> I have a vague theory that as the amount of wealth inequality in increases in a system along with excess money printing (lending, hypothecation, etc where the wealthy are permitted privileged leverage and risk), the more detached markets become from reality in general.

If you want to make it less vague, you can read Keynes.

It's inequality that is the important one, money printing doesn't impact it (except for it impacting inequality). In simple language, people don't want to spend all their money on consumption (the "demand is infinite" you see on econ101 is an approximation), and so when only two dozen people have all the money there aren't many things you can sell and turn a profit. But those people still want to invest all the money they aren't using, there is just nothing to invest into.

At the turn of the 19th to the 20th century, explaining this was a huge open problem in economics.

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electrograv 4 days ago | parent | next [-]

I had no idea Keynes had similar ideas, so I definitely should read his work (and economics literature in general).

I probably should generalize my thoughts though to say “expectation of economic growth” (instead of just “money printing”) seems to me necessary to yield “opaque market insanity”, as opposed to “transparent evil sanity”.

As a thought experiment, consider a (practically impossible) scenario where there is universally no expectation for long-term economic growth/contraction — regardless of whether it’s “real” or just monetary. Then by definition, a long term market simply cannot exist at all. No amount of wealth inequality can cause market insanity if there is no (long-term) market at all.

Wealth inequality in such a situation can still yield hoarding, domination, conquest, control, scams, manipulations, etc. But I wouldn’t call that “market insanity” so much as “evil sanity”.

In practice, the real impact of wealth inequality on the common people would likely be the same either way. However, without long term economic growth/inflation, the “sane evil” of the greedy wealth can no longer hide behind the veil of “market insanity”.

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marcosdumay 4 days ago | parent [-]

Humanity have always had markets, investment has been a thing for thousands of years, while economy growth wasn't something people expected until something around the middle ages.

You probably won't get a lot to support that idea on the literature.

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andrepd 4 days ago | parent [-]

Financial markets and capitalism has only existed for ~300 years, even if trade did happen since the start of recorded history.

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hollerith 4 days ago | parent | next [-]

The Romans had private ownership of land, mines and early industrial concerns (e.g., steelmaking) 2000 y ago. They had a legal system to protect the interests of investors. Also, professionals specialized in providing various financial services.

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immibis 3 days ago | parent | prev [-]

And capitalism with unlimited ability to print money has only existed for 53 years. And capitalism with actual unlimited money printing has only existed for 17 years. These aren't ancient systems or part of fundamental human nature; they're modern experiments.

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marcosdumay 3 days ago | parent | next [-]

The restriction on how much money banks can print has only some 200 years. A while before that, banks invented unlimited money printing, and a while before that banks were completely reinvented as regulated entities because money was coming and going without control...

I don't know how the ancient civilizations handled non-metalic money, I know that on the Middle age it was a famous kingdom killer because most kings couldn't refrain from creating infinite money.

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imtringued 3 days ago | parent | prev [-]

Calling these things modern experiments even though nothing fundamental has changed since the Roman age seems pretty foolish.

If anything, the experiments you're talking about are just the logical consequences of doing the same thing over and over.

After all, the experiments never seemed to modify the problematic element, all they did was increase the quantity according to the logic of accumulation.

In fact, isn't it remarkable that the last 2000 years have produced the exact same pattern over and over again?

The logic is always the same. Money from period A can be carried over to period B. This means there is too little money during period A and too much during period B.

Since period A is perpetually today, and period B is perpetually tomorrow, one could get the idea to at least fix period A, which isn't as stupid as the Austrian economists would like to tell you. But fixing today through quantity means there is even more money carried over to tomorrow. The problem is being fixed with more of itself. It certainly isn't being fixed by having a competing system for trade.

Abandoning gold, fractional reserve banking, QE, etc all exist due to the fundamental mistake of making it possible to carry something that is time and location bound away from the time and location it is bound to.

Reintroducing a gold standard doesn't change this logic. It just makes it slightly more visible.

When you look at Arrow-Debreu models, you see the assumption is that utility maximizing economic agents will spend their entire budget on either present utility (consumer goods) or future utility (investment goods). The concept of carrying money from one period to another doesn't exist and is inherently incompatible with equilibrium and yet you don't see economists warning us about the carrying over of past balances into the future with the exception Keynes and Wolfgang Stützel. Not even Marx thought that this was problematic. Even the Austrian economists know the problem, as they argue that the single individual with the lowest time preference should own the entire planet and that the real problem is the national central bank (which happens to be quite small in contrast to world domination).

The problem and its half baked attempts at solutions is at least as old as Christianity. Possibly all the way back to mesopotamia.

	▲	immibis 3 days ago \| parent [-]
		> Calling these things modern experiments even though nothing fundamental has changed since the Roman age seems pretty foolish. I just told you two things that changed within a human lifetime, and you didn't even read them, so the conversation ends here.

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mitthrowaway2 4 days ago | parent | prev | next [-]

Money printing does directly impact inequality, via the Cantillon effect; in most cases, the printed money is put into the system in a way that disproportionately increases prices of assets that are held disproportionately by the wealthy.

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rstuart4133 3 days ago | parent | prev | next [-]

> there is just nothing to invest into.

I think you have just defined gold and bitcoin to be "nothing".

Sounds about right.

	▲	NoMoreNicksLeft 3 days ago \| parent [-]
		True investment is when you put capital into a project or endeavor that is expected to earn rewards beyond its future sale price. You open a restaurant, and sell meals for more than the cost to make them. If your only hope is that 3 years from now you can sell the restaurant for more than you bought it for, it's no investment. Even if gold will be worth more, it won't make more of itself.

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Zigurd 4 days ago | parent | prev [-]

A post-truth environment adds to the ickyness of the feeling: on top of the bubbles, we've got RFK Jr. deciding the fate of biotechnology companies. Having a tech bubble at the same time science is being vandalized at NIH and in universities looks pretty damn dark.

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ethbr1 3 days ago | parent [-]

Not just RFK Jr. The rest of the government requiring a 15% kickback from Nvidia and AMD to approve GPU sales to China, and the CEO of Intel being told to resign.

I feel like I'm going to be able to tell my adult kids "Yeah, when I was younger the Republicans were the party of free trade and government non-intervention in private industry..."

	▲	immibis 3 days ago \| parent [-]
		Conservatives have never been that party. They've always been the part of making the rich richer and the powerful more powerful by whatever means seem to work today. In the past free trade seemed to do that. Now arbitrary trade restrictions seem to do that. Or at least they feel so.