I heard a message the other day that there's 3 main vehicles of investment: stocks in companies, bonds in governments, and property (owned mostly by banks and a few rich people).
I've been thinking about it ever since, particularly that money usually flows between these 3. The exponential growth required for compound interest to work is only possible in a shortage. Stocks in companies follow a contract-expand business cycle. Governments grow linearly at best. But property has been increasing exponentially due to an increasing population.
I fear the day when companies realise that they'll make more money by starting a war, which would devastate governments and property. Many people of a similar age are getting married and buying houses, but I don't know feel that the future is stable enough to make either of those decisions. The kind of house I'd want now as a single guy is different to a house that would be suitable for kids (in the right school zone), or a house for retirement. I think the only safe investment is philanthropy: give it all away, and if I'm still alive, hope that some of those people I help now will be able to support me in my old age after economic, political, and environmental disasters strike.
>The exponential growth required for compound interest to work is only possible in a shortage.
Compound interest doesn't need exponential growth. That money is not destroyed when you repay the loan, it's just the profit margin of the banks. If interest rates are above what can be repaid they will have to be lowered until they can be repaid. The 0% lower bound is good enough. It's when people withhold deposits and never use them to pay for anything (you know as dictated by the responsible citizen always earning more than he spends) that you need endless growth because debts must grow fast enough that past debts can be repaid even at 0% interest.
>I fear the day when companies realise that they'll make more money by starting a war, which would devastate governments and property.
Well, the problem is that it's true. The broken window fallacy isn't about doing something smart it's about doing something smarter than what is being done today.
Governments grow in proportion to population (tax base), right?
And you can give it away to someone with a promise that they give it back in the future or give you something that they produce, rather than going through philanthropy and hoping things work out. That’s why investments exist.
The stock market (after IPOs and issuances) is all speculation and detached from reality of day to day operations (except for buy backs, dividends, the stock is only worth what someone will pay for it - and some companies don’t pay dividends…).
Real estate Is growing due to heavily regulation and International Capital. Change these parameters and real estate values Will come back to family purchases
I've been thinking about it ever since, particularly that money usually flows between these 3. The exponential growth required for compound interest to work is only possible in a shortage. Stocks in companies follow a contract-expand business cycle. Governments grow linearly at best. But property has been increasing exponentially due to an increasing population.
I fear the day when companies realise that they'll make more money by starting a war, which would devastate governments and property. Many people of a similar age are getting married and buying houses, but I don't know feel that the future is stable enough to make either of those decisions. The kind of house I'd want now as a single guy is different to a house that would be suitable for kids (in the right school zone), or a house for retirement. I think the only safe investment is philanthropy: give it all away, and if I'm still alive, hope that some of those people I help now will be able to support me in my old age after economic, political, and environmental disasters strike.