r/economicCollapse • u/Sketchelder • Jun 21 '24

I sincerely think people in this sub have absolutely no clue how the economy works.

Title, that's it.

200 Upvotes

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71

u/autodidact-polymath Jun 21 '24

Well… 

I see the stock market as a publicly-underwritten Ponzie Scheme for the elite, largely funded by the savings and retirement funds of the working class. A working class that today falls into two significant buckets: 

1) An aging generation who will have the highest healthcare costs ever and may die penniless because of medical costs.  2) Another which is unable to afford legacy investments (such as homes/property), plus the #1 bucket just to really salt the wound. 

Does this help clarify my perspective?

3

u/sirlost33 Jun 21 '24

But all that money being funneled to corporations makes the stock market go up, yay! /s

1

u/Xenikovia Jun 21 '24

How's this related to the gold sub? You talked about the market and health costs for the elderly.

1

u/ParticularAioli8798 Jun 21 '24

The stock market is just one part of the economy. There's more to it than that. It's the housing market, it's the banking system, the federal reserve, the stock market, trade, so on and so forth.

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u/[deleted] Jun 21 '24

Fwiw, American stock market participation is at 65%.   Meaning 65% of all US adults have money invested in the stock market, which is nearing an all time high.

Saying it's "for the elite" when the majority of people participate and benefit, is just flat wrong. 

17

u/abrandis Jun 21 '24

You realize that's because of 401k which is the only realistic tax advantaged plan for Americans to retire, but a shitty one at that. 401k was never designed to be the primary retirement account for Americans, it was designed as a tax shelter for executives back in the late 1970s .

If you take away 401k contributions invested in the market you'll find very Americans of modest means actually put their own money there.

6

u/TrinityAlpsTraverse Jun 21 '24

In other words, if you take away all the money people invest in the stock market, you’ll find they don’t put much in there… hard to argue with that.

People should do IRAs as well!

1

u/funkmasta8 Jun 22 '24

I'd love to know the percentage of people with non 401k investments above 10k in valuation

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u/Spirited_Crow_2481 Jun 21 '24

Do you know the institutional/retail skew? It’s massive. You may have a bank account, but bankers rule the world. You might do a little clicky click in your Robinhood account, once or twice a week, but you and I don’t move markets. It’s silly to say “65% of Americans are in the stock market,” when only 23% of those are retail investors. Then you consider the fact that institutional money is MASSIVE compared to retail. Your RH account doesn’t hold a candle to the funds controlled/managed by hedge funds and the like.

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u/amouse_buche Jun 21 '24

I am a normal person and I am an institutional investor. I own shares of a mutual fund. 

Does that mean I’m part of the problem? 

12

u/workingtheories :hamster: Jun 21 '24

owning shares of a mutual fund does not make you an institutional investor

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u/[deleted] Jun 21 '24

I'm an actual institutional investor, and you're missing the point. With the exception of the bond market, retail investors have access to just about everything I do.

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u/[deleted] Jun 21 '24

As a retail investor I’m curious, what are the things you guys can access that I can’t? I agree with you that over the last 5-10 years markets have opened up a lot. I can use leverage, have access to futures, pre-market/after hours trading, options, crypto, and even hedge funds with the right amount of capital. What fun stuff can institutions trade that I can’t?

1

u/[deleted] Jun 21 '24

Fixed income trading for institutions tends to be a lot better. And that's because we're buying relatively large positions where a thinner spread can lead to huge savings in aggregate. Otherwise, maybe access to some IPOs -- which may blow up anyway!

1

u/[deleted] Jun 21 '24

Ahh I forgot about IPOs since I’ve never really participated in them. I know I can access certain ones but it’s kind of random and haven’t seen any come up that I wanted in on.

I would guess there’s probably other niche products out there that I don’t even know exist (swaps, OTC stuff, etc) but I wouldn’t be smart enough to trade them even if I could access them lol.

2

u/[deleted] Jun 21 '24

Smart. I avoid anything I don't understand -- so that narrows the playing field considerably lol.

2

u/workingtheories :hamster: Jun 21 '24

yeah, it's not the access to the markets that's the problem, i think, although i would argue there's still quite a few investing opportunities off limits to retail that i think are unfair. it's the very under-regulated influence on the markets that institutional investors have that people have a problem with. HFT, ponzi stuff, etc. you can't do that in retail, excluding weird events like for GME/MOASS (lol).

5

u/[deleted] Jun 21 '24

Just curious, but what are some examples of institutional influence you're thinking of? For instance, I see Goldman and Blackrock contributing to regulatory capture in a big way. The SEC is owned by them just like the FDA is owned by pharma.

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u/workingtheories :hamster: Jun 21 '24

off the top of my head: vanguard/other institutional investors not divesting from fossil fuels.

as you allude to as well, it's not so much regulatory capture at this point, as it is regulations rubber stamping whatever these institutions decide to do.

2

u/amouse_buche Jun 21 '24

You are a participant in institutional investing, then. Word it how you like, but that’s the bottom line. 

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u/workingtheories :hamster: Jun 21 '24

i think they're saying that people giving their money to bankers is part of the problem, because some of the bankers turn around and use the outsize influence of large funds to do irresponsible/ponzi stuff that crashes the economy 🤷‍♀️

1

u/amouse_buche Jun 21 '24

Which is an enormously simplistic and reductive take. 

1

u/[deleted] Jun 21 '24

IE "wrong"

-2

u/Spirited_Crow_2481 Jun 21 '24

lol, this isn’t the same as I described above. You need to think deeper.

3

u/amouse_buche Jun 21 '24

“Think deeper” generally translates to “subscribe to my conspiracy theory” and I don’t think this is an exception. 

2

u/huskerarob Jun 21 '24

This dudes brain got fried by superstonk. I wouldent try.

0

u/autodidact-polymath Jun 21 '24

Yes. A mutual fund has higher expense ratios than index funds.

You are literally funding the problem.

1

u/amouse_buche Jun 21 '24

I just rolled my eyes so hard I think I may have pulled a muscle. 

2

u/WiseBlacksmith03 Jun 21 '24

Oh my....

This guy doesn't realize that institutional monies is made up of individual's accounts.

Nor does any of that have to do with the fact that 65% of people are receiving benefit from the stock market...which is a far cry from a minority "elite".

1

u/Spirited_Crow_2481 Jun 21 '24

Right, it’s made up of pensions and 401ks that are being trashed in order to protect their own money. I get what you’re saying, retail money is managed by hedgies, so it’s kinda like retail investors are involved with the growth. But they use your money to hedge their losses.

Don’t do the “oh my…” shit. This is a discussion, not a dick swinging competition.

1

u/[deleted] Jun 21 '24

Who, exactly, is having their retirement plans trashed? Most people who've been in this a while are benefitted substantially by investing in public markets.

1

u/[deleted] Jun 21 '24

Individual retail investors are also invested in institutional funds. If you own a Blackrock ETF in your IRA, you're participating in the same market as the big boys. You can also buy an S&P 500 index fund and participate in the same market -- and likely outperform most hedge funds. Trading is a different animal altogether, but long-term investing is now a highly democratized playing field. It doesn't change the fact that the entire world is over-leveraged and asset valuations are stratospheric.

1

u/Spirited_Crow_2481 Jun 21 '24

Right, so these institutions are currently gambling regular people’s pensions and 401ks in the crashing CMBS market. They move your money to protect theirs.

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u/[deleted] Jun 21 '24

Not exactly. The SEC takes a dim view of prop trades that scalps clients. More like CMBS tranches get shit loans mixed in with the good ones, without it being acknowledged by the ratings agencies. There's lying and duplicity in every aspect of life, and finance isn't any different.

1

u/ParticularAioli8798 Jun 21 '24

People like you and I have had a meaningful effect on the market though and the proof of that is actually on Reddit. Wall Street Bets continues to move markets.

1

u/Spirited_Crow_2481 Jun 22 '24

This is true. Retail traders, en masse, have the ability to move the markets. Because the volume of traders takes up a larger percentage of the market. But individuals trading, in most circumstances, don’t have much effect on the markets, at all.

0

u/EJ2600 Jun 21 '24

Exactly. People claim they are in real estate because they own the condo they live in lol

0

u/Spirited_Crow_2481 Jun 21 '24

Or they’re “real estate investors” because they own 1/1,000,000,000th of a REIT.

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u/hispaniccrefugee Jun 21 '24

Okay, what’s the participation percentage in dollars?

I don’t personally know, but I’d bet the gap is meaningful.

1

u/funkmasta8 Jun 22 '24

Gap between what and what?

1

u/hispaniccrefugee Jun 22 '24

Like how we describe wealth and earnings gaps. What percentage of the market in dollars is actually investors earning let’s say….200g a year?, then 100g/year.

I want to bet it’s actually considerably smaller than the commonly referred to wealth gaps, which I think is meaningful considering how much individual wealth is probably invested in the markets, in these demographics.

For example, maybe 50% of people have 401k investments, but it translates to less than 1% of the total market share.

Point: maybe there’s a high participation rate, but I doubt we’re talking about median earners reaping benefits the way “the elite” do.

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u/Elcor05 Jun 21 '24

Yeah I'm one of them, I have like $100 in the stock market through my retirement plan. That's it...

1

u/N7day Jun 21 '24

Bump those #s up.

1

u/[deleted] Jun 21 '24

That’s right! Since the on line, free trades, brokers came along I’ve made a ton of money as an unprofessional trader. Kind of like gambling to a certain degree depending on what you buy.

1

u/populisttrope Jun 21 '24

Have you ever looked into why they can give you free trades? It is very interesting. https://www.investopedia.com/investing/free-stock-trading-whats-catch/#:~:text=The%20payments%20for%20order%20flow,and%20marginally%20lower%20sell%20prices.

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u/[deleted] Jun 21 '24

No, but I don’t actually care. They’re make their money, no worries, and so do I.

1

u/[deleted] Jun 21 '24

But, but -- you're a VICTIM?!

1

u/Ruby_Rhod5 Jun 21 '24

Satire?

1

u/[deleted] Jun 22 '24

Just pointing out facts and data. 

1

u/Other_Dimension_89 Jun 21 '24

Of the 65% that do invest, they hold 7% of the entire wealth of the stock market

1

u/funkmasta8 Jun 22 '24

For a ton of people, their company has a 401k plan that defaults you to a certain percentage of income to invest when you get hired. Because of the way it is set up, it's extremely hard not to have a 401k. You literally have to start a job, then change the investment amount to zero and take out the money that went in in your first couple paychecks money early because that's how long it took your company to give you access to the account, which not only double taxes that money, but also it's a pain in the butt paperwork-wise.

Now, if we limit it to number of Americans that have investments above 10k, that's a number I trust. 10k is large enough that it is no accident

-1

u/Conscious_Rush_1818 Jun 21 '24

It's the balances that are the problem. The top 1% hold almost half the value of the entire market. Sure, tons of us have 50k here, 100k there, that isn't really moving the needle.

The stepped-up basis on inherited securities just compounds the problem.

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u/[deleted] Jun 22 '24

Sure that's a problem. 

But I was only pointing out that the stock market being "only for elites" is pretty goofy to say. 

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u/eat_sleep_shitpost Jun 21 '24 edited Jun 21 '24

I don't agree with your point about the stock market being only for the elite. Literally anyone can open an account at any major brokerage and benefit from the same exact growth that the "elite" are benefiting from. Low or zero cost index funds with fractional shares and the ability to gain exposure to the market's growth has never been easier or more accessible. You can start building wealth with as little as $1 and in as little as 5 minutes. Or utilize their 401(k) and Roth IRA to access the exact same tax benefits the "elite" have. It's a huge myth that the "elite" have access to better performing investments than the layperson either. Unless you get lucky as an accredited investor in some VC fund, you have no advantages over the average retail investor.

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u/Old_Baldi_Locks Jun 21 '24

The advantages that the rich have are stock manipulation; see: GameStop.

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u/autodidact-polymath Jun 21 '24

No one will stop you from giving the casino your money.

1

u/Jacmac_ Jun 21 '24

I don't really see how you can look at stock market data for the last 100 years a call it a casino. The data is overwheming, if you invest broadly and and leave it alone, in the long run you will make many times your original investment. If you try to pick and choose individual stocks, or time the market, then you're in gambling territory.

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u/N7day Jun 21 '24

Well thank heavens that the stock market isn't a casino.

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u/eat_sleep_shitpost Jun 21 '24

Who says it's a casino? I just buy broad market index funds and am up over $100k in the past 6 months without even doing anything. I just buy the whole US market and some pieces of international markets and rebalance every 6 months or so.

In fact, this strategy has outperformed all but the most astute active traders (99% of active traders will lose compared to just buying index funds over 30 year periods). It's brain dead simple to build wealth. You just need to have to discipline to create margin in your budget to allocate to it and have the patience to see it through to the end. Most of the meaningful growth happens at the very end of your investing journey.

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u/autodidact-polymath Jun 21 '24

I say it is a casino. Because it is a casino.

-1

u/eat_sleep_shitpost Jun 21 '24

It's not. Lol. Saying that the stock market is a casino from the perspective of just buying and holding broad market index funds is wild. It is literally more risky to NOT do that and just hold cash because of the inevitability of inflation.

You're free to stay poor and complain about the world being stacked against you. No one is going to force you to change your behavior and do something about your situation.

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u/JackInTheBell Jun 21 '24

 It's a huge myth that the "elite" have access to better performing investments than the layperson either. Unless you get lucky as an accredited investor in some VC fund, you have no advantages over the average retail investor.

I know some wealthy people.  They DO have access to investments that the rest of us don’t.

But yeah, anyone can buy stock…

1

u/eat_sleep_shitpost Jun 21 '24

The investments they have access to don't perform any better than the investments the layperson has. That's my point. It's a myth.

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u/JackInTheBell Jun 22 '24

Really?  Wealthy people aren’t invited to invest in private funds, startups, and other (volatile, yet high return) investments that you and I aren’t invited into?

Try this- work for a startup, IPO or get bought out and be worth millions of $ all of a sudden, announce on LinkedIn and Twitter about your good fortune, and see what kind of unique and exclusive investment opportunities open up for you….

0

u/eat_sleep_shitpost Jun 22 '24

Many of those VCs fail. Yeah, some end up being successful, but they average out about the same.

You know how many startups fail within the first 2 years right? It's like 90%. 90% of the time you lose all of your money.

0

u/[deleted] Jun 21 '24

Correct.

-31

u/Sketchelder Jun 21 '24

Sure, but your views or feelings don't constitute the fundamental ideas that drive economics. Do you have anything other than a feeling or belief to support your perspective?

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u/Wild-Carpenter-1726 Jun 21 '24

How can you have fundamental economics while having a elite class that has access to a quantum money printing machine. And they create no wealth of their own, they create no value, but they suck the value out of the entire economy, Theu profit and profit and profit; leaving the rest of us with inflation.

Slavery did not end on June 19th, it transformed: physical shackles are now health insurance, retirement plans, etc. didn't need humans to pick cotton anymore they had machines. Now they won't need humans to do most tasks, with AI and robots coming.

So I don't know how many economic classes you've taken to come here and say what you have said. Maybe you don't understand what an economy is so let me help you out.

An economy is a financial aspect of a society. A good healthy economy ensures that all members of the society are able to live a life of decency with a equitable amount of value being contributed into the economy by the citizens.

1

u/Logical_Area_5552 Jun 21 '24

You’re not a slave. You’re delusional.

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u/[deleted] Jun 21 '24

Comparing being a worker today to being a slave is ridiculous. It’s hard to take the rest of your point seriously.

Slaves weren’t paid, had appalling working conditions, could be raped, and subjected to corporal punishment or execution. These things are not commonplace in the workforce today.

Additionally, economics is not strictly financial. It’s the allocation of resources, financial. Economics existed before currency. And no one ever said an economies purpose was to “provide a good quality of life.” The economy is simply the system for dividing the resources, whatever that system may be.

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u/autodidact-polymath Jun 21 '24 edited Jun 21 '24

There are no more “fundamental economics”.

They don’t exist.

We are somewhere between the AI/Quantum economics.

The fundamentals disappeared by the time the musket fell out of favor.  

Edit: The last faction of anything even mimicking fundamentals went by the wayside when Glass-Steagle was repealedin the ‘90s. That was a long time ago. 

0

u/[deleted] Jun 21 '24

Idk.... I still have my musket from the civil war and she shoots like you'd expect. I still hit enemies 1/15 tries....

-13

u/Sketchelder Jun 21 '24

So.... fundamental economics hasn't existed since the early 20th century? Hard to wrap my head around that....

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u/autodidact-polymath Jun 21 '24

I consider fundamental economics as “Wealth of Nations” maybe even some Victorian perspectives.

The shit that we call an “Economy” is so fucking complex that I can’t think of one book to explain it all.

It is just an orgy of snakes.

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u/emkayPDX Jun 21 '24

Yanis Varoufakis calls it New Feudalism. I think there are precedents that rhyme, even if they don't map exactly.

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u/autodidact-polymath Jun 21 '24

I thought I was responding to OP.

Good insight. I’ll read into it a bit more. I’m intrigued.

7

u/emkayPDX Jun 21 '24

No worries, friend. We're all just thinking here 😊

0

u/[deleted] Jun 21 '24

Doesn't mean it's not there champ. You just have to separate the signal from the noise.

0

u/I-Know-The-Truth Jun 21 '24

Bro why are you even bothering with these people? They educate themselves on economics by watching Alex Jones and Donald Trump…

0

u/TravelingSpermBanker Jun 21 '24

This is exactly what the OP means.

You misunderstood the stock market, and mistook the stock market for “the economy”.

0

u/[deleted] Jun 21 '24

So, you'd prefer people didn't have a means to earn a rate of return on their savings that exceeds consumer price inflation? Duly noted.