Economy in uncharted territory

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mle-be-me

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mle-be-me
Apr 24 32 Comments

TBH, reading all the stock experts on blind predicting an imminent collapse, I was trying to find economic precedent with no luck.

- undoubtably there is much inflation
- employment is super high
- market is headed down
- economic growth is slowing
- there are not goods on the shelf (my local supermarket runs out of random things like milk which is unprecedented. Looked at buying a new car and there is a one year wait for a Toyota)

My 2 cents is that the stock market is going down in the short term and we will see economic slowdown but only to get back to reality from the fiction we’ve been operating in since 2018 (yes this started pre-pandemic, but I won’t get into it). I know many will say it started in 2008 or even in 1971 and there may be some merit to that, since we have been printing money, but there is an argument to be made that it is ok to print some amount of money in some situations.

National debt for reserve currency of the world is another thing that gives me pause. It is ok for a nation to borrow money. Same as your personal life or a corporation. Musk borrows money against Tesla stock to access his wealth and avoid taxes, many borrow some amount for state school tuition or to buy an appreciating asset… those situation give you a greater return than what you borrowed. But US often just blows the money it borrows. These chickens will come home to roost (though people have been saying this since 1700s)

Anyway, I am not 100% sure which way we are headed when you weigh all the conflicting forces now at play, what do you think?

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TOP 32 Comments
  • Alteryx
    mJYv81

    Go to company page Alteryx

    mJYv81
    I think the Pandemic is what has really put us in unprecedented territory. It really kicked off a chain of events.

    The state the housing market in is largely due to the pandemic. A lot of this kicked off with individuals leaving big cities and buying houses in other areas. This then pushed out the buyers in those areas. I think this has widely been seen in large areas like the Bay Area, Seattle and New York. I’m in CT and we had everyone from NYC coming here to buy houses in cash which caused prices to sky rocket and made it impossible for normal people to buy a house.

    The ā€œgreat resignationā€, which was spurred on by the Pandemic is why we see the huge changes in the employment area that we do.

    The stock market, again, was impacted by the Pandemic. First it saw a sharp drop at the beginning, and then we saw a huge increase in many tech stocks or ā€œpandemic darlingā€ stocks.

    Then, you have all the supply issues, which again, started with the pandemic, especially when Omicron hit. Supply chains still haven’t recovered from this.

    You even have inflation spurred on by the several rounds of stimulus checks that were sent out.

    It’s a recipe for disaster.

    TLDR - This is all because some guy in China decided one day that he wanted to have bat soup
    Apr 24 13
    • NVIDIA / Eng
      _GoodMan_

      Go to company page NVIDIA Eng

      BIO
      Almost do not exist.
      _GoodMan_
      So why did it not cool down the prices in the Bay Area if people are moving to other parts during pandemic?

      It’s not that simple.
      Apr 24
    • Twitter
      mle-be-me

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      mle-be-me
      OP
      @goodman 100%. That’s the problem, there are a lot of really mixed signals today. Every theory or precedent seem to fall under further examination.
      Apr 24
  • Optum
    oz98

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    oz98
    US has too much debt, bottom line. With the rate hikes it will soon be spending $1 trillion per year JUST to service the debt. This is unsustainable and first to get hit will be social programs and taxes will have to rise to keep us from defaulting. The golden era is over boys and girls.
    Apr 24 5
    • Optum
      oz98

      Go to company page Optum

      oz98
      You’re raising valid points on tax changes that could be enacted, Mle-be-me, but the key is enacting them which we seem to struggle with as a country. And we seem to waste so much of the tax revenue on pork. We generated 4 trillion in tax revenue in 2021 and like I said earlier, with the rate hikes the cost to service the 30 trillion in debt is quickly approaching 1 trillion a year and we still cannot create an annual budget that is break even - it continues to be in the red. Our country is the equivalent of a household that generates $1M a year in income but we spend $5M - you can only keep that going for so long. I know I’m pessimistic but I think rightfully so given our track record.
      Apr 24
    • Twitter
      mle-be-me

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      mle-be-me
      OP
      @oz98 absolutely. I think ultimately some combination of cost cutting and revenue raising would be needed, sadly thus far we are only interested in printing our way ā€œoutā€.

      The point about pork is spot on. I think you can cut a ton of the budget without any real effect on non-discretionary or discretionary spending.
      Apr 24
  • Apple / Eng
    phase

    Go to company page Apple Eng

    phase
    Ray Dalio has put out a bunch of material on this stuff. TL;DR he thinks US is in the process of dropping from no. 1 world power and China is overtaking it, and this kind of thing has happened before: https://m.youtube.com/watch?v=xguam0TKMw8
    Apr 24 7
    • Twitter
      mle-be-me

      Go to company page Twitter

      mle-be-me
      OP
      Thanks. I think critical thinking skills are for sure in short supply and (having kids) I totally understand that public education is insufficient (we do a lot of ā€œenrichmentā€).

      Some other potential factors are demographics (we are getting older with fewer people producing economic output), currency manipulation, growing economic division between the haves and have nots, overbearing government regulations, globalization (there are many benefits but also some drawbacks), innate finite-sum (us v them) thinking…
      Apr 24
    • Twitter
      bunnyboile

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      bunnyboile
      Skeptical of Dalio
      Apr 24
  • New
    deadlockšŸ’€

    New

    deadlockšŸ’€
    Nuke likely coming šŸ“‰šŸ’€
    Apr 24 0
  • VMware
    gtefb536

    Go to company page VMware

    gtefb536
    If you are DCA-ing and are mostly exposed to broad market ETFs and your time horizon is 15-20 years, you will be fine. Just tune out of market noise for the next year or so.
    Apr 24 2