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I'm not sure what you're agreeing with considering the article is arguing the US govt should NOT be selling off helium.

TheEzEzz 16y ago
I think stretchwithme meant sell it off wholesale to private distributors, rather than selling off directly to consumers.
- gwern 16y ago
  Like it matters? Helium is helium, it's fungible, the private distributors have every incentive (like the consumers) to use or waste helium. An annual discount rate of 5% or more means that value 20 or 50 years from now is very small indeed.
  - stretchwithme 16y ago
    No, that's not the case. If you own something, selling it immediately for whatever cash you can get is what you want to do. You want to sell it for as much as you can and that means not dumping it in to the market all at once. This is especially true when getting more is very difficult. The price is likely to go up in the future, making even more sense to hold on to it. And not sure what fungibility has to do with it. Doesn't that just mean its easy to quantify and trade? A pound of helium is a pound of helium no matter where you buy? Why would that give you an incentive to dump what you own for whatever you can get now? Many people like buying assets that hold their value and like holding them instead of pieces of paper the government can and will soon have to inflate away.
    - stretchwithme 16y ago
      sorry, meant selling it immediately is NOT what you want to do. sorry for the confusion.
    - gwern 16y ago
      The fungibility point is that it doesn't matter who the helium gets sold to, the price will be affected. It's like oil - it's all pretty much the same, so it doesn't matter whether you boycott Venezuela and specify that the oil you buy must come from Brazil rather than Venezuela, since that just means someone in Brazil will buy Venezuelan oil for you or a potential Brazilian customer would switch to Venezuelan. The oil flows where demand is. > This is especially true when getting more is very difficult. The price is likely to go up in the future, making even more sense to hold on to it. The price has to go up beyond the opportunity cost and one's discount rate. One doesn't invest in a merely profitable activity - one invests in the most profitable activity, and if that isn't bigger than one's discount rate one just consumes rather than invests. If helium goes up 2% a year but Treasuries return 3%, then the savvier merchants will sell helium and buy Treasuries, and laugh at you all the way to the bank.
      - TheEzEzz 16y ago
        From the article, "But if we do run out altogether, we will have to recover helium from the air and it will cost 10,000 times what it does today." Assuming he's correct, and assuming we are set to run out of helium in the next 50 years, a 3% a year return would be chump change.
      - stretchwithme 16y ago
        That makes sense. If the US government is selling it cheap, those who purchase from the US and other holders have the incentive to hold on to their helium til later when the price returns to normal. You're right. Oil is a good example. That's why embargoes don't work. The target country just has to buy it through a third party to defeat the embargo. Embargoes can really only work when the country embargoed is shooting itself in the foot with price controls, as we did in the 70s.
- stretchwithme 16y ago
  Exactly. Thanks.

I think stretchwithme meant sell it off wholesale to private distributors, rather than selling off directly to consumers.

gwern 16y ago
Like it matters? Helium is helium, it's fungible, the private distributors have every incentive (like the consumers) to use or waste helium. An annual discount rate of 5% or more means that value 20 or 50 years from now is very small indeed.
- stretchwithme 16y ago
  No, that's not the case. If you own something, selling it immediately for whatever cash you can get is what you want to do. You want to sell it for as much as you can and that means not dumping it in to the market all at once. This is especially true when getting more is very difficult. The price is likely to go up in the future, making even more sense to hold on to it. And not sure what fungibility has to do with it. Doesn't that just mean its easy to quantify and trade? A pound of helium is a pound of helium no matter where you buy? Why would that give you an incentive to dump what you own for whatever you can get now? Many people like buying assets that hold their value and like holding them instead of pieces of paper the government can and will soon have to inflate away.
  - stretchwithme 16y ago
    sorry, meant selling it immediately is NOT what you want to do. sorry for the confusion.
  - gwern 16y ago
    The fungibility point is that it doesn't matter who the helium gets sold to, the price will be affected. It's like oil - it's all pretty much the same, so it doesn't matter whether you boycott Venezuela and specify that the oil you buy must come from Brazil rather than Venezuela, since that just means someone in Brazil will buy Venezuelan oil for you or a potential Brazilian customer would switch to Venezuelan. The oil flows where demand is. > This is especially true when getting more is very difficult. The price is likely to go up in the future, making even more sense to hold on to it. The price has to go up beyond the opportunity cost and one's discount rate. One doesn't invest in a merely profitable activity - one invests in the most profitable activity, and if that isn't bigger than one's discount rate one just consumes rather than invests. If helium goes up 2% a year but Treasuries return 3%, then the savvier merchants will sell helium and buy Treasuries, and laugh at you all the way to the bank.
    - TheEzEzz 16y ago
      From the article, "But if we do run out altogether, we will have to recover helium from the air and it will cost 10,000 times what it does today." Assuming he's correct, and assuming we are set to run out of helium in the next 50 years, a 3% a year return would be chump change.
    - stretchwithme 16y ago
      That makes sense. If the US government is selling it cheap, those who purchase from the US and other holders have the incentive to hold on to their helium til later when the price returns to normal. You're right. Oil is a good example. That's why embargoes don't work. The target country just has to buy it through a third party to defeat the embargo. Embargoes can really only work when the country embargoed is shooting itself in the foot with price controls, as we did in the 70s.
stretchwithme 16y ago
Exactly. Thanks.