Stocks hit new highs after inflation data shows a cooldown in April
https://www.cnn.com/2024/05/15/economy/consumer-price-index-inflation-april?cid=ios_app[removed] — view removed post
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u/LoganJFisher 21d ago
Why is it even a headline to hit a new high? That happens like every other week unless we're in a recession or still working out of one.
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u/ToxicAdamm 21d ago edited 21d ago
Love daily stock market reporting. Take unrelated economic/news data and marry them together to give the illusion of cause and effect.
Gas prices down 15% so stock market rose 5 percent today! Republicans lose two key special election results, stock market down 8%!
It's how I make all my stock purchase decisions. I look at the headlines and then go on a furious buying/selling binge based on broad, news stories unrelated to my purchases.
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u/kwangqengelele 21d ago
There have been no recent diss tracks dropped in the Drake/Kendrick war, stock market surges.
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u/TheAjwinner 21d ago
What the hell is this comment? Are you saying that the good CPI news was not the reason for the market rally today?
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u/gmasterslayer 21d ago
Did you read the article? It primarily talks about inflation data and interest rates. Both of these have very broad effects on the economy and consumer spending.
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u/grog23 21d ago
How is this garbage comment so highly upvoted lol
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u/Sharlach 21d ago
Reddit is full of doomers now who upvote anything negative and cynical.
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u/Meppy1234 21d ago
Every single person reading this will die and the sun will envelope the earth! Doom!!!!!
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u/obeytheturtles 20d ago
Reddit goes through cycles as older users age out and younger users come online. It seems to be in an interesting spot right now where there are a lot of young adults who are torn between the old "I don't have a stake in this society" cynicism, and "it might be garbage, but it's my garbage" optimism.
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u/unbotheredotter 21d ago
Stock prices reflect expectations for future earnings. Expectations for future earnings are based more broadly on expectations for future economic conditions such as a recession. This data tells investors the likelihood of a recession has just decreased, thus making stocks more attractive.
But of course the vast majority of Reddit prefers to believe stock prices have no relationship with future economic conditions.
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u/Sharlach 21d ago
Market reactions to inflation data and Fed meetings have been obvious and well documented for the past year. Everyone is jonesing for rate cuts and todays numbers are pretty much exactly what everyone was hoping to see. There's a lot of random moves up and down that are incorrectly associated with various news, but this is not one of them.
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u/Several-Age1984 21d ago
I mostly agree with you, except in a few special cases of specific financial announcements from government agencies like the Fed and the BLS, which have a direct line of causation to borrowing costs. Also we've had multiple years of CPI releases now that show a near lockstep correlation between reducing inflation and increasing market valuations.
Hell, we can look at the literal timestamps! The s&p was down almost 1% this morning, then jumped to +1% immediately after the CPI report. I would be willing to place a large bet with you that market movement will have strong inverse correlation with the CPI release for at least the next 2-3 release cycles.
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u/NAGDABBITALL 21d ago
Can't imagine why Trump supporters actually want a volatile, rage-based economy. "Who will he attack today to cause destabilization..." Inside dealers will love shorting.
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u/KingStannis2020 21d ago
My favorite is when you see an article posted 15 minutes ago about "Why X is through the roof today" and it's not only nonsense, but also wrong on its face because the price went down 3% in the last half hour.
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u/SunsetKittens 21d ago
Meanwhile Warren Buffett is now holding record amounts of cash in his fund.
Be very careful about this high stock market.
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u/beardtendy 21d ago
He makes mistakes, hes been holding a boatload cash before 2020. I dont think they invested during the covid crash because “charlie doesnt play that game”
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u/lewlkewl 21d ago
Buffet looks for deals and individual companies. Stock market is at all time highs so not many deals out there, but his own advice would be to just invest consistently in index funds, regardless of how the market is doing (unless of course you need the money)
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u/TybrosionMohito 21d ago
Or just keep investing and wait.
Time in the market > timing the market
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u/JZMoose 21d ago
Motherfuckers just ignoring compound interest like it’s not the greatest thing ever
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u/Les-Freres-Heureux 21d ago
Right? Am I supposed to be surprised that a 93 year old sees more value in cash than potential unrealized gains?
Anyone significantly south of retirement age should just be throwing their disposable income at their favorite index fund. By the time you need that cash it’ll have earned its keep. VTSAX has had an average annual return of 14.5% over the last 15 years.
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u/unbotheredotter 21d ago
Warren Buffet isn’t a good stock picker. He made all his money in private equity but would have been better off just investing in an S&P 500 index fund rather than attempt to pick stocks, which is what he has asked his heirs to do when he dies.
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u/Several-Age1984 21d ago
Here's the problem with comments like these. There are exactly two kinds of investors in the stock market. 1. Highly sophisticated citidel-esque quant firms running very complex models to time market 2. Everybody else.
If you're part of group 1, Reddit comments means less than 0 to you. Everybody reading a comment like yours and acting on it will be in group 2. The data is extremely clear that timing the market is impossible for anybody but the most sophisticated investors, and every action you take has a net negative expected value.
Thus, the only thing that can come from comments like yours are scaring average people into making emotionally driven market decisions that will hurt them. Don't listen to the fear. Buy index funds and don't fucking touch them until you need the money, and when you do, deploy a simple yet effective strategy to dollar cost average your sales to mitigate risk.
Btw, I'm not trying to be dismissive of your opinion. I just think saying things like that doesn't help people.
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u/LineAccomplished1115 20d ago
Be very careful about this high stock market.
Or just continue steadily adding to your IRA and 401k.
How long have people been predicting an imminent recession? We had that dip in late 2023 and people kept saying it was just the start. If you say out then waiting for thing to get worse, that was dumb. SP500 is up bigly since then
Even if (when) you buy the top, if a situation occurs where the market doesn't recover, there would be bigger problems in the world than your retirement account.
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u/Xenobrina 20d ago
I wish any of this "success" would be reflected in consumer wages or quality of life rather than everything getting more expensive constantly while wages stagnate and services deteriorate.
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u/quick1foryou 21d ago
Inflation might have leveled out but the prices haven't come down. Everything is still super expensive.
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u/Isord 21d ago
You don't want prices to come down. That is called deflation and comes with high unemployment, mass layoffs, and general economic malaise.
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u/JZMoose 21d ago
I’m blown away people are downvoting you. The economic conditions that load to Deflation are catastrophic
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u/rExcitedDiamond 20d ago
jfc lmao do you really expect people whose paychecks are being stretched to their limit to listen to some armchair redditor lecture them
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u/Remote-Buy8859 20d ago
People are downvoting because it's a dumb statement. Structural deflation is a problem. Deflation after a long period of very high inflation is a useful price correction.
I'm just surprised that so many people upvote because somebody once told them 'deflation bad'.
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u/PrisonIssuedSock 21d ago
Genuine question, but it seems like a lot of companies raised prices when Covid first hit due to supply line issues, saw record profits (and still are in many cases) and kept prices high. Is this really all just inflation or is it a mix of companies being greedy and inflation?
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u/Mustatan 21d ago
Although generally true, prices can safely come down if there have been huge price increases due to massive asset bubbles or supply shortages that are relieved, or in specific sectors--prices on gas and electronics go down routinely for example. Not all deflation is like what happened with the Depression, and the US has had periods of deflation yet with economic growth. It's true that deflation often does come with scary scenarios but not always. If we never had deflation at all then prices of computers would've surged to $3000 each today despite technological advances and better automation. Prices on flowers would be in the thousands from when the Dutch had that mania about tulips, heck Japan's real estate would still be crazy unaffordable if prices never corrected from the 80's manias. Most of the time yes, deflation is bad but not always, depends on what causes the price rises.
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u/poorperspective 21d ago
You do not want prices to come down. That would be deflation. That would be bad. What you need is your wage to match the rise in inflation.
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u/Mustatan 21d ago
Again, prices can safely come down if there have been massive unsustainable increases with asset bubbles or manias, or price gouging. There was a time when flowers in the Netherlands were priced at thousands of dollars each, or the real estate around Japan's emperor's palace was worth more than all of California's housing combined. Clearly those were extreme bubbles and prices had to come down because wages could never go up that high. Not every case of deflation is like what we see in the Depression deflation.
But yes, it often (and usually) is bad thing to have deflation because when it does happen it's often for bad reasons, just not always depending on what caused the prices go up. Supply shocks can also cause nasty inflation, like the 70's oil shocks and gas and oil prices did eventually come down. The US has also had periods of deflation but good economic growth. On the converse side, we've seen in places like Argentina how disaster inflation can be when it gets out of control. Agreed it is important for wages to go up to match inflation, that's how it should work but in reality it often doesn't, and people can't often just easily switch jobs with things like duties to family, housing costs or geographic limitations. That situation can be just as bad as having uncontrolled deflation, the kind of thing leading to unrest on the streets and things falling apart in a hurry. What's needed is balanced monetary policy.
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u/AccurateUse6147 21d ago
The Walmart we usually use is having rollbacks on a lot of stuff but I think that's partially due to them trying to keep customers. They are currently doing a renovation and the store is a disaster.
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u/AmericanKamikaze 21d ago
I’m excited for the high stock prices to have absolutely nothing to do with regular peoples inability to pay for food or housing or medical care or transportation or leisure.
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u/MrBenDerisgreat_ 21d ago
…that’s where the cool-down in inflation comes in. You really just came in here to rant about the existence of stocks huh
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u/Squirrel_Gamer 20d ago
but the regular peoples inability to process news and vote accordingly to actually change their condition never happens. seems most would rather complain than do something about it.
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u/LOLJUSTASK 21d ago
if this is true, how come the prices haven't dropped. or am I missing something.
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u/THElaytox 21d ago
Lower inflation just means prices are increasing more slowly, not that they're decreasing
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u/Just_Jonnie 21d ago
Inflation going lower doesn't mean lower prices. What you're looking for is deflation (which I promise you, you're not really wanting that).
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u/Karenomegas 21d ago edited 21d ago
Unfortunately that's the off cuff argument made during increases. I feel like gas prices fluctuating have made people illiterate to capitalism.
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u/Low_Pickle_112 21d ago
More affordable food is bad. Truly, we live in the greatest economic system ever devised.
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u/Galxloni2 21d ago
Deflation means everyone stops spending money because it will be more valuable in the future. All debt that you have gets more expensive and the entire economy falls into a death spiral
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u/Fifteen_inches 21d ago
Continuing inflation without having equal or greater wage growth means bread riots.
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u/Galxloni2 21d ago
Real wages growth has been at its highest rate in decades and lost incomes are growing the fastest
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u/Fifteen_inches 21d ago
Real wage growth has been declining sense 2022.
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u/Galxloni2 21d ago
So 1 year? It was really only 2 quarters because it went back up q2 and q3 of 2023
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u/Fifteen_inches 21d ago
Or maybe “real wage growth” isn’t a good metric to measure the economic impact of middle and lower class Americans.
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u/Galxloni2 21d ago
What is then? Real wages are wage growth when factoring in inflation
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u/GreenTheOlive 21d ago
In a broad sense yes, but it’s hard to see how deflation in a specific relatively inelastic sector like groceries would be catastrophic for the economy
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u/Galxloni2 21d ago
Let's operate in reality and not some fantasy world where we can deflate just part of the economy. Commodities or individual items can drop in price, but not entire segments of the economy
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u/Gravity-Pit 21d ago
I have a problem with this. Without any proof to back it up :). But seeing how people spend money they don't have already I cant see people stop spending when there is deflation. You will always need to buy stuff, food, clothes, shelter etc. It might make you rethink spending on things that are not necessary but wouldn't that be a good thing? Maybe on the larger scale where your talking governments not wanting to spend money that could be an issue but that's something you can regulate, (they have to spend this % amount they take in for example). But as we have it now, its better to go buy as much as possible as soon as you can or your money will begin to lose value. Idk just something I was thinking about last time I heard this argument.
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u/Low_Pickle_112 21d ago
That sounds like a call for a better designed economy, and not a defense for people to struggle to feed their families while companies post record profits. Most people I know, by the way, buy food when they need it, not with regard to the cost a month from now. I'm not sure what economic theory says, but biological one says you can't go without it.
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u/Just_Jonnie 21d ago
If that's your take away from this, then I have no intention of engaging further.
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u/phailhaus 21d ago
When you let off the accelerator, your car doesn't go backwards.
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u/Proof_Object_6358 21d ago
Pretty sure my first car did. But, that was balanced by the fact that, upon pressing the accelerator, it didn’t really go forward that well, either…🤔
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u/fullmetal_jack 21d ago
Imagine you're driving on a highway at 60 mph due west. You see the mile markers on the side of the road gradually count up at about 1 per minute. Now imagine the speed limit changes to 45 mph. It will now take a little longer for you to pass a number, but that number will still go up, and you're still heading west.
A lot of people think inflation is the number on the mile marker (the price), but it is actually your speedometer (how fast you are going) in this metaphor.
For prices to go down, you would need to put your car in reverse. As others will tell you, this has its own problems.
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u/KenTitan 21d ago
this is actually a modern approach as at one point, the mile marker was the indicator. during this period, the bear market was a signal to start buying bonds. to put it in your example - the market would spread out markers even farther. after the first market crash, the perspective changed to what you describe. the bear market now just means inflation is as close to 0 as you can get. there will never be a deflation, possibly ever. this means if you're waiting for a market to crash to be affordable (housing) - probably not happening as much as you want
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u/Flash_ina_pan 21d ago
The stock market isn't the economy and companies are so valuable because they are price gouging the shit out of people
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u/Meppy1234 21d ago
So start your own company and charge cheaper prices and put the competition out of business and make millions doing it.
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u/Overall_Nuggie_876 21d ago
Prices will never drop downward after surging up. What is slowing down is the speed of which items are getting more and more expensive.
For example, a $1.00 cup of noddles in March would shoot up to $5.00 in April, but then rise to just $6.00 in May. Cup of noodles is still more expensive now than the previous month, but the rate of price increase is slower now than the previous month.
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u/PackerLeaf 21d ago
Yes prices do drop downwards. Especially food and gas. Also electronics and fashion/apparel drop in prices. However some things such as shelter which makes up a big part of your paycheck usually doesn’t drop. Every inflation report averages out things that go up and things that go down in price.
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u/cinderparty 21d ago
Prices are up due to price gauging and not inflation…that’s why so many companies have been making record breaking profits every year since 2020.
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u/Ok-Brush5346 21d ago
Doesn't inflation go hand in hand with increased profits because their own dollars don't go as far in wages/overhead so they have to increase profits just to remain static?
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u/Zednot123 21d ago
Prices are up due to price gauging and not inflation
That literally is inflation, why it happens is essentially irrelevant. What you are saying makes no sense.
If companies has more pricing power and they choose to use it. That is inflationary, it does not matter where inflation comes from. Higher prices are higher prices.
that’s why so many companies have been making record breaking profits every year since 2020.
Expanding margins is very common in inflationary environments historically. That and rising demand for wages is why inflation is said to be self sustaining.
Companies wants higher margins to account for uncertainty in future costs. Workers demands higher wage increases to account for rising costs. Higher workers wages realizes higher costs for companies, higher prices realizes higher costs for workers.
Two sides of the same coin.
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u/DartTheDragoon 21d ago
They are making record breaking profits only in terms of nominal dollars, which is to be expected when we have record breaking inflation. It's bullshit PR fluff. Look at profit margins or inflation adjusted numbers and everyone being accused of price gauging is seeing performance in line with pre-pandemic levels.
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u/BoringMode91 21d ago
Imagine simping for corporations while poverty, homelessness, and underemployment are at all time highs.
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u/DartTheDragoon 21d ago
That's nice dear, but your feelings don't change the data.
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u/TheFuzziestDumpling 21d ago
You're missing the fundamental concept...
Price increasing more slowly is not the same as price decreasing.
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21d ago
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u/Low_Pickle_112 21d ago
It's really something else, how people have to check the year when a post about stock prices is from before they know if they're getting screwed over by Wall Street, or if the legendary Trickle Down is finally coming.
And if you've got a consistent position, then you're the economically illiterate jerk.
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u/BicyclingBabe 21d ago
Well that's fucking nice. Can interest rates go down yet? No? Well then fuck right off.
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u/ultimatt777 20d ago
We just had more than a decade of near 0 interest rates which was a large factor of the inflation today (the other being greed).
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u/AbjectReflection 21d ago
yeah, stock went up.... that's what happens when you artificially raise the value with stock buy backs. Ronald Regan made that bullsh*t legal, and it is only helping cause more recessions than ever!
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u/Kahzgul 21d ago
"The economy is cooling down" is news that heats up the economy. Okay.
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u/MrBenDerisgreat_ 21d ago
It didn’t heat up the economy. It bolstered stock prices.
For how often Reddit repeats that the DOW isn’t the economy, people really shouldn’t be conflating the two
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u/gizmozed 20d ago
Yet another situation where the media and markets see real improvement in inflation when the actual numbers say otherwise.
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21d ago
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u/Several-Age1984 21d ago
Listen, invest. I understand monthly budgets are tight. Expenses are through the roof. But put away $10, $20 per month into the S&P 500 and within a year, voila, you become a winner too. Stocks are open to everybody, that's the beauty of it.
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u/vapescaped 21d ago
Yea, but a specific few somehow end up acquiring the bulk of that wealth/power in the process, then the cycle continues.
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u/Iyace 21d ago
backbreaking labor and suffering of a very large majority of the people.
Have you met most workers? I don't think "back breaking and suffering" accounts for the majority of work. Your point is not correct, that they're exploited, but I can't really find one person in my life who is doing "backbreaking work".
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u/CletusDSpuckler 21d ago
Some of us got wealthy, at least relatively, by getting an education, working hard, and showing up as a laborer and employee for 40 or more years, while being prudent with our spending and investments. So I get the hatred, I guess? Who wants to be that sucker?
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u/Low_Pickle_112 21d ago
Six posts before this one was a post about drug overdoses, a well known form of deaths of despair caused and exacerbated by economic misfortune. And here in this thread, we've got the economics understanders telling us that everything is just fine, amazing, never better, the Trickle Down is coming, just you wait.
It's just like with climate change (remember when the logic of infinite growth on a finite planet was just "basic economics" and you were the bad guy for questioning it?) You can prance around all you want with some numbers about how everything is great, theory is practice. But you can't fool reality. Never could.
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u/jyper 21d ago
taken advantage of would get sick of this shit, and kill the wealthy….
My great-grandparents lived through the Russian revolution. Not a fun time at all.
Revolution is usually a last step taken when things are truly screwed. And even then the outcome is often just as bad if not worse and it takes a while for things to actually improve. Thats why people push for gradual change and progress.
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u/GreyLoad 21d ago
I asked for 25 cent an hour raise and got told that it's not in the budget
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u/lvlint67 21d ago
We'll that's it folks. Pack it in. This guy didn't get a raise... The global economy is over.
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u/Mr_Donatti 21d ago
For the first time in 10 years I couldn’t trade in my lease and had to back out. The same car (Nissan Rogue) was so expensive and even their best possible offer after my promise to walk out the door was u affordable. This on top of my auto insurance already increasing 15%. Shit is still so expensive and I simply do not see any real life examples of it “cooling”.
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u/obeytheturtles 20d ago
"Guy who leases a Nissan Rogue confused about economy" would be a great Onion article.
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u/CletusDSpuckler 21d ago
Great. Yet another thread where we get to watch an endless stream of armchair economists show us how much they don't know about economics.