This Ray Dalio thing is above my financial literacy level, but it tracks with my anecdata. I hear people complaining about struggling to make rent, and people struggling to find a place to put hundreds of millions.https://www.linkedin.com/pulse/world-has-gone-mad-system-broken-ray-dalio/?fbclid=IwAR0kRor9Dt94pHKZxjvy9Ze_Kaki1nE8Bwytdj9Kd5_6EIwLln81EvlmuWk …
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Replying to @vgr
This accords with a lot of things I’ve heard — basically, stimulus policy tries to goose the economy by increasing the number of dollars in people’s pockets and hoping they’ll spend them. But investors know there’s nothing good to spend on, so they sit on tons of money.
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Replying to @s_r_constantin @vgr
Result: we’re not richer, but we are more unequal. The financial elite gain not in consumption but in relative security. The extra “money” never corresponded to extra goods; it is fake; it is a measure of “low risk of eviction” more than a measure of “having nice things”
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Replying to @s_r_constantin @vgr
They partially sit on it, but also it starts to chase ever riskier returns. Over-capitalized startups, share buybacks instead of R&D, etc are all partially downstream of this
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Replying to @ben_mathes @vgr
Explain “share buybacks instead of R&D?” Is that common? And why is a share buyback higher risk than R&D?
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Replying to @s_r_constantin
https://www.epsilontheory.com/yeah-its-still-water/ … is a good, if angry explanation. https://www.marketwatch.com/story/heres-how-share-buybacks-get-used-to-transfer-billions-of-dollars-to-senior-management-under-the-guise-of-returning-cash-to-shareholders-2019-10-30 … is the shorter TLDR. https://www.epsilontheory.com/when-was-i-radicalized-boeing-edition/ … is an extension to Boeing data as well.
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Replying to @BenDMahala
Texas Instruments sells calculators that haven’t changed in decades. Flat sales, same product, same thing year after year: that sounds like the kind of company that would pay stock dividends in the old days. Aren’t buybacks equivalent to dividends? Doesn’t this make sense?
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Boeing slashing costs and paying out a ton to its shareholders is kind of scary from the public’s perspective because if you skimp on engineering in airplanes, people die. I’m not as sure that this applies to all businesses though.
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