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Please don’t conflate savings and investment - they are fundamentally different things with very different risk profiles. Both serve a purpose. Modern monetary

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.

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.