My malinvestment was premium bonds or a bank savings account
Just one of the UK government’s malinvestments during the pandemic… 17 field hospitals constructed in Wales to the tune of 166 million …only one was utilised at all
Quantitative Easing:
- This was by far the biggest scam to ever happen to humanity. Funny that it was called " Quantitative Easing " but in reality it’s called PRINTING MONEY. If you look at the Fed’s balance sheet from 2008 - 2020 they have printed more money in 12 years then they have since inception. I find this to be a malinvestment of capital because it has completely eroded the buying power of the US dollar as well as so many other Fiat Currencies.
I find it incredible that most people including myself have no way of influencing how or when new money is printed. How is it possible that we can elect the president of the United Sates but we don’t have a say when it comes to the head of the FED.
As I learn more about the history of money it becomes clear as day how creating money out of thin air will eventually end poorly for the Fiat currency as well as the people holding it.
Tulip Mania
The first recorded speculative economic bubble in the Netherlands
One Tulip bulb became up to 10x average persons salary before price collapse in feb
The malinvestment would be investing tulip bulbs after a sharp increase in value,
being unable to sell them for 1/4 of the price shortly after.
https://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp
The Government of The Commonwealth of the Bahamas purchased the Our Lucayan hotel in Freeport Bahamas for $150,000,000.00 ostensibly to preserve 400 jobs. The assumed the debts of the previous owners and intended to resell the hotel. The resale was said to be “imminent” at the time of purchase 1.5 years ago.
Nearly two years late the government has not close the sale for the hotel. It has to pay $1million monthly for upkeep of the hotel. The original purchase price exceeded market value by more than 150%. the inability to resell in a timely manner and the carrying cost of the resort makes this investment a malinvestment.
Recent example from stock market when people kept investing in Hertz despite the fact that company filled for bankruptcy. The price initially pumped but then experience traders dumped on the market leaving inexperienced people at a loss.
Putting money I don’t currently need in a standard savings account at a retail bank instead of investing it somewhere else where I could have higher returns.
Increasing education budgets controlled by corrupt teachers unions that do not educate children properly now. They indoctrinate and control now instead of promoting freedom to have a difference of opinion. So why do they want more money every budget cycle? And why do we give it to them?
In today’s economy, lock money in a bank account through a Certificate of Deposit or any type of restrictive Saving accounts. It doesn’t allow you the flexibility to move your money somewhere else in case you need it and more than that it is a way of mid-term devaluation under the current depreciation the fiat currency is facing.
Research an investment (could be a public company, private company, government agency, infrastructure project, etc) that you believe meets the definition of a malinvestment (past or present) and argue why you think it’s a misallocation of capital (3-5 sentences).
Buying capital based life insurances and government bonds. Very low interest rates which mostly can’t even keep up with the inflation.
Greenland and its banks borrowed 6 times their GDP and invested in mortgage backed securities. When you study what these securities consisted of, Its no wonder how Greenland (along with most of the World) plunged into crisis.
for me, malinvestment would be to put my money into the interest-bearing deposit, earn couple percents per year, and to think that it’s a good idea, but these gains barely cover the inflation, and there are far better ways to use the money
XRP is a cryptocurrency that I believe is a malinvestment. It has no utility other than banks using it for cross-border payments. It’s currently being sued as it misguided investors about its offerings. The SEC currently says that it is a security that did not properly make aware to the investors that bought the coin when it first launched. It’s a misallocation of capital because the creators used it to prop up their financial accounts and cashed out from the investment that investors purchased.
I live in the United state’s and to consider the way that our tax dollars are spent as a malinvestment is an understatement. We spend 100s of billion of USD year after year on destructive proxy wars in the Middle East. For the past two decades I’ve been alive we could have take the trillions of USD spent over seas and could have rebuilt our nation 3-4 times over. Tbh I’m pretty sure there hasn’t been a worse investment in the history of the world.
1 Like
In 2 words, yet twice: stock buyback or share repurchases.
Before, when this practice was against the law, a company had retained earnings, Invested in the business, people or machinery.
The Banking Sector
Banks in the last decade have been subject to both regulation and funny money. This has caused their profitability to become entirely skewed, with speculative trading desk and derivatives operations profiting excessively while lending to small business has been at best marginally profitable. The “quantitative easing” of the Fed, the European Central Bank, (ECB), and the Bank of Japan and the zero-rating of government debt for capital calculations has clogged up bank balance sheets with unproductive detritus and arbitrage games, and taken their focus away from productive activity. Regulators have imposed huge and arbitrary fines. As interest rates normalize and regulation is loosened, many banks will find themselves in the position of Deutsche Bank, facing large, unquantifiable losses and an absence of profitable business opportunities. The result will inevitably be defaults, and equally inevitably bailouts by unfortunate taxpayers.
NKLA. motors is a prime example of the term “Malinvestment” at a time of easy (low interest money, and retail investors FOMO in the electric vehicle space) this company has really taken advantage. It’s stock has risen at which any other time it would have been seen as the “Bubble and Cheat” that it is. So it’s stock has fallen in 6 mo. from the high of $79 to $15 as it’s easy money has eyes to see the technological advantage it doesn’t have.
During the Irish property bubble in 2006, there was approximately one fifth of the Irish workforce employed in building houses. The Irish construction industry had swollen to around 25% of the country’s GDP compared to less than 10% during normal economy and Ireland was building half as many new houses a year as the UK, which had approximately 15X as many people to house. Since 1994 the average price of a house in Dublin had increased more than 500%. By 2007, Irish banks were lending 40% more to property developers than they had to the entire Irish population 7 years earlier. In 2010, only 78,195 of the 180,000 units granted planning permission were actually completed and occupied. Many housing developments are called “ghost estates” because they are empty, there were never enough people in Ireland to fill the new houses.
The current investment craze in securities by both institutional and retail investors is malinvestment at its finest. During the pandemic we have seen governments providing massive stimulus packages which were dumped into the stocks of highly speculative companies. This comes at a time when growth has come to a screeching halt and millions of people are unemployed. Furthermore, the housing sector is experiencing a boom on the back of this crisis that has everyone and their mothers fiending for more. Interests rates and $ supply shock are keeping this proverbial party going far longer than it can reasonably be sustained.
I believe that keeping money in a savings account that pays a very low interest rate meets the definition of a malinvestment. Considering that more money is being printed than ever before, keeping money in a savings account will actually cause its value to decrease even more than if it were used elsewhere. It would be better to use a different method of storing value, like bitcoin, because there is a fixed supply of bitcoin.
Social security- We believe this is a misallocation of capital. This is largest ponzi scams of are time and what we feel is a malinvestment .