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A central repository for questions about economic theory, research, and policy. Please read the rules before posting, as we remove all comments which break the rules. Answers must be in-depth and comprehensive, or they will be removed. Posts should be in the form of a question.
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r/finance
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Welcome to r/Finance! No Personal Finance, Homework, Personal blogs, or Career-related posts. All questions go in Monday Morning catch-all threads.
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r/BusinessHub
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/r/BusinessHub * A central reference point for the business, economics and finance subreddits * gathers the best insightful reads from the Business, Economics and Finance subs which tend to be buried on your front page by self posts, image posts and short blog postings and in the absence of a good flair system on many subs its difficult to trawl through content to find longer insightful reads that you might miss
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r/BusinessVideo
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[/r/BusinessVideo](https://www.reddit.com/r/BusinessVideo) is a subreddit for video content about anything business related. Some topics that we'll try to focus on are marketing, economics, finance, investing and entrepreneurship. Direct links to major video sites are preferred (e.g. YouTube, Vimeo, etc.)
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r/Business_WorldNews
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Provides you with the best of your business section. From tips for running a startup, small business, to pitfalls to avoid, /r/BusinessWorld shows you the right moves and steers you away from the wrong ones.
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r/BusinessRisk
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r/BusinessBritain
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A UK focussed sub (made in March 2018) with a business and marketing spin not otherwise available. /r/entrepreneur, /r/business and /r/investing are thriving communities yet concentrate largely on the USA. Rather than competing with those communities, we welcome any x-posts from them as a way of creating a UK based discussion around the same topics. Along with x-posts from similar subs to discuss in their British applications, you'll also find business news from the likes of the ONS and BBC.
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r/AusFinance
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Australian Personal Finance: budgeting, saving, getting out of debt, investing, and saving for retirement. Please read the sidebar and observe sub rules when posting.
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r/mmt_economics
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This is a place to post links and discuss topics relating to Modern Monetary Theory (MMT). Economics can be a fractious discipline. Remember to judge arguments on merit, and not opinion. Offer constructive criticism first (and perhaps 2nd/3rd/4th, etc). Just as important: if your argument contains opinions, expect criticisms. Enjoy! For a good getting started resource, you might consider starting here: https://activistmmt.org
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r/OpenEconomics
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Have a question about Economics? Want to learn more about heterodox schools? Here is a great starting point.
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r/QuebecFinance
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Venez discuter de tout ce qui touche la finance personnelle de près ou de loin avec d'autres québécois!
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r/EngineeringEconomics
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This is a place for discussion revolving around money and engineering. Firm startups, moonlighters, established corporations, should feel free to discuss ideas about their design, their business, or both! Moderation will be fairly lenient in therms of topics so feel free to discuss anything even the slightest bit related to the sub.
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r/ViraLataFinance
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Vira-lata Finance is the name of the project and community behind the socially-focused and deflationary cryptocurrency $REAU, which was born in 2021 and spread throughout Brazil and the world, appearing in multiple media outlets, all while donating thousands upon thousands of dollars to abandoned animal shelters throughout Brazil. Official website: viralata.finance
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r/KenyaBusinessGroup
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The Kenya business group is a community of African diasporan and native Kenyans who are ideologically centered around group economics and a commitment to ensure, not only ourselves financial independence but future African generations as well, through the means of business creation and entrepreneurship. we will share ideas amongst our brothers and sisters to accomplish this glorious goal of financial independence and birthing generational wealth.
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r/biz is the place for discussion of topics related to business, stocks, economics, financial markets, startups, commercial law, securities, currencies (including cryptocurrencies) and commodities.
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r/FinancialPlanning
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r/academicfinance
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A subreddit to discuss asset pricing, corporate finance, market microstructure, consumer finance, and other academic studies of finance / financial economics.
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r/LatAmEcon
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Your daily source for economics, finance, and investing in Latin America.
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r/aussiedollar
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Welcome to r/aussiedollar
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r/AusProperty
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This forum is for discussion on all things Australian property related. Markets, economics, finance, investing, auctions, renovating, repairing and housing affordability.
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Posted by1 month ago
Jerome "Man On Fire" Powell, Chair of the Federal Reserve of the United States

By Peruvian_🐂 with regarded adaptationz by 👉🐒👈 there is no TL;dr or ELIA.

For the last few decades, houselessness has been on the rise in virtually every major American city. Drug addiction and mental health issues are of course the driving factors. Below is a graph of the amount of houseless using shelters in New York. We can see spikes in the late 1980s due to the crack scourge, but the rate stabilized until the aftermath of the 2008 financial crisis. Due to deflationary forces rippling through our economy, mass layoffs and home evictions, millions of people across the States lost their housing and became desperate.


https://i.redd.it/weug1kwz0aha1.png

The Fed (🐒 Federal Reserve) responded to the housing bust with a massive influx of cash into mortgage backed securities. Cumulatively, since 2008, the Fed owns more than $2.6T of MBS (🐒 Mortgage Backed Securities). This caused massive asset price inflation in the housing market and led to enormous wealth gains for those who owned real estate- but those who did not, or lost their homes in the bust, now saw skyrocketing home values but did not have any equivalent jump in income to compensate. This caused what is called "economic despair", similar to the opioid crisis tormenting midwestern "rust-belt" cities.


https://i.redd.it/3ruik3q21aha1.png

The median age of a new homebuyer has risen steadily since 2008- due to the higher prices of homes, many were priced out of the market. Only middle age folks had the wealth to pay for these expensive homes- boosting houselessness across the spectrum but especially in young people.


https://i.redd.it/bbfabgw41aha1.png

With a collapsing economy and slowly rising rent and home prices, dozens of thousands of people were pushed onto the streets each week- and did not have a way back into housing. They turned to drugs, crime, and more to deal with the pain and anxiety.


https://i.redd.it/wfrk90t71aha1.png

Economic self-reliance- especially for men, is closely linked to rates of depression and sewacyde. When the jobs in the city leave, the houses get too expensive to own, and the school tuition skyrockets; many feel an overwhelming hopelessness and turn to self destructive habits to cope with the pain.

Typically in a recession the Treasury will increase spending to cushion the blow to workers- and in 2009 they did extend a few unemployment benefits. But, by and large, Congress authorized few benefit programs for workers, and the average time on the benefit decreased after a slight bump in 2009. At the same time, the Fed was pumping massive amounts of cash into the banking system, boosting equity and bond prices to cope with the fallout of '08.


https://i.redd.it/vzv4vxda1aha1.png

This caused the beginning of a massive bull market- 70% of the gains for the last 30 years have occurred since the Fed began their massive QE (🐒 Quantitative Easing) program. This would benefit the real economy, they claimed- creating what is called a "wealth effect", the behavioral economic theory suggesting that people spend more as the value of their assets rise.


https://i.redd.it/k8sj2ltd1aha1.png

The idea is that consumers feel more financially secure and confident about their wealth when their homes or investment portfolios increase in value. They are made to feel richer, even if their income and fixed costs are the same as before.


https://i.redd.it/8k8wt87g1aha1.png

However- who does this really benefit? Studies show that the majority of the equities are owned by the top 10% in terms of wealth- in fact, these wealthy individuals own 89% of all listed US stocks!


https://i.redd.it/k2rugufi1aha1.png

The median American worker saw his bosses become enormously wealthy, without additional work or effort put in, while his/her wages were stagnant for basically the entire decade. This further contributed to economic despair and gave people a sense of a "rigged system" and that the American dream, touted by the Baby Boomers and those before them, was now dead.

Upward mobility became increasingly difficult as home and asset prices rose without a corresponding increase in median wages.

Something had changed since 2008. Although the NBER ( 🐒 National Bureau of Economic Research) claimed that we had only experienced a recession, if we use their original terminology we actually had been through a depression.

Depressions were originally defined as prolonged periods of economic underperformance, which by all indications we were experiencing. GDP (🐒 Gross Domestic Product) nominally was rising, but much of that could be attributed to increased government spending (component of GDP) and base effects of recovering from a weakened economy. NBER estimates we underperformed GDP potential by around $8.2 Trillion in real growth since ’08, which would have mostly gone to middle and working class workers in the form of wages.

Although unemployment spiked post 2008 and then began falling, a large part of the reason for this is how unemployment is actually calculated. They include people who do not have jobs and are actively looking for work- but what about those who have given up and no longer are looking? they are not included in these stats- which is why we see a falling Labor Force Participation rate (above) even when the unemployment figures are reportedly falling.


https://i.redd.it/g2oaca8m1aha1.png

Millions of Americans have left the workforce- and many of these people have ended up houseless, dependent to drugs, and worse. According to the National Institute on Drug Abuse, almost 100k people lost their lives in 2020 due to an overdose- 5x the rate of the early 2000s:


https://i.redd.it/ii9dlrfq1aha1.png

The Fed has also worked to suppress interest rates to the zero bound- stimulating credit growth and pushing money out on the risk curve. This brought enormous sums of cash into the tech space, where companies received insane multiples on incredibly low earnings.

Tech linked indices, like the NASDAQ, saw enormous price gains in excess of the other "blue chip" stocks of the real economy. Facebook, Apple and Google became trillion dollar companies and VCs (🐒 Venture Capitalists) were willing to pour in unlimited funding for whatever the tech giants wanted.


https://i.redd.it/80bqh50u1aha1.png

This virtually unlimited cash gave the tech firms the resources to supercharge their apps to become mass psychology manipulation tools- to addict young people, causing anxiety and depression. Worst of all, it pushed sewacyde rates up, especially among young girls, who were fed unending comparisons and social judgement from their peers in the digital milieu. These apps have gotten more ubiquitous and more entrenched over time- if any young person wants to be relevant and have friends, they are pushed to buy into these harmful apps.


https://i.redd.it/8m0ketaw1aha1.png

Of course, some may say this was inevitable, as the tech giants would eventually be pushing for profit and exploiting these children anyways- but the Fed certainly sped up this process significantly by lowering interest rates and allowing unprofitable tech firms to borrow freely, pushing up valuations and allowing them to raise mind boggling amounts of cash.


https://i.redd.it/vql8v57z1aha1.png

Money is power, and power can buy many things, even the ability to influence minds.

Young people nowadays are in most ways actually worse off than their parents. They can't buy a home. They can't afford school. They can't get a good job. And this issue is causing societal-wide consequences, like a falling marriage and birth rate.


https://i.redd.it/ip05rxi12aha1.png

Couples typically only marry when they can afford their house- although it is commonplace in Latin American and Asian cultures for a married child and spouse to live with parents, this is taboo in the states, where owning a property is considered a rite of passage.


https://i.redd.it/mrn05dm32aha1.png

General rates of depression are rising- humans are made for community, for intimacy.

Turns out we need each other. 🐒🦧🦍

And by pricing couples out of the housing market, destroying jobs, and hiking asset prices, the Fed has seriously damaged the ability of young people to seriously date and have children. Thus the birth rate is collapsing in the US as well, which portends some disastrous consequences in the next 40 years. Small generations beget small generations- and we may begin a death spiral, similar to Japan where overwhelming amounts of old people are retiring, with no one to replace them. This decreasing population means less workers, less products, and a less industrious economy- creating economic stagnation and decline in the long run. Furthermore, it puts severe strain on the retirement system, such as social security.


https://i.redd.it/tfmsj1f62aha1.png

The Social Security trust fund most Americans rely on for their retirement will run out of money in 12 years, one year sooner than expected, according to an annual government report. The outlook, aggravated by the 😷🌐, also threatens to shrink retirement payments and increase health-care costs for older Americans. When the program was created, there were over 6 young workers paying in for every 1 retiree receiving benefits. That figure is now less than 3:1, and is soon falling to 2:1

Through the magic of QE (🐒 Quantitative Easing), the Fed has exacerbated the worst houseless, mental health, and population crisis the United States has ever faced. These issues are incredibly complex and hard to remedy- and it may take decades to undo the damage.

Source of this God-tier DD by the 🐂


https://i.redd.it/7d8nha1b2aha1.png

https://thedollarendgame.com/

🐒🤙

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