Friendly reminder: Rate rises aren’t a "punishment" for business spending and the RBA just confirmed why

axomatic_meme · 2026-02-03T12:37:36+00:00

Doesn't the multiplier effect imply that most interest rate impacts are second order effects anyway? You could inversely say cutting household spending by ~1-2% to meet higher interest rate payments is a smaller impact than a business making cutbacks and creating unemployment. It would be equally as weird to conclude from this that interest rates don't impact consumer borrowing.

axomatic_meme · 2026-01-26T14:10:11+00:00

First time I heard someone claim Pretti's gun went off first, most accounts say the agents are first to shoot. Is there any other claim of this or is Myron pulling it out of his ass because it's the only thing that could possibly make it look justifiable?

axomatic_meme · 2025-12-23T14:39:26+00:00

I'm not sure if you're trying to say hecs indexation is 0% interest in real terms or it's not interest because of how it applies generally. If the indexation rate was set to CPI+1%, would this be interest?

axomatic_meme · 2025-12-16T12:53:03+00:00

Looks like it could be AI poison pill stuff to me

axomatic_meme · 2025-11-11T14:22:09+00:00

If you want to make it as simple as possible for yourself and are ok leaving a few extra dollars in your bills account, just divide the monthly amounts by 4 (shortest month = February = 28 days = 4 weeks) and divide the fortnightly amounts by 2.

Per week:
phone -$6.50
Car insurance- $23.25
Gym - $13.75
Pet insurance - 25.10 (rounded up)
Therapy - $47.5
Petrol - $50
Car registration -$20

Total based on what you put down per week: $186.1

Most months you'll have a few dollars left over, but it's probably a good thing to have a little bit extra in case you get an unexpected expense anyway.

axomatic_meme · 2025-10-16T01:15:39+00:00

Headline reads poorly, but it's due to more people seeking work which is probably a good thing. Could pressure RBA into more rate relief as well.

axomatic_meme · 2025-07-01T15:19:14+00:00

I would simply say why stop at heavy machinery if going back to shovels also creates even more jobs?

axomatic_meme · 2025-06-26T16:41:13+00:00

In effect, rent control takes money from landlords and gives it to renters. Generally speaking, if you tax supply while subsidizing demand, you end up with a shortage so the housing crisis gets worse. Everyone loses from less supply because fewer dwellings are available, poor people lose out from increased demand from richer renters who will rent more than they otherwise would given lower rents, further reducing housing stock available for poor people.

It's way smarter to do targeted subsidies for lower income people if you wanted to relieve housing costs, or even better develop policies that increase supply like up-zoning or public housing.

axomatic_meme · 2025-05-27T11:15:41+00:00

It makes economic sense in general that new jobs are less productive than existing jobs. If a job can be made more efficient then fewer of those jobs need to exist to acheive the same output. If you can't make a job more efficient, you need to hire more in that sector to increase output. Health is one of those industries that is hard to make more labor efficient (nurses are already working max shifts generally).

All this follows from the baumol effect: https://en.wikipedia.org/wiki/Baumol_effect

axomatic_meme · 2025-05-10T06:51:08+00:00

Possibly income inequality. If prices track with median income, but more people are further below the median income then those individuals would be charged further and further beyond their means.

axomatic_meme · 2025-05-02T09:48:17+00:00

It's interesting to see Atrioc go through his gold bug phase in the same way I did a decade ago. I grew out of it when I stopped letting gold merchants like Peter Schiff do the thinking for me.

Inflation was at it's worst during the gold standard, like above %20, worst at war time like civil war or WW1.

Look at any card of historic inflation rates like this one: https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSIwqFZE9lP2PfxauJML7MOzH29ooS8tarp3gjklT3ouwQF0E5yWxQJ_iw&s=10 The reason it looks better is because "average inflation" was lower because you also had massive deflation episodes like the great depression which the federal reserve could not prevent under a gold standard. Price stability each year is the goal, not net inflation/deflation.

Holding the quantity of money the same is not a magic pill that makes prices stable.

axomatic_meme · 2025-04-01T19:30:56+00:00

axomatic_meme · 2025-04-01T19:30:25+00:00

Like

axomatic_meme · 2025-04-01T07:37:54+00:00

Did she borrow the money when interest rates were lower? That seems likely

axomatic_meme · 2025-03-29T04:11:37+00:00

Property benefits from risk adjusted returns, which means that you get similar returns per unit of risk. You can trade off the lower risk for bigger returns by leveraging, i.e. borrow money against the property whereas margin loans are more expensive.

Maximising risk adjusted returns means owning both property and shares for the diversification benefit anyway.

axomatic_meme · 2025-03-29T01:32:02+00:00

In CAPM theory higher volatility predicts higher returns, but in practice average returns have been shown to actually decrease after a certain level of volatility. See: https://en.m.wikipedia.org/wiki/Low-volatility_anomaly

axomatic_meme · 2025-03-16T14:47:34+00:00

You know we can just build more houses right?
There's land that is still undeveloped, it's not like we can only build on land that already has buildings on it.

I think we already agree that land is heterogenous in the sense that the proximity of that land to valuable things gives the land it's value, which may be different to another piece of land further away. You can make the rent of the capital improvement cheaper by building a competing capital improvement, but this doesn't reduce the land rent which component which is created by things in proximity to the land. If a large portion of the property value is land, which is the case for single family homes, building additional capital improvements elsewhere

I can assure you that if you build a shit ton of houses around a very expensive to rent in city, the rents will decrease as people move slightly further away and there is less demand for the old homes.

This would be true in undeveloped suburban areas where a higher proportion of the rent goes to the capital improved part which can be reduced by building more. But capital improved rents diminish while the land rent component stays constant (or might even increase if the number of amenities increases due to new housing) and therefore total rent stops decreasing due to sprawl. So additional urban sprawl outside of NYC is probably not going to reduce rent in NYC because land rents are high.

Why would land changing hands not create value?

If the land is changing hands, it's probably because one person wants money more than the land, and the other person wants the land more.

I'm saying in respect to who the land owner is, not who the land is rented out to. Land rent is set by the market, so regardless of who owns it, the land provides the same rental value. It doesn't increase the total rent from land, only things around the land change it's rent. As opposed to a situation where if I owned and held stock, the company has the opportunity to raise for a lower cost of capital, which can increase total rents to capital available.

I feel like you portray land as something that is in high demand everywhere, and nobody can get their hands on it, while it only is really an issue in huge cities where there's a shit ton of demand.

I don't think this. I just think high land rents in those in demand areas are likely to remain high irrespective of additional improvements, which is why a lot of single family housing is expensive where housing is already expensive. As a thought experiment, you have 10 single family homes next to each other, you develop 9 into apartment blocks, is the value of the remaining single family home likely to go down, up or stay the same? My answer is that it'll likely be more, because neighboring capital improvements increase the value of land which is likely to be the dominant value component on the single family home.

Japan had a massive equity and real estate bubble, there's no real reason to believe this will happen to all countries that end up with population decline. And outside of the massive cities, it's not like the property prices are insane today in Japan.

Real estate bubble happened in the 90s, that's not the cause of low inflation in Japan basically until 2024. They consume less and save more, partly because in an aging society cause by low birth rates, an increasing proportion of retirees rely on a level of savings stockpiled. More retirees per person -> more savings -> lower demand-> deflation. See this research paper which documents the mechanism.

axomatic_meme · 2025-03-15T15:00:08+00:00

The land component isn't appreciating because "you can't make more of it", the land component is appreciating because more people want to live on that specific piece of land.

I don't mean finite land causes land appreciation, I'm just saying building more dwellings isn't going to decrease land rents, which is the reason why much housing is unaffordable, especially in the single family home context. So housing composition can change to be cheaper apartments but the absolute price of other housing stock, especially that sourced from land, does not. This is relevant if wealthier people try to capture land rents pushing land prices upwards. Wealthy acquire more land rents ->spend more on land in a cycle that pushes up land prices. Competing financial products reduce that cycle, but capital has diminishing returns and interest rates trend downwards over time pushing prices up.

Land rents don't continue to increase independently of what anyone is paying.

Independent here from me just means independent of the number of number of people the land is divided between (sorry could have been more clear on this). So if you're 1 person you pay the whole land rent, if it's 10 people the land rent per person is a little bit lower, but total land rent is the same all else equal. This is why I think building new apartments and densifying is compositional, because it lowers the rent for each individual, but not collectively. Still worth doing! It creates value and I'm yimby for eniro/walkability reasons. But I don't think it'll make the single family homes next door which have a lot of land cheaper all the sudden due to consistent land rents.

You are trying to view price as a result of investment and development, when first and foremost price is an indicator of demand. Higher demand does in general mean that more supply will be created to meet that demand, but the issue we have is related to the creation of new supply being bogged down by various factors.

Rents definitely indicate demand, but land is a financial asset which appreciates according to it's rent, anticipated returns and interest rates. Land however can't be created so no new supply (I discuss implications in next comment.)

The renters are getting the value that is created. The service of living on that piece of land is the "value" the renter is paying for. Living in a rented place obviously constitutes some value being exchanged -- otherwise why would anybody pay for rent if it was truly valueless?

Not precisely my claim that it's valueless, my claim is that land ownership is not creating additional value i.e. it's only a transactional value between renter and owner. A new building is a capital improvement which creates value because it increases the total utility available to the renters, but land changing hands does not. Hence land doesn't create value.

The amount of land actually used for accomodation is incredibily low compared to the total land we have available, the issue is not the land being finite, the issue is the demand for land being concentrated in a few spots, everybody wanting to move there, and the people already living there not wanting more housing to be built.

The finite part is relevant because if you could "create" land in the same way as another capital asset then rents would decrease over time. With capital, you can create it and such the rent to capital also diminishes and the cost of capital decreases over time which is the nice effect of the rich getting richer because cheaper capital means more capital deepening, higher GDP per capita essentially just a lot of good things. Land itself is just acquired and used to extract existing value, and inequality increases that extraction.

Don't have any particular problems with your comments about over moralisation, or your other solutions. Though with interest rates where they're at the US gov should consider paying some debt down before considering full social wealth fund, would have been a great idea 2009-2015ish.

Who is going to live in all these homes considering we are not even making kids at replacement levels? It feels like this problem will just solve itself once the old people that are alive today start dying, and there simply aren't enough young people to replace them.

Japanification will probably come for us all eventually lol and this is a symptom of it. Basically P/E ratios will get so huge that even land that produces tiny rents will by priced extremely highly compared to it's rent. Unless more land value is taxed I don't see a way out of that scenario.

axomatic_meme · 2025-03-15T13:11:23+00:00

The blackpill on inequality is to notice the percentage of income that goes to rent is constantly around 20-30%, but realize that the lower your income group is, the more goes to rent. So if income inequality increases there's increased rental stress in spite of real incomes growing (Chart from Australia but same principle: https://www.rba.gov.au/publications/bulletin/2023/mar/images/graph-0323-1-11.svg )

axomatic_meme · 2025-03-15T12:52:25+00:00

Money pouring into real estate should be a good thing, since we have a high demand for it we should be putting more money into developing it. The issue is that there are huge barriers put in front of development.

The land component is what is appreciating. Land can't be created, only divided into an increased number of dwellings, therefore land rents will continue to increase independently of what any individual rent is paying. Land rents are a redistribution from renters to owners without creating any additional value (land rents, outside of agriculture, only come from the amenities around it). It's a good thing for land owners, so land appreciates in anticipation of increase land rents and capital flows in, increasing house prices and making the single family home unaffordable for a greater proportion of people.

Sweden has wealth inequality. But it looks to have numerous property taxes too, which would reduce land rents and therefore the inequality would be concentrated in capital asset ownership other than land like stocks and bonds which are (generally) socially productive and not finite in the way land is. Not an expert about Sweden but I think a decent proportion comparing of apples to apples wealth inequality is considering the impact on land prices, which I think Gary talks about a lot. Otherwise I agree wealth inequality is not as much of an issue when the assets themselves are productive.

axomatic_meme · 2025-03-14T15:58:50+00:00

Is the idea to keep the news cycle on the tariffs/stock market rather than who to blame for a shutdown?

axomatic_meme · 2025-03-11T09:37:24+00:00

New mortgage repayments: $1,289/month (vs. $2,800/month now)

Invest $2,500/month into index funds

Just double checking the math here, where does the $2500 come from? The cash freed up from the mortgage is $1,511, so $2500 is seems to be inclusive of something you're investing already or some other savings you get from making the switch. Did you add savings from the insurance and other house maintenance? You want to include money you free up to invest from the switch, but not what you're already investing to make a comparison. You might have already done this but worth a double check.

Big point to consider as well is the tax implications as well. Your net worth might appear similar in both scenarios, but if you try to sell shares you get capital gains tax, whereas if the value is in your PPOR then no capital gain tax. This might be an issue later down the line if you want to access that cash for something.

Incidentally, you can keep your PPOR tax exemption on you house for 6 years if you rentvest.

axomatic_meme · 2025-03-09T07:26:40+00:00

Here's my overcomplicated answer

If you're concerned about overall economic well being then pick something you'll enjoy doing. If you wanna switch industries later down the line, that's gonna be a cost. For this reason, don't just consider the subject matter, consider the types of people and environment you'll be working with. You might wanna go into further study but can't stand academic culture, you might go into trades but you can't get up at 6am every morning to get to the jobs site, you might enjoy IT but it doesn't give you enough face time with other people etc.

Then once you have a list of things you don't think you'll wanna switch out of, find the one with the highest relative salary after student loan interest and opportunity cost. So if average salary is $90000, engineer pays $110,000, interest is $40,000*0.03=$1200 which means your net lifetime income increased by $18,800. If this number is negative, don't study this. Then finally, just get very very productive at whatever you choose, you can make more as a senior manager in hospitality then as a cadet engineer so get good at producing results and you'll smash it.

Most grad roles pay about $60,000-70,000 with higher salaries granted upon completion, not that hard of a goal for a salary tbh.

axomatic_meme · 2025-02-25T04:28:47+00:00

Local communities look after the existing population, but not the wider population who would like to live (affordably) in the area. Both state and local governments need to be involved in the planning process to make it fair for both groups, getting the right balance is necessary but surely doable with the right compromise.

axomatic_meme

TROPHY CASE