We are making two big changes going into the future
- We will have something close to real money (bitcoin)
- Once we have real money, assets stop being speculative
Everything we call an asset today is something that we think we can sell for more, in the future. Meaning, the asset is defined as an asset because it will go up in price. (not value. Value is not impossible to compute in a fiat money world)
And since the debt based, fractional reserve lent, fiat currency goes down in value every year, then people have to buy assets that will appreciate in value to offset that. But, truly, in an overall aggregate, these things only go up in price because more fiat is printed.
House prices have gone up because people can borrow more fiat to buy one.
Stocks have gone up because more fiat exists looking for an "investment". Every year more fiat is printed, and some of that goes into the stock market. So, every year it goes up. Until there is no one left to borrow more fiat.
Given that we will have deflationary currency in the future (the value goes up the longer you hold it), then all the things we call assets today will no longer be assets.
Housing is not an asset
Lets pick on my favorite first, real estate.
Real estate is truly a speculative market. Where else can you buy a house, do some fixes, and resell it for more than your fixes?
House prices have been going up for two reasons. The first is the population has been increasing, along with new housing being delayed and forced to be made bigger/more expensive. The second reason is that the banks keep working things so you can borrow more and more on a mortgage.
That city planning departments limited new house construction to below the levels needed for population grown meant that the kids just starting out were denied homes. And now, it is almost 40 years of age before a person gets their first home. (because the name of the game was you had to pay more for a house than all the people before you did)
But now, we have entered a time of population decline. And "all causes mortality" is still rising. And interest rates are going up. So, there are going to be a lot of houses on the market that no one is going to be able to buy. As the birth rate continues to decline, there will be so much housing empty that no one will be able to sell them.
Now, in this blog, we must go further.
A house is a depreciating thing. Its value gets lower every year, until it needs to be replaced. Lifespan of a modern house is 100 years if you're lucky. More like 50.
The house requires maintenance all the time. The house is costing you money. So, really, the house is a money pit (yes, having a roof over your head is worth it), it is not an asset. There is no reason, in a market that is not rigged, with a monetary system that is not inflationary, that a house would go up in value.
Stock Market Shouldn't Really Exist
Do you really think, that in a normal world (not clown world) that you could buy something that kept paying you every quarter?
You could have a fruit tree, and every year it gives you fruit, but that requires work, feeding and watering. How do you get something that just keeps paying? Really think about it, stocks are strange.
If you really had such a thing, you would never sell it. It would be too valuable. But, here we are, people buying, trading, swapping, shorting, longing all of these stocks, so much so that we have a "market" for it.
If we had a deflationary currency, like bitcoin, how much money would be invested in the stock market? My bet is pretty much none. Most people would rather hold bitcoin, than something risky like a stock. No risk and completely liquid, AND its value is going up each year? Why would you look elsewhere?
After we have solid money, the structure that makes for giant corporations falls apart. WallyMart makes money on borrowing money and covering the spread by inflation. There is no way you could do this without banks just able to print fiat into existence. And the inflation wouldn't exist to make those loans "inflated away"
The other thing that real money encourages is buying things that are built to last. If you are going to part with your hard earned, real money, you are going to want to get some value for your purchase. So, it better be useful and built to last. The entire market designed around planned-obsolescence falls apart.
So, we will see a lot more small/local companies, and they won't be selling shares. The giant corporations will fail to compete with the (after real money) much smaller and much more efficient businesses.
Or, in other words, everything that made a stock a stock, and a stock market where you traded them just vanishes.
Speculation to get a return to keep up with inflation and grow your retirement account are things that just won't exist after we have sound money.
The things that may go up in price are things that are getting rarer, and are desired.
Hell if i know what those will be. They may be fine art, but really, we will probably see much better art being created, and everyone else will just get a print of their favorite landscape.
So, most things we call an asset today will not be in the near future. They were only an asset because of price speculation.
The new assets will be good tools that help you do your tasks. Land that you actually farm. True friendships and people you can rely on.
We will stop making junk, because it won't be worth our time, energy nor the buyer's money.
The world will be completely changed
It seems to me that in our world an asset can be considered as something that at least does not depreciate in value on a daily basis.
Sorry, I accidentally flagged it. I changed my vote immediately!
Well, Robert Kiyosaki has always defined assets as things that put money in your pocket.
Those will be very different in the future than they are today.