Hey /pol/ was just in an argument or discussion with an economist friend of mine

Hey /pol/ was just in an argument or discussion with an economist friend of mine.

My job is being a financial engineer, basically I make algorithms to pick up trends in the stock market. However, lately I have been feeling that this is all just a bunch of bullshit and that nothing is actually being produced. It is almost like my company just makes money from doing nothing.

I told my friend that I think the economy is going to have a crash because there are not many people actually MAKING anything in the US anymore. He had a bunch of economic words and events that I didn't know about so he basically won the argument as I wasn't going to argue if I didn't have the right terms like trade deficits, Hayoot Smoody, a bunch of other things about interest rates, etc.

Who is actually right? He seemed pretty convinced the US economy was doing fine and will not crash anytime soon.

I find it really hard to believe this. I take a bunch of data, run some programs on it, and then wow my company just made like 5 mil doing nothing. I feel like our economy is just magic and not actually real.

Who is right me or the economist?

Whoops meant Veeky Forums my thread got deleted on pol for not being relevant

At first I thought it was political but I guess not. I think that board is satire.

I think that the stock market will definitely crash this summer, but I'm not sure about the entire economy. It really depends on how negative interest rates will affect business and the presidential election. Tell him to go fuck his self about the interest rates. Nobody knows how negative interest rates will actually impact businesses, because we've never had them.

>Who is right me or the economist?
Your argument seems to be based on you not understanding the value of a service economy in a modern country. So I would say the economist is right. That said people are buying less things and services, so that may lead to a recession.

What evidence do you have it will crash?

I told him there was a bubble because GDP was not rising at the rate of the stock market and he like had a ton more stats that I didn't have time too look up

I guess what I was saying is that some day the service economy will have a severe reduction in the number of jobs. I can already see it where I work, we used to have way more quants, now we have faster computers and use less people and make more money.

gdp literally never rises at the same rate as the stock market

I didn't mean the exact same rate. Sorry, I meant proportionally to previous times.

Well, you're incorrect to say that as a lot of businesses are multinational. For example, Apple can produce iPhone in China, sell them to India and profit, even though US GDP doesn't go up.

The US stock market isn't 100% the American economy. In fact, when the US market collapsed, almost the whole world suffered.

The whole world is having problems with growth though and other economies have had larger corrections than us.

A crash is possible, but we've had corrections the past 2 years as well. That being said, there's still room on the downside, we are trading at 23x earnings without growth present, which means that the market is currently overvalued.

Cheap fed money won't last forever.

Well yeah that is sort of what I was thinking. I was making a program the other day and I was looking at the Fed interest rate and I noticed this huge length at the end where it was near zero which did not trigger as a previously occurring event in my software.

I attached a pic, how is this possible, it seems like a very long time to have such a low rate.

The entire stock market and trading system is based upon a foundation of quicksand.

It only works because everyone takes predictions as facts and makes additional predictions based upon it. It's literally a house of cards.

Physics, Engineering, are all based upon physical laws which have shown to be true - finance is based upon guesses built on guesses, based upon systems which people prop up but could fail at any time.

I feel like I am using my nuclear science degree to create like money meme magic. This is what I was trying to say to him but he didn't believe it. He said it was valuable financial services.

Is that even true? Which previous times? You sound like you're just making things up

Like historically as GDP increase and more goods enter the market like commodities the stock market also increase in a correlated manner.

Now it seems like the market just keeps going.

Central banks are printing money like bats out of hell buying up all the "assets" in site and being the buyer of "last" resort. Ultimately I think they'll be the buyer of penultimate resort, but who knows.

The amount of funny money in the globe is growing at an astronomical rate. This means good things for equities markets b/c they get nearly first crack at the cash.

The stock market is a decent proxy for the economy but is a reasonably lagging indicator.
Much like you can get a bruise and it not hurt until you touch it. The injury is there but the pain is not.

You're both right. Sadly. You can have tremendous circulation of money but no true velocity of money.

Meme money Welcome to inflation land where the PPP only goes one way.

I'm not sure about the Central banks strategy of being economic garbage disposals, isn't gonna clog the pipes.

Internet age on top of broke age. significantly less waste and many many middle men are dying out.

How can we both be right? He seemed to have literally zero problem with current economy and interest rates etc. I believe it is a real problem and will not be able to be fixed once the chickens come to roost. I am saying that when there is a problem it is going to be big. No one has skills jobs and no one has labor or manufacturing jobs in the US

Wow, this is dumb.

> company just makes money from doing nothing.

That makes no sense. Are you saying they are scamming people? Money would not be exchanged if someone was not getting some sort of value. If someone is getting value, it implies that "something is being produced" in your terms.

What's wrong with that? Stock markets are human driven prediction machines. If humans make prediction that a certain company might succeed (which implies it may create value for society) people get behind it and give it financial backing. You know, how the fucking stock market works. What's wrong with the stock market if it can potentially provide a company with the money it needs to do something good for humanity?

Alright well I can explain how we make money from nothing. No need to call me fucking dumb it is what I do as a job. Our company hooks into basically a fibre optic cable system that allows us to trade between Chicago and NYC with microtransactions. This means we can skim money off price differences in stocks. We also run trading algorithms that net 4-8% profit when the market goes up or down.

We make money in a way you could never as an average trader. We use our clients money to make more money. There is no exchange of good. We also design the programs specifically not to change the stocks price by limiting volume.

Because there's no real value, it has gone into avalanche, it's not based upon what something is worth product-wise, or even about what it will be worth product-wise, it's making a guess on what other people will pay for it in the future.

It sounds like your company's role in economics is acting as arbitrage. The value to society is invisible but it's there in the financial markets by keeping prices stable and updated. Any money you guys make is probably insignificant in the grand scheme of things. I'd be surprised if your job doesn't get replaced by robots/AI within a decade or so though.

You're not talking apples to apples. If someones found the bubble they're not telling.
Somewhere in the bubble is the conversion factor.

Even on the worst days the stock market only lost 50% peak to trough.

That's just proximal arbitrage and has existed since property was invented. You're not doing nothing.
Did you ever hear about hyper inflation in argentina or brazil.
When an economic event happened the store owners fired all the old people and hired the youngest fastest people they could to change the sticker price on the food b/c the price was going up huge intraday and these sticker printers had to race up and down the isles racing to get in front of customers.
Most people were out of luck. But the people who just happened to be standing in front of teh price changergs could just swipe a whole shelf of stuff into their carts before the checker got to them and had a huge opportunity to arb later.

You're the guy who just stands infront of the soup waiting for the news about the soup. It seems terrible b/c you're in the trenches all day. but frankly you'll not make a huge difference.


With the bonds at near 0, there are virtually no competing investments for equities.

The opportunities for arbitrage in a liquid market are quite rare. Enjoy the fun and get all the money you can.

Yes I'd say all of our jobs will. I just said that before.

How do you all not see how this is a massive problem? If everyone is not working and computers just trade stocks with each other then what the fuck is even going on? How can you say this is still real?

But there IS value on stock markets predictions, in the same way I would have value if I bet on a poker hand. Yes, sometimes it is lost on companies that fail but the markets learn over time. In the long run, you focus on the companies that *do* succeed and how far they managed to get thanks to that funding from stock markets.

They said the same thing when they invented paper and ink.

It never was real and it was all just words in the end.

Ever try to do the physics on a spinning top? its one of the most complicated pieces of mathematics in history.
But anyway the economy is like a spinning top. Pretty stable and when it stops you just spin it again.

You're just seeing the signs of the top slowing its spinning.

If this top spins for the last time call it the end of an interesting civilization.

Golden ages last roughly 200 years. The american golden has 80-150 left depending on whether you're using rates or relative positions of power.
The US will have been a fairly unimpressive Empire historically, and that will be that.

Just wait for the crash when no ones got money to throw around and real work needs to happen.
You'll be in a better position then most because you were net short the market and made out like a bandit.
The executive suicides are coming.

As a financial engineer, you really don't do anything truly useful although you do make a lot of money. A lot of people in the asset management industry will vehemently disagree with that and truly believe it but they're wrong. Only a very small percentage (less than 5%, perhaps even less than 1%) of them are actually worth what they're paid. They're part of the rentier class that has been analyzed to death by the great economists.

The U.S. economy is not really doing fine but it is far better off than many of the other developed or emerging economies.

Whether there is going to be a crash or not is very difficult to know. While all asset prices are high, the central banks of the world are colluding to prevent any sort of substantial draw down. This isn't like 2008 when none of the central banks believed that there could be a systemic crisis since they didn't see all the interdependencies and tremendous leverage.

If had to place a bet on you or your friend, I would bet on your friend. At the moment, not all of the conditions for a crash are present. Note, I define a crash as a 40% or great fall in an asset price. A 20% drop is a correction or a draw down.

You left the last part off of your post where you tell me to invest in Ethereum™

Ya no definitely don't do that. Etherium pretty sure is not even a speck in history

Economists are by and large idiots when it comes to the real world. As the poster you're replying to makes clear, the theories and models in physics are a hard science and clearly reproducible and verifiable through the scientific method.

Economics presents itself as a science but it is not one no matter how fancy the mathematics get. Your friend has no doubt drunken deeply of the economics Kool-Aid and believes the propaganda. Truth is, he's not very useful at all to useful society. He's a useful idiot of the powers that be. He and his ilk's fancy degrees and convoluted theories give credibility to the overpaid bullshit artists.

That said, at this point in time, he's still more correct than you are. A crash is almost guaranteed to occur but not as soon as you think and not as far into the future as he thinks.

your friend is right
the interest rates will increase the value of the dollar
increasing our global purchasing power

>I guess what I was saying is that some day the service economy will have a severe reduction in the number of jobs.
Farming also had a severe reduction in the number of jobs due to the diesel tractor. Still growing strong!

>got deleted on pol for not being relevant

Next time add a sentence bashing black people, jews or women and they'll let it slide. How is this not relevant to politics?

Honestly economics is about as reliable as sociology.

>arbitrage has no value
Aaaaaand that's what they dont teach you in STEM.