Author Topic: Druckenmiller on CNBC  (Read 7460 times)

scorpioncapital

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Re: Druckenmiller on CNBC
« Reply #10 on: December 17, 2017, 02:12:32 AM »
I think Buffett said this too - when rates are low you can afford to take your money out slowly. In the consumer realm, this means basically carry a debt forever until you die - almost a free lunch on the individual level. If rates are high or much higher, it means you need to get your money - return - out faster. On the personal level this means liquidation, bankruptcy for those who got in last or have income issues - in other words, you run out of time before the goal of dying with the largest debt. If you think about it, it's imminently rational - why would any consumer not stream out a huge debt over their entire lifetime and live off the banks and state and then die with a state old age pension? It's an upside down world :)


randomep

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Re: Druckenmiller on CNBC
« Reply #11 on: December 17, 2017, 08:02:42 AM »
2.) current phase of innovation (greatest in over a century) is likely what is resulting in low inflation and this is not a bad thing.

This one comment really made me think? Are we really in a great phase of innovation? Hard to tell while we are in the middle of it.....


HJ

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Re: Druckenmiller on CNBC
« Reply #12 on: December 17, 2017, 08:38:20 AM »
2.) current phase of innovation (greatest in over a century) is likely what is resulting in low inflation and this is not a bad thing.

This one comment really made me think? Are we really in a great phase of innovation? Hard to tell while we are in the middle of it.....

We certainly are.  Things like wide adoption of wireless communication, carrying a powerful computer anywhere you go, google translate is incredibly good, available to everybody on demand for free, advances in genetic engineering, even horizontal drilling and fracking, all happening more or less at the same time, iPhone is only 10 years old!  Nothing short of miraculous. 

randomep

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Re: Druckenmiller on CNBC
« Reply #13 on: December 17, 2017, 11:31:21 AM »
2.) current phase of innovation (greatest in over a century) is likely what is resulting in low inflation and this is not a bad thing.

This one comment really made me think? Are we really in a great phase of innovation? Hard to tell while we are in the middle of it.....

We certainly are.  Things like wide adoption of wireless communication, carrying a powerful computer anywhere you go, google translate is incredibly good, available to everybody on demand for free, advances in genetic engineering, even horizontal drilling and fracking, all happening more or less at the same time, iPhone is only 10 years old!  Nothing short of miraculous.


But GDP growth isn't super high to reflect this, or is the gdp numbers not accurate?

Cameron

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Re: Druckenmiller on CNBC
« Reply #14 on: December 17, 2017, 11:43:43 AM »
2.) current phase of innovation (greatest in over a century) is likely what is resulting in low inflation and this is not a bad thing.

This one comment really made me think? Are we really in a great phase of innovation? Hard to tell while we are in the middle of it.....

We certainly are.  Things like wide adoption of wireless communication, carrying a powerful computer anywhere you go, google translate is incredibly good, available to everybody on demand for free, advances in genetic engineering, even horizontal drilling and fracking, all happening more or less at the same time, iPhone is only 10 years old!  Nothing short of miraculous.


But GDP growth isn't super high to reflect this, or is the gdp numbers not accurate?

It would be in productivity gains which don't reflect it.
We moved a lot of bits and not enough atoms.

Cigarbutt

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Re: Druckenmiller on CNBC
« Reply #15 on: December 17, 2017, 01:58:03 PM »
In terms of new technology: "Nothing short of miraculous"

For some reason: "It would be in productivity gains which don't reflect it."

Some say the gains are not there yet. Some say the gains are there but not measured.
Will someone explain?

https://www.bls.gov/opub/btn/volume-6/below-trend-the-us-productivity-slowdown-since-the-great-recession.htm

Looking at the official productivity numbers, one can feel it but we just don't see it.

In the early 60's, the wage gap (chart 6) showed that the real earner was lagging to some degree. In the period from 2007-2016, the difference (gap) is comparable in absolute value and is still harvested by the capital providers. Productivity gains are below trend however.

In the early 60's, an archbishop of Wales wrote to the London Times: "To a simple fellow like myself it seems that the lower prices which increased production makes possible would benefit everybody, but I recognize there must be a flaw in my thinking, for increased productivity has not brought—and does not seem likely to bring— lower prices. Presumably there is some good reason for this. Will someone explain?"

Where are the common men's yachts?
Will someone explain?

Maybe the answer for the central bank is to start managing directly the rate of productivity gains. ???


Cameron

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Re: Druckenmiller on CNBC
« Reply #16 on: December 17, 2017, 02:14:07 PM »
In terms of new technology: "Nothing short of miraculous"

For some reason: "It would be in productivity gains which don't reflect it."

Some say the gains are not there yet. Some say the gains are there but not measured.
Will someone explain?

https://www.bls.gov/opub/btn/volume-6/below-trend-the-us-productivity-slowdown-since-the-great-recession.htm

Looking at the official productivity numbers, one can feel it but we just don't see it.

In the early 60's, the wage gap (chart 6) showed that the real earner was lagging to some degree. In the period from 2007-2016, the difference (gap) is comparable in absolute value and is still harvested by the capital providers. Productivity gains are below trend however.

In the early 60's, an archbishop of Wales wrote to the London Times: "To a simple fellow like myself it seems that the lower prices which increased production makes possible would benefit everybody, but I recognize there must be a flaw in my thinking, for increased productivity has not brought—and does not seem likely to bring— lower prices. Presumably there is some good reason for this. Will someone explain?"

Where are the common men's yachts?
Will someone explain?

Maybe the answer for the central bank is to start managing directly the rate of productivity gains. ???

Most of the innovation we speak of has come from entertainment. Social Media, iPhones etc. you could make the argument these innovations have made us less productive.

On the optimistic side, how do you measure the productivity gains that have been had as a result of Google, having any answer you want at your fingertips has to account for something.

Or maybe those productivity gains are being had in other countries.

HJ

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Re: Druckenmiller on CNBC
« Reply #17 on: December 17, 2017, 05:48:16 PM »
GDP numbers and productivity numbers are all macroeconomic estimates which are terribly imperfect.  They measure things that sometimes are only useful to economists themselves(and politicians that they work for).  The rest of us are only told that they are important statistics.  They don't necessarily correspond to human progress, or even their trajectory doesn't necessarily measure the trajectory of human progress. 

Take the invention of printing press, there's no question it was, over time, an incredibly powerful and important invention to humanity.  But where is that in GDP numbers around the time they were invented (if any of the economists were ever to attempt to venture an estimation for that period of time using their modern day techniques)?  Take something like the wide adoption of wireless communication, it may not be on par with the invention of printing press, but there's no question that it represents important progress and over time betters humanity.  Plus, as some have pointed out, these may not have necessarily showed up in US or developed market GDP. 

But I am of a firm belief that the advancement in communications technology, the spread of internet, availability of cheap computing power to every person in whatever form it takes, all represent very important innovations to humanity that somehow economists will prove incapable of measuring.   And politicians, other than Al Gore, won't attempt to take credit for. 

randomep

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Re: Druckenmiller on CNBC
« Reply #18 on: December 17, 2017, 08:58:11 PM »

My thinking regarding innovation/productivity gains is not an academic exercise, but a very practical one. I want to know if we are growing our wealth in real terms. If we truly are growing our wealth in real terms, then it must go to someone. And I want to grab as much as possible through investments. If not then all this QE and low interest rates is creating a bubble that will end badly because ultimately investing is a zero sum game and our gains will have to be given back.

If we aren't going to grow wealth, then ya...... a third -50% crash in my investing lifetime is probably going to happen.

Cigarbutt

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Re: Druckenmiller on CNBC
« Reply #19 on: December 18, 2017, 05:17:54 AM »
Trying to bridge the macro with the micro.

Technology can certainly be fun and exciting but I think that the net effect, on the kind of productivity improvements over financial engineering concept that Druckenmiller refers to, has been, so far, relatively marginal.

Think of the following versus productivity
-e-mails
-people texting while driving
-last time you went to the doctor/dentist/accountant/lawyer
-last time you were involved in the deployment/maintenance of a "new" IT system

So, a lot of potential but also a lot of time-consuming distraction.
And let’s not talk about social media.

It may be fair to say that the introduction of the washing machine had a more significant impact on down to earth real productivity than the iPhone(s). :)

For those who say that the GDP number simply does not pick up the IT intangible input, I submit that when goodwill shows up on the asset side, the implicit earning power should be expected to manifest in a very tangible way down the road in a time value decay dependent way.

I suggest that significant real productivity gains have not come to life in a big way so far. But they will.
Despite the swamp, the central bank, the inequality, the demographic decline or whatever you think is hindering “progress”.
Inevitably.

2 opposing views

Techno-pessimist:
www.nber.org/papers/w18315.pdf

Techno-optimist:
https://www.amazon.ca/Race-Against-Machine-Accelerating-Productivity-ebook/dp/B005WTR4ZI

The latter is available, in its entirety, on the internet with minimal work.
That’s what I call productivity. :)
« Last Edit: December 18, 2017, 05:24:06 AM by Cigarbutt »