Not always, at least some banks will allow you to go into overdraft and then charge a fee (e.g. $15 for Commbank) - so it's worth being cautious about running out.
I remember miscalculating and going into overdraft by a very small amount (e.g. a dollar or two) and then being slugged the overdraft fee - I would've much preferred the transaction to be declined, but that isn't/wasn't the default behaviour.
For example: https://www.commbank.com.au/support.banking.explain-account-... -> `CommBank may allow you to overdraw transaction accounts for the following payment types... Spend using your linked CommBank card`
(It used to be enabled by default with Commbank, not sure if that's still the case; but I'd kinda guess "yes"...)
Debit cards are used almost exclusively when credit cards are unavailable.
One thing we have is deferred payment (usually 1 month). And looooooads of credit companies...
Some payment cards here (usually with 'store points') are with 'revolving loans' which is considered quite predatory... Wouldn't want to touch this with a space-elevator-sized pole.
What is interesting is that we use the term « credit card » to speak about our debit cards so I needed a long time to acknowledge that in America, Credit cards really meant that you paid your coffee with a real credit and not with your money.
Renting a car or making a hotel reservation without a credit card can be quite painful, even in Europe.
With a credit card the deposit is held on your card but the money never moves, with debit the money is gone from your account.
I have lived in Europe basically my entire adult life and have never had a problem doing either of these with a debit card.
Do you live in Germany? Here in Norway credit cards are quite common for various reasons (safer to use online, pay later, bonus points).
You're effectively paying a somewhat high interest rate. From the looks of it CBA's low interest card would be comparable or cheaper if you were young and held a bit of rolling debt. And right now they have 15 months interest free on their 'low' rate card.
I think the difference that's better for afterpay customers is being able to have your purchase chunked into installments, effectively making it more like lay by.
Also, cba should have made it black so it didn't look you were holding a learners plate credit card.
Our Australian banks are lazy.
Yes the chunking into 4 payments, is the primary benefit of BNPL. It allows you to buy something significant (i.e. a laptop) and spread the payments over time.
The downside is its very easy to overspend and get stuck in a debt spiral
Yep. Buy-now-pay-later services are just short term loan providers. Part of what they're selling to merchants is the fact they are regulated as lenders. We use Klarna in the UK to offer BNPL for exactly this reason, even though we could likely offer it ourselves.
I don't have a credit card and see no point in it. I use a debit card for everything. I don't think most of my friends have credit cards either, but maybe they do and I don't notice.
I know some debit cards are getting closer to credit cards in these areas but at least when I first got one, they were just plastic cash. You spend it you lose it, the bank won't support you with clawing it back.
The principle is also using the bank's money, not your money. So you make a purchase and now you owe the bank. Unless I am very strapped for money or there is an incentive program, I see little use in using one.
Dutch here. We don't have points or cashback. Purchases are insured with standard bank debit payments as well, as are chargebacks. I do own a credit card but that is purely for the occasional (usually US) webshop that doesn't accept European debit cards, or as a backup payment method on vacation (my debit card once broke on vacation and my family had to send me money through Western Union)
The only time I ever use a CC is when I'm dealing with an American company- because it's either CC or PayPal with them.
Visa and MasterCard debit should work anywhere online regardless of origin.
These cards don't have a 16 digit card number and CVV that you can in online shops and pay with those. This has the advantage that these numbers also cannot be "stolen" and then used by criminals to buy things.
Debit cards are really just for physical payment, where you either use contactless payment or by using a PIN. For online shopping, the shops talk to the banks by using an OAuth-like API that can be used to either pay once or set up a monthly payment. There's a few different of these APIs throughout Europe, in each country usually only 1 or 2 are used. Some examples of these APIs are: Bancontact, iDeal, Giropay and Sofort
European webshops usually only support the ones in the country that they are located in, and for all others they either support credit card or bank transfers (which are free and standardized within Europe). American webshops usually only support credit cards, so that's the most common reason for people to have one.
I worked for a points loyalty program, and the customer always pays. The bank knows their market well, they know the redemption rate of points for different demographics and they set the annual fees on points earning cards appropriately.
For a small number of very diligent points hack customers, the bank loses money on this and the customer wins. For a larger proportion customers get back roughly what they paid in fees.
Then for the remainder the points eventually get written off or redeemed for value that is far lower than the fees they paid.
When you pay off the card, it can automatically debit the Apple Cash account first. Basically all my purchases are 1% cheaper on that card than my other ones. Sure, spending $9,900 instead of $10,000 doesn’t sound like much, but it’s painless free money.
The first 3 don't really seem to exist in relation to CCs in NZ, and wanting/needing to do a chargeback seems unlikely.
There are probably mild benefits to me having a CC over a debit card in NZ, but it doesn't seem to be anything like the US.
Chargebacks atleast exist in NZ - this is what I mainly use credit cards for - if the company goes bust before delivering (or before you take a holiday etc), or the product isn't as described, or the company starts quibling about their unconditional money-back guarantee - the credit card company will pay (by law)
That's my main reason for never using my debit and always using a credit card, to offset the risk of fraud.
It seems like a few of them have some perks like travel insurance, cashback or airpoints/reward points, but most of them have no or very tiny perks on their cards. A lot of the airpoints are also locked behind a minimum spend in the first 3 months.
For me personally even the "good" cards aren't that great because I just don't spend that much money. Though travel insurance would be nice once the world opens back up.
Chargebacks are useful depending on consumer protection laws. I'd guess in NZ they're less useful like here in Aus, but if you buy from foreign companies it can be a useful stick to wield as otherwise you'd have little legal recourse.
I've got reasonable travel insurance protections when I pay with the CC, I get airpoints, and some chargeback options, as well as fraud detection. Additionally, it's been easier and more reliable to set up online payments with a credit card.
Some banks might ask you to contact a merchant before trying a chargeback, but if you don't get your money back the bank will either do a chargeback or cover the cost (as they do with fraud).
Secondly, I'm not sure outside the UK, but we have something called Section 75, if I buy something and spend just £1 on a credit card, they are jointly liable for compensating me if something happens. If I'm buying a car, or large purchase I'll often pay £100 on a credit card just for the extra protection.
Chargebacks on debit cards are also much more painful than on credit.
It might be different in different countries, but in the US you do not pay additional to use a credit card. As long as you pay on time each month many credit cards have zero fees or interest. Rewards can range from 1-5 percent cash back, which does add up.
Now if you are making a larger point about credit cards increasing the general cost of goods across the board as merchants incur the cost and pass along to the consumer to maintain margin, sure, but that ship sailed a long time ago. The only reasonable reaction from the consumer is to leverage the convenience, protections, and float afforded by credit cards, while maximizing any rewards afforded by said cards.
If you use a credit card like a debit card (pay it off in full every month) it can be rewarding depending on the card. I make $75-$100 cash back every month on my credit card.
It's how Visa ($540 billion market cap) can be worth more than the world's most valuable banks (eg JPMorgan $453 billion), and has an almost unbelievable 64% operating income margin ($14.6b operating income on $22.6b sales). Visa has one of the greatest businesses ever conceived, it's almost nothing more than an intangible floating brand toll bridge (they do operate an enormous global processing network, their primary cost center).
And then there's Mastercard, worth $380 billion. And American Express, worth $135 billion.
It's how Capital One - a credit card issuing company in the US - can be worth more than Barclays and Deutsche Bank combined.
HSBC is a giant for example, the second largest bank by assets in Europe, and is worth $113 billion.
And although some might jump to the conclusion that Americans must be drowning in credit card debt, that's not the case. US household finances are in decent shape and have been for most of the past decade. The ratios of household debt and debt service payments vs disposable income remains at historic lows (lower than 50 years ago). US household debt as a total sum hasn't increased in the past 20 years inflation adjusted. It's the processing fees that keep the card industry thriving. The switch from cash to cards for everything here was a bonanza for the industry.
Some private debt on top isn't changing much in the end.
Barring extreme cases where people go on a spending spree, usually for mental health reasons.
Besides, rich people in Europe always leverage credit/loans/debt.
I’m sorry you are just wrong. Classic HN Dunning–Kruger.
Visa and MasterCard make their money two ways — network and cross-border transaction fees. For ordinary (non-cross-border) transactions, V/MC have a very small take, on the order of .1-.2%. The vast majority of the fees go to interchange collected by the issuing bank and then to transaction fees to the merchant acquirer (eg Square). Interchange is paid back out to customers in the form of rewards at very low (or zero) margin; issuing banks make their money when customers revolve on their lines of credit.
Credit cards in the US offer all kinds of perks. My card covers my purchase for damages or theft/loss for 120 days. This reduces the friction in consumption.
Meanwhile, when someone had stolen my Schwab checks from the mail and written themself fraudulent rent checks for several thousand, it took nearly 3 months to get the money back. And the account was empty at the time, but Schwab’s (unknown to me) overdraft protection helpfully pulled liquid from my investment account. A debit card like using checks. The bank cares way less about your money than they do their own.
Another card(the annual fee got waived too) gave me free access to the airport lounge in Dubai, which was great, because I could get a free meal, free drinks, and take a shower during my layover.
Airline/Frequent Flyer point conversions similarly got nerfed, so much so it's better to cycle cards (credit worthiness permitting) every year to get a point bonus up front (e.g 200K points for spending $X000 in the first 3 months) than trying to earn that amount.
I bought a pair of speakers costing $2500. I tried to reach to the company for a return but no one would answer. No phone, no email, nada. 1 month return deadline was coming up and I called American Express. Within literally 10 mins (no wait at all), I filed a claim and was done with it. 60 days later, I got the money back. Turns out that they couldn't reach them either.
Credit cards are more consumer centric than merchant centric and they're a huge boon to otherwise rampant asshole behavior from merchants. I also run an online shop and its a pain in the neck when someome files a charge-back, we just consider it as part of the cost of doing business.
In last 20 or so years of using an AMEX card, I've filed half a dozen charge backs. It's an amazing company, it's better than any other CC company in my opinion. They also have one of the highest fees and it shows why - their customer service is absolutely top notch - red carpet, the works.
(Yes, it is a real risk. Yes I know that you and me are not going to e so stupid. But I am not trusting this belief.)
If someone charges $5,000 to my credit card in error, I've got 30+ days plus to resolve with zero financial impact to me. If it doesn't get resolved in that time, I have the option to not pay the bill (or that portion of the bill), knowing that if the error is fixed, the penalties and interest will be waived.
in my case payment will fail due to spending limits (though repeated small charges would go through)
The banks themselves seem to be against it so they made me write emails explaining the situation, give the seller more time (1 month not enough) and then wait another few weeks for processing.
With a credit card (British), they just did it -_-
And let me mention how a SEPA payment means your money is gone unless the seller themselves agrees to refund.
Spiral of debt is only a risk if you have no discipline.
For those of us that do have discipline, CC's are great.
Btw I find it weird that EFTPOS cards have no annual fee, but debit cards do, but some credit cards don’t (eg ASB Visa Light has no ongoing fees).
I sometimes have to pay £1 via card when in a shop activating a service like a monthly phone plan. The £1 is just to validate the card details I gave. They then give me a £1 coin back. I always pay with the credit card, even for such a small amount- because it’s the banks money, not mine, and the bank will always take care of their money more carefully than your own.
Visa/Mastercard on the other hand has Merchants paying 1-3% of all transactions as well as customers paying an annual fee (usually around $25 or so for standard non-reward cards but can go up to hundreds of dollars for higher end cards) for many card products (so a tidy profit from the merchants as well as some annual top-up from the customers).
From a typical New Zealand merchant's perspective it doesn't always make sense to offer Visa/Mastercard if they can decide to only accept EFTPOS cards (which almost everyone in New Zealand has) and keep the 1-3% that they would otherwise lose to Visa/Mastercard.
Visa/Mastercard offer more modern benefits (e.g. Paywave) which is not offered by EFTPOS which I suspect is partly due to the fact New Zealand's EFTPOS network does not generate much of its own income (just the small fees merchants pay to access the network I believe) so they just continue with the minimum amount of investment.
Personally I have an zero-fee American Express card that earns Air New Zealand Airpoints. As a fallback at merchants that don't accept Amex, I have a Wise (ex TransferWise) Mastercard on my phone (for NFC payments) as well as a physical Kiwibank Visa card. When none of these are accepted I fall back on to my EFTPOS card which is more or less on par with cash in New Zealand. I estimate around 50% of my expenses are on Amex, 10% on Visa/Mastercard and the balance through EFTPOS with the occasional cash for markets and the like.
That’s why I love Apple Pay (I’ve got UK & NZ bank cards on it, Wise & Revolut too). Now when going out for a local shop I often only take my phone and keys, no need for a bulky (or slim) wallet. Drivers license only if I expect to buy alcohol (and 90% of the time I could have left it at home).
Edit: Also to add, if the pandemic ended up hitting NZ the way it did in the UK/Europe/US, you would see a far higher uptake in contactless payments methods. I dislike touching pin pads now unless I absolutely have to!
Sounds exactly like Interac in Canada. Although nowadays I believe most if not all Interac debit cards are also co-branded as MasterCard/Visa debit. Which makes em usable online as well. (There is a Interac online but only a small small small handful of sites even support it.)
Maybe it's because I grew up in Europe, but "Don't buy it if you can't afford it" has served me well. The majority of people I know just use credit cards for the perks but never miss a full payment.
The difficult thing is... when does it stop? The above could have been said 10 years ago, just replace the 3 with a 2. Should it have stopped then? Now? In 10 more years?
However Australia has such a large amount of land, and such a small population that forecasted worldwide population drop won't affect Australia so much. It's such a desirable place to live that immigration at the current rates will be sustainable regardless of the rest of the world's population growth rate. Whether or not our cities can keep up with the growth and maintain their high levels of livability is another question.
I'd also question your statement about population drop on the next 15-20 years. All forecasts I have seen are that the world's population will continue to grow until the end of the century. If the world's population were set to start shrinking in such a short timeframe, I'd think it would be a huge talking point in any discussion about sustainability and global warming.
I am always amazed at news reports from Japan about how the sky is falling because their population is shrinking. For some reason no one ever says "on the plus side, Japan is one of the most densely populated places on the planet, a slow decrease in population will help improve quality of life measures and sustainability".
It's not fake money. It's likely not even "beyond means". The debts can likely be paid back. But it seems quite unlikely the level of spending can continue to grow.
There is still time for a pop once governments decide things are normal again after covid.
While thats true on its face, in practice trying to make that bet is a fools errand at this point. People have been telling me that for a decade plus, now. It still hasn't happened, and the Australian economy (and household wealth) is inextricable intertwined with real estate -- I can't see any government deciding to let it "pop", personally.
Australian property prices are cyclic with an upward trend. There are (substantial) cyclic decreases in prices, especially in Sydney.
But people who talk about "popping" property prices seem to believe there will be a massive (50%+?) fall in prices.
But there are fundamental reasons why this is unlikely. The 2008 GFC causes a 16% decrease in prices in Australia, and it's hard to imagine something being worse. Prices recovered 10% the next year, because Australia avoided a recession and there is fundamental demand for living areas in out major cities.
The GFC caused a 18% decreases in prices in the US. Given that Australian mortgage rules are different (there is no ability to walk way from a mortgage in Australia, unlike the US) it's unlikely a bubble in Australia will "pop" worse than that.
But 10% decreases occur relatively often. For some reason these are ignored, but the truth is these are the "pops" that take the froth out of the market.
There's also reason to believe that the Australian property market has decoupled from the rest of the economy, and that's because tax breaks like negative gearing incentivize buying properties even when it makes no financial sense otherwise. This could change overnight with the stroke of a pen, but it would take an awfully bold politician to do it.
They won't let it pop, but that doesn't mean it won't. Of course, timing it is the big bet, not predicting if it will happen.
1. As long as your LVR isn’t too high your interest payments on a home loan will probably come in well below what renting an equivalent house would cost. Further rent will generally rise over time with inflation, whereas your interest will decrease to zero over time as you pay down the loan.
2. If you’ve got a home loan with a 100% offset account (very, very common in Australia) then a credit card makes financial sense. I purchase everything on credit and pay the full balance each month. I pay no interest, earn points and this maximises the amount of money in my offset account at any one time.
3. Depending on your usage and tax situation a noveated lease (car lease) can make good financial sense.
The thing worth pointing out that explains how both this, and the person you are replying to are correct is that in Australia we haven't had an unemployment crises since the 1990s.
If you have never seen unemployment, and can't imagine not having a job then arranging your affairs for tax efficiency makes perfect sense, even if it means you are carrying more debt.
I'm including 'Investment debt' cause who are we kidding? It's all investment properties.
Real estate prices in Sydney and Melbourne are in the million(s), but incomes are ~100+k AUD. Some people earn 200k+ as a principal engineer, but that's pretty much it.
In America you have much more cities where you can find a decent job and different lifestyle. If New York is too expensive, you can move to Raleigh, NC. I don't think that exists in Australia.
There is also a very low degree of innovation in Australia, it's all related to real estate and mining.
Personally I just feel like it's not worth building a life here unless you get a large inheritance, but for an immigrant, America is a much better place to build a future.
Look at property prices in Vancouver and Toronto, New York and San Francisco or London. You're going to find them just as unaffordable relative to the median salary. The difference is that for you personally - a worker in tech, the US will likely pay you a better salary relative to the median than you receive in Australia.
Think of house prices as reflecting the "price of living in Australia".
Melbourne is pretty decent for high end tech jobs, but not as good as Sydney.
Certainly real estate is extremely expensive and broken, but it's not like New Zealand where the real estate is almost as expensive but the pay is much lower. I had to leave for this reason - New Zealand's housing crisis is much worse in real terms.
How close? let's say AUD 300k (I'm honestly curious, does Optiver/Atlassian/Google even pay that much here?) which is a mind-blowing salary in Australia, tops all kinds of taxes, it converts to USD 220K give or take, adjusted for higher taxes and cost of living, down to about 200k.
So a top earner 0.1% in Sydney makes as much as a strong 3 yoe engineer in America.
Presumably they have to pay taxes and have a high cost of living as well :)
I don’t know how accurate it is but the 2020 SO developer survey puts the median salary for an engineering manager in the US at $152k and an SRE at $140K.
In my experience that’s maybe slightly higher than going rates in Melbourne and probably about the same as Sydney.
On the other hand, AUD300k is a C-level salary here in Australia and way past the start of top tax bracket (AUD180k)
SO numbers are way off comparing to levels'. They're heavily skewed toward the low end. Think about it, who even bothers reporting salary there? I don't even find SO useful in general, these days when I look up an issue I usually end up on github, not SO.
Out of interest I had a look at roles advertised on indeed.com in Atlanta and SF for SREs and data scientists. Estimated ranges seemed to match SO survey results reasonably well.
Maybe both just have bad data.
I don’t doubt that there’s some great tech salaries on offer in the US but I do suspect the massive salaries reported here aren’t necessarily representative. Nor of course is 250k/year in Australia.
The point is, in AU, making 300k is a really big deal (high rank in FAANG), while it's far from a big deal in the US.
Not FAANG either.
250k for non-contracting is indeed impressive. I'm guessing a trading firm, in that case, they are outliers, curious if they have presence in Brissie though.
We're in Brisbane.
Thought I'd interview because I was getting sick of the old job. Wasn't intending to start actively looking.
External recruiter approached me on LinkedIn, had an interview with her, another 3 interviews with the company. No leet code nonsense. Did do a personality and IQ test though. And a problem solving excercise which involved troubleshooting Python and SQL. The final interview followed by a group chat with the whole engineering team.
Honestly the whole interview process was really enjoyable. I'm stoked to be here.
That said, I've worked for small companies in the past. Two in fact. And they both hold the rungs for second worst and actual worst companies I've worked for. With this new company though they also hold the top! But it's early days. So far so well.
This was all in March/April too. Quite recent.
The bonus break down is:
10% of my salary paid quarterly if I hit my targets and I get around 0.9% profit sharing.
My position title is just SRE. Same rank as the other engineers.
CEO > VP of Engineering > All the SWE/SREs sit here
Targets change quarter to quarter and are what ever I and my Manager/VP decide.
Typically the targets are technically focused. E.g. product needs in the next 12 months require specific SLO/SLI's being met, in addition to some future customers who we're looking to onboard require us to be compliant in certain security standards. Those are my goals for this quarter.
according to https://www.marketwatch.com/story/the-buy-now-pay-later-wave...
"In Sweden, home to BNPL provider Klarna, installments accounted for 23% of e-commerce transactions last year."
I'm inclined to believe another commenter who suggested that millennials and younger don't really like credit cards, and this is a different way to get a similar thing – better cash flow.
The German word for debt is schuld(Schulden), which has the same meaning as guilt and is associated with something bad.
For some examples of Germany's issues it's worth looking at the weak state of retail banking (Deutsche Bank / Commerzbank proposed merger), and the financial scandals.
I think that is the case as well in the US. Credit card interest rates are atrociously high. Which makes it difficult for people who get caught in the CC debt-loop to get out.
According to the Afterpay investor relations site, Afterpay's gross revenue for FY21 (ended June 30, 2021), assuming constant currency exchanges rates, was $978 million AUD . If you subtract out the first half of FY21's revenue ($385.2 million AUD) , we arrive at an implied revenue of $592.8 million AUD for the second half of FY21. Convert that to USD (USD$1 = AUD$1.36) and we arrive at an annualized revenue run rate of ~$871 million USD.
Which implies an acquisition price of ~33.3x gross revenue. Which is certainly a lot better than 76x ratio. Moreover, that growth rate is ~53.9% ($592.8 million / $385.2 million) over the prior half-year which is truly astounding growth.
: On https://corporate.afterpay.com/investors/asx-announcements, go to 'ASX Announcements', then find the 'FY21 trading update' dated 2 Aug 2021, $978 million is on the second data column of the second table on the first page.
: On https://corporate.afterpay.com/investors/asx-announcements, go to 'ASX Announcements', then find the 'H1 FY21 Results Announcement' dated 25 Feb 2021, $385.2 million is on the fourth data row of the first page's table.
- Acquirer sees huge growth and thus a reasonable PEG ratio
- Acquirer wants some key market they have been unable to win themselves
- Acquirer wants some key technology, patent, or engineering know-how
- Acquirer wants team that has achieved something impressive to apply to acquiring company's own product
- Acquirer wants to absorb client base with higher growth than they have internally
- Acquirer has M&A execs who cant get promoted without deals
- Acquirer has inflated stock, so the cost is only relative to this inflated stock while the stock remains inflated
Fed has been purchasing 120b of assets per month
Federal government has spent at least 3.5 trillion on COVID-19.
EDIT2: More like 8.6 trillion. 2 trillion added by the bills passed early 2021.
That is the US. Then add all the other countries in the world.
That much extra money chasing the same amount of the goods and services, investments, etc…
So either we are in a bubble or currency has been devalued.
Fed spending is about 25k per person in the US.
That's like saying Thermodynamics is trickle up Chemistry. There is value in looking at macro-ecomonic concepts especially when it comes to government spending, federal reserve interest rates and inflation.
How is this supposed to work again?
I'd consider "Trickle up" anything that creates full employment. If employees are earning more money they pay more taxes. It kind of does work precisely because the tax burden is so high.
¿Por qué no los dos? Seriously, to me it looks like we were in a bubble even before COVID, and that has now been juiced up by all the newly printed money sloshing around.
If they can take Afterpay’s product and scale it to their customer base and beyond, that should be worth it.
I mean at some point don’t you have t
All assets are at all time highs - bubble levels for most. Hence those « valuations » - but if history repeats itself, things can change quickly.
Perhaps finance people have less money raising money. Or perhaps people are more willing to pay for things that save/make money.
More info: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more...
(Edit: Updated link to a more recent blog post)
This gave banks more wiggle room to sit out the pandemic without reducing lending at the exact wrong time.
So the Fed has done its job on the way down. Now they just have to do their job on the way up as well, or this money will eventually end up as new money in someone's pocket (via new loans) and potentially create inflation.
For that to happen you need enough credit demand in the economy.
It could happen, and, as you say, the Fed would increase the interest rate making reserves less available (credit more expensive), but the number of reserves in the system doesn't cause directly more money in the economy. It depends of the type of recovery.
They may justifiably want to keep interest rates low and loans easily available to help businesses and governments roll their pandemic induced debt until they can grow out of it.
But then some other credit worthy borrower comes along and snaps up those cheap loans to buy into some asset market that doesn't need any support.
And where they do have the tools to make that distinction they don't appear to be using them. I don't understand why they keep buying mortgage debt while house prices are already looking dangerously inflated.
We had this unprecedented crash that clogged up global supply chains and caused a huge shift in what people are buying. We have massive government spending increases. I don't think it's possible to work out what impact QE is having on inflation right now or whether it will indeed be transitory as the Fed believes.
Inflation always lags behind, though, and it’s pretty likely at this point that rising inflation indicators in the coming quarters force the fed to tighten. Opinions are very much divided on this, where many are convinced the fed needs to take drastic action to keep inflation from getting out of control with another financial crisis as a result. The other mainstream view is that we’re only seeing transitory inflation right now and as long as the real economy is healthy we shouldn’t expect inflation to persist and cause carnage.
I believe the situation is the same with stocks. They were criminally undervalued for decades (imo still are somewhat undervalued) so additional money supply causes the prices to increase (it's profitable to buy into great opportunity and pay back cheap loan later) but it's only because the assets were very cheap. If they weren't it wouldn't make sense to buy them no matter how much money is around (as you need to pay it back).
What may cause inflation though are programs when you just hand money to people (not as loans but as handouts) as then you just diluted everyone's else money.
Because another way to read the situation is that stocks are simply the asset of last resort. In a world with no interest, you can't park money in bonds (or CD's etc.) so you've basically got stocks, real-estate and commodities left as options.
Large-scale asset managers are not going to park billions of dollars under the mattress, so basically it has to go to stocks.
3. Not at a comparable rate as is evident from the graph.
4. Are equities and other assets completely disconnected from the consumer economy? Many of the new rich and retirees will cash out or take loans against their assets.
5. Economically speaking Bitcoin is inconsequential in this story. Careful using its proponents as another strawman.
Despite it being where-everyone presumably-is I do not want to use Instagram, so I am not sure what's best to do.. is there a good-enough 'open'/decentralised alternative now?
Maybe a simple rss feed would do it?
I am more interested to find a passionate niche of ppl that really love the journey than getting general exposure, I guess that's another side of things: 2d fractals don't really have much mass-market appeal, but if you know what's going on there, it's a lot more interesting to follow!
I made an account on shared.graphics:
Valuations in other sectors are still somewhat reasonable.
It is fantastic to see it play out, such as valuations much larger than before, as well as the unexpected areas of speculation and shifts in market tolerances for worse deals.
But we aren't even done yet! And this comes with a pretty clear agreement on the limitations of monetary policy, like we know massive central bank balance sheet increases don't accomplish their [stated] goals well. But we also expect central bank balance sheets to increase by further distorting the market. When central banks purchase things, whoever they bought it from now has money that didn't exist before the transaction. This money doesn't "trickle down" into the economy, instead it more so pools with these people that are active in the capital markets, and they are trying to figure out how to make more of that money faster than the central bank buys and creates more. So the only way to do that is to attempt greater and greater deals. Because there is nothing else to buy - the central bank already bought the "good investments" (bundles of mortgages, treasuries, investment grade corporate bonds, even some junk bonds) and is also looking for more just like you are! So now you have to take greater risks, maybe this $29 Billion deal that the central bank won't try to get in on!
The conundrum is that now the capital markets are expecting the central bank to buy everything, especially the dips. (most central banks don't buy stocks, but when they buy fairly illiquid bonds from people those people often buy stocks. in US a lot of the stimulus money came directly from the central bank after Congress modified its charter to give currency directly to people in exchange for nothing, and the recipients also bought stocks. the same sentiment is distributed in all socioeconomic classes even the top 0.01%.). So if the central bank gives a hint at reducing purchases (called "tapering"), the markets crash, and the central bank is strongly advised to continue!
The stated purpose is to get people to invest in "main street", instead of just the same small collection of assets. Turns out, it doesn't matter and nobody wants to invest in random entrepreneurs. The market is signaling that it would rather pay to not invest in randoms (in many parts of the world, government bonds have a negative yield, which means people are paying to own a bond while also further losing on inflation). So if you do have access to the capital markets due to your pedigree or network or net worth, the stuff you sell - your company's shares that you typed up on a sheet of paper, or whatever - will have a much higher valuation because other people have nothing else [eligible] to buy and need to put their money somewhere!
The US is the strongest hold out on negative interest rates, and is the largest market too, so the anticipation of the "season finale" is that the US gets to that territory as well, and then we really get to see some fireworks in the market as it is a major psychology barrier as well. Watch the 2 year and the 10 year treasury rates, as they are seen as having the most liquidity and trading activity.
As you can see they are really close to 0% right now, for a prolongued period of time. Getting to this negative stage requires SOOOOooooo much infathomable amounts of money, hoarding government bonds. But the central bank is the main purchaser of these bonds, from both the treasury and private owners on the secondary market, as they buy they push the yields closer to zero. (bond price increase = lowers yield)
fun times ahead! expect greater valuations and quick!
For non-financial folks, dust off the little equation you may have learned in high school, where you value something that goes out forever, but where the rate of growth is higher than that of inflation and the risk-free cost of capital. It goes to infinity. So as interest rates go down, valuations grow. But as interest rates really get low ... the valuations vault into the stratosphere.
Only in a weird universe can we really expect these companies to grow at those rates for very long periods of time ahead of absolutely everything else without much risk.
So the discussion is really about markets, less so local types of consumer payments.
Matt Levine’s writings on Bloomberg occasionally go into macroeconomic territory, he has a facetious and satirical approach to current events in capital markets
There are a few other sensational editorial publications about macroeconomics and credit markets, but I wouldn't recommend them for actually learning
Sadly, I think this leaves a void between dry material, and sensational disinformation sites
AfterPay's valuation puts it at two thirds of mid-2012 Facebook. Up until now, I've never heard of them
It would be interesting to see the motivation for this beyond a "shared mission" or "economic empowerment."
Afterpay roll into a new merchant, cannibalise existing payment systems and at leat for the low margin merchants I work with, who are not savvy enough to look at their own sales data, their business becomes less profitable.
Their whole business model is deeply unethical IMO, harms merchants and harms customers who do not use Afterpay as merchants have to amortize cost of business across all their customers. The Australian regulator dropper the ball last year when considering legislation to align Afterpay with credit card instruments on this issue. Eventually regulators will realise this is harmful behaviour and align things correctly.
Customers love using Afterpay, they search on Afterpay for products they want, and are redirected to her store. Online sales went from being essentially no part of her business to being 75% of her sales, and are probably the only reason her business survived the pandemic.
She has no problem with the fact that she needs to pay commission fees to Afterpay - it's a tiny fraction of the (unprofitable) amount that she would have to spend on advertising to achieve the same amount of sales.
So "fees not far higher than Amex" sound really quite terrible.
IMO we all have engrained in our brains the horror of the credit card death spiral and it's warping our perception of any innovation in the space of consumer credit. I think we will see a bnpl takeover of traditional credit and generally healthier consumer finances.
Is this audited by Afterpay perhaps? A company might just increase prices due to quarterly losses and not specifically because of this fee, even if it does contribute to a large amount of margin loss.
The macroeconomic impact is potentially enormous. Your mission is to capture an entire generation of consumers (millennials) to use your payment mechanism, and embedded in that is a hidden cost which is comparable to consumer VAT (called GST in Australia) that the sovereign nation also levies. Eventually regulators will take notice of this massive some of money.
A comment I once read of HN as while back resonates deeply with me, that is how broken and unsolved the problem of paying for things electronically remains, in terms of costs, reliability, security and ease of access. Inspite of all the incredible transformation that has occurred over the past 30 years. You think about all the money that moves around for electronic payments, in an ideal world, the net levy should be a fraction of a %, not the 1.5%-3.0% that is charged by credit cards or the 6-8% that BNPL charge.
Between them and Stripe, it's nice to have something in payments to admire and be excited about.
I remember a time when we had to deal directly with Authorize.net, wow that was a mess!
If you go to a craft show or popup market or anything like that, every vendor has a Square reader to take cards. They're super successful with "offline solopreneurs" -- the independent one-person small businesses.
One of my many side gigs is selling laser-cut wood stuff of all sorts, and I make a set of Square Reader docks that sell really well. I just made several this weekend.
It's crazy most people don't know you can get this. Seems like every popular merchant account provider is a bad deal in comparison.
For those curious, you get it from banks. Open a company account at a major conventional bank then ask them for a merchant account. The default they offer you is interchange + 0.2% or so. Many debit cards have an interchange rate of about 1%. When you pay 30 cents + 3% or 2.9% or whatever you're sortof being screwed.
Is anyone getting this for SaaS? It seems many processors consider digital goods or services like software to be more risky.
> For an online retailer, does the merchant account replace Stripe/PayPal?
It's the other way around. Each retailer needs a merchant account to accept card payments. Without Stripe etc, you'd need to go through the (often tedious) route of getting a merchant account (paperwork, proof of business health, etc) and negotiating rates before you can start integration (using traditionally quite horrible APIs) using it. Stripe is just the middleman which provides their own merchant account with a nice API to accept payments through it.
The question is interesting, not because you don't know, but because it reflects how much things and perception changed so that we think:
> does the merchant account replace Stripe/PayPal?
It shows how successful Stripe has been.
This is like some kind of hidden gem I just found out about.
Is this ~1.2% total rate only for processing debit cards or credit cards as well?
They are designed to let people buy impulsively without annoying restrictions like not having enough money. Who would have though this was either an addressable market or a good idea.
I don't get why they are so popular either, or worth this much. They also don't have any moat - any payment provider can offer to do the same thing they do with less hassle for the customer (PayPal has started doing this for example). There are many direct competitors in addition (eg Zip).
That starts you down a very slippery slope of what other things poor people supposedly can't handle, because of course you know what's best for them.
Pay it outright, if you can. It's usually the best way.