The protected investor
Perhaps those investing in oil hedge funds lost a lot of money this fall, with oil prices (temporarily) fell by 20%. There is RISK investing.
However in general I accept that the nature of capitalism is that smart investors will get ahead parly through their own good sense, and partly because the system REWARDS the investors with protection from some of their own excesses.
This is done in the world economy largely by the U.S. Federal reserve, and its control over the supply of money. It's not perhaps a lot of control, and I'm not suggesting it is corrupted, but it IS SOMEWHAT "maternalistic".
It is not in the interest of the government to allow the system to collapse, so it'll do whatever is necessary to avoid this. Therefore investors, if their failure harms the system can take more risks AND the goverment will do whatever is necessary to help you succeed.
One example of this is in inflation. Inflation is BAD for investors because they have to wait for their profits and inflation means they'll be paid back less than otherwise. For example, SOMEONE is invested in home mortgages, rates as low as 4.5%, but inflation CAN exceed this. Well, I'm not sure how this works, why people would invest in such RISK except trust that inflation will stay lower.
The level of debt in our society is astounding to me - between government and individuals - and most of all the outflow of wealth. Ultimately I believe this TRUST in the system allows people to take risks otherwise impossible. When things are good, we can accomplish a lot more, a lot quicker, but when things turn down, the house of cards will fall down.
The great depression was a failure because of excessive risk, and leveraged debt that could not be repaid. I must believe however much smarter we are now with keeping the system afloat, we're just a taller house of cards, which may take longer to fall, but fall it must.
But until that fateful day, investors are protected to take their risks. If I thought risks were taken towards a safer future, a more sustainable way of living, maybe it would be acceptable. But no, our success is redirected into "economic growth" which promotes more growth, and raises the height we can fall when the safety net finally breaks.
It is easy to talk nonsense, but we're all talking nonsense, when we think we can continue on the path we're going.
What can we do about it? Our best SHORT term interest is to PLAY-THE-GAME, and our best LONG term interest is to change course.
However in general I accept that the nature of capitalism is that smart investors will get ahead parly through their own good sense, and partly because the system REWARDS the investors with protection from some of their own excesses.
This is done in the world economy largely by the U.S. Federal reserve, and its control over the supply of money. It's not perhaps a lot of control, and I'm not suggesting it is corrupted, but it IS SOMEWHAT "maternalistic".
It is not in the interest of the government to allow the system to collapse, so it'll do whatever is necessary to avoid this. Therefore investors, if their failure harms the system can take more risks AND the goverment will do whatever is necessary to help you succeed.
One example of this is in inflation. Inflation is BAD for investors because they have to wait for their profits and inflation means they'll be paid back less than otherwise. For example, SOMEONE is invested in home mortgages, rates as low as 4.5%, but inflation CAN exceed this. Well, I'm not sure how this works, why people would invest in such RISK except trust that inflation will stay lower.
The level of debt in our society is astounding to me - between government and individuals - and most of all the outflow of wealth. Ultimately I believe this TRUST in the system allows people to take risks otherwise impossible. When things are good, we can accomplish a lot more, a lot quicker, but when things turn down, the house of cards will fall down.
The great depression was a failure because of excessive risk, and leveraged debt that could not be repaid. I must believe however much smarter we are now with keeping the system afloat, we're just a taller house of cards, which may take longer to fall, but fall it must.
But until that fateful day, investors are protected to take their risks. If I thought risks were taken towards a safer future, a more sustainable way of living, maybe it would be acceptable. But no, our success is redirected into "economic growth" which promotes more growth, and raises the height we can fall when the safety net finally breaks.
It is easy to talk nonsense, but we're all talking nonsense, when we think we can continue on the path we're going.
What can we do about it? Our best SHORT term interest is to PLAY-THE-GAME, and our best LONG term interest is to change course.
posted by Ares Olympus at 6:51 PM
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