immutable @ immutable @lemm.ee

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2 yr. ago

Eventually they do need to pay back the loan, the low interest rates just make it so that they can choose to sell their stocks in the most favorable way.

This is why it makes sense for the financial institute to give out the loan in the first place.

So here’s the scenario. Let’s say you wake up tomorrow and somehow find yourself with $200M worth of stock. You are now “worth” $200M so you’d like to start living like it! You want to go buy a mansion and a nice new car and a private chef. Problem is, none of those people take stock, they all want money.

Goldman Sachs goes, “hey, I’ll loan you the money really cheap, you have to pay me back with interest, but since you have $200M in stock you can sell some of that later and pay me back”

This is great for you because you get to enjoy the mansion and new car and private chef right now. If you sold the stock right now you’d get taxed as if it were income at 38% but if you hold the stock for a few years when you sell it it will be considered capital gains and only taxed at 10% (or 15%, whichever the rate is). In addition, you don’t have to go to the stock market and sell for whatever they want right now, you can wait until the value of your stock is really high and selling is very advantageous for you.

So you do have to pay back the money, but this is still a really sweet deal because you can enjoy all the nice things right now and you get to avoid that extra ~30% you would pay in taxes if you sold it right now.

As long as the amount you saved in taxes outweighs the amount you pay in interest, this is a great deal for you. And for the financial institute it’s low risk (they extended you $10M backed by $200M in assets) and when you repay they make back enough in interest to make it worthwhile.

You get more money in your pocket, the bank gets more money in its pocket, from their point of view this was a win win. The losers are the market suffering a higher price for the stock because the supply was artificially constrained by you having access to this credit (otherwise you’d have sold shares to buy a mansion and nice car and private chef) and the taxpayer who was to shoulder a heavy tax burden because you converted your income into capital gains.

The one thing that definitely isn’t happening is Bezos or Musk or any of these other “they are only rich on paper” people clipping coupons to make ends meet. They live like rich people because the have access to plenty of money secured by their less liquid assets

For anyone that’s fallen for the “{wealthy person} doesn’t actually have ${huge number} because it’s stock” thing, here’s how it works.

1. Wealthy people with lots of stock get access to very, very cheap credit. Not credit cards like the plebs get with a 23% APR, multi million dollar lines of credit from places like Goldman Sachs with hyper low interest rates.
2. Wealthy people use that credit to live indistinguishably from a person that actually has the vast wealth that they have access to. Spez might “only” make $400k but if he has access to $50M in cheap credit it spends all the same.
3. Wealthy people enjoying their access to cheap credit which spends the same as income then get to dodge income taxes and instead use the more favorable capital gains tax rates.
4. As a fun bonus, they also get to go “you morons I don’t have $200M that’s all just on paper, I only pay myself $10 a year because I’m a man of the people. Now if you’ll excuse me I have to get on this private jet”

You might be wondering, why do they get this cheap credit? Because it’s a very safe bet for the financial institute, they are acting as a sort of time arbitrage mechanism for the person they are extending credit to. Since they perform this function they can be relatively assured that this will allow their client to sell their stocks, not because they have to cover expenses, but because capital gains protections and the market is favorable. It also aids in fostering a positive relationship with someone with a lot of wealth which is something financial institutes have an interest in doing.

All the actors are doing what’s in their rational self-interest. The end result is that Spez can access a large part of that $200M as liquid cash right now through credit with one hand and with the other wave you off and say “those are stocks I actually only got paid $400k”

I think furniture assembly is more about being able to work together for a common goal and communicate what you need the other person to do and listen to what they need you to do.

For some reason a lot of people struggle to assemble ikea stuff (I honestly don’t know why, I’ve assembled dozens of items and it’s not rocket science). But there’s definitely been moments when I’ve been assembling some shelf and need my wife to assist with a two person step. If the assembly has been frustrating you have a really good test of how well can the two of you communicate through frustration and work together.

So maybe you are great at ikea assembly and don’t have the frustration factor, or you are a wonderful communicator and listener. For a lot of people though it’s that “this is the 12th step, I’m annoyed because I did the 9th step backwards and had to undo some shit, I’ve stripped this fucking screw… I’m gonna slide this piece and you need to guide it past the shelves, past them, you see how it’s hitting the fucking piece of wood, I need it not to do that!!!”

You probably shouldn’t marry everyone you can build a shelf with, but if you can’t effectively communicate when frustrated doing something trivial like building a shelf with someone you should work on that before tying the knot.

Now I’m just imagining the ads from the League of Assassins on AM radio and whatnot, and it’s great.

I mean it’s not like you can major in Batman studies or go down to the Batman Trade School and become a professional Batman.

Batman is just as much an amateur as that guy is, he just has more expensive gear.

I tried to go back and watch the Dark Knight Batman movies because I remembered enjoying them when they first came out.

There’s an early scene where there is a Batman impersonator and he goes “what’s the difference between me and you” and Batman goes “I’m not wearing hockey pads”

It’s supposed to be a real zinger. As I watched it though the realization hit me that what he’s really saying is “because I have money so the rules don’t apply to me” and then I realized that that’s kinda the entire point of Batman. He’s a billionaire that’s decided he’s wealthy enough that silly things like laws don’t apply to him.

Really made me not enjoy the movie and I ended up turning it off.

People that are upset about electron should consider it’s not:

Electron App vs Wonderful Fully Supported Native Linux Application

The reality is that your choice is largely:

Electron App vs No App (maybe running their windows app in wine if you can get that to work)

It’s not like companies are going to go build a native linux app but electron got in their way. It was always electron or no support.

So if you like the app, remember that the ram and the cpu you paid for doesn’t provide value unless it’s doing something. There’s no trophy you get at the end of your life for “most cumulative ram left idle”