At the very least there are issues of power and information imbalances. Take the example of someone comparing the price of something at Amazon and the same thing at a local bookstore and deciding that it's worth the $0.50 savings to go with Amazon. It is easy -- and incorrect -- to say, "well, they signed up for the massive corporate supply chain consolidation and the dissolution of many local economies' autonomy that transactions like this will precipitate when performed at a large scale."

The average consumer simply doesn't have the access to data that corporate boards and politicians do, nor do they have the historical and statistical training to make an educated analysis of their implications.

Finally, even though there are people and organizations who urge alternative consumer patterns, the reach and the volume of their message pales in comparison to the marketing, PR and advertising armies employed by large corporations and their political allies.

The average consumer doesnt need to be given a bachelor's degree in economics to make a choice on making a company bigger or smaller with their purchase. I know people who support smaller business and it is independent of education.

Amazons offer to the end consumer, is not a hard sell. Theres no drug dealing physical addiction, nobody wakes up with a horses head in their bed and no guns held to people's head. The offer is buy an item that costs money. That's it.

People sign up. They want 0.50c cheaper with overnight delivery. The people see the benefit and convience of internet shopping and choose it. Small businesses failing to keep up and relying on thinking of the population as dumb and unlucky to force redistribution of wealth are not helping their own case.

Many small businesses have succeeded massively off the same medium amazon is using, the internet and it's not 'luck'.

They're not owed in a fully capitalist system, but I can see some merit for the idea that inequality has gotten so bad that there needs to be external intervention to fix that, and redistribute the wealth that is currently concentrated in the top 1%. Giving normal people that money would be a good thing for the economy, and I can see some benefit to it.

Now of course in practice it wouldn't be legal and getting that money from them would be near impossible, but its interesting in theory.

The rich are the first to encourage a witch-hunt against the rich. It drives up business.

(In fact, Marx considered Russia the least likely candidate for a communist revolution; it would start in England or Germany.)

Why would anyone in their right mind give up their life for a revolution under these conditions?

Then again, judging by the downvote happy people here, there may not be enough braincells left for a successful revolution.

In that world, why bother innovating? Why bother investing in innovation when the risk-free play has a huge positive expected return?

The stimulus is intended to protect jobs and livelihoods, not to react to movements in the stock market (even if the current president seems to think so)

For better or worse, agreed or not, the US' gov diverted - for now? - an implosion. The Fed can't eliminate risk. It also can't guarantee future returns.

More than $3 billion for "research and development of vaccines, as well as therapeutics and diagnostics"

$2.2 billion "in public health funding to aid in prevention, preparedness and response efforts — including $950 million to support state and local agencies"

Almost $1 billion for "medical supplies, health-care preparedness, Community Health Centers and medical surge capacity"

$1.25 billion to fight COVID-19 internationally.

source: https://en.wikipedia.org/wiki/Coronavirus_Preparedness_and_R...

I'm referencing the CARE Act.

https://en.wikipedia.org/wiki/Coronavirus_Aid,_Relief,_and_E...

Granted the one you reference was passed prior, the CARE Act was introduced first. The CARE Act was never in danger of being dropped, as the market was counting on it (it is filled with pork).

[0]: https://www.cnn.com/2020/05/04/investing/fed-junk-bonds-etfs...

[1]: https://twitter.com/TruthGundlach/status/1256352949787176960

[2]: https://www.federalreserve.gov/releases/h41/current/

You invest for a return. Stopping a slide yesterday has little to do with getting a return tomorrow.

The future. New products. New ideas. Etc. That's where a return comes from. Not the Fed.

The FED only steps in for once in a lifetime risks that impacts the market broadly. Any risk specific to individual firms, which is all the risk between these broad market events.

[0]http://www.adriendavernas.com/papers/valuationofbanks.pdf

Those risks overlap. It's not effectively once-in-a-lifetime, as of the last century.

Are you so sure that they don't get this? I guess that many do understand it and either would like a much more inequality-reducing tax structure, or envision themselves as (somehow!) becoming part of the top 10%.

I don't disagree with you but want to add some insight to this... My entire life I've been told the lie that if I "just work harder" I can be rich etc. Most of America thinks about themselves in this same way, and it's taken me years of traditional employment + risky startup opportunities to realize that no, success is not guaranteed if you "just work hard"... Honestly you just get nailed with the majority of work as an IC who's trying to crank it out vs. your peers who are off having "dev beers" at the trendy bar down the road.

The peers that I see that are "well off" often had huge monetary injections from their parents in either fully-paid education, first houses, vehicles, incestuous "investments" in their business, etc. Now, those same people that had everything handed to them on a silver platter are invested, some own rental properties, etc. to the point that they can choose not to work for long periods of time to just collect dividends/rent. Funny part - they still define themselves as people who have pulled themselves up by the bootstraps!

So yea - in the US we have a really unhealthy view/mentality around success and ignore the fact that the IT'S THE EXCEPTION for someone to truly "pull themselves up by the bootstraps" into any sort of significant wealth. Truth is most "rich" people had an incredible amount of external financial support and stability to get themselves there and maintain it.

Bring the downvotes, because you're darn tootin' I'm bitter about all of this.

Available effort could likewise vary. For example, someone with a disability might have much less effort available or their effort may be significantly less efficient. Someone who has to expend a great deal of effort on other matters (e.g. providing for basic needs, self protection, caring for others, etc.) may have less effort to expend towards things like career advancement or education.

The argument as I see it is that a person expending a roughly average amount of effort should be able to achieve a reasonable quality of life with the luck and opportunities that are available to them. (There will of course always be some variance in the effort required and the outcome received, but that's fine as long as it stays within a reasonable distance of this goal.)

The increasing anger over inequality seems to me to be because people are being asked to give above average effort (e.g. working multiple or demeaning jobs) in exchange for a low quality of life (e.g. difficulty affording healthcare, housing, retirement, raising a family, etc.).

And what does this have to do with whether a lot of effort and a sense of opportunity is available to the common person?

[1] https://markets.businessinsider.com/news/stocks/ranked-the-s...

Spending as percentage of GDP: Denmark - 52% of GDP Norway - 55% of GDP Finland - 53% of GDP Sweden - 50% of GDP Iceland - 42% of GDP

Average - 50.5%

USA - 22% of GDP

What does all that extra spending get them?

Poverty rates: [0] Denmark - 13% Norway - Not reported Finland - Not reported Sweden - 15% Iceland - Not reported USA - 15%

Unemployment rates (2017): [0] Denmark - 5.7 Norway - 4.2 Finland - 8.5 Sweden - 6.7 Iceland - 2.8 USA - 4.4

Household Incomein US dollars (2018) [3] Denmark - $34,712 Norway - $39,555 Finland - $34,497 Sweden - $34,301 Iceland - Not reported USA - $50,292

Household Debt as % of disposable income (2015-2018): [1] Denmark - 281% Norway - 239% Finland - 145% Sweden - 189% Iceland - Not reported USA - 105%

Household Net worth as % of net income (2014): [2] Denmark - 553% Norway - 318% Finland - 359% Sweden - 526% Iceland - Not reported USA - 601%

[0]https://www.cia.gov/library/publications/the-world-factbook [1]https://data.oecd.org/hha/household-debt.htm [2]https://data.oecd.org/hha/household-net-worth.htm#indicator-... [3]https://data.oecd.org/hha/household-disposable-income.htm#in...

Also should comparing the spending numbers take into account that healthcare, schools and universities are paid by government spending in the Nordics and not from household income?

Honest questions, I'm really interested in these differences between systems.

Your number likely includes State, Regional, and Local spending (which was presumably excluded for all nations in my numbers).

Even with the 33% figure, for the US to make up the ~15% difference would require ~3 Trillion in annual spending.

The existence of Social Healthcare programs in those countries is a huge chunk of the difference, I'm sure.

This link provides more detailed information: https://www.irp.wisc.edu/resources/how-is-poverty-measured/

“ The Census Bureau determines poverty status by using an official poverty measure (OPM) that compares pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963 and adjusted for family size.”

Regarding my definition in the previous comment, I’m unable to find my original source. Sorry.

I can spend an extra 20k as well or poorly as I like.

> They don't seem to be in more poverty

They're clearly not 'more in poverty'. The point is that they spend (the US equivalent) of Trillions of dollars per year for comparable outcomes.

>They're healthier, more fit and highly educated.

This is a matter of culture, not economics. The US already spends more per pupil than all of the 'top 5' nations, with worse outcomes. [0]

[0]https://data.oecd.org/eduresource/education-spending.htm

https://wtfhappenedin1971.com/

https://www.ineteconomics.org/perspectives/blog/how-why-gove...

Now that we've addressed your off topic question. Could you please try to explain how hard work and a sense of opportunity is not available to the common person?

Not everyone can start a machine shop with their dad, or own or even operate a taco restaurant. You need to be at the right place, the right moment, have the right amount of money and or the right equipment, interests and skills. And only then your sense of opportunity and effort will take you places.

For the common person it's a lottery just to be allowed to play the game.

If you flip that around, you get "Anyone, anywhere, any time, with any amount of money and any (or no) equipment, interests or skills should be able to be start and own a successful business." Does that really sound like a reasonable expectation?

Gimme a break man.

https://www.lendingtree.com/business/small/how-to-finance-a-...

I think that would be out of reach for many if not most Taco Bell managers. Presumably it would be even harder in parts of the United States with higher costs of living.

VC is not the norm. It is very much the exception.

> The cost of opening a new Taco Bell restaurant is between $1.2 million and $2.6 million. Taco Bell also charges a $45,000 franchise fee, an ongoing royalty fee equal to 5.5% of gross sales, and a marketing fee equal to 4.25% of gross sales.

https://www.businessinsider.com/what-it-costs-to-open-a-taco...

Give ME a break man. LOL.

1. I read tinco's comment to state (paraphrasing): "it is difficult to start a business, and for the common person it is a game of chance." Which, I absolutely agree with when I measure it against my life experiences/knowledge.

2. You replied with two questions, also paraphrasing: "It's a lottery to work at Taco Bell?", and, "And assuming you do work at Taco Bell, that you would become a manager who could save up to own their own store?"

---

Given that scope of the conversation, I assumed you were positing that someone could seriously start working at a Taco Bell, start saving their money, and then some day afford their own franchise location.

The first question of 2 is an absolute possibility, ie: it is not a lottery to work at Taco Bell and it would be silly to assume otherwise. That may have confused me leading into the second question, asked rhetorically, as something that you deemed possible. This is to say, "A person could absolutely work at Taco Bell, and they could also save to own their own some day."

The "Gimme a break man" in reply to someone saying something that I deem 100% rational (#1) with two rhetorical questions that seem to paint the situations that they posit as rational possibilities confuses the crap out of me.

Simply put: You submitted two arguments, seemingly painted as possible realities, in an adversarial way to something I saw as a rational and relevant statement. I fired back thinking you thought that was possible because there's not much context to figure otherwise.

If I confused your comment I apologize.

Quick Edit: When I posted this reply I saw another person, harimau777, answering similar to myself with another credible source (also with a much higher caliber quality of language - I'm goof sometimes). What I'm trying to say is I'm not the only one who took your statements this way.

The response to that was, "Well, just a lottery winner" with no argument whatsoever. How can you have taken that seriously?

Step one: arrive in the United States as a child.

Step two: a childhood of grinding poverty.

Step three: make tons of money in STEM.

It happens with extreme regularity. It is the rule, not the exception.

Ok - maybe I’m exaggerating a bit. I’m sure some of them don’t “make it.” Someone is staffing those food vans.

But it’s not unusual either.

Positions once available to anyone who worked hard, are now reserved to the children of the already wealthy. The consequences are severe.

85% of American millionaires are self-made.

"The Millionaire Next Door" by Stanley

In the 24 years since that book's publishing I absolutely argue that ladder has become more difficult to climb. But hey - what do I know? I'm just a lazy millennial who's now living through his second major recession, with the first one landing directly on when I was entering the work world FT. Thank goodness for my tech career because let. me. tell. you... my peers were struggling. Especially the ones who persisted in Cedar Rapids (blue collar Iowa town).

But sure - 85% of American millionaires are "self-made", whatever the heck that means. I don't doubt that's how they feel about themselves and self report!!!

I read that book when I was in my early 20's. I followed all of its advice, which basically comes down to "live below your means, save, and invest." The truth is I was already following it anyway. My parents lived below their means, and my dad taught me about investing when I was a teenager.

Every generation has recessions to deal with. By the time I was in my mid 30's, I was, indeed, the millionaire next door, though just barely. This was despite the dot-com crash and the great recession...

I'm surprised nobody's come along yet to tell you that you're not self-made because you had parents and they taught you about investing.

My definition of "self made" is not important, my point is that everyone's definition is going to be different.

Here's the thing - I have no idea who you are, what your history is, and I can't make a single comment on the validity of how you got from point A to point B... that is outside of the above compliment really.

What I will tell you is that my anecdotal experience is that no one is out there admitting, "OH YEAH, my parents totally dropped $120k on my education, bought all of my cars, paid my rent, and gave me a free-reign credit card into my 30's." and ironically... I've ran into a TON of those people who self-identify as "self made" which is why I don't take the term seriously and see it as 100% subjective.

TLDR: "self made" is subjective as all heck. I can't comment on your life man - I have no idea who you are. I stand by my original comment that things are getting more difficult in regards to building wealth from nothing. I got snarky against a comment that seemed to just posit a book from the 90's as the entire content of a reply as if that's valid to any conversation.

What if I tell you that my parents did pay for my education? And they gave me a car when I was 16? Or they were fortunate enough to be able buy a computer when I was in elementary school, which definitely contributed to my interests today, many decades later? Am I still self made? Or did that give me too much of a "head start" so I'm not? Was it so long ago now that it doesn't matter?

TLDR: I agree, it's all subjective...

I'd personally say, me too in so many ways... I had my struggles with an early death in the immediate family but it did provide the money to support me into my early start!

Here's the thing - struggle or not I absolutely have been around poverty and have actually done a bit in advocacy in the area. I don't say this for a gold star - just to qualify what I'm about to say.

Being poor is hard. Like really hard. It's expensive in sooo many ways and I freakin' wish more of us had empathy for those people that are struggling in that situation. I see WAY too many folks on HN that are comfortable in highly-paid positions like myself that don't acknowledge these things and even sound angry in regards to how people are "suppose to be"... lemme tell ya... as someone with struggles - man sometimes it's really really hard. Even with some of the insane privileges that I've been afforded.

All-in-all ... I wish more people admitted "man I had a lot of help" regardless if it's a computer in elementary school, or investments in education, etc. I know this has a negative "SJW" spin to it these days, but man... I have been privileged. holy crap I've been privileged. Doesn't diminish my accomplishments, but we need to come to terms that as a society everyone should have as equal of a playing field as possible..!

Besides, I heard the same lament in the 70s, 80s, 90's, 00's, and 10's.

> I don't doubt that's how they feel about themselves and self report!!!

Always better to guess than pick up the book and read it!

My point is that "the market did great" means investors did great; doesn't mean that everyone did great.

> The market has done even better in the last 10 years than in the 90's

is an adequate response to address the GGGGGP's claim that

> that ladder has become more difficult to climb. But hey - what do I know? I'm just a lazy millennial who's now living through his second major recession, with the first one landing directly on when I was entering the work world FT.

Nobody here is denying your claim about the market performance.

e.g. started own business, vs savings + stock market, vs investing in real estate.

But when you weigh by total wealth the Walton and Mars families skew the data in favor of nepotism. It also depends on your opinion of source of personal wealth of Ms Bezos or Ms Jobs (and anyone in similar position) - nepotism or self-made?

Evidence would be nice to have though.

As for me, I've had enough anecdotes to think it's plausible. Just recently we hired a new CTO at my company, and he got the job simply because he was friends with our CEO and he needed a job. Turns out he's completely incompetent...

Most books don't pan out and if I don't turn myself into a marketing personality good luck. I say this as someone who's marketed books professionally as a web product across all major publishing platforms. I'm a nobody and prefer to focus on my engineering.

> teaching

Sure - because there's tons of money in teaching? Uhhh...?

> consulting

I've made a killing here and am likely going into my next 1099 tomorrow so yea. No arguments here. It DOES take a solid network though to do consulting so if you're not sociable you're likely screwed in this arena. I have two sales people who are my guardian angels hawking my services for top-dollar so I'm incredibly blessed in this department.

> bootstrapped SAAS app

Currently working out licensing with two corps on one of these myself as well. Finding the foot in the door for industry, then collecting user data on problems to solve, then pushing through solving them, and then gambling on the problem you solved is INCREDIBLY risky.

Plus - if you're the startup engineer things fall near-100% on your shoulders unless you're willing to play the outsourcing game. Which I have and my god that's a FT job itself even for the most menial of applications.

---

All-in-all I am actually the guy who pulled myself up by the bootstraps to probably 10x what my parents made in small town Iowa. So yea. But all of my original comment absolutely stands. It was hell on earth and I worked my entire 20's away hustling my BUTT off to get out of the trailer park and out to California.

I still absolutely posit that my story of "just pull yourself up by the bootstraps" is the exception and shouldn't be sold as "anyone can do this if they work hard enough!!!" Most people can't.

Your list makes it seem like those things are easy - and as someone who has experience in them (minus teaching)... it absolutely isn't. Those are all serious endeavors that take time, commitment, failure, getting back on the horse, and ultimately years of pursuit/work.

That's exactly what the stock market provides an opportunity to do.

Middle-class America seems to have a particular disdain for the less well off.

This divide is the driving force behind Trump. It's the same divide we're seeing play out now over reopening the economy. Suburbanites with cushy WFH jobs, chastising the poor who have been laid off, as they have the audacity to want to put food on the table tonight.

Hell as someone who's struggled early-on... Poor America seems to have a particular disdain for the less well off too. I feel like I'm constantly surrounded by entitlement regardless of the person - and I'm no better as I am constantly trying to quash my own crap attitude with this... We were brought up this way across the board, to the point that I'm convinced childish entitlement is in our DNA as a country.

It's just a whole bunch of finger pointing while ignoring the elephant in the room... but hey people seem to get off on the hate so the folks in charge keep us divided and subdued to their interests.

Not disagreeing - just my own take being exposed to many diverse backgrounds rich/poor, rural/metro, etc etc. Everyone wants to point a finger because it's MUCH easier than acknowledging difficult societal problems/self-reflection.

After WWII the situation basically got reversed: Europe experienced such a shock and disruption to the existing social order/redistribution of wealth etc., that it went really left-wing/"social democratic". In the meantime, the US saw a greater and greater concentration of wealth and the division between the rich and the poor got increasingly stark, and social mobility is much worse than that in, say, Northern Europe. The American Dream as people knew it is pretty much dead. This is also one huge reason behind the polarization in politics that we see nowadays.

Unfortunately, a lot of narratives in the US don't seem to realize/willingly ignore this situation and still seem to talk about the old idea of "bootstrapping" and American exceptionalism in this regard, which is really kinda one century out of date already.

This is open to anyone, but of course it's not guaranteed. You have to put yourself in a place where you're more likely to encounter these folks, and demonstrate value.

It might also be the reason social democratic/socialistic parties never got a foothold in the US post world war 2.

That's true, but I have no idea where it came from. "The American Dream" was never about becoming a millionaire, it was the idea that you could start with nothing and have a nice, comfortable middle class existence in the US.

I can't speak to everyone, but my parents are children of the 50s and their idea of the "American Dream" was the nice house in a safe neighborhood in the burbs.

Thanks to inflation "millionaire" doesn't mean as much as it used to. Billionaires are a completely separate class though.

Probably more a factor of where you came from, who you know, etc.

Obviously it's situational.

from https://medium.com/incerto/inequality-and-skin-in-the-game-d...:

These stats just backup what I've always heard - the top 10%, 1%, whatever, is not static. Neither is the bottom 10%. Many people usually start their careers at the bottom (i.e. college student working part time) and then eventually make it into the middle class and plenty make it further than that. Of course, some never make it out of poverty.

The biggest problem is data. It's not that great.

These types of debt typically have low interest rates. Market returns for the past decade have exceeded the interest rates. Paying the minimums, and investing the difference? The consumer would be ahead. 12-15% YoY stock returns compound faster than 4% mortgage debt.

[0]: https://www.experian.com/blogs/ask-experian/research/consume...

Not all debt is equivalent: credit card debt and payday loans are examples of pretty punitive debt that really should be avoided. The return on investment from paying off debt is roughly equivalent from the interest on your debt; if it's lower than you can get by investing elsewhere, then it may make sense to invest elsewhere, especially when you factor in second-order effects like tax laws.

[1] For the record, I think the tax-advantaged nature of debt is absolutely inane and should be removed. But that is unlikely to be politically feasible.

Everything you've said is wrong. I don't know what you mean by "getting in after all the really wealthy get in"... VCs, IPOs? That's not even close to necessary. Investing in simple index fund ETFs is fine. And "all the investments with minimums in the thousands"? Well... don't buy those! Again, buy simple index fund ETFs. Most brokerages don't even charge a commission on that, so you can easily add small amounts each month.

People just don't seem to know that investing in the stock market is easily done, and so extremely worthwhile. Income inequality being what it is, the wealthy will probably own more of the stock market for a long time (or always), but that 84% could easily come way down if people just knew what to do!

But I feel like your comment is counter-productive fear mongering that will turn off people on the margin, thinking everything is stacked against them, the "good" investment opportunities aren't available, and so they just shouldn't even try.

That's a fact of the US system.

> I don't know what you mean by "getting in after all the really wealthy get in"... VCs, IPOs? That's not even close to necessary.

That's a strawman. What's necessary, isn't the subject.

> And "all the investments with minimums in the thousands"? Well... don't buy those!

The wealthy have more opportunity, got it. Pointing to some other instrument, saying "it's also good" is not a correction.

> Everything you've said is wrong.

If you find yourself saying this, you're probably about to say something stupid. It's trite nonsense.

The reason VCs and hedge funds get in early is because they can afford to fail a lot and have their successes outweigh their failures. It isn't because of some caste gatekeeping to monopolize the wealth while twirling their moustaches but because without that level of capital it is a very good way to lose your life savings. First rule in investing is never risk what you can't afford to lose.

My point wasn't that people shouldn't invest, it's that previous poster suggested everyone investing would "chisel away" at the "86% number," and my general presumption is that so long as the return on wealth is nonlinear to the quantity of wealth, as enabled by the ability to access more expensive/specialized/higher-return investments, it's a lost cause as a simple comparison of function order and rate.

If those who are already richer are likely to have a higher rate of return from greater levels of access or unique opportunities and that rate of return compounds non-linearly, no matter how many regular people invest it's still basically comparing functions with nonlinear differences in rate of increase.

It can't handle Bitcoin, space rockets, jordan peterson, self driving cars, hyperloop, neuralink, starlink, ect. There's huge and reliable money to be made riding the flame. Or rather there was, it's all about to be flooded out and those of us who don't like being formless, liquid money & stock chasers will have to wait for the next desert to appear in fifteen years time.

1. the government eats the loses.

2. liquid

3. better returns.

https://news.ycombinator.com/newsguidelines.html

The US has higher wages but mostly as a function of some sort of Baumol's cost disease. Increases in healthcare and education spending drive wages but they also drive costs. It doesn't really reflect a net gain in standards of living as hard stats like life expectancy show. the US has a life expectancy comparable to Cuba.

Not to mention that averages obfuscate the huge degree of inequality. Life expectancy differences between the richest and poorest in the US are larger (almost ~20 years) than between the American average and Yemen.

[1] https://imgur.com/vsUt8rF

His main point seems to be that, if you track people over the last 30 years, they have made economic progress individually. That to me seems extremely obvious though. Someone who is 50 or 60 is almost certainly going to be in a better financial position than the same person at 30, as many people tend to develop more skills or advance their career, it would be straight-up crazy if that wasn't the case.

However, it does not address the actual issue of the poorest as a demographic. What people are saying that if the nation as a whole gets richer, you would expect that 40 years later the floor has risen as well, not that the poor are simply different people.

https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...

No, it's not impossible. I'm from the US and live in Canada and it's essentially comparing the lower US tax rate + health care premiums and expected unemployment benefits.

For the record, the US is clearly cheaper for a slim 30 something with no kids and no medical issues -- like ~27,000 bucks or so per year, when I compared WA to AB. When you start adding kids and getting 60+ that changes, and long term it may be a better deal up north, but in the short term I'd rather do STEM in a state with no income tax.

But for others, the volatility of income is much higher and muddies the calculation. Losing your job is much less stressful when you don’t have to worry about your healthcare also.

Would I trade my iphone to be able to own a house and have my children go to college? Of course! Who wouldn't!?

In 1985, in-state tuition and fees at UC Berkeley cost $1,296/year[0] (inflation-adjusted that would be $3,052 in 2020 dollars) Today, it actually costs $14,000/year[1] (plus an extra $16k room and board, but let's compare apples to apples).

[0] https://www.dailycal.org/2014/12/22/history-uc-tuition-since...

[1] https://admission.universityofcalifornia.edu/tuition-financi...

More people go to college now than 40 years ago; the price is high because of the easy credit that makes it more accessible now, not less.

As for healthcare, I guess you had a higher chance of being able to see a doctor back then, but they wouldn't be able to treat your illness as effectively as today so it's a tossup depending on what ails you.

Housing is totally fucked now, I give you that.

Diplomas were more accessible. Education has never been cheaper.

This isn't an attack on your point, since what people really want are the diplomas (and the comfy middle-class jobs they led to), I'm just pointing out that everything that runs on information transfer[1] is incomparably cheaper in 2020 than in 1980. The college tuition problem isn't an economics of information transfer problem, it's an economics of status transfer problem.

[1] All of which you dismiss as "hollow digital toys" somewhat unfairly I feel, but I don't actually know enough to have an informed opinion on 1980 vs 2020, so I won't get into it.

In the states where the "elites" are, housing and participation in the economy is dramatically limited.

I was a child then, and I vaguely remember easy access to GPs, but specialists required travel. Long travel.

A smaller portion of the population went to college. Seems more accessible now.

They certainly don't pay a higher absolute dollar value of the total taxes received by the government though.

The rich pay disproportionately a lot more. Most technology is funded by the rich either directly or through the majority of the taxes they pay.

97% of taxes are paid by the top 50%.

And so they should.

the top 50% has a lower band of $41k annual income in the US. they are not rich, in many places they would struggle to support a family on that.

>The top 1 percent of American earners pay almost 40 percent of all federal income taxes. That’s more than the bottom 90 percent pay combined

that fact should not be celebrated as how generous the top 1% are but rather how unequal the system is that this can be the case.

It was possible for a family of four to survive on a single income and own a home...

The top 50% pay 97% of taxes. That means 97% of the insurance is being paid by 50%. The top 10% paid 70% of taxes.

To all the economists that like to pontificate on the market structure / monetary policy and what not on this site, feel free to read a book about the history of the federal reserve. It also covers the theory of money thru out the ages.

No mater what side you are on this will provide a detailed history of Congress, Federal Reserve, politics and the politics of monetary policy.

"Knowing is half the battle" G.I. Joe

In what sense is 90% average?

In this case, though, average is meant in its colloquial form of another way of saying "normal".

There are many "us vs. them" thresholds to choose from; curious what was special about this one.

[0] https://dqydj.com/2018-average-median-top-household-income-p...

It's a fundamental problem of capitalism: the market's notion of "value" is weighted by wealth, without growth to stir things up wealth concentrates, and those looking to create value are increasingly forced to search for marginal "rich people problems" rather than tackle obvious "poor people problems." You wind up in a paradoxical situation where there are lots of obvious problems that could be fixed by obvious application of labor (e.g. crumbling infrastructure) yet nobody can find a job.

This is why inequality is bad.

Equality is bad because then you can't incentivize people, but that point generally gets enough air time already.

To optimize this system, we should identify which extreme is currently posing a larger threat and back away from it.

Still, WeWork and Theranos are only examples of the "bubble" side of the effect, not so much the "freezing out" side, and they don't really illustrate the contrast between unworthy, overfunded endeavors and worthy, underfunded endeavors. I originally had a more visceral, abstract example that did a much better job, but it was attracting so many drive-by downvotes that I decided to retire it while I searched for better wording/examples. Here is the original:

Economists invite you to ignore this effect by conflating "value" (the economic notion, which is weighted by wealth) with value (the philosophical notion, which isn't, at least not to the same degree). For example, consider the prospect of feeding starving African children. This action has 0 "value" -- the market will not pay you to do this because the kids have no money with which to pay you -- even though the prospect has loads of value in the philosophical sense. Now consider the prospect of merging up the banks so that they can charge higher fees and offload risk to the federal government. This action has loads of "value" -- it gives investors a return, at scale, and investors have lots of money, so their opinion counts heavily -- even though this prospect has zero or negative value in the philosophical sense. Because it is weighted according to wealth, the economic notion of value diverges from the philosophical notion of value in proportion to inequality, and with exploding inequality, that's a big problem.

That is literally any company, be they large or startup, that is trying to attract investment. These were both "disruptive" types that had the backing of a few notable investors and interested parties, and looked juicy to those who could stomach the risk.

Theranos was trying to solve blood testing problems, to make them quick, cheap, and to disrupt the handful of companies that dominate the medical testing field. The whole idea was that poor folks could get a cheap, reliable blood test at Rite-Aid.

WeWork was an REIT designed to resell coworking space to low-to-mid scale clients; rich people and big companies aren't getting coworking space, they're just getting their own private offices.

Except to back away from it is to alter a relationship where the incumbent ruling class holds all the cards and controls all the influence and narrative. Which they don't want to do. So they don't, and the government they bought and paid for just write them windfall blank checks for trillions while the poor threaten governors since they are going to lose their homes and are going hungry.

The US had a chance to right the power balance when it was at its most equal in the post war boom period. But instead America decided times were good enough to let scrutiny slide - complacency in plenty and the optimism of the post-industrial were powerful drugs. Since then its just felt like the late Roman republic in its glutinous downfall. The feudal lords will pillage the state until the house crumbles from the inside with nothing left holding it together while the robber barons run wild and happy in their Deus Ex style post-capitalist dystopian corptocracies.

Serving the middle class was an excellent strategy precisely to the extent that the middle class had money.

Serving the middle class will be an excellent strategy precisely to the extent that the middle class will have money.

There’s a lot of people that are neither poor nor rich, that people keep thinking in those terms baffles me.

The People do not buy new cars without massive credit anymore, and in general do not buy new cars at all.

Looking at sales numbers, “they don’t sell as much as they used to” is waaaay more accurate.

I don't buy that, as a much larger percentage of stock ownership is pension plans, where ordinary people indirectly own stock.

https://www.nytimes.com/2018/02/08/business/economy/stocks-e...

> A whopping 84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households. And that includes everyone’s stakes in pension plans, 401(k)’s and individual retirement accounts, as well as trust funds, mutual funds and college savings programs like 529 plans.

Remember that the median income in the US is about 30k. If you have any sort of actual pension plan, there is a good chance you are in the top 10% in terms of net worth.

[1] Depends on circumstance, but people are generally supposed to have at least $1,000,000 in savings by 67. https://www.nerdwallet.com/investing/retirement-calculator

That means you chose not to participate in the market, not that you were prevented. In which case I can't accept grousing about not getting the gains from investing in the market.

> retirement-calculator

Use it. It'll show how much you need to invest monthly to retire a millionaire. Your money will do a lot better than double.

You can’t invest money you don’t have.

We can go back and forth about how theoretical people could invest theoretical savings, but unless you have another source, it seems like the reality we live in is one where 90% of the country share 16% of the stock market. Whether that 90% have low savings (all of which are in the market) or better savings (little of which is in the market) - either way their financial health doesn't seem very tied to the market.

You can't separate the two.

The vast majority of businesses are privately held[1]. Those businesses hire most of the people and buy most of the goods. Even for companies that are listed on the markets, the majority of their financial assets come from doing business.

It's true that companies raise money on the public markets to expand and thus hire more people, but the idea that most economic activity happens there is false.

[1] https://www.forbes.com/sites/sageworks/2012/10/01/private-co...

Small businesses are the future big businesses.

Both are needed for an efficient, productive economy.

Various times countries have tried to prevent big business from operating, and always gave it up after a while.

just like voting has no real "impact" right?

Participating has an impact. The impact may not be as big as you'd want, but it's there. and it's better than not participating.

The reason I don't think the voting metaphor holds up is that everyone who's elected does so by "getting" the most votes. Obviously there are forces at work here (turnout, voter suppression, get out the vote efforts, etc), but there's no official alternative way to be elected. The voting comparison would make sense if the stock market was the only possible way to gain money - in which case I would agree! But it's not. There are lots of other ways we can ensure people gain wealth.

The low interest rates we've experienced over the last decade, which have only gotten lower as of late, have actually blown up retirement plans.

Used to be, $500,000 saved at 8% meant you could retire off the $40k interest + social security. It also meant that growing a savings account into $500,000 was not out of reach, even on a modest income. This was the plan many people in the 60's, 70's, 80's worked towards.

Now, getting to $500k in savings is much more difficult as compound interest is so much lower. And if you happened to get there, you'd earn a whopping $5000, maybe less, in interest per year.

Banks use deposits to create loans whose funds go directly to the companies receiving those loans. Banks which interview the loan applicants, review financials, ask for references, and which themselves tend to be pillars of the community (before the proliferation of national banks) and have a vested interest in helping it to thrive.

So, no, your premise is 180 degrees wrong. Savers were once paid high interest rates precisely because their dollars were necessary to directly fund risky investments like a new business or expansion. The bank's function was to determine high vs low risk and allocate depositors' money efficiently. Meanwhile, buying an index fund or Amazon stock and having a few irrelevant proxy votes on decisions already made, is the definition of "stashing" it away with zero utility.

that's absolutely not true.

The buying stocks (or indirectly via index funds) must mean somebody else is selling.

The person who sold the stocks will put the money obtained from the sale to use somewhere else. It moves capital just like any other economic transaction.

It may be that the seller will "just" buy another stock - and it looks like nothing's changed. But eventually a seller down the chain is either going to invest in something other than stocks (e.g., a bond), buy new IPO stocks, or to consume the money (e.g., retiree selling stocks to fund their living cost).

The problem with banks doing loaning is that they have to be conservative. They cannot loan out money that might not return - since they must return their depositor's money.

Investors, on the other hand, do not have this conservatism (for the right price). That's why stocks exist, and that's why bonds exist (for those willing to risk less than stocks).

The point being, `eanzenberg`'s idea that money in a savings account just sits there idly doing nothing, is false.

after all, a bank cannot invest in risky assets. "eventually down the chain [of stock investments]" is very fast in terms of timing, and i guarantee you it is faster than a bank's loan process for small businesses.

There would be no IPO market without a secondary market. Almost nobody is interested in buying a stock at IPO and holding it forever without being able to sell it.

But they can issue new stock at the inflated values to fund expansion, which itself allows the company to grow profits and potentially grow future dividends. E.g. Tesla stock price quadrupled over the last year and then Tesla issued $2 billion worth of new shares in February.

The best you could hope for is a younger generation of increasingly productive new workers being able to spin off enough profits to provide a return on the capital that generated that productivity. But the demographic time-bomb of relatively few Homelanders supporting relatively many Baby Boomers is going to upend that, and the stagnating productivity of the last couple decades isn't going to help.

Edit: I think this is the relevant table: https://i.imgur.com/h8Fo8yx.png. If I'm reading it right, this is likely the source of that 84% number. Note the line "Stocks, directly indirectly owned", and the note that it includes retirement plans. I'm guessing this also includes pensions, since that would be a retirement plan. There are many interesting tables in this paper, however.

No need to guess. Google is just a quick click away!

is that still thing for the average american?

Airline stocks probably have a bigger upside, but they're quite a bit riskier. Bondholders do get priority in a bankruptcy, if it comes to that (though I'd doubt it).

Chapter 11 means the business keeps running, but the owners lose their money, Chapter 7 is what most of the world considers to be a bankruptcy / going bust / liquidation. Uncle Sam probably doesn’t care if Delta does a Chapter 11, as long as the planes keep flying.

https://money.cnn.com/2005/09/14/news/fortune500/delta/

My bet is there will be a large number of hard hit industries (e.g. airlines, cruise lines, hotels, car rental companies) which will see widespread ch 11 and bankruptcies. Makes sense if then they can reemerge after eliminating a good chunk of debt and also roll back labour agreements. Likely a bunch of consolidation/merges on their way as a result too.

Should see the ball start rolling after the mid-year results come out early July.

- bonds: Definitely not 0% interest rate, definitely better than cash. You can expect around 1.5% in the US for IG bonds. This is all relative to the default risk of course, the stronger your central bank, the less risky are the bonds, the less interests you earn.

- Real estate: you don't have to own it directly. This exposes yourself to a huge idiosyncratic risk. You can easily get real estate exposure while maintaining diversification and liquidity through REITs, which are trendy since at least 10 years.

There's a whole lot of other investments if you dare to look into it. You can play with currencies (FX, IRS) if you have macroeconomic views. You can play with debts (CLO, CDS) if you have views on the corporate debt market, etc.

Sure, but the fed's target inflation rate is around 2%. That means you're in fact losing 0.5% of your purchasing power per annum. That's just losing money slower.

There is in fact, no alternative.

But if you're looking to invest cash on hand, and looking for a long-term upside. I'm not sure currency is good idea.

If have been buying since the lows, you're just front-running the FED. The worse is over in that it is now very unlikely that the stock market will retest the lows in nominal terms.

Large cap stocks are to some degree an international investment.

REITs: well they are down, maybe more of an opportunity if only because the good stocks are so high.

Speaking to a friend who bought stocks recently, they said, "I'm bullish on America."

I might say if you are the opposite of bullish, then buy gold. And if you have no faith in humanity, buy a survivalist bunker.

The breakdown happen precisely because you can no longer trust even your neighbours. You got the cause and effect backwards.

As far as I can tell, the extreme versions that turn into warlordism occur mainly in response to outside threat.

What’s the rent on a bunker these days? If it’s cheaper than an apartment in SF I might go in on it

All in all, it seems like a hopeless scenario. A better approach is probably to make friends with your neighbors and try not to look like you have anything worth stealing.

A castle. You're describing a castle. :)

[1] - https://en.wikipedia.org/wiki/Wolf%27s_Lair

I think you said it all :)

Nothing like a good oversimplified false dilemma for a complex economic situation. Don’t give the secondary stock market a greater purpose than what it is.

But I’m putting my money where your mouth is and betting on a correction.

vs the alternative - a guaranteed loss of 4%?

And the expectation of only 0.5% return is only going to be short term. Long term recovery is a good bet imho.

That's how you end up with companies with negative net income having valuations in the billions.

You can only call it a bubble once it pops. So therefore, it is axiomatic. This stock "bubble" might not pop, and hence, it might not be a bubble.

The three currencies have risen from the big drops on 2020-03-18, but are still worth less than earlier in the year.

We also just passed what in hindsight will likely be seen as a historic buying opportunity.

Almost as likely to be a historic selling opportunity. The 35%-ish bottom isn't close to the bottom of the really huge recessions (and every non-stock-price signal is saying "really huge recession"). And the volatility we just saw resembles the movements from early 2008 to summer 2008.

Of course, the market can stay up in defiance of any bad news for years at a time, too, if the participants want. We won't have the hindsight until we have the hindsight.

Besides, it doesn't make much sense to claim that it's unfair people are making money in the market, while saying it's too risky to invest in it.

e.g. https://www.cnbc.com/2018/01/18/few-americans-have-enough-sa...

> Only 39% of Americans have enough savings to cover a $1,000 emergency

So you're part of the 61% of americans with less than $1k on hand, but you put it into the stock market, congrats! At the end of the year you have $999 + 6% roi = $1059. Best case scenario you're looking at less than $10k for retirement after 30 years of this.

Actually, buying $100 in stocks on a regular basis is the foundation for good investing.

And I used 30 years because 61% of americans aren’t 20 years old right now.

And this is still the scenario where you don’t have a >$1000 emergency any time during that 45 years.

My point is not that investing doesn’t work, my point is that most people don’t have enough capital to be a part of that system.

But at least we all have our big screen TV's and iPhones, right?

Like, ok... an entry-level iPhone ($20/month) and a big screen tv ($500, lasts ten years)

That's $50/year + $240/year, call it $300 a year to get an iphone and a big screen tv. Amazing. Are you really here trying to tell me that $300/year is going to make the difference between crushing poverty and a healthy life and retirement?

Now compare that with a $2/hour raise, which amounts to somewhere north of $300/month extra. $3600/year. Yeah, THAT is getting a lot closer to the difference between crushing poverty and a reasonable retirement.

I guarantee that a single iPhone purchase and a single big screen TV purchase are not the only poor purchasing decisions being made here.

Yes, lets consider a $2/hour raise. That gets wiped out with a daily trip to take-out instead of regular meals at home, or even by a 750/mo car payment.

Compare it to burning calories. It's much easier to not eat that 500 calorie hamburger than it is to run 5 miles.

Our society should be giving our kids financial literacy instead of bombarding them with advertisements.

"The best minds of my generation are thinking about how to make people click ads. That sucks." - Jeff Hammerbacher.

Most people are not in the bottom quintile of income.

I would be very hesitant to make an uncharitable assumption about that many millions of people - their situations are likely more complex than you or I understand.

Best case scenario, you are right, and we are failing massive swaths of the population by not teaching good money management as part of the core education everybody receives. Either way, things are broken right now!

I've advocated many times on HN that public schools teach basic accounting and how a free market economy works.

Sounds fair to me.

Note that poor people pay 0% income taxes on capital gains and dividends.

americans haven't had real inflation since the military backed greenback. it will be very interesting to see how much that outdated system can hold after being stretched so much by the feds (fed and federal govt).

the traditional measures of inflation expressed in the price of other goods are not capturing the real story. Those good are much cheaper today and mask the actual decrease in purchasing power.

tbh, i think the US gov't really shouldn't be doing bailouts. Equity and bonds _should_ come with appropriate risks, and these risks should be discovered (via pricing of the interest rate for bonds, and for the expected risk-premium in equity).

The distortions happening right now is that the Feds backstopping bankruptcies is causing money to be lent out much more freely than it would've been. This means more worth businesses do not get their chance.

It's like the analogy of bushfires. Big firestorms will clean out the undergrowth, kill the weaker trees, and let the new seedlings grow afterwards. The pain is short term.

If the gov't wants to ease the pain, they need to make unemployment benefits greater, rather than bailout existing businesses. I say this, even tho i own shares, because to not do so means to entrench the moral hazard of socializing losses and privatizing gains.

You can still buy bonds of a bit less-developed nations. E.g. "new" EU nations. They usually offer better RoI than Western EU bonds.

These less developed nations will have a higher default risk. Buying them can make the bond act more like equity than bonds!

> the price of real estate is propped up by similar logic.

This is where the idea falls apart. They can't both be propped up by the fact that there's nothing else around. They're two different things.

or is the stockmarket a "the only way to lose is not to play" kind of deal?

But yeah I’d trend towards “the only way to lose is not to play” side of things. It’s really hard to find other ways to efficiently save/grow your money, interest rates are crushed for saving money outside of the market.

The "G" is also there mostly because it's the only thing that can be quantified across every company. For that reason it dominates the sampling, even though most values-driven investors care much more about the E and S.

There is very little, if even any way to recourse this without massive societal change. And getting such change in action is even harder.

getting water to flow up hill is massively hard. And in the foreseeable future, not possible. Until the day humanity discovers unlimited energy and move into a post scarcity society.

So play the game as much and as well as you can, and build up wealth for your family and future family. That's the only move left, unless you want to sacrifice yourself and your family's financial well-being for a cause that you nor your children will benefit from.

This pegs it at 50% of private sector workers and 80% of public sector workers. https://www.pensionrights.org/publications/statistic/how-man...

Additionally, in many cases, couples may just have one person with access or contributions to the market - but this still leaves them exposed (for good and bad) to the market.

Fun story: I was interested in investing as a kid, family member opened an account for me as a minor, with enough money to pick one investment to buy and hold. It had a bad month, account went below some threshold minimum balance I didn't know about (I'm sure it said somewhere, I didn't get to choose who the account was through), and suddenly account provider started liquidating shares every month for an account fee because of a balance below some amount, and we ended up having to close the account at a loss to avoid fees eventually wiping it out.

Obviously a lot of lessons packed in there, but at the time it seemed obvious that the whole system was designed to prevent regular folks who couldn't just start with many $k accounts from buying and holding.

Now there are tons of low cost options for things like robo-investors, ETFs and index funds, monthly low value investing, etc. It's a whole different world, which on one hand is nice, but on the other leaves me with the feeling that "regular" investments are some kind of loss-leader or tool to enable some other means of profiting the big players.

Given that stock ownership is about 55% of the public, the median household likely has at least a few shares.

https://news.gallup.com/poll/266807/percentage-americans-own...

In addition, stock ownership has been on steady decline for everyone but the upper middle class.

They stick with bonds and such.

which is a shame. Stocks (or owning businesses in general) is the real way to get out of the rat race.

I wish that financial education is part of the standard school curriculum. Financial education such as what stocks are, what bonds are, and how do you "save" money and budget, and what it means to invest and what risks "mean" etc

Most people are scared of stocks because they think it's "risky" - they'll lose all their money if the company bankrupts.

While that's true, the other factors not considered is inflation risk (of bonds or, of bank savings account). The risk of not investing for the long term is just as bad.

Most models have the numbers of Americans living in poverty or lower class as above 50% of the US population.

It’s unlikely if even what they term “lower-middle class” owns real estate.

Even these[0] models have it at >=50% and they are at least 15 years old, and disparity has only increased since then.

[0] https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta...

If all you have is a sub-5% mortgage (though even that's pushing it), or a low-interest student loan, then you should put money toward retirement if you can.

On the other hand, ~15 years ago I had a 3.5% student loan, and even though rationally I should have carried that debt (making regular payments, of course), for peace of mind I paid it off as quickly as a could. I think a lot of people are in that boat, or worse, having been taught that all debt is bad for you.

Right, but near or sub inflation rate student loans are mostly a non-existent thing anymore. They're much more likely to be at 8% and because of their special treatment in bankruptcy they're usually better to pay down than other loans at similar rates.

As a child I learned how to compute compound interest then shortly after saw a TV advertisement for some kind of predatory loan (not sure if there were payday loan places in the late 80s/1990, but something like that), did the math and for a long time thought all loans were essentially scams (not realizing that the interest rates of payday loans weren't representative). ... it turned out to serve me well: there are worse financial mishaps you could make than avoiding reasonable debt. :)

a) Consumption spending

b) Real estate

c) Stocks

When middle class people hit diminishing returns on electronics and vacations, they upgrade their houses. Appetite for remodeled kitchens and bigger, nicer, better-located houses is voracious, so relatively few people satisfy it and fall through to stocks.

Making sacrifices on housing in favor of your stock portfolio is of course possible, but will get you a lot of weird looks and pressure from family, particularly if kids are involved.

Only the latter "version" of this is possibly true. Nothing you said shows a discouragement to savings. At best you showed that the wealthier are more encouraged to save.

Though yes it’s probably too small-potatoes for the rich rich to bother with. Mere tens-of-millions business owners are more the audience for that maneuver. Like everything else it seems one is likely to be smacked down for attempting to use it while not-rich (need enough legitimate business activity to make the wages to relatives plausible)

Anyway, sorry to hear, that probably gets really old.

But these are largely just assumptions on my part.

This of course is, after paying off all high-rate debt, and maxing out 401k contributions.

Would you be buying stocks if you didn't have enough to eat?

[1] https://www.feedingamerica.org/hunger-in-america/facts

[2] https://finance.yahoo.com/news/58-americans-less-1-000-09000...

EDIT: Apologies, first should be 37 million Americans (NOT 37%)