Baksheesh

(Another comment, elsewhere, that gets elevated to essay. Kind of a selfie, I guess. The context: whether any of the other semiconductor companies can, or even should try to, match Intel. From the quant's point of view: what should be the measure of RoI, and how should it be measured? If tech is close to, even reached, stasis, then justification for buying more of existing producer goods rest solely on fulfilling unmet demand. With global wealth/income continuing to concentrate, is there meaningfully growing unmet demand? Has a black swan touched down in Wall Street?)

The larger issue, and certainly not imminent for the momo or day trading types, is what becomes the $$$ sink for The Giant Pool of Money? It's still out there. And now we've got more in the form of giant cash balances in the Fortune X00. The right wing Americans (mostly, financial sector with a dog in this fight) demand that we're spending too much on consumption, and not investing enough (they want those fees). Fact is, except for healthcare and semis, most "investment" is things like housing and finance and share buybacks. None of which produce anything. The Fortune X00 and the existing Giant Pool of Money are still sitting out there, looking for baksheesh. But without an avenue to buy "better" producer goods into, return on investment falls. As it has been, and without any help from the Fed. That's why the housing market was targeted by the Giant Pool of Money: seen as low risk, high payoff (relative to what real physical investment was providing); iow, low return on real investment had already happened by 2003, and is still here.

The return on physical investment is a function of technological progress; iow, there's no reason to add an open hearth steel furnace, only a better one. If there isn't....? You see where this is going? For much of the last 60 years, that's been semis. If semis also reaches a place of tech stasis, how to earn from investment? Housing pays off only if owners can earn more, since housing doesn't produce anything. Since they weren't the house of cards collapsed. If industry, too, hits a wall of stasis, what do we then?

[Looked at another way: the owners of the Giant Pool of Money seek to extort high return from Treasuries, i.e. taxpayers, rather than actually building out infrastructure. As the captains of industry seek to avoid making real investment due to perceived low real returns, then Treasuries' return must fall, too. Demanding X% from the Government when industry only returns Y% (less than X%, of course) with real investment perverts the system. Kind of moral hazard. Without expanding technology, and unmet demand, i.e. moolah in the hands of the many, capital loses value. And, no, rate of time preference is not the gating element, tech is.]

Have a nice day.