Topic: Stock market, bubbles, US economy, distribution of wealth...Americans=no savings (Read 340 times)

What does that really mean though? Hasn't it been pumping like this for decades? Just looking at the price action since 2009, everything looks quite normal:



Every correction is a shakeout. The Fed rescues the market every time. I don't think this is an exit pump. If anything, the March crash was institutions shaking out the weak hands, retail investors, etc. and buying on the cheap.


So you're expecting the stock market to crash, while gold and BTC rise?

Things did not got better, governments around the world are just delaying the inevitable, to understand that we need to get into the minds of politicians, the truth is that politicians are only looking after themselves and their political parties and they care about their internal and external power struggles leaving the well being of their populations very far away in their minds, as such politicians have an incentive to try to avoid an economic crisis on their watch but they have no incentive to prevent it because if they happen to be opposition when the economic crisis happens then they have a lot of ammunition to shoot at the political party in turn and then get yet another turn at being the ones with all the power.

every day i become more sure that a new economical disaster is coming whereas before i wasn't. now with the stock market booming, i am more suspicious that it is indeed a pump. some users already mentioned that it is not average Joe's money but the whales, but such pump is going to attract the average Joe too and then as whales pumped it well and attracted enough newbies they dump to make the most profit while exiting and letting the economy crash while they move to safer assets that rise during the crash (food industry, pharmaceuticals since we are in a pandemic, gold and of course bitcoin).

The basic anatomy of a bubble is identical to pump and dump cycles present in cryptocurrency trading since day 1.

A bubble occurs when pre miners attempt to unload significantly overpriced assets onto the market.

Whether they're selling an ICO that claims to cure cancer via colloidal silver, some derivative of student loan debt or subprime mortgage CDOs. There isn't necessarily a relevent difference there.

Do you think things are looking better? Stimulus cash went into the stock market and people paid off credit card debt...small positives things happening for some people.

There are ~30 million small businesses in the US, employing ~60 million employees or roughly 1/2 the entire workforce. https://www.sba.gov/sites/default/files/advocacy/United_States.pdf

That means on average, each self-employed business owner employs one other worker. And that applies to half the labor force. That doesn't seem like a shortage of entrepreneurship at all.

I don't understand this attitude that "everyone should start their own business" either. Most startups fail. There is nothing fundamentally wrong with getting a job. Most business models require workers to succeed.

Your advice might have been useful in the 1950s but this "pull yourself up by the bootstraps" stuff isn't very convincing in the face of the economic realities of 2020.

And also people forget about entrepreneurship, all they taught was how to be a slave/labor/employee forever which makes the issue in the wealth distribution.If people start their own business they can make something more when we compare it with their salary but most people afraid to begin with so they stuck there.

The distribution of wealth was designed from the beginning to benefit a group of parties. In the highest pyramid strata of the food chain, there are humans, among humans, there are also pyramids where 3% of the community controls 70% of the world's human wealth. Even 10% of human wealth equals 90% of the people below. Such is the analogy of the current world economy which is dominated by oligarchs.

A good economic form should be like a pencil rather than a pyramid, which is happening at the moment the base of the pyramid is narrowed in the middle and sharply high up because the winner has been designed and the winner takes all and they use the power of a country's government as their pawn so that their wealth becomes eternal. The 3% group above is solid (a little small and compact). So individually they control the inverted pyramid because their wealth is greater.
https://www.credit-suisse.com/about-us-news/en/articles/news-and-expertise/the-global-wealth-pyramid-growth-with-regional-transformations-201811.html

The weapons they use are banks, banks collect and rake in the assets of many individuals ranging from the lower class to the middle class and are then destined by business groups which are 3%. Whereas the central bank and the government protect banks for the benefit of people who are 3%

The three components that make an economic bubble are
- Culture of debt with interest
- Bank institutions are not banking practices
- Money is not only as a means of payment but also as an asset

The income and wealth gap, as opposed to the passion and commitment to solidarity and fairness, can be overcome by:

- Eliminating monopolies, except by the government, for certain fields
- Guarantee the rights and obligations of all parties in the economic process, both production, distribution, circulation, and consumption
- Guarantee the fulfillment of the basic needs of life of every member of the community
- Carry out socio-economic security where people who are able to bear and help those who are unable.

... No one is trying to scam you, no one wants you to sit around and day trade with the market. Why would some billionaire even care if you toss your 10k in and lose it being dumb with some penny stocks.

The Stock market isn't a scam for anyone. If you're willing to invest and stay in for over 10-15 years, you're going to average somewhere in the realm of 7-10 percent per year (ON AVERAGE) It's been one of the most reliable investments that anyone can involve themselves in. Just invest in a low cost index fund, keep investing, and let the power of compound interest takeover. That's it.

To add to this, some people are still trying to recover from these events here in 2020. Most will probably just have the excess/small sum of the total earnings poured into their 401k or other retirement programs that the employer offers. This way all the retirement funds are taken out and then the paycheck gets handed over.

Right, car loans. That explains everything.

I'll be sure to tell all the poor people I see, "just buy assets, not liabilities." I'm sure that'll solve their problem of having no money to begin with, and of wages stagnating behind inflation. I'm sure it'll reverse the course the American economy has been on since the 70s.

It is possible that the main problem in this situation is not that there is some lack of money, but that many people do not save some of their income in case of any emergency, and can spend almost all of their income immediately after receipt, the problem is most likely this.

I am not an economy expert. But I will try to answer your question as per my knowledge,

To fight the bubble burst situation, you have suggested more wages in the hand of the population. However, it may solve the savings issue to some extent. But it will have more severe effect of the consumer prices. In order to pay more wages, the companies will have to increase their products/service pricing which will in turn draw out more money from the pocket of the mass to maintain the similar lifestyle.

Everything will become expensive to cope up with the increased expense of the companies. This situation will create more disparity between the riches and poor class in the society.

Salary increase must happen in phased manner which must not go beyond the business forecast for the upcoming year. The current system is probably flawed but we don't have anything else to do. Rather, post this pandemic, we will see a decrease in global wages.

We are soon going to see a death spiral in the economy. Accumulate more bitcoin and gold in the meantime if possible!

Problem with the latter is most don't understand it and there simply isn't basic enough tools for your ordinary first time investor that are easy enough for them to learn to get on board this starship

Combine that with the weary effects of a post 2017 market crash and the dark web stigma and we have little to no interest from the majority of mum and dad investors who are likely to consider putting there money elsewhere for a change, but some major companies are going to make hell of marketing this if post-halving we're still upright and slowly drifting upward

Loans keeping the working-class people poor so they need to do something if they want to get out of the inflation rate, I am not saying they shouldn't take loans but they are taking loans for what, most of the people taking loans to buy liabilities and many think that they are buying assets, for example, buying a new car at loans is really not worth it, and if you think new car is going to make you proud then you will be paying interests forever until you/ we die.

The cost of living is high in USA but if we compare the wages of an Indian then we know the difference in their lifestyle.

All they have to do is to buy assets not the liabilities.

How do you save when wages don't rise and price inflation is up 20% over a decade? Half the US population is considered impoverished or low income. With skyrocketing rent, health care, and food costs and completely stagnant wages, much of the country can barely get by. A single family medical emergency will ruin people financially.

People who repeat stuff like this fundamentally don't understand economics or human nature. When hundreds of millions of people are this desperate, how do you expect them not to take loans if offered? Do you have any idea how many people buy groceries with credit cards?

You'd rather they starve, right?

If poor countries had this dynamic, you can be damn sure their residents would be taking on more debt. The cost of borrowing money in India is 3-4x that of the US. Based on rental value, renting in the US is also 3-4x as profitable for landlords. Do the math. Americans must spend much more of their income on basic living expenses (like rent) while the cost of borrowing is immensely cheaper. What exactly would you expect to happen?

What would you finance? House and car? Maybe have an emergency credit card or 2...

I've heard that you should pay cash for your car, but that is probably unrealistic for most.

People in the USA must be taught financial intelligence, buying what they don't need on loans is a deadly way to live life, this will cause one's savings to disappear and creat problems for the national economy. Dr Ben Carson once said in his book Take The Risk, that Americans must do away with credit cards as it's creating more problems for them and this is making the American economy weak. People should leave within their means and not take loans to live big lives and later become slaves paying debt all their lives. This does not apply to the USA alone. While I was in the banking sector, we always plan to make people to be indebted to the bank, this way the bank makes more money while the debtor losses his savings.

Terms such as "fairness in the distribution of wages" and others are what make the difference between the classes in the community increase. The more the middle class, the better.

Economic problems are individual and collective responsibility, and the beginning of the solution is to redefine the difference between the assets and liabilities of many people. Many citizens do not understand the difference between the two interests and thus become poor when any economic problem occurs.
As for the reason for obtaining a bubble, it is the continuation of the same policies and the printing of more currencies, and thus hyperinflation.

There is no greed for rich people because they see money something similar to a game, they just want to get involved compared to common people, like me, who works for money, not for pleasure. All the bubble and depression take place because we care what is going on around us when is to late. In conclusion this game of rich people renews every decade.

As I have read economic books on how to grow the economy and the people, I have not seen wages as a better way of distributing wealth nor if taxing the rich (because, in real definition, taxing is a mechanism against the rich) , has been a way of distributing wealth. Taxing goes Bach to the rich who is in the government to control    .

Distribution of wealth therefore is giving equal access to government awarded contracts, equal access to loans, equal access to education in high places without racist inclination and stigmatization, equal social connections etc.

In every society plus America, this is how Icthink wealth can be created. In America till this day, there are still poor people who rely to survive the covid-19 pandemic from government stimulus package.

I think that Americans cannot save for 2 main reasons, we are tricked into wanting things through marketing AND many items just happened to be market priced at the high-end limit of what it can cost...business probably spend a fortune figuring out the max the market will pay for a device/service.


for example: For some reason we need a new phone every 2 years and that new phone costs $1100

(But yet you can build our own computer for $2000 (or less) and it will be good for at least 8-10 years)


Housing is still way overpriced compared to incomes...unless there is a major restructuring (I can get in trouble for saying this) only the frugal will survive and be able to save and I say this because; if you go onto Twitter and see all the people begging for money right now...sure some of them are probably scammers, but still it's crazy how so many people have NO SAVINGS (or toilet paper)!

My personal opinion is that the distribution of wealth being the way it is, is more a factor of differences among people--their drives, personal attributes, and perhaps being born with a silver spoon in their mouth--and less a matter of what the stock market is doing.

OP, you're correct about the 10 year trend of boom and bust.  That's been a well-known fact for a long time, and it's said that investors have very short memories when it comes to bubbles.  I happen to agree with that, as I've seen a few in my lifetime so far.  You're also correct about money flowing into the stock market again, but IMO that could well be a dead cat bounce.  The coronavirus outbreak is going to have some serious effects on corporate earnings for at least the next few quarters, and I don't think it's really known how bad it's going to be.

My vote is for big pharma stocks, by the way.  They'll be doing well regardless of what the rest of the economy is doing.

Wealth distribution is undoubtedly a complicated problem and unsolvable problem because there are only limited resources to be shared with many people. If you want to be rational, you can only pick from working systems to date, i.e., free-market capitalism, state capitalism, centrally planned, mixed, etc., and I favor free-market capitalism over the others.

Since printing more money is also a means to dilute the idle cash, hoarding cash is guaranteed to be a loss. People need to spend it on growing the economy. Well, that's the idea behind it. However, instead of risking their money in productive activities, some people like to store their wealth by buying assets (including stocks). So please don't save your wealth in the form of fiat.

And about the higher wages, well, let's assume the economy is a pie. Wages will increase if:
- You have a bigger pie (assumed the proportion unchanged);
- You have a bigger slice (assumed the pie's size unchanged); and
- You get a smaller slice, but the pie is getting bigger, resulting in a net positive. It is only possible if the economy is growing more rapidly than population growth.

Artificially increasing salary can kill small businesses, and many will lose their jobs instead of getting more money. Anyway, in free-market capitalism, people don't have to wait for a (salary) raise; they can open their own businesses.

The money you see going to the stocks is not average Joe's money. As you said average people have no savings. That money belongs to the whales and they are trying to scam you like pretending that the bear market is over and the worst is happened, which I think is not true.

There are only a few big guys trying to scam each other and you (small guys) that's what stocks is about now.

I see airlines companiy stocks going up while there are no planes in the sky. How can that be possible? It is because it is a scam that's how.

America calling themselves as supernation of this world which means all the people in that country living a better life compared to third world countries, or am I wrong?

So Americans have to change their money spending habit if they want more savings.

Rich investor? Every investor knows that is good time to buy stocks which will give them huge profits in very quick time but only people have enough money will go for it but there are other options also available for them to invest now such as gold, real estate and especially cryptos.

Without getting political...it seems every 10 or so years we see another bubble burst, my question to you economic experts:


Do you think the current way wealth is distributed in the United States is one of the leading causes of this trend...and also do you think that if we had a "more fair" distribution of wealth (and I do not mean tax the rich and give it to the poor - I mean higher wages - I believe wages have been more or less stagnate, for most of Americans, for about 20 years)...[cont] a "more fair" distribution of wealth, the bubbles bursts would not be so extreme AND (in this case) Americans would have more money/savings for emergencies.

Currently money is pouring into the stock market again (greed and no alternatives), and we aren't even out of this mess yet, most likely because rich investors have no place else to put the money - with possible inflation around the corner, holding on to cash is risky (my take).


What do you think?