7 ms·

there's no way to protect yourself from it. You either Risk up and get into equities or have everything taken from you via inflation and low interest rates: th

there's no way to protect yourself from it. You either Risk up and get into equities or have everything taken from you via inflation and low interest rates: that's the whole point. this is a wealth transfer from savers to non-savers.

Robotbeat 7y ago
Either put the capital to use in the real economy, or moths and rust will destroy your hoard. That's fair.
- thorwasdfasdf 7y ago
  Do you think it's fair, that the government issues you a Dollar one year, and the next year, they devalue it by 2% or more? then they devalue it some more every year 2% or more? If we can't even rely on a stable currency, what is the point of government? we might as well go back to bartering. In fact, this is what is happening. As people can't rely on money to hold it's value anymore, they're going back to hard assets like stocks, and real estate.
  - JumpCrisscross 7y ago
    > Do you think it's fair, that the government issues you a Dollar one year, and the next year, they devalue it by 2% or more? Inflation is at record lows. If anything, deflation is rearing its ugly head.
    - isoskeles 7y ago
      Rent doesn’t seem to have gotten cheaper. Food too. And education and health care. How exactly is inflation at record lows, because the BLS said so?
      - AnthonyMouse 7y ago
        Those things cost more relative to other things. Inflation is everything costs more, specifically including wages, because dollars aren't worth as much. The reason e.g. rents are high is that there is high demand for housing in cities and zoning restricts new construction. That's not inflation.
      - rawbeef 7y ago
        Oh boy. Tin foil hats here we come. Look up consumer price index. You can do this yourself if you really want, but I'm guessing you don't churn your own butter for the same reason you wouldn't want to do this: Go to the super market, pick out a bunch of items, average the cost of them and chart that average over time. There is no conspiracy here. Measuring inflation is very straight forward.
        asdfadsfgfdda 7y ago
        Measuring inflation is not straight forward. How do you calculate inflation of completely new products, like smartphones? How do you measure inflation on a car that is superior in every attribute (fuel economy, safety, reliability) to a car of 10 years ago? How do you measure inflation on non-rival goods, like access to wikipedia?
        cdiddy2 7y ago
        Yes there is conspiracy here. We have changed the way we measure inflation over the years. It completely changed how we count housing costs and technology. "if we calculated inflation today the same way we did during Carter’sadministration, CPI would be closer to 10% rather than the 1.5% calculated as of 12/31/10 by the government." https://www.cornerstonewm.com/downloads/measuring-inflation.pdf https://www.cornerstonewm.com/downloads/measuring-inflation....
    - cdiddy2 7y ago
      I disagree. Inflation is only low because we don't measure it right. https://www.cornerstonewm.com/downloads/measuring-inflation.pdf https://www.cornerstonewm.com/downloads/measuring-inflation.... Inflation is much closer to whats listed here for many americans. https://chapwoodindex.com/ https://chapwoodindex.com/
  - snowwrestler 7y ago
    You're acting like the government invented inflation; it didn't. Before central banks, inflation fluctuated freely in the economy, sometimes very high, sometimes into significant deflation. This volatility exacerbated other economic or financial fluctuations, causing a lot of problems. The goal of central banking is not to introduce or create inflation, but to manage it for greater certainty in long-term investment. A steady 2%/year inflation is a stable currency. If you think it's bad knowing that your dollar will devalue 2% every year, imagine trying to make plans not know whether it was going to drop or go up 7% next year--or anything in between.
  - Robotbeat 7y ago
    Yes.
- spking 7y ago
  That sounds overly simplistic. There are many savers who currently rent, and through sacrifice/discipline scrape an extra thousand or two per month in an effort to save for a down payment on a house. That is not "hoarding", that is capital that will be deployed in the "real" economy, just not right this instant.
  - AnthonyMouse 7y ago
    Nobody says you have to buy the house right now, but in the meantime you have the choice between keeping it as cash in a bank account or stock in a brokerage account. A disincentive to hoard currency in the midst of turmoil is not a bad thing.
    - spking 7y ago
      So you would have the disciplined saver risk their capital in equities that are highly volatile and dropping precipitously?
      - AnthonyMouse 7y ago
        Somebody has to if you want companies to be able to raise capital and carry on forming new businesses and employing people etc. It's your choice whether you prefer that or the moths and rust. Hard times aren't as safe as good times, all around.
        spking 7y ago
        Sure, I think I understand the spirit of your point and agree that a healthy economy relies upon capital circulating through the system. That said, there is a wide spectrum of people with different financial situations and risk appetites. There are lots of institutional and individual investors who are in a better position to take on the risk of putting their low-yield savings into equities and accept significant volatility. The small-time saver who is desperately trying to break out of the rent cycle is probably not going to have the stomach for that, and I don't think that is the cohort that is going to impede the free flow of capital into and out of the stock market anyway.
- pmoriarty 7y ago
  "Either put the capital to use in the real economy, or moths and rust will destroy your hoard." I'd like to explain this to my elderly parents, who have cash sitting around in savings accounts and don't invest, but don't think trying to scare them with "moths and rust" is going to be very convincing. What's a more convincing way to explain this? Also, are money market accounts also going to be hit hard by negative interest rates, or would that be considered investing?
  - deleted 7y ago
    [deleted]
  - armagon 7y ago
    With the caveats that I don't know more than the basics of investing and have a few years for funds to grow, I found the audiobook "The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life" by JL Collins to be very useful. I don't think it'll touch strongly on saving your money being a bad idea, and I really don't remember anything about negative interest rates, but it does make investing seem much less scary.
    - SketchySeaBeast 7y ago
      A "few years for funds to grow" is probably the opposite of what his elderly parents have.
      - armagon 7y ago
        That's why I mentioned it as a caveat.
  - jbay808 7y ago
    If your parents are elderly, maybe a savings account is the right place for their money.
- AlexandrB 7y ago
  That’s only fair if the economy was run responsibly. Is the government going to bail out retail “savers” who invest in equities after the next disastrous credit bubble?
- growlist 7y ago
  If you can't get ahead, why even try? Easier to fall back to simpler ways of living - and in the end that certainly doesn't keep rich folks in private jets etc.
- ComputerGuru 7y ago
  That’s stupid. People don’t save so they can die with lots of zeros in their bank account, they save because they want to inject that money into your so-called “real economy” but at a later date, perhaps when they’ve retired or when they’ve amassed sufficient savings to make that large purchase they’ve been eyeing. You can’t punish people for saving on one hand and then charge them exorbitant rates or deny them loans altogether when they want to purchase a house without that down payment at hand.

Robotbeat 7y ago

Either put the capital to use in the real economy, or moths and rust will destroy your hoard. That's fair.

thorwasdfasdf 7y ago
Do you think it's fair, that the government issues you a Dollar one year, and the next year, they devalue it by 2% or more? then they devalue it some more every year 2% or more? If we can't even rely on a stable currency, what is the point of government? we might as well go back to bartering. In fact, this is what is happening. As people can't rely on money to hold it's value anymore, they're going back to hard assets like stocks, and real estate.
- JumpCrisscross 7y ago
  > Do you think it's fair, that the government issues you a Dollar one year, and the next year, they devalue it by 2% or more? Inflation is at record lows. If anything, deflation is rearing its ugly head.
  - isoskeles 7y ago
    Rent doesn’t seem to have gotten cheaper. Food too. And education and health care. How exactly is inflation at record lows, because the BLS said so?
    - AnthonyMouse 7y ago
      Those things cost more relative to other things. Inflation is everything costs more, specifically including wages, because dollars aren't worth as much. The reason e.g. rents are high is that there is high demand for housing in cities and zoning restricts new construction. That's not inflation.
    - rawbeef 7y ago
      Oh boy. Tin foil hats here we come. Look up consumer price index. You can do this yourself if you really want, but I'm guessing you don't churn your own butter for the same reason you wouldn't want to do this: Go to the super market, pick out a bunch of items, average the cost of them and chart that average over time. There is no conspiracy here. Measuring inflation is very straight forward.
      - asdfadsfgfdda 7y ago
        Measuring inflation is not straight forward. How do you calculate inflation of completely new products, like smartphones? How do you measure inflation on a car that is superior in every attribute (fuel economy, safety, reliability) to a car of 10 years ago? How do you measure inflation on non-rival goods, like access to wikipedia?
      - cdiddy2 7y ago
        Yes there is conspiracy here. We have changed the way we measure inflation over the years. It completely changed how we count housing costs and technology. "if we calculated inflation today the same way we did during Carter’sadministration, CPI would be closer to 10% rather than the 1.5% calculated as of 12/31/10 by the government." https://www.cornerstonewm.com/downloads/measuring-inflation.pdf https://www.cornerstonewm.com/downloads/measuring-inflation....
  - cdiddy2 7y ago
    I disagree. Inflation is only low because we don't measure it right. https://www.cornerstonewm.com/downloads/measuring-inflation.pdf https://www.cornerstonewm.com/downloads/measuring-inflation.... Inflation is much closer to whats listed here for many americans. https://chapwoodindex.com/ https://chapwoodindex.com/
- snowwrestler 7y ago
  You're acting like the government invented inflation; it didn't. Before central banks, inflation fluctuated freely in the economy, sometimes very high, sometimes into significant deflation. This volatility exacerbated other economic or financial fluctuations, causing a lot of problems. The goal of central banking is not to introduce or create inflation, but to manage it for greater certainty in long-term investment. A steady 2%/year inflation is a stable currency. If you think it's bad knowing that your dollar will devalue 2% every year, imagine trying to make plans not know whether it was going to drop or go up 7% next year--or anything in between.
- Robotbeat 7y ago
  Yes.
spking 7y ago
That sounds overly simplistic. There are many savers who currently rent, and through sacrifice/discipline scrape an extra thousand or two per month in an effort to save for a down payment on a house. That is not "hoarding", that is capital that will be deployed in the "real" economy, just not right this instant.
- AnthonyMouse 7y ago
  Nobody says you have to buy the house right now, but in the meantime you have the choice between keeping it as cash in a bank account or stock in a brokerage account. A disincentive to hoard currency in the midst of turmoil is not a bad thing.
  - spking 7y ago
    So you would have the disciplined saver risk their capital in equities that are highly volatile and dropping precipitously?
    - AnthonyMouse 7y ago
      Somebody has to if you want companies to be able to raise capital and carry on forming new businesses and employing people etc. It's your choice whether you prefer that or the moths and rust. Hard times aren't as safe as good times, all around.
      - spking 7y ago
        Sure, I think I understand the spirit of your point and agree that a healthy economy relies upon capital circulating through the system. That said, there is a wide spectrum of people with different financial situations and risk appetites. There are lots of institutional and individual investors who are in a better position to take on the risk of putting their low-yield savings into equities and accept significant volatility. The small-time saver who is desperately trying to break out of the rent cycle is probably not going to have the stomach for that, and I don't think that is the cohort that is going to impede the free flow of capital into and out of the stock market anyway.
pmoriarty 7y ago
"Either put the capital to use in the real economy, or moths and rust will destroy your hoard." I'd like to explain this to my elderly parents, who have cash sitting around in savings accounts and don't invest, but don't think trying to scare them with "moths and rust" is going to be very convincing. What's a more convincing way to explain this? Also, are money market accounts also going to be hit hard by negative interest rates, or would that be considered investing?
- deleted 7y ago
  [deleted]
- armagon 7y ago
  With the caveats that I don't know more than the basics of investing and have a few years for funds to grow, I found the audiobook "The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life" by JL Collins to be very useful. I don't think it'll touch strongly on saving your money being a bad idea, and I really don't remember anything about negative interest rates, but it does make investing seem much less scary.
  - SketchySeaBeast 7y ago
    A "few years for funds to grow" is probably the opposite of what his elderly parents have.
    - armagon 7y ago
      That's why I mentioned it as a caveat.
- jbay808 7y ago
  If your parents are elderly, maybe a savings account is the right place for their money.
AlexandrB 7y ago
That’s only fair if the economy was run responsibly. Is the government going to bail out retail “savers” who invest in equities after the next disastrous credit bubble?
growlist 7y ago
If you can't get ahead, why even try? Easier to fall back to simpler ways of living - and in the end that certainly doesn't keep rich folks in private jets etc.
ComputerGuru 7y ago
That’s stupid. People don’t save so they can die with lots of zeros in their bank account, they save because they want to inject that money into your so-called “real economy” but at a later date, perhaps when they’ve retired or when they’ve amassed sufficient savings to make that large purchase they’ve been eyeing. You can’t punish people for saving on one hand and then charge them exorbitant rates or deny them loans altogether when they want to purchase a house without that down payment at hand.