🔥 This is why I oppose making things public institutions.
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Edit: Also, http://finance.wharton.upenn.edu/~abel/pdf_files_papers/sseqity6.pdf. From Wharton Business School. About social security and Miller-Modigliani and market reactions to the Social Security portfolio's allocation.
They make the same wrong assumption that the Social Security Trust fund is anything but the government spending the money and writing an IOU to itself. It's an accounting fiction, not capital. It would be like excusing Madoff so long as he wrote an IOU to himself every time he bought a yacht or whatever.
Delusional.
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@Captain said in 🔥 This is why I oppose making things public institutions.:
Social Security does good. It has been broken by demographics, which will pass. It's the demographics that are the problem, since the problem would have existed even if Social Security did not exist.
It should be noted that the US has it relatively easy in this area because its population is still growing. The situation is uglier in much of Europe…
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@boomzilla If it's not capital, then there is literally no position to unwind, and the Miller-Modigliani theorem holds trivially.
Look: here's a really simple, factual, thought experiment. Suppose we lived in a world without social security. Then Wall Street would still invest about 40% of what it takes in in US Treasury Bonds. And 60% into stock portfolios. If you bought a retirement fund, you would get a share of a portfolio consisting of 40% bonds and 60% stocks. For simplicity, say you put in $100 a month -- you're buying $40 worth of bonds every month.
Now compare this to a world where there is Social Security. Again, for simplicity, suppose the government takes $10 per month out of your income and puts it in a bond fund on your behalf. How do you unwind this position? It's unbelievably easy: you just buy $30 worth of bonds and $60 worth of stock, so that your total contribution to your retirement totals to $100, and at the same percentages.
It is trivial.
The problem with Social Security is the same as the problem with the stock market: the demographic assumptions that are breaking both.
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@Captain said in 🔥 This is why I oppose making things public institutions.:
The problem with Social Security is the same as the problem with the stock market: the demographic assumptions that are breaking both.
Yes, just like every other ponzi scheme. Eventually, you run out Of New people putting in more money to pay off the old investors.
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@boomzilla said in 🔥 This is why I oppose making things public institutions.:
Yes, just like every other ponzi scheme. Eventually, you run out Of New people putting in more money to pay off the old investors.
The easiest way to fix this is to make the retirement age later. You might've thought you were going to retire at 65, but now you'll not get a cent of your pension investments until you're 70. The only problem with this is that it really irritates one of the parts of the electorate most likely to vote…
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@flabdablet The problem is the more money you have, the easier it is to make money.
So while a lot of rich people are ambitious and will take their money and make a lot more money (say, a Bill Gates type), if you were an equally-ambitious poor person you wouldn't have the same opportunity to make that money because you didn't start with enough money. You couldn't afford to go to the ski resorts where you made a personal connection with the executives of a large corporation, you couldn't afford to pay cash for a in-development OS, etc.
If Bill Gates were born to a family making minimum wage, what would have been the mechanism for him to meet and make a deal with IBM execs? How could he have gotten the capital to buy QDOS? $50,000 is a shitload of money. Heck! Where would he have gotten access to the university whose computer he borrowed to write his BASIC variant? Without any those resources to work with, do you think even Bill Gates acting with all the habits of a rich person, would have been able to become a billionaire?
And since it's so easy to make money if you already have money, the idle rich generally stay just as rich year-over-year. You have to really fuck up in life to, for example, go from a net worth of $100 million at age 18 to $10,000 at age 45; it's virtually impossible for that to happen.
But for poor people, it's extremely easy for them to lose money because a simple thing like a broken-down car is a huge percentage of their net worth. Rich-person habits won't work until they manage to get enough savings to make them work, and for most poor people, building up that level of savings is either a lucky lotto ticket, or a lifetime of work.
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@jmp said in 🔥 This is why I oppose making things public institutions.:
The trick to being rich: start with money in the first place.
... exactly.
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@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
But for poor people, it's extremely easy for them to lose money because a simple thing like a broken-down car is a huge percentage of their net worth
It's also really expensive to be poor. That broken down car will cost more in mechanics bills over the next year than the repayments on a loan for a newer car, which will cost more than the lost interest from buying the same car with cash
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Except if you have some skill in earning money.
Plenty of rich have hit bottom barrel, and then end up earning it all back. So much so that it's a trope.
But, as you said, they still had their connections, and as I point out some skill in manipulating money.
@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
$50,000 is a shitload of money.
Back then? Loan.
@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
Where would he have gotten access to the university whose computer he borrowed to write his BASIC variant?
I guess it's easier today. In Louisiana, they have state tuition scholarships. Dirt poor student can get access to a computer.
@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
You have to really fuck up in life to, for example, go from a net worth of $100 million at age 18 to $10,000 at age 45; it's virtually impossible for that to happen.
Happens to athletes and music artists all the time.
You give someone who is irresponsible with a little bit of money, a ton of money, and they'll blow it all real easy.
Plenty of 2nd/3rd gen rich have lost it all. Again, so much it's also a trope.
@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
But for poor people, it's extremely easy for them to lose money because a simple thing like a broken-down car is a huge percentage of their net worth.
That I completely agree with.
@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
Rich-person habits won't work until they manage to get enough savings to make them work
But, every financial professional will disagree with you here.
The reason rich people can rebound from poverty is because if they were that poor, they'd get a gym membership and live in a shelter. Invest the difference.
Another thing poor people can do, is start making their own "credit / work-opportunity unions". That's what the 1st gen East Asians do. What, you think they just come over here and plop down a restaurant or nail salon all their own?
Oh, and just because they dress poor, doesn't mean they don't have bank. All they do is throw money into the bank. They come here with absolutely nothing, and they're making six figures in five years.
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@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
@jmp said in 🔥 This is why I oppose making things public institutions.:
The trick to being rich: start with money in the first place.
... exactly.
Just don't start an airline
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@xaade said in 🔥 This is why I oppose making things public institutions.:
Except if you have some skill in earning money.
They don't need skill, they just need to KNOW people with skill and to have collateral for sweet loans from them.
@xaade said in 🔥 This is why I oppose making things public institutions.:
Plenty of rich have hit bottom barrel, and then end up earning it all back. So much so that it's a trope.
So it's on a TV show, therefore it must be common in real life? Awesome thinking.
@xaade said in 🔥 This is why I oppose making things public institutions.:
But, as you said, they still had their connections, and as I point out some skill in manipulating money.
Not even that much.
I have a lot of trouble believing Paris Hilton has skill in literally anything, much less manipulating money. But she knows people who do. That's enough.
@xaade said in 🔥 This is why I oppose making things public institutions.:
Back then? Loan.
In 1982 (or whatever year it was), a poor person couldn't get a $50,000 loan for love nor money. That's an entire house's worth of money, and generally-speaking, poor people can't afford to own houses.
@xaade said in 🔥 This is why I oppose making things public institutions.:
Happens to athletes and music artists all the time.
... some of the time. You hear about a couple cases a year.
@xaade said in 🔥 This is why I oppose making things public institutions.:
Plenty of 2nd/3rd gen rich have lost it all. Again, so much it's also a trope.
You know what else is a trope? Aliens who come down and try to destroy humanity because we're too violent, then learn the concept of "love" and change their minds.
IT'S A TROPE! THEREFORE IT MUST HAPPEN ALL THE TIME!
@xaade said in 🔥 This is why I oppose making things public institutions.:
But, every financial professional will disagree with you here.
Uh ok? I'm quite the iconoclast I see.
@xaade said in 🔥 This is why I oppose making things public institutions.:
The reason rich people can rebound from poverty is because if they were that poor, they'd get a gym membership and live in a shelter. Invest the difference.
They wouldn't need to because they could bunk in their buddy Charlie's summer place in the Hamptons while he's off in London.
Look, I never said it was impossible, I said it was way more difficult.
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@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
You have to really fuck up in life to, for example, go from a net worth of $100 million at age 18 to $10,000 at age 45; it's virtually impossible for that to happen.
That's an enormous amount of cocaine.
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@blakeyrat tl;dr: What I don't understand cannot possibly be true.
Why So Many Lottery Winners Go Broke
Ric Edelman, chairman and CEO of Edelman Financial Services LLC, explains.
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@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
Look, I never said it was impossible, I said it was way more difficult.
That's true.
Also, you don't even have to have money, you just have to have the image of having money. Some fool will throw more money at you.
At the same time there are certain sets of behaviors that better your chances. And I think that's the other side of the coin that's been mentioned here.
@blakeyrat said in 🔥 This is why I oppose making things public institutions.:
IT'S A TROPE! THEREFORE IT MUST HAPPEN ALL THE TIME!
I'm saying it happens often enough that it became a trope.
Obviously reversing that is non-sequitur.
And, all-the-time, meaning regularly, not meaning all people in the category.
I know you won't read it, so I summarize.
Bill Bartmann: lost and restarted debt collection business.
Dorothy Hamill: Olympic gold skater. Spent everything, bankruptcy, resumed skating.
MC Hammer: Rapper, 1 million assets, 10 million in debt. Filed bankruptcy, started up music industry related businesses.
Gary Heavin: Women's gyms. Over equipped the gyms at one point, and revenue didn't keep up. Restarted businesses 6 years later after marrying.
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@xaade said in 🔥 This is why I oppose making things public institutions.:
I'm saying it happens often enough that it became a trope.
Either I don't know what the word "trope" means, or you don't.
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No, you're just making a mistake in your logic.
I can come up with some possibilities.
You could think that just because many tropes are formed by common elements in fiction, that they cannot be formed by common elements in real life.
You could think that causation is bi-directional, and when I say that it happened often enough in real life to be a trope, you assert that this means tropes cause events happening often enough in real life.
Check those trope pages, there's a little tab called "In Real Life". It's worth a read.
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@xaade In the 3rd world there are only 2 ways to make significant amounts of money: crime and inheritance.
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@boomzilla said in 🔥 This is why I oppose making things public institutions.:
They make the same wrong assumption that the Social Security Trust fund is anything but the government spending the money and writing an IOU to itself.
It helps if you refuse to let people use the words "Social Security Trust Fund" all together in that order.
6 Millionaires Who Lost It All, but Came Back
