
The booming stock market shows America is diseased - paulpauper
https://theweek.com/articles/886198/booming-stock-market-shows-america-diseased
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opportune
I have a theory that another reason the stock market and property values are
growing so fast is that they're basically the only things that the upper
middle class can invest in, so most of the money that well off people save
just goes to pumping up the valuation of a couple different asset types that
haven't actually changed in their fundamentals that much.

Upper middle class people can't really do venture capital or private equity
(well, they can if they get accredited, but these also require a lot more
knowledge and time), bond yields and interest rates are so low, and our
retirement system essentially requires chasing inflation-beating yields to
work, so they have no choice but to participate in bubbles.

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tempsy
Retail investors don’t drive stock market trends. It’s the Fed, institutions,
and companies themselves.

Well known the Fed is pumping liquidity into the market for last few months
through the Repo market. Plus cutting the Fed rate twice last year since the
recession.

Companies are engaging in stock buybacks. When there’s fewer shares in the
market the share price goes up.

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opportune
Does the money I put in Vanguards 20XX retirement funds in my 401k count as
retail? Because I assume across all the different flavors/providers of that,
it adds up to quite a lot

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Simulacra
I don’t get it. Reading this article it almost sounded like satire. Stock
market goes up, in a quality grows greater. Black market goes down, inequality
worsens. It’s as if the very concept of a public company is hated which begs
the question: Is there any society where a free stock market does not exist
that can hold a candle to the generally improved standard of living for
everyone??

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victoro0
That's not at all what the article says. Naturally, it is good that the stock
market goes up, i.e., the values of the companies goes up, if it's because of
improved performance. The author argues the stock market is increasing more
than it should based on increased inequality between the economy participants
(stock holders, customers and employees), where one class of participant seem
to be taking the biggest share of the pie. The author argues this creates a
bubble situation that can lead to depressions.

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pm90
Its astounding how quickly people can forget the mistakes of the past, or
pretend that they didn't happen. The foundation of a thriving civilization is
learning from past mistakes and taking action to avoid _the same mistake_.

The bad faith arguments for trickle down economics and the myth of tax cuts
automatically generating enough economic growth are just that: myths, that
have been debunked.

This is what makes me especially excited for the possibility of a
Warren/Sanders Administration. Republicans will run the economy to the ground;
we need a player in the economy that is concerned not just with short term
profit maximization but long term investments in society.

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mu_killnine

      trickle down economics and the myth of tax cuts automatically generating enough economic growth are just that: myths, that have been debunked.
    

I'm just heading out the door, so I apologize for this being a very lazy
reply. But does anyone have any semi-academic reading (I'm not an
economist..., but I don't want pundit talk) that thoroughly debunks these
points?

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Ididntdothis
“tax cuts automatically generating enough economic growth”

This one is easy to debunk. Deficits have gone up with every tax cut since
Reagan and they never came down much. Trickle down also doesn’t seem to work
with upper incomes rising while lower incomes are stagnating.

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caseysoftware
But you're one step removed.

Deficits are income minus expenditures.

If expenditures are increasing faster than income (regardless of how fast
income is growing), then there will _always_ be deficits. A better measure
would be to look at income (aka tax revenues) which _usually_ come from
productive economic activity.

Your analysis is closer "eating vegetables makes you fat!" while ignoring that
you're eating three desserts after each meal.

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wallacoloo
I’ve been thinking that it’s weird that if you think a company has good
chances of succeeding and you want to benefit from that, the canonical way to
do it is to give money to someone _outside_ the company in order to buy their
share of the company.

Like, wouldn’t I prefer that money to go towards the actual funding of the
company’s projects?

I’m not aware of any form of “investment” that allows a casual investor
(someone who isn’t a millionaire) to actually deploy that capital towards
production.

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pm90
> Like, wouldn’t I prefer that money to go towards the actual funding of the
> company’s projects?

The problem is that this would make the company too responsive to the needs of
investors rather than its markets.

The corporations power is delegated via its shares but its value is derived
from the markets it serves. It’s in the interest of shareholders (who
passively invest in it) for the corporation to judge projects based on what
the markets think are valuable. Neither the corporation nor the shareholders
know exactly what that may be, but the corporation spends more time and effort
trying to get a good answer than the shareholders do. So the shareholders
leave everything beyond the most drastic decisions (sell, close the company
etc) to the corporation.

