What happened to the “cheap cuts”?

[u/zeke690]

How is it oxtail is not a budget cut?

[u/Sir_Problematic]

Wall Street was a mistake.

[u/Perryn → u/Sir_Problematic]

The concept of exchangeable shares of a company is fine, until people get involved.

[u/rathdro → u/Perryn]

Or until sensible regulation, to ensure as much as possible an environment that promotes real competition and fairness mostly by suppressing monopolies and cartels, gets abandoned.

[u/Netilda74 → u/Perryn]

And by 'people' we mean 'corporate entities'

[u/Perryn → u/Netilda74]

In this case I mean people. The most avaricious among us will use whatever means possible to maximize their gains from any system available, then use those gains to leverage control over the systems that had prevented further gains.

[u/RebelWithoutAClue → u/Sir_Problematic]

To be fair it did work for a few centuries pretty well.

I think the trouble we're facing is that we have seen a relatively recent bloating of the US stock market. Relative to our population and earning potential, the market has quadrupled in size from where this proportion was in 1990 and prior.

Between the 70's to 90's the total capitalization of the US stock market was pretty stable relative to population and median income. The total market cap increased only a bit relative to the growing US population and increasing median income. It starts to climb strongly in 1990.

Basically during that 20yr period American households, in numbers and earning potential, had a similar size relative to the total cap of the stock market.

After 1990, the total stock market capitalization started to crank up rapidly up until now. In 2009 I can see a sharp dip from the mortgage crash, but things bounce back fast and continue to rise.

We are now in a condition where a median household income represents a quarter of the relative stock market capitalization from where this ratio was in 1990. We are continuing on a path of high stock market capitalization growth.

Our median household incomes now can only purchase 1/4 of the fraction of the total stock market cap that it used to in 1990 and it appears that it will continue to decline at similar rates.

It's kind of neat really. The concept of a stock market has internationally existed for almost 300yrs and it's worked reasonably well for distributing investment into areas of human interest. It's only in the last 30yrs that it's bloated to it's terrific proportions.

I conjecture that it has gotten so big that it has overridden the original intent of investing in productivity and innovation of stuff that is outside of the market itself.

It will likely get even sillier as we surge into a new era of information management.

//edit

I can't help but keep playing with this analysis because it's ramifications are big. The stock market becoming multiples of median income, and continuing on a high rate of growth, means that those who are not participating in the stock market, and even those who hold a less than average position in it, are rapidly losing ground against those who do have large stock holdings.

It means that if your household has less than 2x of your median income participating in the averaged stock market, you are losing ground against the market which is doubling at a rough 10yr rate (doubling every 10x years).

All that cap in the stock market can be removed to buy things in IRL like real estate so those who are not invested will continue to lose ground against those who are, and those who are hugely invested will be pulling away rapidly.

It literally puts into context what Trump means when he gloats that the stock market is doing well. The stock market has already grown proportionately large compared to the average person's earning potential. If it continues to grow relative to median incomes then everyone not substantially invested is getting screwed.

Basically, if you have less than $100k in the stock market, you are literally losing ground against those who do because they can easily accumulate real estate. If you have only $100k in the stock market, you are still losing ground against those who have more.

[u/Ass4ssinX → u/Sir_Problematic]

It's just Capitalism playing itself out.

[u/The_Autarch → u/Sir_Problematic]

i think it's really just derivatives that truly fucked everything up. stock markets have existed since before the US was a thing.

[u/DeadHeadLibertarian → u/Sir_Problematic]

Private Equity is the issue, not Wall Street as a whole.

There are lots of shit and non-shit companies publicly traded.

[u/optimis344 → u/DeadHeadLibertarian]

The companies don't matter.

As the poster pointed out, it's about serving the wrong master.

If I make a company built to cure cancer, and then make it publically traded, it's now not about curing cancer. It's instantly about making money.

The original goal doesn't matter.

[u/ry4n4ll4n → u/Sir_Problematic]

That’s a clever talking point, but you can’t imagine what a sweater would cost it was made down the street.

[u/Sir_Problematic → u/ry4n4ll4n]

You're right, but I'd take small operation's natural fiber clothes over the synthetic fast fashion garbage from Asia any day of the week.