Three Things I Think I Think – I’d Like To Report A Mass Murder

Here are some things I think I am thinking about today:

1) Hello, 9-1-1: I’d like to report a mass murder. Here’s a JP Morgan note that has been going around twitter the last 24 hours. I don’t have much to say here other than this – most of the people on this list have a few things in common – political bias and/or a permabear bias. So, don’t be biased or one day you might end up on a list like this getting carried out in a body bag.

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(Thoughts and prayers – image via @nickatfp)

2) Here’s the worst take ever on Twitter. The socialist movement seems to be gaining traction. Unfortunately, it seems to be largely due to people presenting fake news about capitalism. For instance, here’s Robert Reich on Twitter declaring that all billionaires are basically defrauding the system:

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This is over the top. I mean, Donald Trump tweeted 82 times on the same day and Reich’s Tweet was still worse than all of Trump’s (perhaps combined). That’s quite an achievement.

Look, I agree that inequality is a problem. I don’t think American capitalism is serving everyone as well as it could. But we can make pragmatic conclusions about all of this without losing our minds and declaring that all billionaires have gamed the system or worse, saying that billionaires shouldn’t even be allowed to exist. I’ve discussed how no one is self-made. There are so many factors that go into success – lots of luck, government support, social support, family support, education, intelligence, hard work, etc. These factors all play a big role in the outcomes. So it’s just silly to boil it all down to the idea that the system has created a playing field that is so uneven that only fraudsters can get rich.

3) Congrats on the record debt levels! Household debt levels jumped to almost $14T this quarter according to the NY Fed. You’re likely to read lots of scary stories about high debt levels and all that. But let’s circle back to accounting 101 here. Remember, all financial assets have corresponding liabilities. So, when someone starts screaming about how the debt levels are high we should ask them what the asset levels are. Balance sheets are called balance sheets because, voila, they balance. At the aggregate level all those financial assets and liabilities just cancel out and all we have left is a big pile of real assets (like houses, cars, factories, etc). So, it’s not so important what the quantity of the financial assets/liabilities are, but really what they are funding and whether that funding is sustainable.

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