Where else is anyone with assets going to put their money? Clearly everyone notices that investing in the “real world” has terrible risk/reward. So we get (3,3), where the only people who lose money are overlevered or Panicans.
The market goes up as long as the dollar exists. Most of the world cannot do Algebra 2, complex financial plumbing promoting a better system isn’t going to take off in the way regular people think — through mass adoption.
The world has always been a function of parallel economies and realities — just look at how the politicians live off of campaign “donor” largesse, now that old money no longer sees it fit to have a public presence. There are the legacy fiefdoms, the tech fiefdoms, and then the muck that people who don’t have anything better to do argue about, and a high pressure race to find what’s next in the Internet age that lurks beneath the surface of the increasingly vanishing public internet.
This doesn’t mean that there aren’t obvious flaws with fiat — I’ve written tens of thousands of words on the flaws with central banking, how it operates as a quasi-religion, and yet, I still make my money in dollars, and invest in dollar denominations, and spend those dollars on my lifestyle. Ray Dalio has put out a different variant of doom thesis once a month since the 70s, yet he’s never once taken a cut on his Bridgewater payouts.
There is no better alternate system, there is no “warp” in how electrification of money changes our denominations. Inflation reduces purchasing power over time bc you have to prove that your balance is worth something other than its consumptive effects — and for those earning money in the increasingly scarce ways to do so in the “real” economy, stocks are the best liquid mechanism to park wealth to at least peg to inflation, at least until direct investing in frontier models through tokens supplants direct techquity.
There is no better outlook for the “real economy” because, by and large, outside of complex manufacturing, there isn’t really much to innovate in terms of consumer facing goods. Which is why the only real result of the 2020 money printer has been an increasingly volatile resale/middle man market, and influencing to further aggregate consumer flow. The Internet allows for an absurd scale of coordinated behavior, which is why seemingly everything “known” seems crowded, yet it’s obvious that cities like New York are spiraling downward in a broader sense. The people most nervous about their forward status will spend the most show they have it now — the people confident (or content) in themselves will just take their ball and go home, and the balances reset.
If the mass influx of American wealth and growth came in the boomer generation, and wealth dissipates by the third generation, then we’re following the timeline pretty exactly. Millennials and late zoomers inherit the stock complex, and, not knowing wha else to do with it, probably liquidate and spend it. Those with foresight will invest in the next iteration of public equities, and the churn of wealth continues. Most people who inherit wealth don’t stay at the top — it’s just clear that the wealth distribution is about to shift rapidly in the next ~10-15 years
Serious question:
How am I supposed to think about this?
A. the market hasn’t yet priced in the damage a bit like it was late to COVID
B. inflation and money printing expectations have exceeded any damage to earnings
C. The war has increased the earning potential of companies on US markets
D. Market prices are being manipulated by friends of the money printer buying assets
E. The market always goes up because there’s no alternative
F. Something else?
The stock market feels so at odds with reality since 2019.
Employee motivation down. My small/medium business competitors dead. Private equity businesses on life support. Quality of product and services are worse. Intense foreign competition. Government getting in the way of everything.
Pretty much every interaction I have with a publicly traded company is worse today than it was 6 years ago, but the stock market over the same period is up 180%?
How should I think about that?
And whats the endgame as a result of that explanation?