Weapon of Mass Delusion: Wealth Without Work
POSTED BY: SIGNYM
UPDATED: Monday, September 27, 2021 03:20
VIEWED: 1239
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Charles Hugh Smith
Quote:
Allow me to summarize the dominant zeitgeist in America at this juncture of history:
Grab yourself a big gooey hunk of happiness by turning a few thousand bucks into millions — anyone can do it as long as they visualize abundance and join the crowd minting millions.
Beneath the bravado and euphoric confidence in our God-given right to mint millions out of chump change, a secret plea lurks unspoken: Please don’t pop our precious bubble!
The big gooey hunk of happiness available to all depends on one special form of magic spell: If we don’t call the bubble a bubble, it won’t pop.
And so Wall Street shills spew endless “research” (heh) proclaiming that the forward price-earnings ratio of 21.1 will only slightly exceed past norms, and so on — in summary:
If we don’t call the bubble a bubble, it won’t pop.
Everyone’s All in on the Everything Bubble
What differentiates this bubble from the 1720 South Sea Bubble, the 2000 dot-com bubble or the 2007–08 housing bubble is: This bubble includes every asset class and has sucked the entire populace and economy into its magic maw.
The bubble has swept up housing, stocks, junk bonds, commodities, cryptocurrencies, NFTs and numerous collectibles — the bulk of America’s household assets are now firmly lodged in the maw of the Everything Bubble.
Here is a sampling of recent headlines in America:
I Turned $10,000 Into $6 Million in 6 Months
My Cat Turned $6,000 in My Robinhood Account Into $6 Million by Walking on My Keyboard
I Turned $100 My Aunt Gave Me for My Birthday Into $6 Million in One Trade, Buying Way Out-of-the-Money Calls on a Meme Stock
I Turned $23 Into $6 Million So Easily I’m Going to Sleep My Way to $60 Million
OK, so these are slight exaggerations, but the zeitgeist is very real.
The Great Illusion
Of all the mass delusions running rampant in the culture, none is more spectacularly delusional than the conviction that we can all get fabulously rich from speculation while producing nothing.
The key characteristic of speculation is that it produces nothing: It doesn’t generate any new goods or services, boost productivity or increase the functionality of real-world essentials.
Like all mass delusions, the greater the disconnect from reality, the greater the appeal. Mass delusions gain their escape velocity by leaving any ties to real-world limitations behind and by igniting the most powerful booster to human euphoric confidence known, greed.
Lost in the mania of easy wealth from speculative trading is the absence of any value creation in the rotation churn of moving bets from one table to the latest hot game:
In flipping houses sight unseen, no functionality was added to the house. In transferring bets on one cryptocurrency to another or from one meme stock to another, no value to the economy or society was created.
In the mass delusion that near-infinite wealth can be generated without producing anything, creating value has no value: The delusion is that I can get rich producing nothing but speculative gains, and then I can buy all the stuff somebody else is making.
Work Is for Suckers
The fantasy powering the speculative frenzy is once I get rich, I’ll stop working and live off my wealth. It’s interesting, isn’t it, how everyone can get rich via unproductive speculation, quit their jobs and then live off the productive work of somebody else who failed to get rich off speculation? The Great Illusion.
Maybe that’s why all the containerships are lined up at Long Beach, waiting to unload the goodies made in China for American speculators to buy.
This is what happens when the incentive structure of the economy decays so that being productive has little upside (i.e., working is for chumps) while speculating is all upside (get rich quickly and easily).
Everyone knows great empires became great by transferring their critical supply chainNOTIFY: Y | REPLY | REPLY WITH QUOTE | PERMALINK | TOP | HOME
How about live within your means then you don't need to be chasing dragons.
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Quote:It's not about trying to become rich to improve your lifestyle, SIX. Becoming rich by speculating is like a game that "everyone else" is winning at, and if you're not playing, you're losing. It's a mania: herd behavior at its finest.
Originally posted by 6IXSTRINGJACK:
How about live within your means then you don't need to be chasing dragons.
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Pity would be no more,
If we did not MAKE men poor - William Blake
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Quote:It's evident. If you're not speculating then you're falling behind.
Work Is for Suckers. The incentive structure of the economy decays so that being productive has little upside (i.e., working is for chumps) while speculating is all upside (get rich quickly and easily). Working for monopolies and cartels is for chumps because monopolies and cartels have zero incentive to share profits with mere employees. Their profits are made not by taking care of their workforce but by regulatory capture, artificial scarcities and financialized destruction of competition:
This is the result of monopolies and cartels becoming the financial and political power centers of the nation. They end up treating employees as chattel to lower costs, offshoring critical supply chains to squeeze out a few more dollars of profits, engineering products to break down (planned obsolescence), buying regulatory barriers and “free passes” and tax breaks galore with all the billions showered on financiers and other fraudsters by the Federal Reserve. The most rewarding “skill sets” are a sociopathological obsession with maximizing profits by any means available and speculating with Fed free money for financiers.
The millions of “retail” speculators are simply picking up the cues being given by the billionaires who gained their wealth by issuing debt to fund stock buybacks and other financial manipulations.
BTW, money was getting printed and was getting scooped up by banks who were loaning it to 'institutional' borrowers - like major corporations - who then bought back their own stocks, causing the stock market to inflate. But that didn't directly cause general inflation. OTOH pandemic benefits went into the general economic circulation. That DID cause "too many dollars chasing after too few goods" whcih is generalized inflation. It looks like there's a distinction to be made between printed money going to institutional money circulation (asset bubbles) and general inflation.
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Quote:
Originally posted by SIGNYM:Quote:It's not about trying to become rich to improve your lifestyle, SIX. Becoming rich by speculating is like a game that "everyone else" is winning at, and if you're not playing, you're losing. It's a mania: herd behavior at its finest.
Originally posted by 6IXSTRINGJACK:
How about live within your means then you don't need to be chasing dragons.
I'm not denying that (about the herd behavior).
I've got a buddy that's doing it right now, and I can't talk him out of it.
Despite their bad spending behaviors, he's still ahead of the game because he's great at his job and the commissions are more than their insane monthly expenditures.
But instead of trying to rein the spending in, his idea is that he's going to be a millionaire in the next couple of years off the market and he's never going to work again.
It doesn't even make sense to me since he's always seemed to love what he does. He also loves his family and talks about them all the time, but it's also obvious that it would not be a good thing for any of them if he just sat around the house all day long with nothing to do and they were on top of each other all of the time.
We hadn't talked for years and when we re-connected after finding out we now live really close to each other (small world), I'd told him at one point what I live on in a year and he laughed and said "I wish" and says that his monthly bills are almost twice that.
If they'd been smart about their spending at all in the last 10 years, they'd already have their first million.
But the excitement when he talks about his investing is palpable. Several of the things he was trying to get me to buy into about a half year ago would have quadrupled my investment with what they are at today. You do feel like you're losing if you don't join. But you have to remind yourself that bubbles are bubbles and it could have very easily gone the other way and wiped you out after you bought in.
In my case, I have to remind myself that I only have a very small pool of money that I have set aside somewhere that I'm willing to gamble with, and had I pulled the trigger on those investments at that time, quadrupling that money would hardly have been life changing with the little amount I would have been willing to play craps with.
I've said a million times before that the DOW is a legal and massive casino. It's never been more true than it is today.
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Well, in THAT case ... can you pass on some of those tips to me???
Anyway, it's not just a few people, and it's not just stocks. It's real estate, collectibles, fine wine, farmland ... Almost Anything But The Dollar.
And it's not just individuals, it's pension funds, investment/retail banks, cities ... My fair city, for example, is addicted to rising real estate prices. (As are many cities in coastal California.) Because as RE prices rise, county taxes rise, and since the county re-distributes back to the cities, city coffers rise.
People wring their hands about homelessness, but what they don't realize is that RE speculation has driven the "first time" owner out of the market. If you were on the escalator when it started up ... well, you're going up. But if not, all you can do is watch it rise out of reach. I wrote a letter to the local paper saying that we can't build our way out of homlessness bc that's not what causes prices to double, triple, pentuple ... it's not population stampeding in and out of CA causing prices to rise and fall, it's all about speculation. That was the one letter that I sent to the paper that they didn't print. Why didn't they print it? Because it was something they didn't want to hear. (They turned one of my other letters into a first-page article, with pictures and everything.)
But it's not just cities, it's individual homeowners and rental property owners and counties and banks and pension funds and real estate rental/management corporations (CBRE is a big commercial owner around here) ... there is not a single investment sector that has an interest in seeing property prices drop.
*****
So, multiply that to a whole society. "People" act for reward. When people see that the way to become wealthy is by speculating, they will speculate. A whole society of speculators. This is like CAPNCRUNCH's view that we can all consume without producing.
This would all be an entirely internal affair if "the dollar" wasn't spread across the globe. But internationally, you can't continue to consume without producing. At some point, other nations and institutions will want something for all of the dollars that we gave them, and what will we sell them? More dollars?
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Pity would be no more,
If we did not MAKE men poor - William Blake
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Why the Rich Get Richer and Interest Rates Go Down
Central bankers carry much of the responsibility for the increased inequality, slow growth, high debts, and over-inflated asset prices, however much Professors Mian, Straub and Sufi try to persuade us to believe otherwise. . . .
The low interest rate is, therefore, not a ‘natural’ rate at all, but a highly un-natural rate, which is imposed on a stagnating and highly unequal economy by central bankers who have no reason to raise rates (since structural inflation pressures have been eroded) but who cannot lower them further (because of the zero-lower bound). More than a decade ago, central bankers reached the end of the road when it comes to interest rate policy, and they were left with the option to revive the real economy by means of unconventional QE. In the present system, and given establishment thinking, this was probably the only — and therefore best — option left to central bankers, but while QE did succeed in preventing another crisis and keeping the economy on life-support, it failed to revive the real economy and enhanced the already considerable asset-price inflation. Monetary policy-makers find themselves in a catch-22, and they have themselves to blame for this.
So, what is the way out of the impasse, if there is one?
More at https://www.ineteconomics.org/perspectives/blog/why-the-rich-get-riche
r-and-interest-rates-go-down
The Joss Whedon script for Serenity, where Wash lives, is Serenity-190pages.pdf at https://www.mediafire.com/two
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Quote:
Originally posted by SIGNYM:
Well, in THAT case ... can you pass on some of those tips to me???
It's MEME stocks. It's bullshit.
My only tip there would be to stay the hell away from it.
Quote:
Anyway, it's not just a few people, and it's not just stocks. It's real estate, collectibles, fine wine, farmland ... Almost Anything But The Dollar.
And it's not just individuals, it's pension funds, investment/retail banks, cities ... My fair city, for example, is addicted to rising real estate prices. (As are many cities in coastal California.) Because as RE prices rise, county taxes rise, and since the county re-distributes back to the cities, city coffers rise.
People wring their hands about homelessness, but what they don't realize is that RE speculation has driven the "first time" owner out of the market. If you were on the escalator when it started up ... well, you're going up. But if not, all you can do is watch it rise out of reach. I wrote a letter to the local paper saying that we can't build our way out of homlessness bc that's not what causes prices to double, triple, pentuple ... it's not population stampeding in and out of CA causing prices to rise and fall, it's all about speculation. That was the one letter that I sent to the paper that they didn't print. Why didn't they print it? Because it was something they didn't want to hear. (They turned one of my other letters into a first-page article, with pictures and everything.)
But it's not just cities, it's individual homeowners and rental property owners and counties and banks and pension funds and real estate rental/management corporations (CBRE is a big commercial owner around here) ... there is not a single investment sector that has an interest in seeing property prices drop.
*****
So, multiply that to a whole society. "People" act for reward. When people see that the way to become wealthy is by speculating, they will speculate. A whole society of speculators. This is like CAPNCRUNCH's view that we can all consume without producing.
This would all be an entirely internal affair if "the dollar" wasn't spread across the globe. But internationally, you can't continue to consume without producing. At some point, other nations and institutions will want something for all of the dollars that we gave them, and what will we sell them? More dollars?
Sure. It's EVERYTHING. If it can possibly have value, even just sentimental value, somebody is figuring out a way to make money off of it.
Recently a sealed copy of Super Mario Bros. for the original Nintendo went on auction two million dollars. It was by far the most common game that was ever made. In 2017, it broke a record for video game sales for $30,000 at auction. That's a 6,000% increase in 4 years. In the last year, retro game prices have skyrocketed.
It turns out, there's a nefarious reason behind it.
And one of the guys behind it is the same guy who was doing it with coin collecting back in the 80's.
I would tell my grandpa how much my coin collection was worth because the book said so. I used to get mad when he'd tell me that it's only worth what somebody would pay for it and that the book was bullshit.
That's a lesson I'll never forget. All the crap I spent money on when I was a kid isn't worth a nickle today... except, ironically, the video games that were worthless by the time I'd moved out and my brother ended up selling for nearly nothing when he was trading all of them in for new games without me or my other brother knowing he was doing it.
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Quote:
Originally posted by second:
Why the Rich Get Richer and Interest Rates Go Down
Centra bankers carry much of the responsibility for the increased inequality, slow growth, high debts, and over-inflated asset prices, however much Professors Mian, Straub and Sufi try to persuade us to believe otherwise. . . .
Almost every time I bring up central bankers you dismiss them as a factor.
NOW you agree with me??
As usual with people who lie constantly, your thoughts twist and turn like a bag of snakes eating their own tails.
You need help.
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Pity would be no more,
If we did not MAKE men poor - William Blake
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Second's a Pit Bull with 1/4 the brains.
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