Author Topic: Welcome President Romney 2020  (Read 1744 times)

Cigarbutt

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Re: Welcome President Romney 2020
« Reply #30 on: November 08, 2019, 04:54:36 PM »
Why be more productive when we can just grow the deficit? Economic growth. It's like magic!
Then you may want to look into the concept of debt or credit intensity. The idea comes from globalist organizations that drain US funds in order to publish useless papers. The 'experts' talk about concepts such as the marginal utility of debt (which can be an incredibly useful concept in distressed investing and the identification of the fulcrum security for individual names, a specific topic which would be infinitely more exciting than discussing macro topics in a tribal political thread) and, if I understand correctly, the idea has to do with the unfalsifiable evidence that developed economies (and China more recently and more convincingly), in a conceptual way, need a progressively more significant amount of leverage in order to produce a unit of incremental growth in GDP. The econometric models are way above my limited analytical skills and, unlike Elon Musk who reasons on first principles, I have to resort to more basic reasoning which, in this case, implies using analogies. So, in addiction parlance, there is a well known phenomenon related to habituation which refers to the fact that, in order to simply maintain an effect, the addict must use a progressively larger dose leading to very unsustainable consequences. Of course, the addict is not (or does not want to be) aware of this phenomenon and often overlooks the detrimental and cumulative effect on productivity. Because of multiple biases and incomplete knowledge, I've come to think that the 2007-9 episode was simply an episode where another dealer, a very public and explicit one, took over. Contrary to Mr. Romney who suggested that 47% of people were deplorables, the new guy in charge, the greatest salesman of all times for whom bankruptcies was just a cost of doing business, has been able to somehow rally a majority supporting the greatest deficits and debt to GDP in peace time. I guess it's like magic.
We have a winner. Hayekians > Keynesians
Then you may want to look into youtube videos that confront, in a humorous way, Mr. Keynes and Mr. Hayek. IMO, the unfortunate historical outcome has been the incomplete application of the relevant aspects of both perspectives. I think it's called the path of least resistance, which may not lead to an optimal outcome. If you made it this far, I'd like to share that I followed the HSA thread that you started recently even if health care is free in the US Protectorate where I live. What's the link between HSAs and this thread? The HSAs in your great again country are used to their full extent only by about 5% of HSA account holders (the rest of holders use them as equivalent to checking accounts) so I submit that saving for later is a dead concept for most. Contemporary to the initiation of your HSA thread, I set up an appointment for my third child (who just reached 18, legal age in my immature country) with a local bank representative in order to open an account (called a TFSA in Kanada, a typical tax-deferred account similar to HSAs but which can be used for any purposes and which is used as a checking account by a large majority). The bank person forcibly offered many credit options (from credit card with rewards, LOC, to other various debts, student-type or otherwise) and was incredibly disappointed to learn that my daughter simply wanted to open a tax-deferred account. "Why would somebody do that at age 18", she said, adding that she had never seen this before (forgetting that I had met her with my older daughter 3 years ago for the exact same procedure). To answer, and taking into account that it had not sunk in the first around, I just said that a financial planner advised to do so obviating the need to explain that a 5000$ (CDN) "investment" made at birth in an in-trust account had become sufficient (avoiding mostly any taxation through capital gains reported on the child's declaration) to fund the yearly contributions of the new adult-only tax-deferred account while the in-trust fund had reached escape velocity in the sense that it would likely continue to grow despite the annual withdrawals and would allow the holder of the initial 5000$ investment to have amassed a net worth superior to the median CDN household wealth by age 30. My kids don't want to hear about Hayek or Keynes but I use the concept of thrift described by Hayek and use the Keynes concept of alternating cycles in spending and saving, underlining though the very contrarian idea that it's easier (at least from my perspective) to save first.


no_free_lunch

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Re: Welcome President Romney 2020
« Reply #31 on: November 09, 2019, 05:34:06 AM »
You have hit on the real reason or one of for the wealth gap. It seems intuitive that saving rate has an impact on net worth. I could believe that there are simply no funds for investment but the cars on the road would imply otherwise.

There are other factors of course. Globalization and automation are probably hg eadwinds for the middle and lower class but when you have a culture that frowns on saving, what else would you expect.