3 ms·

None of this helps the average worker who keeps his savings in a bank account which pays well below the rate of inflation.

jcfrei 8y ago
With a couple of hundred dollars you can already open a brokerage account and invest in pretty much anything.
- stopshadowbans 8y ago
  Please don’t conflate savings and investment - they are fundamentally different things with very different risk profiles. Both serve a purpose. Modern monetary policy has made saving impossible.
  - jcfrei 8y ago
    That's simply not true. There are plenty of cheap investments (via ETFs) for pretty much any risk profile. If you save money in the form of currency on a savings account then you misunderstand modern financial markets. That's not the idea behind a currency.
    - freejulian 8y ago
      Please, enlighten me. Show me a risk free asset that pays above the rate of inflation (don't forget to consider any taxes you might owe on interest and dividends!).
      - jcfrei 8y ago
        An inflation adjusted government bond ETF might be what you seek. In any case, there's no such thing as free lunch: In other words "a risk free asset that pays above the rate of inflation" doesn't exist.
        freejulian 8y ago
        Oh really? Specifically, which one? Give me a link. Keep in mind the latest inflation reading today was 3.33%y/y. This is also an optimistic reading -- if you use the exact same calculation the fed used back in the 80s inflation would be at 10% (many government obligations such as TIPS are linked to CPI and, as such, they are motivated to make that number appear low). Risk free savings used to be much easier when the dollar couldn't be freely printed. Sure, there were times of moderate deflation and moderate inflation, but overall the average was 0. Furthermore, labor was able to consistently achieve wage gains. Those days ended in the 70s (and is evidence by the famous wage-vs-productivity charts). Also, you're conveniently ignoring the fact that fiat currency has made it possible for governments to print money to pay for war instead of needing to levy a tax on its citizens (something which would frequently be met with protest).
        twblalock 8y ago
        I-Bonds and TIPs are two types of bonds that are adjusted based on the inflation rate by law and backed by the US government, and they both pay slightly more than the inflation rate because of their other various features. There, that's two examples.
        hndontcensorme 8y ago
        Correct, TIPs will keep pace with inflation. Until you pay income taxes on the interest they earned. Then it's not even close. Also, you're putting a lot of trust in the governments calculation of CPI. What makes today's calculation better than the calculation used in the 80s?
  - JumpCrisscross 8y ago
    > Please don’t conflate savings and investment My savings are in MMAs, CDs and Treasuries. These earn interest and, on average, track inflation. Savings and investments shouldn’t be conflated; neither should saving and hoarding cash.
- epx 8y ago
  In countries that happen to have low inflation. When inflation rises, government makes sure ordinary people cannot hedge against it.
drexlspivey 8y ago
Bitcoin is inflationary too and it pays zero interest.
- bufferoverflow 8y ago
  Bitcoin is not monetarily inflationary. (and definitely not price inflationary, long term). Its limit is known well ahead of time. The distribution is spread over time, by design. But the number of bitcoins is mathematically capped.
  - cesarb 8y ago
    > But the number of bitcoins is mathematically capped. The number of bitcoins is capped at a distant future date; but in the present, it continually increases. This is similar to how a curved Earth can appear to be locally flat. For now and for many years to come, the supply of bitcoins does inflate constantly.
    - JumpCrisscross 8y ago
      > the supply of bitcoins does inflate constantly Inflation is a measure on prices, not money supply. Bitcoin’s money supply is increasing. It is, on average, deflationary.
- fanpuns 8y ago
  Bitcoin is a deflationary currency.
- tempestn 8y ago
  In what way is Bitcoin inflationary?

jcfrei 8y ago

With a couple of hundred dollars you can already open a brokerage account and invest in pretty much anything.

stopshadowbans 8y ago
Please don’t conflate savings and investment - they are fundamentally different things with very different risk profiles. Both serve a purpose. Modern monetary policy has made saving impossible.
- jcfrei 8y ago
  That's simply not true. There are plenty of cheap investments (via ETFs) for pretty much any risk profile. If you save money in the form of currency on a savings account then you misunderstand modern financial markets. That's not the idea behind a currency.
  - freejulian 8y ago
    Please, enlighten me. Show me a risk free asset that pays above the rate of inflation (don't forget to consider any taxes you might owe on interest and dividends!).
    - jcfrei 8y ago
      An inflation adjusted government bond ETF might be what you seek. In any case, there's no such thing as free lunch: In other words "a risk free asset that pays above the rate of inflation" doesn't exist.
      - freejulian 8y ago
        Oh really? Specifically, which one? Give me a link. Keep in mind the latest inflation reading today was 3.33%y/y. This is also an optimistic reading -- if you use the exact same calculation the fed used back in the 80s inflation would be at 10% (many government obligations such as TIPS are linked to CPI and, as such, they are motivated to make that number appear low). Risk free savings used to be much easier when the dollar couldn't be freely printed. Sure, there were times of moderate deflation and moderate inflation, but overall the average was 0. Furthermore, labor was able to consistently achieve wage gains. Those days ended in the 70s (and is evidence by the famous wage-vs-productivity charts). Also, you're conveniently ignoring the fact that fiat currency has made it possible for governments to print money to pay for war instead of needing to levy a tax on its citizens (something which would frequently be met with protest).
        twblalock 8y ago
        I-Bonds and TIPs are two types of bonds that are adjusted based on the inflation rate by law and backed by the US government, and they both pay slightly more than the inflation rate because of their other various features. There, that's two examples.
        hndontcensorme 8y ago
        Correct, TIPs will keep pace with inflation. Until you pay income taxes on the interest they earned. Then it's not even close. Also, you're putting a lot of trust in the governments calculation of CPI. What makes today's calculation better than the calculation used in the 80s?
- JumpCrisscross 8y ago
  > Please don’t conflate savings and investment My savings are in MMAs, CDs and Treasuries. These earn interest and, on average, track inflation. Savings and investments shouldn’t be conflated; neither should saving and hoarding cash.
epx 8y ago
In countries that happen to have low inflation. When inflation rises, government makes sure ordinary people cannot hedge against it.

drexlspivey 8y ago

Bitcoin is inflationary too and it pays zero interest.

bufferoverflow 8y ago
Bitcoin is not monetarily inflationary. (and definitely not price inflationary, long term). Its limit is known well ahead of time. The distribution is spread over time, by design. But the number of bitcoins is mathematically capped.
- cesarb 8y ago
  > But the number of bitcoins is mathematically capped. The number of bitcoins is capped at a distant future date; but in the present, it continually increases. This is similar to how a curved Earth can appear to be locally flat. For now and for many years to come, the supply of bitcoins does inflate constantly.
  - JumpCrisscross 8y ago
    > the supply of bitcoins does inflate constantly Inflation is a measure on prices, not money supply. Bitcoin’s money supply is increasing. It is, on average, deflationary.
fanpuns 8y ago
Bitcoin is a deflationary currency.
tempestn 8y ago
In what way is Bitcoin inflationary?