
Too much money and too few places to invest it - rndmize
https://www.axios.com/money-companies-investors-assets-buybacks-dividends-f0a4d79b-bfa7-4205-9d27-f09b50266307.html
======
tryptophan
Ugh. These sort of pseudo-intellectual articles that mix economics and
politics are my least favorite things to see on this site. They are super
misleading and play towards people's biases about how they view the world
while selectively interpreting the sparse data they present to do so.

An example:

If there was too much money, you would think that bond yields would go down.
Look here:
[https://www.cnbc.com/quotes/?symbol=US30Y](https://www.cnbc.com/quotes/?symbol=US30Y)
\-- looks like they are! Guess we can all go blame the fed and "trickle down".
But oh wait, scroll out to a longer time-span. Looks like yields have been
falling ~linearly from 1989 till today, 2019. Show me where QE/ZIRP started
based on the chart. You can't, because the trend didn't change at 2008/9\. All
this "blame the fed, im smarter than them and would've not done QE" nonsense
maybe isn't as supported by evidence as some would like. The world is a little
more nuanced than that. On the surface level, the data seems to agree, but you
look a little deeper and it quickly becomes apparent it's all bullshit trying
to spin a narrative.

~~~
internet_user
At which point these charts become entirely meaningless? When the fed owns
50%+ of sp500?

The fed, BOJ and ECB are already busy painting yield curves full time, the
market has become so distorted it's not trivial to even orient yourself,
nevermind to develop conclusions.

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SteveGregory
I've wondered if, in this context that we are in, it actually starts to make
sense to both raise interest rates and simultaneously monetize government
debt.

We _want_ some inflation, but we also do not want a late-1980s-style Japanese
asset price bubble.

I cannot find a real answer to this question anywhere - would this plan
produce any negative effect? The plan would, as far as I can tell, help the
long-term outlook of our currency and economy while incentivizing wealthy
people to stay invested.

I might be missing something obvious. Maybe this would lead to businesses
having a harder time employing because of the higher borrowing cost (but we
are at full employment now), or maybe the effect is just too uncertain on the
money supply. Either way, I really want to know the answer, so I'm asking it
here.

To be clear, I am not suggesting that politicians have direct control over
monetizing debt, but rather that the central bank deems this to be best for
the economy in the long term.

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chiefalchemist
> "How we got here:
    
    
        The Fed's quantitative easing program pushed the cost of borrowing money to next to nothing for nearly a decade, allowing companies to splurge on debt for mergers and acquisitions and to boost revenue."
    

Put another way, the Fed made the rich richer, and the lack of significant
"trickle down" has created a socio-political Charlie Foxtrot; of which the Fed
is not accountable for.

~~~
theturtletalks
The Fed is against raising the minimum wage because it will make inflation
increase above the allowed 2% per year. Which kind of makes sense because
paying workers more will make things more expensive especially service
businesses. But, they should still raise the minimum since most service
businesses are heading for automation and the bump will help workers have a
better job transition.

~~~
nickbecker
To the best of my knowledge, the Federal Reserve has no official position in
favor of or against raising the minimum wage. Claiming otherwise is
speculation and likely misinforming people.

Disclosure: Former researcher at the Federal Reserve Board

~~~
theturtletalks
They may not take an official position, but their actions do lead to wages not
increasing. Here's one example: [https://www.axios.com/economists-federal-
reserve-wages-708b9...](https://www.axios.com/economists-federal-reserve-
wages-708b9532-537c-4738-a4e6-9fe777646ac1.html)

------
fallenfallacy
How misleading.. There are a ton of places to invest money. My personal
favourite are businesses and real estate.

There's two things in common with businesses and real estates as a form of
investment:

1\. They build equity for you in two ways: cash flows and appreciation

2\. Businesses & real estate are some of the most transparent vehicles when it
comes to doing research on whether it's a good investment or not. This is in
comparison to investments like stocks where information might not be as
transparent or as easily accessible as doing research for a real estate or a
business.

Not only that but when it comes to an investment like real estate, some people
are unknowingly leveraging in an environment where real estate has
consistently appreciated 4% per annum for the past hundred years.

Consider this:

If you purchase a $100,000 house at fair market value for 10% down, you borrow
$90,000 and drop $10,000 as down payment.

If it appreciates at the historical average rate of 4% per annum, your house
is worth $104,000 next year.

You sell your house at $104,000, and paying off your mortgage ($90,000), you
pocket $14,000, a 25% return on investment ($4000/$10,000).

Obviously this excludes variables like rent, interest, or mortgage but the
illustration shows how a simple real estate investment can turn out to be a
far better investment than it would otherwise show on paper (4%).

If there are 'too few places' to invest your money, there's always businesses
or real estate. There's a compelling article here that further suggests why
real estate might be the most consistent way of building wealth:
[https://digitalyse.io/why-real-estate-investing-is-the-
most-...](https://digitalyse.io/why-real-estate-investing-is-the-most-
consistent-way-of-building-wealth/)

------
internet_user
and literally every asset class exploded. Isn't this the very definition of
inflation...?

Another view would be that money is simply losing value. a million is not what
it used to be.

~~~
repsilat
That holds for houses, but most inflation measures index housing on _rent_ ,
not house price, possibly to account for the sensitivity of house prices to
interest rates.

From another angle, look at consumer goods a year ago compared to today. This
year you can get a better car/tv/phone/computer for the same price, or the
same one for less. Isn't that the very definition of deflation? Another view
is that money is simply gaining in value -- a thousand bucks is worth a lot
more than it once was :-).

(Funnily enough, I'd agree with you at a million because of house prices, and
at a hundred because of food, haircuts, clothing etc. 1k-100k is weirdly
different though.)

~~~
internet_user
prices of "houses" is really mostly land. the replacement of the building
itself is a very small fraction in most in-demand locations.

So yes, land went up. All other examples you are citing are depreciating, non-
scare items. It's not that it's "better" or anything, but we can make way more
of iphones/etc.

However, there is only one Switzerland and only one Manhattan.

------
quickthrower2
What about investing it in the planet. Fund lobby groups. Fund companies
working on alternative energy tech. There was a (YC funded?) startup on here
recently looking to turn air and water into fuel in an efficient enough way.
That sort of stuff. Unless the goal is purely to maximise gains of course.
Announce "I am investing 10Bn in climate change startups over 50 years", so
that people can plan their career around this.

~~~
weddpros
I don't think there's too much money: there are not enough GOOD ways to spend
it.

Investors don't refuse to fund ethical businesses or finance saving the
planet, if it can make them money. It's just that there's no good opportunity
on the market.

When investors can make more money saving the planet that destroying it, the
planet will be saved.

~~~
internet_user
Maybe there is just too many paper bills (or more like 0 and 1s) chasing
relatively slower growing amount of value?

~~~
weddpros
I don't think the glass is too big: I think it's only half full

------
jakelazaroff
If people and companies have so much money that _they literally don 't know
what to do with it_… is giving it away so ridiculous? There are so many worthy
causes in the world. Is there really a point to acquiring more wealth if
you're that rich?

~~~
conanbatt
Giving it away for them would be to pay out dividends. I'm guessing its too
tax disadvantaged to do that.

------
astazangasta
Ironically the best thing they can do to create new investment opportunities
is pay their workers more, but they never will because they are too short
sighted.

~~~
fastball
If you pay your workers more you have less money for investment
opportunities...

~~~
Waterluvian
Your workers buy your cars.

~~~
vkou
This only works when everyone pays their workers more. It's in your benefit to
defect.

And besides, it's just as likely that instead of your employees buying your
cars, their landlord/medical insurer/kid's college will take whatever wage
gains they make.

~~~
beamatronic
Prisoners dilemma vs. velocity of money?

~~~
fastball
Tragedy of the commons.

------
bitxbit
The biggest consequence of easy money is market concentration afforded by
stock repurchases of the past decade. I don’t know if we will ever be able to
return to anything even close to normalized ten-year rate. People couldn’t
“deal” with 3% and this goes back to the fact that corporate America simply do
not develop high-risk high-return businesses because the hurdle rate is so
low. These two factors will lead to a dramatic decrease in innovations.

------
lostmsu
Companies with money can definitely invest into/buy my deep learning startup
at any time. :)

It enables .NET developers to use full TensorFlow and some other Python
frameworks.

$1.5M e-checks can be forwarded to email: contact AT losttech.software :-D

------
qwerty456127
Why not invest in R&D to invent what to invest in then?

