The reason? Too much capital, not enough growth to invest in because demand isn't growing.
Demand isn't growing because 60% of the population is barely scraping by.
How do you increase demand? Roll back the tax cuts to the wealthy who have nowhere to put that money except into speculation and bubbles. Redistribute it back to the working class in the form of tax cuts, credits, higher minimum wage, and social programs. They will immediately put it to work by spending on things they need to get by. Demand increases.
That money trickles back up to the wealthy who receive the profits from that spending, and invest it back into the industries where demand is actually growing.
Among the things that people can't afford and really need, the most common ones are healthcare and housing.
The problem with giving people more money to stimulate demand for those things is that it only solves half of the problem. Healthcare is limited by the supply of doctors so no matter how much government subsidizes it, the amount of people who can be seen by the constant number of doctors will be the same. In practice, this means the price will increase every time you try to give people more money for healthcare.
Housing is similar in that even if you give people money for new houses, everyone wants their house to be in a nice location and there are only so many houses that can fit in a constant amount of desirable real estate.
Without reforms to medical school and medical residency programs, healthcare might never be affordable. Without reforms to zoning laws, housing might never be affordable.
Without at least allowing for an increase to the supply of nice things, increasing the demand of nice things won't be very helpful.
US spends significantly more money per capita to healthcare than other countries. US healthcare problem has nothing to do with lack of resources (human or financial resources).
This is the sort of thing that happens when there are not enough doctors to go around so rich people use their fortune to hog up a disproportionate amount of qualified medical personnel and resources. With the resources that are used to keep VIP hospitals running, they could probably have dozens of regular hospitals.
It's similar to what happens when there aren't enough houses in an affordable nice place so rich people use their fortunes to outbid everyone else and the nice affordable place becomes expensive and gentrified. With the money and labor spent on huge mansions (or hyper-luxurious tiny houses, because land is inelastic), they could have built hundreds of regular houses or apartments.
healthcare sucks a lot more out of the customer in the US than elsewhere in the world, so the fact that the US spends more is combined with healthcare patients spending more money per capita in the US.
Having experienced both, I can tell you that I am terrified of having a motorcycle accident in the US. Or breaking a leg.
There is this weirdly strict moral aspect of what someone 'deserves' in the realms of public policy. In private finances, deserving is not an issue at all.
If pure cold economic calculation would be applied to public policy, it would become clear that healthcare is not just personal issue, good healthcare provides positive externalizes for all. Your neighbors good teeth are not completely unlike investing in a bridge or other public infrastructure.
If someone stays healthy and can work full time 5 years more because he had free healthcare, he pays 5 years more taxes, generates more profits fro employer, and consumes less medical services during his lifetime.
To be completely fair, we don't actually know that health care pays for itself. The RAND Health Insurance experiment and the Oregon Medicaid experiment found little improvement in health outcomes and a significant increase in medical spending when insurance was expanded.
Those studies are hard to make because it's hard to measure medical outcomes. For example, for the Oregon experiment they couldn't look into differences in death rates because death rates were too low even among uninsured people. They had to look at cholesterol, blood sugar and other proxies for health outcomes, instead of the outcomes themselves.
This suggests that at some point further spending in health has diminishing returns and we don't actually know if we reached that point yet.
> Without reforms to medical school and medical residency programs, healthcare might never be affordable.
That's important, true. But that's not the only thing that would increase the amount of healthcare available to people. Dean Baker, for example, makes the important point that we could greatly increase the supply of doctors simply by allowing qualified foreign doctors to be certified in the U.S.[1] Lower class workers in industries like manufacturing have had to compete with foreign workers because of free trade, but upper class workers benefit from extreme protectionism that shuts out foreign competition. Protectionism is also why drug prices are so high; if people were allowed to import drugs from places like Canada, the cost would be substantially cheaper.
Doctors saw what happened when every factory worker in the US was forced to compete with every factory worker in North America after NAFTA, and later the world. Unlike factory workers, no one's spent decades dismantling doctor unions and organizations, and they actually have the money and influence to resist attempts to break protectionist barriers. This just isn't going to happen.
Rapid, careless globalization was an interesting experiment, but it's left a lot of people with no hope for the future. Do we really want to repeat it?
The problem isn't money for doctors, it's money for administrators (including insurance). Same as education.
In any field x, you have people who specialize in x and people who specialize in extracting money. It's no surprise where the money ends up. (This is independent of particular mechanisms for extracting money that vary across economic and political systems.)
If more money is put into the healthcare system but the amount of new doctors per year does not increase, of course the money is going to go to administration. It has nowhere else to go.
That's also why the US spends so much on drugs. Doctors are overworked, so they are forced to depend on prescribing more drugs, the most time-efficient tools for them.
Doctors are overwhelmed with paperwork, often with institutionally-mandated EHR systems that are slower and worse than traditional paper notes for medical purposes. They are spending more time on administrative tasks that could otherwise be spent on actual patients, just like professors are spending more time on grant acquisition that could otherwise be spent on teaching and research.
> The problem with giving people more money to stimulate demand for those things is that it only solves half of the problem. Healthcare is limited by the supply of doctors so no matter how much government subsidizes it, the amount of people who can be seen by the constant number of doctors will be the same. In practice, this means the price will increase every time you try to give people more money for healthcare.
That's true but that's not true. While the # of doctors is constant right now, it is always changing as new doctors are trained and licensed (and also older doctors retiring). Just like computer science, as the demand increases and supply does not grow to catch up, wages will increase, but that doesn't mean there isn't at least some stimulus in the number of new people who decide to get into the profession.
While there won't be a glut of new doctors in 48 hours, obviously, but rather over years, it will (hopefully) eventually catch up.
It's not just like computer science because those are cheaper to train, their work can be outsourced if their wage rises too much and immigration is not as restricted as it is for doctors. Computer scientists also don't have to do residencies.
More should be done to speed up the supply of new doctors.
Gr8 points. The healthcare problem is a disconnect in the laws of supply and demand. In economic theory prices are determined by the intersection of supply and demand curves. So when demand shifts up, more supply comes online to meet demand and bring prices back down. In health care this is not happening. Bear in mind that the first and one of the most powerfull lobbying organizations is the AMA.
QE3 inflated the things in question, not 'tax cuts to the wealthy'. in fact, taxes have gone up on the richest and that bubble continued to inflate. if you want to make it about politics, (and if this is a bubble of bubbles), it was done under the fed under a liberal president - who claimed credit for its 'success'.
when you put funny money in the market, tech booms, paper assets boom and investment in hard industry becomes less appealing. the investment in tech has failed to rise all boats. its only raising boats for some very select geographies, and perhaps that could have been changed if tech developed differently (less monopolies), but it didnt.
This is factually incorrect. No funny money is put in by QE. QE is an asset swap, treasuries for reserves, and it nets to zero. The goal of QE is to lower the price of money in hopes that people will borrow more but they are not. All of the lending/borrowing aggregates are going sideways and down. The reason that the stock market is up is the expectation that QE will someday work to bring get the economy growing faster, but it hasn't happened in 10 years. The only thing that will get this economy ( and the rest of the world) back to where it needs to be is massive deficit spending ala world war II. You need to physically put money into pockets. Tax cuts on middle class and Jobs( via large scale infrastructure spending) will do that.
"The underlying problem is structurally deficient demand caused by thirty years of neoliberal economic policies that have undermined the income and demand generation process (Palley, 2009). However, rather than fixing this problem, policymakers are again turning to ultra-easy monetary policy in the form of QE. Viewed from this perspective, QE can be interpreted as a form of asset market trickledown whereby supporting asset prices is supposed to jumpstart the macro economy…From a political standpoint, this is an enormous change from the world of forty years ago. The New Deal policy paradigm of wage floors and household income supports has been replaced by one of asset price floors and asset market subsidies. Viewed through a political lens QE therefore represents the triumph of plutonomics, and that makes it an obstruction to the extent it obscures the challenge of repairing the income and demand generation process."
I wonder when we’ll admit wholesale that interest rate and money supply just aren’t very good economic levers in the absence of fiscal policy?
Re tax cuts, instead of tax cuts on the middle class, make wage increases tax deductible for corporations. As someone in the middle class, I don’t care what my rate is, I care what the take home is. Reward corporations for passing more money through to employees by lowering the taxes on their earnings.
Its not that complicated. We could just have the fed pay everyones payroll taxes including the corporations share. This would jack up the economy. The problem is getting this policy through congress. The entire macro-economic problem is a political problem.
sigh, probably. OTOH, unless we drastically cut government spending, tax increases on the rich and tax decreases on the middle class won't really help much. Maybe my armchair policy is a bad one, but providing the carrot to corporations to increase wages seems more rational than constantly providing them tax incentives to relocate to places where they can lower their effective tax rate. (see GE moving to MA from CT, e.g.). If you could achieve the same tax rate change by encouraging them to simply pay their workers more, some good might actually come of that policy.
depends what spending is on, government spending can be incredibly productive. Tax increases on the rich would work better if they actually paid them. This is a difficult problem, I certainly don't have the answer, and I'm not convinced there is a simple answer.
The problem is that conservatives find working-class-specific programs offensive, and liberals construct elaborate social programs where a hefty chunk of cash vanishes into overhead. Just give the money back to the working poor - if the problem is a shortage of money in the economy creating demand, then put the money directly into the economy by the most direct method possible.
Yes there is too much capital, after all the US printed over a trillion dollars to avoid the collapse of the financial industry. None of those banks except for two went bankrupt, which means that now you have an extra trillion dollars that will eventually funnel through the system.
Well, look we are nearly a decade later from that moment so that money has gone through the system, aggregated usually with the 1% and then dispersed.
Additionally the world continues to become more global. If you look at some of the main residential markets in America like NYC and Miami, you will see that a significant percentage of purchases aren't from US citizens, but instead, international buyers that are moving their money into a more secure asset offshore and away from their government.
In Miami there is a lot of money from Russia and South America. In NYC it is a lot of money from China.
Then consider that after the housing bubble popped it would only be natural that money would look for another asset class to invest in so it shifted to the stock market.
Certainly there is speculation there, that's the nature of the stock market but the largest companies that have the majority of the growth are simply larger due to higher revenues. What made them successful five years ago are macro trends that are still playing out.
As massive as Amazon is it's only a small percentage of overall sales, which still occur at retailers, however the macro trend of more sales happening online hasn't stopped so you are seeing that continuation.
Apple could be argued is under valued, not over valued.
Google is still continuing to grow.
Sure, Tesla could be considered a bubble, but eventually it grows into the valuation or the irrational exuberance stops and the stock will decrease to it's real valuation. Similar to what happened to LinkedIn. But again, that is too small to really matter on the global scale.
The question of reducing taxes to spur more demand, well that won't really work. Think of it this way, if you reduce taxes even 10% that isn't going to lead to more cars being bought. Sure things that you need like groceries and maybe making your rent, but you aren't going to be making massive purchases.
That tax cuts would benefit the rich the most, because 10% of a $10MM salary means an extra $1MM of cash after you already have enough for savings, so that really does become discretionary spending money. But those people would again purchase the most expensive assets and drive up real estate prices.
Also very unlikely that you could push through a tax cut for a single class or even two classes without a tax cut for the rich, otherwise it would be called socialism, which is misunderstood, but still hated and feared in America.
These are just normal shifts of money moving depending on the barriers that it encounters. We all are exposed to inflation so money needs to be shifted as inflation is it's own version of having limited timeline. Leave the cash under a mattress and 50 years later be surprised by how much spending power you lost.
If you look at the American economy manufacturing is only 10% of salaried positions and 80% is the service sector. So you are seeing how this plays out over time.
The reality is that the world was never equal, and unless you want to move to communism where everyone has the same stuff, it will never be equal. As such there will be some winners and some losers.
Now if you really want to reset this imbalance, it isn't about tax cuts for the poor, but instead massive taxes on the rich. That would then move those funds back to the government, they could focus on more infrastructure which is sorely needed, and it would be coming from the very class that can afford to lose that money.
This would decrease some of the real estate prices, but that could lead to problems in building as well, which means that sector will lose jobs.
The reality is that everything is interconnected, you can't change one thing without affecting everything else.
But certainly if you want to tax those that have the most you could move forward.
Plus, check out what the highest tax rate was on the largest income earners 80 years ago and be surprised by how high it was.
Meh to almost everything here except maybe housing.
Corporate debt is high because DEBT IS STILL CHEAP (fed is changing that). Of course they're going to borrow fuckloads of money, it's practically free by some measures!
The indexing "bubble" is actually a correction for a lack of value from active funds. I don't expect the correction to be corrected.
The cryptocurrency bubble is tiny. 65 billion? That's a rounding error.
5 Stocks accounting for most of growth is troublesome when corrected, but still not catastrophic. If we lose ALL of that growth then we go back to 2016 levels? Ok.
Just providing nominal values and comparing them to values decades ago is so basic BS marketing strategy. Any investor who wants to figure out risk levels must put it all into context. Usually it means ratios.
The housing bit interests me but I can't take it seriously when they're pointing at the single most irrationally priced area in the nation to make the overall situation look similar. Yes, if you want to live in SF you can expect to pay utterly idiotic amounts. But that's pretty much isolated to SF.
The housing index confused me too, as they chose a year after a huge collapse in the housing market as a comparative point. I'm not saying US homes aren't overvalued--or that they are--but it's misrepresentative of the state of the market: https://fred.stlouisfed.org/series/CSUSHPINSA
The value of your condo going up gives very limited information if there is bubble or not.
If you want to figure out what the correct price level is, find statistics that compares price of housing to median income in your area over time. That's the single most important metric determining the correct property valuations.
Prices can go up as long as incomes go up. Major cities have higher productivity and prices can go up until they start to eat too much from the income. In declining areas prices can go down and houses are still overvalued.
What is the price/income ratio now compared to long term average? How much of the 60% can be explained with prices rebounding to long term normal.
ps. I'm almost sure that house prices in Toronto are exceptionally high compared to income. I'm not arguing against that. I'm arguing against people using wrong numbers to measure things. Find relevant numbers and use them.
practically free indeed, vs the practically have to pay for keeping my savings on a savings account... shrugs in discontent (tax is higher on my savings then the interest i get, for those that didn't understand)
Not the parent comment but in the Netherlands where I live you have to pay tax on your savings once it exceeds about 21K EUR.
The government then makes up that you must be at least getting 4% (up to 9% if you have up to 1M) interest, and it wants 30% of that interest of anything over that 21K EUR limit.
Meanwhile the current interest at banks is anywhere from 0.05% to 1% here (most major banks are around 0.2%).
The way you describe it, it's not tax on savings, it's investment income tax. Almost all countries have it.
As a general principle taxing personal investment income should be taxes at least the same amount as labor income. Taxing labor has more negative externalities than taxing investment income.
I think they're saying that they're being taxed as if they were getting 4% interest on their savings, when in reality they're getting less than 1% because rates are low. So even though it's nominally a tax on interest earned, it's effectively a tax on value of assets held in savings over 21k.
Fun fact: Capitalism depends on crises - they are not the exception, they are the rule. People forget that and treat it as something that happens, like a natural catastrophe. This is unfortunate, because this is a purely man-made thing, but still, even the high end media is kind of left in the dark about this central theme (let alone economists, who sometimes get lost in the details of their specialisation).
Now the real analytic question to ponder is: where exactly does this destructive element of capitalism originates from (left as an exercise for the reader).
Crises aren't necessarily destructive, or something that needs to be prevented. When railroads were first built across the USA there was a huge bubble in railroad stocks. Many investors lost everything, but the country ended up with some great transportation infrastructure.
I'm sorry for being short on content, but I wish, more people would really go deeper into theory and open their eyes on the things around them and realize, that capitalism is an extremely aggressive beast that has sucked up everything, that is not itself.
Three days ago, I wondered (time and again) about all the fuzz about this site called facebook - within ten years it took something, that was not really exploited (social relations) and made it a first class business. Startup hubs are still dreaming of the next social startup - meaning exploiting special kind of relations (neighbours, potential partners, coworkers, what have you).
And we won't stop here. Think your dreams belong to you? Maybe today, but I can see large enterprises exploiting your very being for profit, soon. You find that disturbing? But why?
There are several issues to be aware of with the way society and technology is evolving for sure, but when you just shout "wake up sheeple!" and offer nothing but hand waving, you are not contributing much in that regard.
Yes, true. But I am not a salesman to sell you a solution.
All I ask for is to be more conscious about these, sometimes subtle, sometimes less so - things.
If it helps you, here's a simple framework of mine to develop some kind of directional feeling for technology: If it helps to lessen the power of a single entity it's perfect, if it enables you to do new things it's good, otherwise, it might only be a distraction.
Linux and free software is perfect, it is free and a huge enabler for all kinds of things - even for businesses. Bittorrent is good, because it is a huge enabler and took power off content distributors. Raspberry Pi is perfect, because it puts computing into a lot of hands. AWS is only good, because it is an enabler, but it actually feeds a single entity - so that's bad. Cryptocurrencies in theory are perfect, since they take power off single large entities - but they are not robust yet. Solar power is perfect, because it can a human make independent of a single large entity.
So, it is somewhat simple: There are things that liberate you - you as a person and let's you voluntarily choose to cooperate and there are things that lock you in - facebooks walled garden, adtech in general, where information asymmetry only grows - and many other things, that only make sense in the capitalist framework (in however shiny colors you want to paint its advantages).
Well, Minsky's financial instability hypothesis is at least interesting. His argument is, basically, that there's a cycle wherein: during normal times, people want to beat the averages, so they engage in more speculative bets; as that ratchets up, and speculative positions become increasingly leveraged, a point comes where debt is financing interest on speculative leverage; once enough people get suspicious, further debt isn't extended, so the speculative positions default and drive cascading defaults (since there's "blood in the water"); the after-crash period comes with a renewed sense of caution, and people accept lower yields as the price of earlier speculative frenzy; over time, the caution comes to seem outmoded and people believe that normal times are here again; and so on.
I'm not sure how I feel about this, but it's at least a perspective.
Basic differential equations: Any system with an effect proportional to the negative second derivative in it will tend to have cyclic behavior. That's a bit oversimplified, but in practice it often works out that way. And there's plenty of such things in the economy, so cycles in the economy are inevitable.
You can make solid cases that we don't need to have quite the crashes we actually do. But I don't believe in the existence of a real economy that doesn't have some substantial cycles in it that people will point to as evidence that something is wrong.
(Of course, if enough of those people get together and get put in charge of an economy, they often are successful at removing the cycles, by virtue of removing all instances of the economy going up at all....)
Big business have got drunk on low interest rates and corp. debt so cheap, making it very good for big business but negative for the majority of the worlds population.
So they like to see interest rates to remain very low, and have leverage with governments saying their business it at serious risk if interest rates were to return to 'more sensible levels'. Which is kinda true!
Also:
People with sufficient savings or disposable income have choose one of the few obvious/easy investment options and buy into property, either upgrading or buying more properties.
The wealthy who have access to good financial tools have also invested into property, both commercial and residential. Hence so many empty properties in London, that people complain about.
Driving up the price, so further squeezing the population who are not able to follow.
Hence the rise of Trump and others, promising to make America great again, cuz so many voters are being squeezed.
Low interest rates is like a drug addiction, but the addicts (big business) are not the ones suffering.
Hence the rise of popularism and the likes of Trump into powerful positions, but he is sitting on the side for businesses and not the person. He incorrectly believes recovery can only be found with big business, but I believe this just perpetuates the addiction.
Interest rates need to rise (ouch!) and companies must be forced to pay the taxes they owe. Also giving individuals with big investments (risks) into property to exit gracefully without the property market crashing, which hurts everyone.
Why is more investors indexing a “bubble”? Is it just because of the growth line?
While there surely must be some crappy indexes out there, one could argue that more indexing by (individual) investors is a sign of a more people understanding the difficulty of stock picking and harsh effects of management expenses on investment returns.
I’m very happy indexing in my retirement portfolios, but am curious as to what the arguments against it are. The few I’ve read have seemed to be active fund managers scared at the prospect of losing their livelihood to a better product.
The term "bubble" gets thrown around a lot, sometimes incorrectly. It doesn't just mean that money is flowing into an asset class.
Let's take an S&P 500 index fund as an example. Vanguard or whoever does some marketing, and people decide that index funds are a good way to invest, and money flows into index funds. That's not a bubble.
The economy starts doing well, and stocks go up, and a bunch more people decide that they want to be in the stock market, and so they put their money into an S&P 500 index fund, not because they really want to be in the stock market, but because it's what's going up. That's still not a bubble.
Vanguard gets a bunch of money for its S&P 500 index fund, which it has to use to buy stock in the companies that compose the S&P 500. As a result of all the new money coming in, the stock in the S&P 500 companies go up - more than the fundamentals of their business indicate, more than stock in, say, the Russell 2000 goes up. Because the S&P 500 has gone up more, more money pours in to S&P 500 index funds. Now the S&P 500 is going up because of all the money being invested in it, and all the money is being invested in it because it's going up. That's a bubble - a positive feedback loop that has become detached from the fundamentals of the assets involved.
That's a bubble, but it doesn't really get bad until borrowed money enters the picture. If people are borrowing money to invest in S&P 500 index funds, because the funds are going up faster than the interest cost on the borrowed money, now it's a bubble that can cause serious damage when it pops, because it may damage the lender as well as the borrower.
So, for example, people were talking about bonds being in a bubble because bond prices were so high (extremely high by historical standards). That was a flight to safety, not a bubble. People were not buying bonds because they expected bond prices to keep rising, they were buying bonds because they expected other prices to keep falling.
>but am curious as to what the arguments against it are
There's a "philosophical" problem to the effect of, at some point, what are you indexing? But what seems to me to be the more practical issue, and forgive me for this being half-formed, is that it seems like indexing is subtly the wrong thing to do (in a world consisting of only bad choices). The things being indexed are basically weights, for example, the relative capitalization of various stocks, based on some filtering criteria. In order to keep a fund on target with an index, they have to buy and sell according to those weights, and in principle, if the weights change, then the fund's holdings have to change accordingly.
This would seem to me to introduce problems like, if there's a sell-off of some stock so that its price drops, then its capitalization will also drop (capitalization being number of shares times price per share), which would seem to reduce its weight in the index. This should then lead to index funds having a follow-on sell-off. (And likewise for exuberant buying.) So this would suggest to me that, if index funds come to dominate stock holdings, then they should both increase volatility, and result in their holders systematically "buying high and selling low." That is, because an index fund is not the same as an index, but it's in active feedback with the index computation method.
There's also a potential issue, again depending on the level of buy-in, that one should see systematically increasing P/E ratios because of increased overall buying of stocks. That is, in the past, it was not typical for normal people to engage in regular stock purchases (which are held for decades). This would suggest lower dividend yields, which leaves one wondering whether 401ks will become what people think Social Security is, i.e., ever-rising P/Es serving as a transfer from the young to the old that requires continual workforce increases to maintain.
Though I'm not in finance, these are just the things that occur to me in thinking, how would I implement an index fund, and what might that do to the system's dynamics.
By definition, almost all investment money is in an index. What proportion of it is in low-cost index mutual funds vs. high-cost employer retirement and managed mutual funds is of interest only to the financial services industry, which makes more money in the latter case.
I have no great difficulty believing we're due for another pop, but the only one of these that I find remotely alarming is the auto loan one. The rest seem to be one of: utterly irrelevant (number of cryptocurrencies in circulation?), lacking any frame of reference, or readily attributable to the economy still not being really recovered from the 2008 crisis.
The underlying assumptions of the value of the used cars may well be too optimistic particularly during a crisis period.
That is not counting the systemic risk from regulation e.g. my diesel car is has lost considerable value and there is a non zero risk that I may not be allowed to drive to the city center in two years. The used car market for diesel cars tanked in Germany.
The widespread adoption of electric vehicles makes calculating the remaining value of a car difficult for any period beyond 5 years. When the buyers fully understand that and factor that into discounting future values the regional used car markets will move a step down.
> Which means the book value for all cars goes down the toilet.
which isn't that big a deal, because average people aren't buying their cars as investments (or repeatedly refinancing them). your car still gets you to work just fine even if it is worth less than you owe. and that state of affairs would resolve itself in <5 years, even if you just bought it.
> So when they repo lots of cars due to a downturn the second hand market will crash.
that would only happen if folks could no longer service the debt on their vehicles. the amount of auto loan debt isn't evidence that will happen any time soon.
folks were able to "suddenly" develop problems servicing their mortgage debt because they'd gotten adjustable rate mortgages. adjustable rate loans for automobiles are much less of a thing.
We have ever-increasing amount of money in the system (banks figure out ways to create money)
But there isn't much real growth in useful, appreciating assets. E.g. most of production capacity these days operates with ever-thinner profit margins.
Therefore money flows in a few vehicles still considered performing. Such as real estate. This creates a lot of bubbles in the absense of real growth.
This is not unlike to when a ship sinks, everybody clutters at the ever-smaller area still over water.
Totally on-board. A lot of these numbers are really silly. Comparing the # of UN recognized currencies to # of cryptocurrencies is like comparing the number of kindergarteners to the number of world-renowned physicists; it doesn't make sense.
I could spin up a cryptocurrency in about 10 minutes, I can't do that with a UN-recognized currency.
Some of the debt statistics fail to account for the cash Corp America is holding on their balance sheets, so that's an incomplete picture.
Also, I posit that a lot of the inflation in indexes relate to redistribution of wealth. When fewer people have more, they are willing to pay more for just about everything: cryptocurrencies, stocks, houses in prime areas, etc. Bubble status would require some proof points suggesting we have reached systematically unserviceable levels of an underlying fundamental.
I think that definition of Bubble status is only useful when looking at things in retrospect. Money is only drawn to an asset because at present it's valuation looks sustainable.
This isn't what it looks like! Because when you take the whole S&P500 you get stocks that go up and stocks that go down. If you pick just stocks that go up, you can get numbers well over 100%. Or negative numbers - imagine if the S&P 500 had fallen slightly but Apple had gained slightly - you'd have that Apple was -1000% of the S&P500's gains!
Though I just checked the data: in order to get past 100% with YTD from [1] you need to go to around top 112 companies, so my complaint isn't that valid. Only 159 of the S&P 500 lost value this year and almost all of those were very modest, so there isn't as large a cancellation as you might otherwise see. Nonetheless, you can always select the top performers and point out how they're outperforming the rest. If this were an honest infographic it would compare this value (% of total gains obtained by top N performers) to previous years.
The increase in corporate debt is worth watching because most of that will have to be refinanced and is thus sensitive to rising interest rates. Much of the proceeds were used for questionable purposes like repurchasing stock near historic highs instead of investment in the underlying business. This is a proven way to boost short term stock price and EPS, but not so much the capacity to repay.
That said, it's disingenuous to compare 10yr treasuries to indices comprised of bonds with a maturity of >=1yr. Issuance skews shorter term that 10 so those indices probably do, too.
As bubbles go, this one seems rather localized. Looking at that infographic, one can see than in the real estate and stock market sections most clearly. In the former, most of the gains went to certain select markets, mostly in coastal cities. In the latter, most of the gains went to the usual few suspects such as AMZN, FB, and GOOG.
It might follow that we might see localized bursting rather than a system-wide meltdown if this "bubble" pops.
"More cryptocurrencies than fiat currencies in circulation."
Yeah. Well, no, that's a completely meaningless point. Even "marketcap" for Bitcoin is useless---a marketcap is the marginal price that the greatest current fool is willing to buy one thingy for, multiplied by the number of thingys.
There may be too much money in cryptocurrencies, but this chart isn't showing that.
But honestly, I've grown tired with all the doom-and-gloom oracles every year, they irritate me much more than the "everything is fine, nothing to see here" ilk.
And when a recession finally happens, you'll see all those broken watches on a daily basis in the media proclaiming they "predicted" it in 201x and nobody listened and I'll have to really hold myself not to smash the monitor...
On a side note, who (apart from the few investing) cares if cryptocurrencies are a bubble? It's currently not even a footnote to the global economy
![The Everything Bubble [infographic]](http://ggc-mauldin-images.s3.amazonaws.com/uploads/editorial/170919_Bubble_infographic_newfinal.png){kind=link}
Demand isn't growing because 60% of the population is barely scraping by.
How do you increase demand? Roll back the tax cuts to the wealthy who have nowhere to put that money except into speculation and bubbles. Redistribute it back to the working class in the form of tax cuts, credits, higher minimum wage, and social programs. They will immediately put it to work by spending on things they need to get by. Demand increases.
That money trickles back up to the wealthy who receive the profits from that spending, and invest it back into the industries where demand is actually growing.
Voila, more growth, fewer bubbbles.