Investment returns in the era of the decline

[Humanofearth]

ou can literally move anywhere in the world. Your capital is hyper mobile. It is legal tender in some countries. Others openly endorse it-Singapore, Dubai. You don’t pay the government directly for most services, what matters is people accepting it, even just a friend who accepts it and will trade you fiat fixes the problem for all possible governments as you make one transaction to send your friend some sol and they give you the fiat. That is literally how it is currently bought in “banned” countries. Western governments have been very clear that they will not ban as they don’t want to get left behind, they will tax what they can as it is literally impossible to stop. Representatives of said governments often own large amounts as well. You can also change your address infinite times.

Again, highly recommend learning about the logic of violence and game theory here.

[zbigi]

ou can literally move anywhere in the world. Your capital is hyper mobile. It is legal tender in some countries. Others openly endorse it-Singapore, Dubai. You don’t pay the government directly for most services, what matters is people accepting it, even just a friend who accepts it and will trade you fiat fixes the problem for all possible governments as you make one transaction to send your friend some sol and they give you the fiat. That is literally how it is currently bought in “banned” countries. Western governments have been very clear that they will not ban as they don’t want to get left behind, they will tax what they can as it is literally impossible to stop. Representatives of said governments often own large amounts as well. You can also change your address infinite times.

Again, highly recommend learning about the logic of violence and game theory here.

I don't want to move though. I have ties to my immediate area. And most people are like me - they would move if a catastrophe hit them, but otherwise are not interested in it. After all, for most people things like money are only secondary concerns in their life, and they will not make major life decisions based on them only (how many people do you know who would move to a country on another continent only because it has better policies? I think I know zero).

Re: banning crypto - many governments are currently in the process of slowly banning cash (to stamp out tax evasion) [1]. So, if governments are not afraid to of delegalizing freaking cash (even though there's already considerate push back from the public), they won't have the slightest issue with delegalizing crypto, if it ever becomes a threat to the tax revenue.

[1] For example, in Poland, the latest regulation says that, if you make a purchase over roughly 4K euros with cash, you won't be able to count it as a cost in your business.

[zbigi]

Going back to Musk

Yep, I was always amused by that too. There's also the effect of Musk starting to sell his position in a major way would signal that he no longer believes that the stock of Tesla is worth as much as the market says it is. Since he's practically by far the best informed person on the matter, the markets would immediately take note and the price would tank way beyond what the supply/demand curve would indicate.

Likewise, if Millennials collectively decide that "stocks" aren't for them, boomers and genxers will not have anyone to sell to and would thus have to rely on dividends from their collection of "sh". As such "generational buy-in" is also important. A big part of why the US stockmarket did so well in the 20th century is that stocks went from a minority interest to becoming mainstream. There's really nothing that physically prevents it from losing that popularity as an asset class again.)

I wonder about that too. For instance, in Poland it's still not "a thing" to invest in the stock market. In effect, even now we still have very friendly 10-15 P/E values for the major stock indices and their ETFs. Which is great for a value investor, but I wonder if stock market ever takes off and I'll double my money "for free" or if it will basically remain stagnant as it is. Funnily enough, I think it's contingent on how well Polish people know English - as the stock obsession is mostly an US thing, the more people understand English and start veering into English-speaking corners of the Internet (like I did with this forum for example), the more they become infused with the mindset that stock investing is very much a thing.

[Humanofearth]

@zbigi

Btc is the most likely to be used as p2p cash, it is very easy to track, most will make a mistake somewhere in hiding their tracks at some point and then, they’re caught if they owe taxes. I think it’s much easier to track than cash.

If you won’t move, you are implicitly agreeing to the laws of your land. I left the country I was born in and renounced that citizenship. I live in a country without income taxes in certain cases as a resident using a passport from a country I rarely visit. Laws, including taxes, are one of many factors in deciding where you live.

But the possibility of the rich who they are trying to tax being able to leave easier than ever before makes it less likely that they’ll need to because guns won’t come after those using crypto but after those avoiding taxes, which crypto is helping them find with software to analyze the blockchain and those using it for payment at dominant stores that accept it as payment because those stores aren’t doing everything to hide their addresses. The dynamics of the game change with unseizable property even if most won’t use the assets to their most paranoid level but just as easy QR codes and savings accounts on their phones.

[zbigi]

The dynamics of the game change with unseizable property even if most won’t use the assets to their most paranoid level but just as easy QR codes and savings accounts on their phones.

By "the dynamics change" you mean that the state will have trouble getting assets from you, because you store them in crypto? I think there are already widely adopted solutions which allow that - owning (physical) precious metals or, as is popular in Poland, owning traceable assets, but nominally in the name of your parents or other family members you trust. There are already people in Poland who owe Polish state millions (usually after some tax scam), who officially have nothing of value, but live in fancy houses and drive Porsches.

[chenda]

Others openly endorse it-Singapore, Dubai.

Both these countries are run by authoritarian governments which restrict personal freedoms and engage in highly centralised economic planning. Are the really going to embrace a technology which wound turn them into a libertarian paradise? It seems unlikely.

[Ego]

Both these countries are run by authoritarian governments which restrict personal freedoms and engage in highly centralised economic planning. Are the really going to embrace a technology which wound turn them into a libertarian paradise? It seems unlikely.

Are you asking the correct question? How would a technologically advanced authoritarian proceed if they believed it was unlikely they could ever exercise complete control over it?

[chenda]

Are you asking the correct question? How would a technologically advanced authoritarian proceed if they believed it was unlikely they could ever exercise complete control over it?

You mean they are seeking to co-opt it and control it? That seems highly probable.

[Ego]

I'm not so sure cryptographically secure property rights would do much to put Ukrainians at ease at the moment.

Certainly true if the Ukrainian owns a home in Crimea. Not so much if they want to move their crypto wealth from Crimea to Kyiv or Kentucky.

[Ego]

You mean they are seeking to co-opt it and control it? That seems highly probable.

I mean that effective banning would require coordinated, effective authoritarianism worldwide. If the past two years has taught us anything it is that authoritarians can succeed in some of the places, some of the time. Not all of the places and definitely not all of the time. The endemic virus that cannot be mentioned is a good parable.

[WFJ]

Crypto zealots have to believe that governments will readily give up their power to tax and let the netizens pass freely within their borders for crypto to be a safe store of value. The "network effect" will someone come to their rescue when a government wields power on an individual. If one believes this, I have some land in Florida you might be interested in.

I reject that society is in anyway declining. Travel to most developing nations and talk to someone in their 30's-40's and ask if life is better today than 20 years ago to get an idea of the rate of progress. It is obvious that most of the spoils are concentrating at the top, but the median utility of a world citizen is still much higher today than at any point in the past.

A main issue is that the number of individuals left behind (lack aptitude to obtain 2020 first world skills) is growing and at some point, may become large enough to slow progress down (some kind of revolution). IMHO, this is decades from happening as these non-skilled workers seem to be content taking stimmy checks, rent forbearance and an occasional raid of fast fashion outlets in large US metro areas. This is a small tax to pay for most US citizens.

[Humanofearth]

There’s no way the church will allow the printing press to develop.

Nation states are a new idea, there were empires before but nation states came in around the same time as the printing press facilitated the standardization of language and gun powder made large scale violence more economic.

[steveo73]

I reject that society is in anyway declining.

Yep. You need to get your premise right prior to going down the rabbit hole. The premise that society is declining to me doesn't stand up to the evidence. Have human beings ever been able to develop vaccines to counter a world wide pandemic ? We have big social movements like BLM which are really about trying to create meaningful and positive social change. We have mass movements toward a greener society in response to global warming. We have the Internet and the massive amount of information available to society which include early retirement and financial independence. We have index funds.

If anything the thread should be investment returns in the age of mass progress.

[Humanofearth]

What if we define decline as a long term trend of very slowly decreasing median income in the developed world. This happens as technology causes purchasing power to increase even as wages dont, the developing world sees steady increases in median income, ubi, and the massive printing + technology induced deflation causes asset values to skyrocket relative to consumption. Seems like the greatest time to invest in history.

[zbigi]

Yep. You need to get your premise right prior to going down the rabbit hole.

I'm not saying the decline is happening right now, but that it's coming and it would be good to have a investment strategy that is aware of this prediction. For example, if/when cheap energy dug up from the ground finally ends, unless we've invested in ungodly amounts of renewables by then, the party will be pretty much over. Maybe it's nothing to worry about if you're already 50+, but for the youngest people, with potentially 70 years of investing ahead of them, it's not something I would easily dismiss.

[Hristo Botev]

You’re quoting the church talking about the printing press in 1500.

Was the Church wrong?

[steveo73]

I'm not saying the decline is happening right now, but that it's coming and it would be good to have a investment strategy that is aware of this prediction. For example, if/when cheap energy dug up from the ground finally ends, unless we've invested in ungodly amounts of renewables by then, the party will be pretty much over. Maybe it's nothing to worry about if you're already 50+, but for the youngest people, with potentially 70 years of investing ahead of them, it's not something I would easily dismiss.

I don't believe the decline is coming. We keep advancing. Sure there is some really dumb stuff that goes on in the world but overall I think we tend to end up significantly better off than our ancestors.

There is always doom and gloom out there and every so often it's right. It doesn't tend to last though.

[zbigi]

I don't believe the decline is coming. We keep advancing.

It's not about belief. For the last 200 years, the unbelievable explosion of civilization was entirely predicated on cheap fossil fuels. Simple logic dictates that it can't go on forever (the energy deposits don't renew themselves nearly fast enough), so we either find alternative and similarly cheap sources or everything becomes radically more expensive. For a tiny taste of how it would look like, check out the seventies.

And that's just the fossil fuel angle. There are other non-renewable resources on which the current economy heavy relies upon. Each one of them will eventually run out at some point and then it becomes the question of whether science/engineering has managed to find a replacement by then.

[Married2aSwabian]

The trend of global population doubling every forty years has to end soon. It’s true that, especially with climate change, that is not sustainable. If I remember right, Jacob’s main motivation for ERE is to minimize consumption ala verdant.net.
So, the question becomes: can population taper off to stay at under 10 billion without major geopolitical chaos (ie. Decline in pop growth without decline of civilization)? I wouldn’t dismiss the premise out of hand. Mostly, we humans have used our superpowers for good and not evil over the centuries, but not always. We’ll find out the trends in the next 5 - 10 years, that’s for sure.

[steveo73]

For the last 200 years, the unbelievable explosion of civilization was entirely predicated on cheap fossil fuels.

I think your premise is wrong here. It was build on human ingenuity. I bet that will continue.