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Is Human Capital Enough?

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Just thinking out aloud here. It seems that the vast majority of society survive purely on the human capital they have. What I mean is that they don't seem to have built much up in the way of savings or investment, so all they have is their human ability to go out & earn money. They're therefore relying entirely on their employers and on society to generate the employment for them.

If these people find that their human capital is starting to dry up, what next?

So I ask the question, is human capital enough, or do we as a society need people who also have real capital to live off by investing it and putting others to work etc?

A bit bearish for me I admit.

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Just thinking out aloud here. It seems that the vast majority of society survive purely on the human capital they have. What I mean is that they don't seem to have built much up in the way of savings or investment, so all they have is their human ability to go out & earn money. They're therefore relying entirely on their employers and on society to generate the employment for them.

If these people find that their human capital is starting to dry up, what next?

So I ask the question, is human capital enough, or do we as a society need people who also have real capital to live off by investing it and putting others to work etc?

A bit bearish for me I admit.

All you need to do is look outside the box. ;)

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Have you learnt anything?

:lol:

Yeah. I've learnt that you lot have very little to back you up.

It's like that scene out of Dumb & Dumber when they tell the bad guys that the suitcase full of IOU's is as good as money!

"Now that one (speaking of a scrap of paper) is a Lamborghini, better hang onto that - we're good for it, don't worry!"

:lol:

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I think you have "outed" Gordon's Miracle Economy! Wealth based on debt and asset inflation relies on self-perpetuation. When the fuel that has been keeping the Miracle Economy going has to be paid for, the forces of equilibrium bring the inflated assets back to their true worth in relation to ability to pay rather than borrow.

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I think you have "outed" Gordon's Miracle Economy! Wealth based on debt and asset inflation relies on self-perpetuation. When the fuel that has been keeping the Miracle Economy going has to be paid for, the forces of equilibrium bring the inflated assets back to their true worth in relation to ability to pay rather than borrow.

Don't you mean - when the CC bill arrives, it has to be paid for?

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Just thinking out aloud here. It seems that the vast majority of society survive purely on the human capital they have. What I mean is that they don't seem to have built much up in the way of savings or investment, so all they have is their human ability to go out & earn money. They're therefore relying entirely on their employers and on society to generate the employment for them.

If these people find that their human capital is starting to dry up, what next?

So I ask the question, is human capital enough, or do we as a society need people who also have real capital to live off by investing it and putting others to work etc?

A bit bearish for me I admit.

You will like this -

Human capital is rented by employers, just as any service its price is set by the market which, the supply of which is in turn is set by demand, which is set by consumption.

If consumption drys up, because people have been spending beyond thier means, then demand will tend to dry up. You can have a booming society one moment, in which spending on nonsense doesn't seem to matter, and a zimbabwe like collapse in living standards the next moment, where inflation is not measured and bills, rents and real living costs reduce consumption, and thus demand.

When you say you own 'real capital' you own structures, which will meet demand in the same way. The difference is, there is always demand for property, when there is a shortage of supply, like with with unlimited immigration, even if living standards drop through the floor from inflation and wage deflation.

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Just thinking out aloud here. It seems that the vast majority of society survive purely on the human capital they have. What I mean is that they don't seem to have built much up in the way of savings or investment, so all they have is their human ability to go out & earn money. They're therefore relying entirely on their employers and on society to generate the employment for them.

If these people find that their human capital is starting to dry up, what next?

So I ask the question, is human capital enough, or do we as a society need people who also have real capital to live off by investing it and putting others to work etc?

A bit bearish for me I admit.

You are incorrect to assume that people have no "real" capital. Most people have a pension of some sort, which is real capital (shares, bonds, cash, commercial property) held on trust for them by a pension management company. Many people also have ownership via investment funds. The ownership of most medium to large business in the UK and in the western world is held in this way.

The people own more than you think! It is of course true that there is a small management class who have control over these companies, and generally abuse that position by paying themselves obscene amounts of money. But that is an old problem (separation of ownership and management produces this "goal incongruence).

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Try reading one of Edward Rutherfords books, London, Sarum or The Forest, while they are fiction they provide fascinating insights into how family fortunes can rise and fall during and spanning generations.

In answer to your original question, if I have understood you right, there is always a class of people who have money, which is usually then used to create jobs/employment, primarily to create more money for the business owner and as a byproduct pays a salary to the workers.

This is a fact of history, there will always be those who are at the top of the pile (moneywise) and those at the bottom. You work hard and get some lucky breaks you can rise up. At the bottom it can be difficult to climb the first rung (not specifically meaning property), however once it starts flowing in at a greater rate than your cost of living, thats when money starts making money.

As far as living off saved capital, I think that has always been relatively rare, nonexistent for the working class historically who have tended to live hand to mouth, the middle class have traditionally had money put aside "for that rainy day" but still need to work.

But you know all this anyway so why ask?

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But you know all this anyway so why ask?

I liked your post. I'm asking because I think it's a worrying aspect of our society that people (especially 20 to 40's STF) rely so heavily on their ability to earn week by week.

This could be a part of why HPC.co.uk exists, because most people seem to live in fear of what's just over the horizon. A site like this does feed that fear with constant concerns being posted.

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I liked your post. I'm asking because I think it's a worrying aspect of our society that people (especially 20 to 40's STF) rely so heavily on their ability to earn week by week.

This could be a part of why HPC.co.uk exists, because most people seem to live in fear of what's just over the horizon. A site like this does feed that fear with constant concerns being posted.

Now you have "outed" most of the Bears <_<

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You are incorrect to assume that people have no "real" capital. Most people have a pension of some sort, which is real capital (shares, bonds, cash, commercial property) held on trust for them by a pension management company. Many people also have ownership via investment funds. The ownership of most medium to large business in the UK and in the western world is held in this way.

The people own more than you think! It is of course true that there is a small management class who have control over these companies, and generally abuse that position by paying themselves obscene amounts of money. But that is an old problem (separation of ownership and management produces this "goal incongruence).

The average size of a pension pot is less than 30k - about enough for a second hand car and a visit to the cinema once a month.

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I liked your post. I'm asking because I think it's a worrying aspect of our society that people (especially 20 to 40's STF) rely so heavily on their ability to earn week by week.

Yes it is worrying. I personally plan my finances around the assumption that I'm going to be unemployed. If I happen to have a job that is a bonus.

The "normal" thing to do is assume that you're always going to be able to work and have a weekly income. And then borrow on that assumption of a perpetual weekly income. Of course this is disasterous if underlying economic reality means that you are then made redundant, in some cases through no fault of your own.

This could be a part of why HPC.co.uk exists, because most people seem to live in fear of what's just over the horizon. A site like this does feed that fear with constant concerns being posted.

:lol:

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The average size of a pension pot is less than 30k - about enough for a second hand car and a visit to the cinema once a month.

FFS this is a ******** thread. If we all had independent means we wouldn't need to work. What would that do for the UK economy? Get real you twats. There is nothing wrong with working for a living - a lot of people even enjoy it! Life isn't only about money.

Those who seek to shelter themselves from life under a financial umbrella are probably suffering the psychological effects of past hardship. Does this ring true for anyone here by any chance?

Get to grips with your neuroses, please. :rolleyes:

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FFS this is a ******** thread. If we all had independent means we wouldn't need to work. What would that do for the UK economy? Get real you twats. There is nothing wrong with working for a living - a lot of people even enjoy it! Life isn't only about money.

Those who seek to shelter themselves from life under a financial umbrella are probably suffering the psychological effects of past hardship. Does this ring true for anyone here by any chance?

Get to grips with your neuroses, please. :rolleyes:

So you're saying wage slavery is OK?

I personally feel it's quite worthwhile to not only work for a cash income, but to also work to build up capital as well. So I know you'll hate me for saying it, but doesn't that mean I'm working harder & smarter to be concentrating on both?

I also feel it would do wonders for the economy (maybe this is why the miracle economy is working?) if people do more than just earn their monthly keep.

Not trying to sound offensive, honest.

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Hey RB, am I a bull or a bear?

WTF does it matter anyway?

All I know is i'm trying to sell a property, may purchase another (to live in), may just rent for a while if the ideal property doesn't appear and mine sells.

Yes I think properties are overpriced and provided the correct trigger occurs they will fall, if i change property may lose £10K more than if I sit here now for another year waiting for it to happen. May not, who knows.

If the trigger doesn't occur then prices will bumble along, up a bit, down a bit, at maximum affordability.

I agree that now would be a daft time to buy BTL unless the deal was stunning, there are always deals in anything if you look hard enough.

So RB, is that a bull, a bear or just a realist?

PS SITA, you're probably a really nice person but on here you come across as a jerk. :D

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:lol:

Yeah. I've learnt that you lot have very little to back you up.

It's like that scene out of Dumb & Dumber when they tell the bad guys that the suitcase full of IOU's is as good as money!

"Now that one (speaking of a scrap of paper) is a Lamborghini, better hang onto that - we're good for it, don't worry!"

:lol:

Hi,

Welcome to the lovely, experimental world of NuLabour macro-economics (replace words "IOU's" with house price inflation and basically, that is a pretty good ananlogy of the "miracle" economy).

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Hi,

Welcome to the lovely, experimental world of NuLabour macro-economics (replace words "IOU's" with house price inflation and basically, that is a pretty good ananlogy of the "miracle" economy).

An IOU is an I'll earn the money later thing. Nothing to do with HPI. Everything to do with jobs & no saving though.

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Do we always need to rely on others for our employment? Why can't we create our own way in life...spot an opportunity to create wealth, for ourselves and others...look out for the next thing people will pay good money for and capitalise on that.

The world is your oyster, if that is what you want. ;)

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Do we always need to rely on others for our employment? Why can't we create our own way in life...spot an opportunity to create wealth, for ourselves and others...look out for the next thing people will pay good money for and capitalise on that.

The world is your oyster, if that is what you want. ;)

BTL anyone?

:ph34r:

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Hey RB, am I a bull or a bear?

WTF does it matter anyway?

All I know is i'm trying to sell a property, may purchase another (to live in), may just rent for a while if the ideal property doesn't appear and mine sells.

Yes I think properties are overpriced and provided the correct trigger occurs they will fall, if i change property may lose £10K more than if I sit here now for another year waiting for it to happen. May not, who knows.

If the trigger doesn't occur then prices will bumble along, up a bit, down a bit, at maximum affordability.

I agree that now would be a daft time to buy BTL unless the deal was stunning, there are always deals in anything if you look hard enough.

So RB, is that a bull, a bear or just a realist?

PS SITA, you're probably a really nice person but on here you come across as a jerk. :D

My approach is simple: will I be better off by waiting to buy a house or not. If the answer is yes, I am a bear. If no, I am a bull or someone who does not care one way or the other.

A "realist" is a bear who knows why he is and bases his position on current economic realities such as: higher IR trend, unemployment growthh, affordability problems, rising reposession rates and other debt related issues, falling retail. One who ignores such factors would be, in my view, unrealistic.

I have owned a house since 1975 when I bought just before the great run-up of the late 1970's. Bought a new end terrace in Guilford for 25k and sold a year later for 40k. I have owner my own home pretty much ever since except the past couple of years which is by far the longest period I have even been out of the market. I was, therefore, a long term bull with a couple of phases of bearishness (I bailed in 1989 just before the Great Crash and got back in cheap in early 1991). Bought throughout the 1990's and finally STM in late 2003.

I am more bearish now than I have ever been and believe the next HPC will be bigger and longer than the Great Crash. Why? Because of the over-leveraged state of the market. Debt levels are worse than they have ever been and the market is incredibly IR sensitive. Unemployment is a big issue and at the rate we are uploading jobs to India and E Europe sentiment is going to turn very sour and people are easily spooked in which case a run for the exits is on the cards.

There is a lot of anger out there with those who have been priced out and those who are realising that the economic Miracle has dropped them into debt more than it has brought financial Shangri-La. The public are no longer buying the low inflation claims and are taking bad news far more seriously than before as they perceive a real threat to their lifestyle coming around the corner even if they have no idea of the implications of Japan raising the rates. Bottom line: the sheeple (and more newspapers) are turning bearish which is a sign for the smart bears to start planning to put their bull suits back on and maybe getting back in after the crash has made house prices a bargain once more--2009-2010?

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Do we always need to rely on others for our employment? Why can't we create our own way in life...spot an opportunity to create wealth, for ourselves and others...look out for the next thing people will pay good money for and capitalise on that.

The world is your oyster, if that is what you want. ;)

I think it's a big problem in this country that most people aren't very entrepreneurial - i for one don't plan on working until they shove me in the grave.

BTL anyone?

BTL in principle is fine but not at current yields - i also don't understand why most BTL investors focus on the residential side when in principle the commercial side seems far less hassle as the leases ensures you get a long term tenant who takes care of repairs (at least in theory).

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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