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I recently read Capital in the Twenty-First Century by Thomas Piketty - In the book Piketty suggests that the return on capital is now so much higher than the return on labor that traditional income taxes would not be very effective for increasing the tax contributions of the extremely wealthy. Let me know if I'm off-base here, but wouldn't a 90% top income tax bracket just hit a small number of very high earning professionals like doctors, lawyers, etc.?

The title led me to expect read more about Kansas in the article.

Anyone who's unfamiliar with what happened there may appreciate the NPR Planet Money podcast, #577 The Kansas Experiment.

I'm consistently amazed at how the modern fed is fully aware that ambiguity and asymmetric information drives effectiveness of policy, yet they continue to tell us exactly what they're going to do, and then they do it. This has been documented by one of the most important papers on Central Banking, Cukierman and Meltzer (1986):

>A certain degree of ambiguity enables policymakers to stimulate

economic activity when they care most about such stimulation. Ambiguity enables

policymakers to create monetary surprises when stimulation via surprises is most

advantageous to the policymaker. As a result the optimal level of political

ambiguity in the conduct of monetary policy may be larger than the minimum

that is technologically attainable.

I swear, the Fed consistently falling in line with expectations, then reiterating further expectations they eventually fall in line with, almost gives credibility to people who think the Fed only cares about not rocking the boat in markets. When was the last time the Fed did something out of line with expectations? 2008 maybe? I actually can't even remember.

Sure. There are two books that are worth reading on the subject: Dark Money by Jane Mayer and Democracy in Chains by Nancy MacLean. Basically, for the last fifty years, a relatively small group of obscenely wealthy Americans has been pouring money into pushing the overton window to the right so that their libertarian ideals would become mainstream today instead of radical. It was essentially a response to the New Deal and what they saw as the spread of government totalitarianism. Through non-profit groups, university grants, SuperPACs, and other channels, they spread their ideas by educating new generations of young conservatives and getting radical right-wing politicians elected.

It has been depressingly effective. Right now we have wealth and income inequality worse than it's been in 100 years, but people are still afraid of "socialism," even when such policies would help the vast majority of Americans. But the wealthy have a lot of people convinced that the government can't be trusted and should have as little control over the economy as possible. So they can pay their workers peanuts, ignore environmental damage, avoid taxes, and spend billions on lobbying because they have people convinced that they should be allowed to because that's what liberty means.

This isn't some conspiracy theory either, this is actually happening. It is well documented. It's honestly terrifying and it is going to keep going until more Americans realize just how badly they're getting screwed. This has happened before too. The Progressive Era came after the Gilded Age and the New Deal came after the Great Depression, so we may be seeing such a shift happening already, but it's still going to be an uphill fight.

The Adam Smith that we learn about today--a champion of the free market--is a half truth. Smith was a moral philosopher of the Enlightenment and put the improvement of people first. He saw a free market as a means to an end, the end of improving people's material conditions and consequently the power of the state. The Smith that we hear about today is all means without paying attention to how the ends are playing out. You can get a good overview of Smith's views in The Worldly Philosophers, admittedly an old book but still relevant.

ONLY because this is /r/economics and I feel like most folks here have a decent foundation: I encourage anyone without a lot of knowledge but a genuine interest to pick up Ken Benmore's book.

This isn't a Mikio Kaku or Niel DeGrasse Tyson "pop" econ book, much more like a diet textbook.

https://www.amazon.com/Game-Theory-Very-Short-Introduction/dp/0199218463

I wanted to share because I thought the article was pretty shallow & very VERY short. Don't tease me, towardsdatascience.com - I got through Econometrics, ya boi can handle it.

SO - if you're like me, check out the book. Fits in your back pocket & is extremely informative. (I was surprised when I saw all the negative reviews on Amazon, but when you read them, they're almost all bitching about how difficult a read this book is, which sort of supports my argument here.)

George Soros is a rather famous fund manager. He has consistently out performed the market in terms of return. His books are held highly in the investment community due to his unique approach to the markets. His top book The Alchemy of Finance, goes into much greater detail on the concept of reflexivity in the markets that he mentions in his speech. The speech is famous because his opinion is regarded as important, relevant, and often correct. Finance is full of people that don't know what they are doing, so when someone smart speaks they all listen and follow. That's why it's "famous".

Fortunately, this work has been done! It was one of the major research areas in econometrics in the 80s and 90s, and the empirical work basically shows that there isn't a strong selection effect in college education. Card (1999) gives a good overview of the literature. More recent work hasn't contradicted it (if you want to look at recent work, here's the google scholar link).

Could it be that mental health is generally very poor? Viktor Frankl's, "Man's Search for Meaning," is an excellent exploration on the subject. Making a living is not analogous to having a reason to live. At a certain point it is possible to be able to afford perpetual distraction and escape though, which is what the wealthy seem to do.

I'm here, yet again, to debunk the myth that corporations are sitting on tons of cash:

> As you can see, the total cash (in green) for the top 50 companies is $3.71 trillion, which sure sounds like a hell of a lot of cash, and it would be were it not for the debt (in red) totaling $4.45 trillion.

Another source:

> A look at the facts shows that companies only have "record amounts of cash" in the way that Subprime Suzy was flush with cash after that big refi back in 2005. So long as you don't look at the liabilities, the picture looks great. Hey, why not buy a Jacuzzi?

> According to the Federal Reserve, nonfinancial firms borrowed another $289 billion in the first quarter, taking their total domestic debts to $7.2 trillion, the highest level ever. That's up by $1.1 trillion since the first quarter of 2007; it's twice the level seen in the late 1990s.

Saving you a click...

"The billionaire now says "The Intelligent Investor" changed his life. The investing manual was written by former Columbia Business School professor Benjamin Graham and first published in 1949.

"I knew what everybody thought and all of that at an early age, but what Graham wrote made sense," says Buffett, speaking at a recent Facebook live event broadcast from Columbia University and moderated by Charlie Rose."

It's mildly amusing that whenever there is a problem, in Krugman's opinion, it is always the fault of the Republicans.

Obama's stimulus bill passed without a single House Republican vote and only 3 Republican votes in the Senate (Snowe, Collins, and Specter).

0 Republican votes were actually required, which means that whatever was in the bill was completely up to the prerogative of the Democrats, and if it ended up being a bad and ineffective bill...it's the fault of the Democrats.

Furthermore, Krugman is dead wrong his "Excuse No. 2: Fear the bond market" point. We have already had several failed Treasury auctions, and the only reason why interest rates are "low" is because the Federal Reserve is printing money and using that money to buy Treasuries...a rather "crafty" slight of demand to hide the fact that at current interest rates, there simply isn't market demand to satisfy all of the debt requirements of the U.S.

Ron Paul's return on investments. Professional investors don't even come close to the returns Dr. Paul has made in the last decade.

I read in Predictably Irrational (required reading for everyone here) that the jump in CEO pay is in many ways attributable to the the legislation during that time period that forced companies to disclose CEO salaries. It was intended to "shame" them and cause the salaries to lower, but instead prompted them to demand bigger salaries due to their resulting sense of relative deprivation.

Don't fall into that trap. That's how they sell it to the states, which then make it mandatory.

Want a real life example? Barbers sucessfully argued that licensing (which costs significant money and time) was needed for safety reasons. This meant a woman was legally barred from braiding hair!

I recently read through the entire Wealth of Nations. It took about a six months, doing a few pages each night, and googling/wikipedia-ing things I was unfamilar with.

I highly recommend doing this. I think most people would be better off if they simply read The Wealth of Nations in a study group for a semester, instead of the Economics classes usually offered in High School and the first years of College.

Blink made a very strong but unsupported case for gut-instinct decision making, and has done a ton of harm by making people think that instinct is more reliable than it actually is.

Instead, I recommend Thinking, Fast and Slow by Daniel Kahneman. It presents a much more scientific picture of how instinct works. The takeaway is basically "trust your instincts...unless you have time to actually think".

Basically, no we should not incentivize gut-instinct decision making. We should incentivize deliberate decision making based on data and (if possible) testing.

> Ok can anyone on earth explain to me why we are giving corporations a tax cut while we are overspending every year and this only makes our debt bigger?

There's a strong argument that a corporate tax at all is not beneficial. It gives more incentive for a low capital gains tax, and disincentivizes things we want (more businesses generally means higher GDP, more employment, etc) as a poor proxy for something we don't want (wealth inequality).

Increasing capital gains taxes and adding negative externality taxes would be much better than a generic corporate tax for the things people usually want corporate taxes for.

You can check out this podcast from NPR that will shine a lot of light on unpopular, but economically sensible policies.

why would you link to a page that has a link to the article? why not link to the article itself?

http://techcrunch.com/2011/04/10/peter-thiel-were-in-a-bubble-and-its-not-the-internet-its-higher-education/

The article itself is a pretty good read.

Two things:

(1) Why didn't you just link to the original article, instead of some blogpost that is 75% article excerpt? And that excerpt is just a paragraph and a quote. Article link

(2) Recoveries from recessions typically start from the top. The wealthy/well-off consumers and businesses start feeling comfortable about spending and investing again, since they possess a larger cushion of disposable income/capital, and thus are more likely to take the first steps. As time progresses, you'll see increases in business expansions and hirings, and the formerly unemployed now gain jobs (and incomes) and the recovery receives a good strong push.

(2 continued) Not too terribly long after this, businesses that were formerly struggling and operating in the red start to see solid growth in their revenues as well, and this leads to another increase in employment levels. By now, the economy is more or less back to where it was before the recession.

Most estimates place this full recovery at around 2-3 years, at the very least. There's going to be more reports about this type of spending disparity for awhile, but I swear on the heads of my unborn children that I will beat you to death with my copy of The Wealth of Nations if you mention the words "trickle down" near me.

TL;DR: - Yes.

L;R:

Banks don't really 'control' the mortgage rates in the way you think. Those rates are all determined by supply and demand of 10 year and 30 year treasury notes.

http://finance.yahoo.com/q?s=%5ETNX

The value of these notes is determined by what people believe the U.S. Federal Funds interest rate will be over the next 10 and 30 years. So, as this instant, people believe that the interest rate over the next 10 years will be 2.7% on average. Currently, the rate is something like 0-.25%.

When QE eventually ends, the next step would be to raise federal interest rates. This will be done to counter act possible inflation. Since QE is not being tapered (which people though it might), we are actually further away from interest rates rising. Thus, the low rates are staying for longer and the average 10 year note is lower in value.

The 10 year and 30 year notes are important, because this is the return an investor/company can get for their money, without having to go through the trouble of lending it out as a mortgage. So mortgage rates will always be slightly higher, because it is a slightly more risky investment.

Here is a good article that shows the relationship. http://useconomy.about.com/od/economicindicators/f/Relationship_Between_Treasury_Notes_and_Mortgage_Rates.htm

on the other hand...

>Japan’s gross domestic product shrank 1.6% on an annualized basis in the April-June quarter, according to data released on Monday by the Cabinet Office. That compared with a 1.9% contraction forecast by economists surveyed by The Wall Street Journal.

>The data show that a sustainable recovery in the world’s third-largest economy has been elusive, despite efforts by Prime Minister Shinzo Abe and the Bank of Japan to stimulate growth. Japan’s economy expanded the previous two quarters, but that growth followed two quarters of contraction.

http://www.marketwatch.com/story/japanese-economy-shrinks-in-the-second-quarter-2015-08-17

"Technological unemployment" reminds me of the "Joe Smith" example from Henry Hazlitt's <em>Economics in One Lesson</em>:

>...some writers [have gone] to the extreme of looking only at the immediate effects [of new technologies] on certain groups. Joe Smith is thrown out of a job by the introduction of some machine. "Keep your eye on Joe Smith," these writers insist. "Never lose track of Joe Smith." But what they then proceed to do is keep their eyes only on Joe Smith, and to forget Tom Jones, who has just got a new job in making the new machine, and Ted Brown, who has just got a job operating one, and Daisy Miller, who can now buy a coat for half what is used to cost her. And because they think only of Joe Smith, they end by advocating reactionary and nonsensical policies. (p. 59)

I'd be interested in hearing opposing views to this, however.

This chapter from Henry Hazlitt's classic book "Economics in One Lesson" is all about the topic of agricultural prices and the wacky things lawmakers have done over the years to stabilize them or keep them high or low.

Populist parties gain support because people feel disillusioned with how ordinary workers and the middle-class end up paying for the corruption and risk taking amongst corporations or banks. This will continue until more moderate parties start to realize that no matter your economic expertise or ideology, people will cease to trust the system if ordinary citizens keep on being stepped on while white-collar crime fails to result in prosecution. Want to stop ideological parties with little understanding from coming to power? Send some bankers to jail and raise the taxes for the rich. Fail to do that and people will vote for populists no matter how crazy their economic ideas are. Here's a quote which feels relevant, even though it is out of context:

>4. Now, when your weapons are dulled, your ardor damped, your strength exhausted and your treasure spent, other chieftains will spring up to take advantage of your extremity. Then no man, however wise, will be able to avert the consequences that must ensue. -- Sun Tzu , The Art of War

Here's Merill Lynch's guess from 4 years ago

The question is also what the percentages are and how much they adjust those percentages on a regular basis.

I was like that, then I read "A Random Walk Down Wall Street". Check it out.

It's only playing the lottery if you invest short term, and in a few companies. You can buy shares in 'index funds' that track the entire stock market. Obviously not risk free, since the entire stock market can move down, but combine that with long term investment (don't plan to touch it for over ten years) and that risk is greatly mitigated. Even if you invested in 1929.

Granted this is the middle class way to invest, it's not exciting, and you won't get rich quick, but it works.

No specific natural disaster can be linked to climate change but we know that climate change is making certain types of weather events more likely.

It's pretty clear that the recent heatwaves are at least partially caused by increases in global temperatures. https://weather.com/science/environment/news/2019-06-12-heatwaves-human-induced-climate-change-new-regime

I find it funny that the currency is called ether and is knowingly going to evaporate in value soon. Regardless of the currency the DAO model seems quite democratic in its allocation abilities.

Here is a link to the DAO etheruem and explanation.

https://www.ethereum.org/dao

It's difficult to say what happens next - in a lot of ways it depends on how the world reacts.

The closest I can think of off the top of my head for a mainstream analysis of 'what happens next' would be Ray Dailo's book

It's not a perfect analogy but I also highly recommend The Lords of Finance (2010 2010 Pulitzer Prize winner)

>What matters for a nation is its GDP. That's a country's equivalent of personal income.

This is an absolutely ridiculous misconception.

GDP is a terrible metric by which to judge an economy.

The equation:

GDP = private consumption + gross investment + government spending + (exports − imports)

Government spending means the people in power will never let GDP fall until they are absolutely forced to, especially if they have a central bank willing to monetize like Helicopter Ben. (He referred to a statement made by Milton Friedman about using a &quot;helicopter drop&quot; of money into the economy to fight deflation.)

Let's take the United States, for example. If you subtract the deficit from the GDP calculation, we're in a depression.

Taking out federal deficits. The change is pretty amazing. Since 1980 the number of years with negative GDP growth jumps from 7 to 15, and the average GDP growth rate drops from 2.7% to an incredible MINUS 0.3%.

You can live high on the hog for quite some time using credit cards, but the bill eventually comes due.

The only differences between Spain and Greece and the United States is that the United States can print the currency in which its debts are denominated and the United States has that huge military that can take the world down with us. The US will try to inflate away its debts. Spain will get the ECB to monetize for them too. The ECB already jumps into bond markets.

Just think about it this way: Would you lend money to the US for ten years for a paltry 1.985% return?

Spain is doomed, but so is the entire world. Interesting times.

> But you're better off having a smart parent than a rich parent.

These attributes are of course extremely correlated.

In my view, the main gap between poor kids and rich kids isn't so much quality of parent, but rather quantity of parenting. Poor kids tend to have one parent who has no time to do intensive parenting activities. Rich kids have two parents that provide an abundance of face time. Add the difference in face time up and you have a staggering three million word gap by age 3.

>Non competititon contracts for workers

How about companies entering into non-poaching agreements on the sly?

productivity growth stopped being a factor about 1978. productivity growth has outpaced wage growth almost 4-1

Edit: I love the raw number but it's not that simple. Our population has increased 50% and the number of people in the workforce has increased.

Wages have definitely deceased

http://www.worldometers.info/world-population/us-population/

http://www.dlt.ri.gov/lmi/laus/us/usadj.htm

It's quite outstanding how anti-Chinese this thread is. Most comments are about Chinese currency manipulation - it seems the Americans here can't see their own and greater level (the CNY has been <em>appreciating</em> against the USD for several years) of currency manipulation.

Guys, these are your biggest creditors (except for your own Fed, of course...) - don't you think they have a right to be a bit worried about the value of their >$1 trillion reserves, given recent monetary policy in the US?

False. There are 1,597 new FDIC members since 1990. Look, I even made a spreadsheet for you.

Well fiscal responsibility is a relative term. Sometimes it is good for the government to spend when consumers save so that demand doesn't completely deflate the economy. Unfortunately, even that isn't the case. The fiscal problems the government is currently facing is a combination of a loss of tax revenue, an aging population, and a long term healthcare/retirement problem.

Do you have a source for the 80k statement? If that's right I'm indeed complaining about nothing, but I doubt it. There have been many cases where traders made millions (if not billions) using rigged markets. Never have I seen a compensation for small retail investors. (which is to be expected for many reasons, but still awful).

By the way, your 'virtually 0' is closer to 3.5%. And I actually do have sources to back that up.

http://www.marketwatch.com/story/currency-trading-gets-a-retail-investor-following-2010-09-23

http://www.bis.org/publ/qtrpdf/r_qt1312z.htm

People should look at that chart with the scale set to logarithmic, otherwise the early period looks like a smoother ride than it was and the later period looks even more volatile in comparison.

I don’t think it is throwing shade, rather just a genuine description of Thaler and his work. Even Thaler describes himself as lazy and irrational. Most of his academic work is pointing out flawed human thought processes, and behavioral economists have only recently started to apply “nudges” to have positive real world outcomes.

I was struck by a couple of things in this article:

>Friedman argued that intellectual property was a kind of property, and must be defended as such, rather than – as it actually is – a temporary suspension of free trade to encourage innovation.

So, I just pulled my old, dog-eared copy of Capitalism and Freedom off the shelf, and it seems this is not exactly what Friedman said. In fact, F clearly states that the property rights created by patents and copyrights are artificial constructs and that there is a balance between costs (monopoly) and benefits (encouraging creativity and innovation.) "They are matters of expediency to be determined by practical considerations." F goes on to say that he personally favors a shorter period of patent protection. The bottom line: Post author Boyle mischaracterizes Friedman.

>the dead hand of neoliberal orthodoxy has ignored monopolies as a problem as they grow in power over our lives, as we fall into the tyrannical clutches of companies we are virtually forced to buy from

Looks like this passage confuses monopolies and large firms. We are not "forced" to buy from Amazon; essentially all the products it offers can be bought elsewhere, on-line or off. We buy from Amazon because it has good service and low prices.

Having said that, there is a related issue that bothers me more--the growing tendency for large companies (banks, retailers, etc) to bypass the court system by insisting that we accept arbitration as the only remedy for disputes. Back in the day, libertarians used to idealize arbitration as superior to government courts (e.g., "Moon is a Harsh Mistress.") However, in reality, it turns out that the arbitration process is captured by the big firms, so that we are back to a pre-liberal "caveat emptor" world in which the rule of law loses any real meaning for day-to-day interactions with large firms.

You should read The Millionaire Next Door to learn how wrong you really are. 80% of the Millionaires in the US are first generation. They work their way up.

Edit: This video explains real income mobility in the United States.

I always love it when I see spurious, manufactured quotes attributed to historical sources. A quick google search confirms it:

1

2

At the very best, it's a quote pieced together by various other snippets he might've said. I'm not saying that the quote doesn't illustrate a potentially valid concern for some people, it's just that Thomas Jefferson has never been documented saying those words.

Let's try to stick to quotes that are historically accurate, reddit.

I'll just leave this here:

https://www.npr.org/sections/money/2012/06/22/155596305/episode-381-why-its-illegal-to-braid-hair-without-a-license

If this is what licensing looks like, I'll take the risks.

Detroit isn't the only one. Unoccupied neighborhoods cost the city a lot in maintenance, get stripped for copper & whatnot, the houses fall apart in short order and end up needing to be demolished anyhow. At least that's the idea.

"The United States economy has never been in better shape. There is no tax increase coming in the next couple of years, monetary policy is spectacular, we have freer trade than ever before…." --Laffer in 2006, 2 years before the crash.

Plus, capital gains come from corporate profits, which have already been taxed (in theory at least).

>-which means that a lot of small business owners who file as S-corps are lumped in here if they're making good money (as are a lot of doctors who are, if in practice by themselves in the same sort of boat).

I just saw some stats on this the other day. Doctors are 16% of the 1%, lawyers are 8%. Finance sector types are only 14%.

Raw gasoline is about $1.10/gallon right now.

Add in costs for taxes (road tax and sales tax), transport, blending in 10% ETOL ($1.31/gallon), and retail and you get your retail price. Here in Minnesota, the retail price dropped from $1.95 to $1.79 this morning. I'm going to guess your taxes and retail costs are probably almost all of that price difference.

Edit: Looking at this map, California does appear to be a bit "special".

There mention a number of markets that have become less competitive. Cell phone and broadband plans are specifically called out, which is timely given the recent approval of a Sprint-TMobile merger and AT&T-Time Warner merger working its way through. It's an opinion piece, not a research article, so you can't expect that much detail about each market. The author presumably goes into more detail in the book that he's pedaling:

https://www.amazon.com/Great-Reversal-America-Gave-Markets/dp/0674237544

From Henry Hazlitt's Economics in One Lesson:

>...destruction of anything of real value is always a net loss, a misfortune, or a disaster, and whatever the offsetting considerations in a particular instance, can never be, on net balance, a boon or a blessing.

> A guy like Glenn Beck would call Adam Smith a commie socialist.

I read The Wealth of Nations 6 years ago. I concluded that Smith would have been thrown out of today's Republican Party. Thrown far and hard.

This kind of thing is so fucking obvious. I remember when I first read Krugman's book "Pop Internationalism" back in '97, one quote stuck (criticizing, back then, democrats against free international trade):

"international trade is not about competition, it is about mutually beneficial exchange. Even more fundamentally, [...] imports, not exports, are the purpose of trade. That is, what a country gains from trade is the ability to import what it wants. Exports are not an objective in and of themselves: the need to export is a burden that the country must bear because its import suppliers are crass enough to demand payment."

Clickbait article. Every article which has "millennial" in the title is a clickbait article, IME.

Specifically, the article completely ignores 401(k) and other retirement savings. It pretends that they don't exist. And, as we know, Millennials are very good at saving for retirement. 71% contribute to a 401(k); 39% save more than 10%. (Boomers, of course, didn't have 401(k)s at the time they were the age of current Millennials).

Any article that claims that the Millennials aren't saving, while ignoring retirement savings, is dishonest and pointless.

Think, r/economics. Don't just lap up the most recent narrative someone's feeding you.

There are many things economists agree upon with taxes that the average person does not support or listen to. For example, most economists support the removal of the corporate tax and removal of the mortgage tax deduction.

https://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate

There are some good examples -HERE-. I've taken quite a few of those garbage "personality tests" and seen these exact questions (T/F):

• I like to be in a large crowd. (Are you going to be shy around customers?)

• I know someone who has stolen something. (Hang out with thieves, huh?)

• It's OK to tell someone a small lie to spare his or her feelings. (Lie much?)

• It's maddening when criminals go free. (Don't you respect the authority of institutions?)

In each case, the answer they want is the dishonest answer.

I know what you're probably thinking: Those are just trick questions to make sure you're being honest by admitting innocuous morality shortcomings common to everyone, and they don't actually want you to say you've never ever known anyone that stole anything, ever. Surely the creators of these tests aren't that stupid!

Well.... if you really think that the answers of a list of moral questions objectively indicates the personality of a stranger, despite their ability to lie, despite the questions being highly ambiguous and easily misinterpreted, despite NO evidence linking results to job performance, yet still create these tests and sell them to companies, then yeah, you're probably pretty stupid.

>The standard model of the sequence of events that leads to financial crises is that a shock triggers an economic expansion that morphs into an economic boom and then euphoria develops; asset prices increase rapidly, much more rapidly than GDP or some other income measure. Then there is a pause in the pace of these increases. A few savvy or lucky investors sell some of their assets to park their speculative gains. The slowing of the increase in asset prices may induce a more cautious approach by others. Distress is likely to follow as asset prices begin to decline. The pattern is biological in its regularity. A panic is likely and then a crash may follow. -via Manias, Panics, and Crashes

The book goes on to say that although sometimes investors expectations change slowly at some times and very quickly at other times, but it is the change in the mind sets of investors from confidence to pessimism that creates the crash.

It also says that more often than not, a financial crash comes first, then the recession.

So although it is true that the markets are not a direct indicator of economic health, they are an indicator of what investors are thinking/doing. And if enough investors sell, we then have a market crash. If the market crashes, then we go into recession.

Sometimes the recession is long and ugly, like in 2008. But others are shallow, like the one after the stock decline/crash of 2001-2003.

> Globalization has transformed economics into a weird thing, where your economy also depends on the geopolitics.

This isn't new. The Wealth of Nations was primarily a work of political economy.

> It is like corporations have become part of the government in some way. It is weird to realize that capitalism would affect politics that way, and I'm not so sure that is something voters are really fond of.

If you want to look at what it's like when corporations are the government, I highly recommend studying the VOC.

Well, many beer enthusiasts love Boston Lager. I don't. It is too sweet. The only reason that beer is "sweet" is because it did not ferment long enough. "The Wealth of Nations" has fermented long enough, and it is perfect. I am a poet. Please excuse my emotions.

You're trying to offer a ludicrous example, but this has really happened.

Check out The Wealth of Nations. Adam Smith discusses multi-decade (and sometimes multi-century) corn rents, which were used precisely because corn had a tight long-term correlation to the value of labor in pre-industrial times, and hence had guaranteed value over extreme time intervals. I believe that the Cambridge leases were payable partly in corn to lessen the chances of inflation making them trivial over many decades.

Netherlands population is not exponentially increasing, its actually levelling out, and the population desity is incredibly low, what are you talking about?

something a lot of people dont know.. china has a larger money base than we do with a smaller economy and they arent even the worlds reserve currency.

Their m2 grew at 17% this year, ours a little less than 5%.

Our dollar will decline as other nations rise up to our level of technology.

Obviously when you go to a poor nation, it is like we are kings, a few dollars can buy you a huge house, nice meals are only like $5 instead of the $!00 in the states. Now lets see the same nation in 30 years, as they work hard, develop the place, pave roads, have their people start to make competitive salaries, and suddenly our dollar will decline in value versus theirs.

It says nothing about the decline of us as a nation, it is nothing we have done. it is simply other nations who dont have a standard of living as good as ours, building their standard of living up.

(and no I am not trying to say this explains all the dollars decline but you really have to look at the whole story in context and not just grab on some sensational headlining.)

and one more thing.. from this link on compound inflation

>What if the next 11 years look more or less like the last, with 4% nominal GDP growth? That would mean that in 2022 nominal GDP would be 50% larger than now, right at $22.5 trillion. But that is with only 2% inflation.

>What if inflation were 4%, with the same growth? Then nominal GDP would be $30 trillion!

the GDP of a nation can go way up without the nation really being wealthier

Exactly. As the Smithsonian so cogently points out, it didn't happen then either:

https://web.archive.org/web/20140116092102/http://www.smithsonianmag.com/history/what-the-luddites-really-fought-against-264412/

>Despite their modern reputation, the original Luddites were neither opposed to technology nor inept at using it. Many were highly skilled machine operators in the textile industry. Nor was the technology they attacked particularly new.

i.e. for the luddites, destroying machinery was simply another tactic to use against employers - much like striking, hoosiering, protests, etc.

Revisionist historians have changed that to "they hated all modern technology with a seething passion and went on a crusade against all of it". Which didn't happen, of course, but it's a neat capitalist fairy tale.

Feces on paper, for people who don't have the brains to invest properly. Seriously, stay away.

Do your research on what kind of investing you'd like to do, and then keep researching and learning; don't expect one book to teach you secret to anything.

Personally, I recommend you start with "The Intelligent Investor", for background reading.

Here's a meta-analysis of a number of studies on the effects of minimum wage on employment:

https://www.researchgate.net/profile/Charles_Brown24/publication/4981356_The_Effect_of_The_Minimum_Wage_on_Employment_and_Unemployment/links/54200d4d0cf2218008d4378e.pdf

The most relevant bit is here:

>When we turn from teenagers to other population groups, we find a dramatic reduction in the number of studies of minimum wage effects on employment and unemployment. Those which provide estimates of the effect of the minimum wage on young adults (aged 20-24) show fairly consistent negative employment effects and positive unemployment impacts. They tend to finid smaller effects than those estimated for teenagers (e.g., generally less than a 1 percent reduction in their employment in response to a 10 percent increase in the minimum), although the effects vary womewhat across sex-race groups.

A more recent study finds similar things, namely that employment is not perfectly elastic with increased wages:

https://cobe.boisestate.edu/allendalton/files/2014/03/Neumark.Salas_.Wascher_Revisiting.pdf

So you're right that minimum wage increases are linked to reduction in employment, but the effects are not large, certainly not as large as the benefit that employed workers receive. If the goal is to move a larger proportion of the GDI into the hands of working class people who consume more, then minimum wage increases do increase the overall spending capacity of the working class as a whole.

As to your linked Forbes article, I'd like you to think about what motives the former president and CEO of McDonald's might have in writing that piece. I think McDonald's would be rolling out self-service kiosks regardless of the wage situation in the US, because zero dollars in wages will always be cheaper than any wage a worker could demand. There's simply no way that a McDonald's cashier could compete at any wage.

What pisses me off is that the one basic thing you need to accept about economics in order to "solve all the world's problems" is that, "anything which is physically possible can be made financially possible, if the people of a state desire it."

People constantly deny that economics is an entire branch of philosophy, with laws and principles, and people who spend much of their lives trying to understand it. They fail to understand that how our economy works is not as it as always worked, and that it will inevitably change again and again in the future.

People constantly fail to realize why economies change and they are almost always a result of responding to social pressures from our ever-growing and ever-complex society.

As a result of this, people are awash with economic falsehoods, half-truths, and out and out misunderstandings of economic theory.

I would urge everyone to read this.

> The poor are also the most obese.

Not true.

"Contrary to conventional wisdom, … the poor have never had a statistically significant higher prevalence of overweight status at any time in the last 35 years. Despite this empirical evidence, the view that the poor are less healthy in terms of excess accumulation of fat persists."

http://www.sciencedirect.com/science/article/pii/S1570677X11000827
http://ftp.iza.org/dp5366.pdf

From my understanding, JP Morgan has about $183 billion in total equity / $120 billion in net tangible assets also [2]. They've lost about $3 billion on these bad trades so far and by some estimates may lose up to $8 billion.

So to clarify, this loss was a bad investment, but is not putting them in serious risk of going under and having to have the FDIC come in and bail out depositers. Correct?

However, more regulation makes sense if sophisticated smart investors who are (partially) using government-guaranteed money can lose a ~3% of their tangible assets overnight in the absence of an unexpected financial crisis through derivative trading (that even if they called hedging more likely than not was purely speculative).

If you're interested, Fragile By Design by Calomiris and Haber. It's controversial but made a lot of sense to me. From the Amazon recap:

"Analyzing the political and banking history of the United Kingdom, the United States, Canada, Mexico, and Brazil through several centuries, Fragile by Design demonstrates that chronic banking crises and scarce credit are not accidents. Calomiris and Haber combine political history and economics to examine how coalitions of politicians, bankers, and other interest groups form, why they endure, and how they generate policies that determine who gets to be a banker, who has access to credit, and who pays for bank bailouts and rescues."

https://www.amazon.com/Fragile-Design-Political-Princeton-Economic/dp/0691155240

If you're going to suggest Hayek, I'd go for something less ideological and better respected in the economics community, The Use of Knowledge in Society. Pdfs of it are floating around the Internet for free. It doesn't deal with business cycles the way Keynes does, but it's extreme helpful for understanding the basics of how markets work and how prices convey real economic information.

I would personally advise against Keynes, just because his writing style is pretty foreign for modern Americans and most of his insights can be easily gleaned from modern sources. Paul Krugman from the 1990s has tons of great stuff; in particular, I'd suggest The Accidental Theorist, Vulgar Keynesians, Ricardo's Difficult Idea, the parable of the Washington babysitting coop, and the book Peddling Prosperity. (The first four of those are short articles, mostly written for Slate.)

I would humbly suggest Hazlitt's "Economics in One Lesson" to anyone who wants to learn more about what Waesel is saying. The reason I suggest this book specifically is not because it adheres to a certain school of economics, but that it's main theme is something Waesel is specifically pointing out, that: with economics one should not only look at the immediate affects of policy, but also look at the indirect affects. Don't just look at the group the policy is made for, but also look at the affects the policy has on those who are not targeted by the policy.

There are many other valuable bits of Waesel's post and I'm sure lots of suggestions could be drawn from it. This is just my own personal suggestion. The book helped me broaden my viewpoint on economics.

And with that, I say good on you Waesel for being productive with your studying... even though it was Ivy league.

>You know, I just got a shit load of downvotes contradicting this guy. I tried to explain why conventional economics laughed Austrian school people out of the building.

Hazlitt's Economics in One Lesson is hardly Austrian; it's a condensation of mainstream economics. You're implying in your above post that you are an economist; you should certainly know that if that is the case.

> Really now. If you can't afford your own decommissioned-then-recommissioned naval frigate, cruiser or battleship, you may as well not bother with the expense.

You could get a pretty passable armed boat up and running for well less than you'd expect. Probably cheaper than a jet. You'd get owned by anybody on the security council, but you could easily equip a boat well enough to put up a solid fight with many sovereign nations for pretty cheap.

edit:

for example, here's an ice breaker for $700,000, leaving you $64 million to spend on arming it before you exceed the price of a G650 jet.

While that might have been true a few years ago you really can't make such a massive claim without citing any source. Here's The Economist's latest podcast on the subject right at the end. Apparently recent Chinese growth metrics might actually be understated.

Because you don't follow global currency markets. The USD is 5% below where it was 5 years ago against a basket of currencies (example), and has stayed within a 15% range during that time.

The USD has dropped considerably against the Euro since its introduction, but this is more due to the dollar being overvalued before (i.e. end of the 90s tech boom) and the Euro being undervalued at its introduction.

With regard to divestment of athletics and academics I highly recommend Beer and Circus

I have personally up the schedule of switching out two of my front tires, because I've been using this cheap Chinese brand for years, and they are a good bang for the buck, and i was worried they are going to get more expensive when the tariffs hit.

tires

If you're interested in Buffet and bubbles, read a recent edition of The Intelligent Investor which was written by Buffet's mentor.

The last couple of editions have commentary by Zweig, which uses modern day examples to illustrate the classic text. In the 2003 edition the dot-com bubble is deconstructed, discussing stocks which rose in price 200x, despite the company having never made a profit.

>Ahh, YouTube videos, truly the definitive source of truth.

Adam Smith's The Wealth of Nations is on Youtube. Might as well throw it into the ocean then.

Edit : Also, if you are reading 70 peer reviewed papers for your dissertation, you should know better than to frivolously try to dispel an argument with an ad hominem argument. If I were your academic adviser, I wouldn't want to see this type of tomfoolery when reading your work.

And you're not even the original commenter!

> Government is wasteful. Not always ineffective. US Corporate tax rate was the highest in the world and is still above many European countries (which have much higher individual tax rates).

https://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world

0.2032% annual compound growth

Edit: better link

You don't have a grasp on reality.

https://www.fool.com/retirement/2017/08/30/how-big-is-the-average-persons-social-security-che.aspx

UBI doesn't cover the average social security check. Good luck getting the senior vote.

Raise taxes by 20%. Good luck with that too.

I don't agree with UBI not because I don't want people to have better lives. I don't agree with UBI because it is simply unrealisitic in is current proposed form.

Getting seniors to vote down medicare and their social security checks (the demographic that has the highest medical costs and also incidentally has the highest voter turnout).

Pipe. Dream. Propose something that is REALISTIC

I am supposed to post the link to the original source, so I did, but when the piece was reposted to SeekingAlpha, it came with a useful chart on the downward slide in government bond rates. Here is that link.

Brad's bottom line: We in the US shouldn't be worrying how to stop the growth of the government debt, but instead, on how to take best advantage of historically low interest rates.

Seems like BitPay offers monthly services or a 1% transaction fee, and Coinbase offers free processing for the first $1,000,000 in sales then 1% after that.

Two paragraphs on CIC backing out of ESD in the middle of the article, and a sea of words about currencies and central banks. This might be a bit more readable, science almighty...

It's notable, somewhat, but the title is a bit misleading. CIC is not China, it's a 400 billion fund, compared to China's over 3 trillion in currency reserves. Eurozone is not going to collapse due to a halt in its purchases, the scale is incomparable.

It's probably just a statement directed at Europe demanding that they get it together and quit playing around with temporary measures. IMHO.

Moot dictionary entry:

> a moot question -- Of no practical importance; irrelevant.

Strictly speaking, the poster posed a question, he did not make a point though he did insinuate one.

That OWS does not want a platform is not correct. There wouldn't be a demands working group in (at least) NYC if this were true. Also, the proposed July 4th, 2012 General Assembly in Philadelphia is clear proof that (at least) the protestors working toward building the movement understand that this is a major undertaking that must not be approached lightly and decisions must not be made in a rash mannor.

That includes building a well organized and thought out set of demands and course of action.

If you want, I could refer you to some economics courses that you should take. Like something that requires at least intermediate econ, calculus, and probability as a prerequisite. Perhaps you could just crack open this macro textbook by Charles I Jones that I used for intermediate macro in my studies. You could also familiarize yourself with the mit ocw page on uncertainty in economics, which cites Perloff's Micro text that I used for intermediate micro.

I'm not handwaving anything, I just don't want to try and summarize all of modern economics in a reddit comment. The fact that you use politically loaded terms like 'free market' to handwave away the problem of information asymmetry reveals the depth of your ignorance on the subject, especially when you use the examples of lawyers, auto repair, plumbers, and contractors more generally to support that point. Arguments from authority are certainly not valid in and of themselves, but it's pretty ridiculous to expect someone to break down more or less all econ after principles in a Reddit comment just to illustrate that most economic problems are more complex than just allowing the 'free market' to take care of them. Do you really think that the work of 1000s of economists collectively spending millions of hours thinking about and studying hard problems empirically in economics can be summed up by saying "the market is the solution to all of these problems"?

Get real.

Athletes constitute a extreme minority, especially superstars like LeBron. While his example was a little extreme in how lucky the beginnings was, the story is by no means rare. The is a popular book called The Millionaire Next Door which goes to explain how most millionaires in the US got their wealth.

In the vast majority of cases, it's quite straightforward: spend less than you earn, and maximize tax-advantaged investing. Don't waste money on expensive cars or other forms of wasteful spending. Keep doing that for a couple of decades, and you'll be a millionaire.

Of course, the above path does come with assumptions. First is that you need to have an employable degree, and not be crippled by student debt in a way that makes you lose a big chunk of your early earnings. Second is that you need to be not unlucky and e.g. not have an expensive medical emergency. Having a spouse definitely helps (but is not required), and not having kids also helps (but they won't make anything impossible).

Bottom line is that the most millionaires in the US are not sportsmen, nor are they born to immense privilege.

Economics in One Lesson and Naked Economics were the two that really sparked my interest.

Except of course, in the sentence quoted by the OP, Adam Smith was NOT in fact referring to capitalism, but rather the excesses and wastefulness of political masters (of any and every economic system).

What the OP is ignorant of is that Adam Smith's magnum opus (the full title of which is NOT "The Wealth of Nations" but rather "An Inquiry into the Nature and Causes of the Wealth of Nations" was first published in the spring of 1776 (March 9 to be exact) when nearly ALL countries were still ruled by hereditary monarchies and aristocracies.

I realize that my comments are unlikely to be well-received here, but this needs to be said.

This isn't really the best place to get good information about economics. This reddit has a lot of people who subscribe to the austrian school of economics, even though it is often considered (for good reasons) to be a fringe group within economics (perhaps partially because their perspective follows the long-discredited Aristotelian concept of science, and not the scientific method which has been accepted since the enlightenment).

You'd probably receive far more useful answers if you asked this in /r/nonaustrianeconomics.

Incidentally, Peter Schiff, Economics in One Lesson, Murray Rothbard, and anything from the Ludwig von Mises Institute are all from the Austrian School. So, when you see people posting links to their material over and over... remember that it's basically like creationists posting bible quotes, and don't lend them unwarranted credence.

>Paine was obviously ignorant of economics.

You've got to be careful here. Paine's statement wasn't necessarily wrong it just wasn't addressing economics. The quote is about the concept of aristocratic primogeniture (where the eldest son inherits all his father's wealth) and thus the remaining sons are left with nothing. So his quote is right in the sense that when the eldest son is made rich, he makes his brothers poor.

Google has a translation of the book Paine is being quoted from here. Pages 78 & 79 are the relevant parts to the quote.

EDIT: To complete the thought not only are his brothers made poor the entire nation is drained, as Paine argues, to support the non-first born males who inherit nothing. Thus the wording... It's not just his brother the eldest makes poor... He unloads the burden of his brothers on society as a whole who becomes poor(er) as a result.

Yes

I think this article is really just race-baiting. It suggests that because they cannot figure out what's going on that it must be race-based discrimination (as determined by zip code). But it's not hard to think of alternative explanations.

A little let down by NPR on this one to be honest.

This is abhorrently false. Hyperinflation leading to a currency crash is identical.

https://www.washingtonpost.com/politics/2020/05/29/argentina-is-verge-defaulting-its-debt-again-heres-what-you-need-know/

https://www.xe.com/currencyconverter/convert/?Amount=1&amp;From=USD&amp;To=PKR

Firstly, you're suggesting that hedge fund managers always defeat 401k investments. Reading into your words, a layperson has 2 options: invest in 401K and get slaughtered, or put their money under their mattress. I disagree. Hedge funds have an extremely high failure rate. Mutual funds (what people investing in 401Ks invest in) are more regulated, and therefore less volatile. Not all hedge funds outperform mutual funds. Moreover, the hedge fund moguls you hear about are famous because they're the most successful of the bunch.

Secondly, your definitions are all wrong.

401K is a savings account that allows people to deposit pre-tax money and invest until retirement. It is not an investment vehicle.

Mutual funds are what most people invest in with 401Ks. Mutual funds are professionally managed investment vehicles that are composed of various asset classes, usually based around a strategy. They are regulated, and therefore their strategies are more constrained than hedge funds.

Hedge funds are professionally managed investment vehicles, unregulated and limited to "sophisticated investors" (e.g. rich people). Their investment strategies are more free and, therefore, usually more volatile.

Equity is company stock.

Financial assets is a broader term, and really this is what you mean when you say "equity". Types of financial assets are equities, debt, derivatives, real estate, the rights to lottery winnings, song royalties, etc. It's a very broad category of things.

Look, I don't think you're a bad person. I just don't think you have any idea what you're talking about at this moment in time.

Agree with the long term view but chart really need to be log-scale Now is a pretty damn good time to be investing for the long haul; buckle up for some variability but you will be sitting pretty for the next boom cycle.

It's reckless to say that companies don't pay taxes. You can see the taxes they pay right on their income statement.

http://finance.yahoo.com/q/is?s=F+Income+Statement&amp;annual

Every company in the United States that employs people or owns property pays taxes. They pay payroll taxes as well as property taxes that oftentimes completely support the community that the factory is located in.

In Capitalism and Freedom, Milton Freedman goes so far as to argue that licensing for MDs is actually a net negative for society. Essentially, his point is that the pool of available doctors is artificially restricted by the overly strict requirements for being a doctor, and the list of procedures that only MDs can do. This drives up the cost of health care and makes consumers turn toward substitute goods like chiropractic and homeopathy and other types of alternative medicine, which end up negatively impacting peoples' health in the long run.

I read his book The Accidental Theorist and Other Dispatches from the Dismal Science. Although it was written for a lay audience, I found it worth reading.

The funny thing is, Krugman has a reputation nowadays of being partisan, yet back in the '90s, he regularly disagreed with Democrats on international trade. Also in that book, he basically makes the case in favor of so-called sweatshops.

Henry Hazlitt's book, Economics in One Lesson is 65 year old faux libertarian reductionist nonsense rendered into junior high school language so that none of the retards that praise it will feel left out when it doesn't cover basic economics but veers over into corporatist screed protectionism. Seriously, after recommending this book for years, I re-read it and was flatly embarrassed by it's simpleton view of reality and it's omissions. Read it, but only to engage the inevitable questions that will ensue. It's basic reductionist crappola. Know it for what it is.