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Has anyone any idea what that means to the average joe? How to protect one's purchasing power? If the government can give you free money (1200$ checks), it als

Has anyone any idea what that means to the average joe? How to protect one's purchasing power? If the government can give you free money (1200$ checks), it also has the power to take everything away from you, right?

cft 6y ago
Buy Bitcoin
- Qasaur 6y ago
  This may not be the most popular opinion, but Satoshi Nakamoto invented Bitcoin precisely because he wanted to separate money and state. The main purpose of crypto has always been to be hard money in the age of the internet and institutionalised money printing.
vkou 6y ago
The $1200 money isn't free, it is borrowed from future taxpayers. The money the Fed prints doesn't go to Joe Average. It goes to investors who are selling the Fed junk bonds. (They then turn around, and buy stocks with those dollars, which is why the market is soaring.)
- rapsey 6y ago
  > The $1200 money isn't free, it is borrowed from future taxpayers. That is a pretty outdated view. More like the money supply grew and everyone's money is a bit less worth.
  - RobertoG 6y ago
    >>"[..] everyone's money is a bit less worth. " Only if the economy is at full utilization. The reason for the stimulus is that the economy it's not at full utilization, ergo, there will be not accelerated inflation.
    - rapsey 6y ago
      Not now.
- lifty 6y ago
  "The $1200 money isn't free, it is borrowed from future taxpayers." That is debatable. They say this but at some point you have to wonder, will they have the capacity to take it off the balance sheet without massive inflation? Historically, there are two ways governments went out of huge debt: default or massive inflations. I doubt the USG will ever let itself default so inflation is more likely. One advantage that the US has is that it has the world reserve currency.
  - wegs 6y ago
    I think that's more a disadvantage. If the US starts to inflate too much, it may be dumped as the world's reserve currency. A global run on the dollar could convert modest, manageable inflation into hyperinflation. If dollars are worth 1/2-1/10th of what they are now in three years, that's kind of okay, and in-line with the damage of COVID19. If they are worth 1/1000th, we're looking at a serious, structural collapse.
    - rapsey 6y ago
      > If dollars are worth 1/2-1/10th of what they are now in three years, that's kind of okay That is massive inflation.
      - wegs 6y ago
        Yes. It is. It's frighteningly high, but likely necessary: We have a massive crisis. It seems like the least of all evils, unless we somehow are able to act with focused intelligence. On the one hand: Look at unemployment rates, business failure rates, mortgage defaults, people unable to pay for food/medicine/shelter, or any other economic metrics, and plot even conservative predictions even a month or two out. The economy will be dead very quickly if we don't do something drastic. On the other hand: If we let it burn: look at COVID19 mortality rates, and multiply by a significant fraction of the US population. You land on numbers greater than WWI casualties, and likely greater than all previous wars combined. Heck, looking at permanent lung damage alone, we're already tanking our economy. These are exceptional times. They take exceptional measures. The metrics I care about are: (1) Structural damage to the economy (layoffs, defaults, bankruptcies, etc.). (2) The number of people working (likely in pandemic-adapted industries) (3) Deaths. To minimize those, we'll either need to be clever or to inflate. So far, we've been really bad at clever.
- wegs 6y ago
  It isn't free, but that isn't really true. The $1200 comes out of inflation, which decreases the value of accumulated wealth (at least to the extent it sits in cash). If you're sitting on a retirement fund, that hurts you. If you're sitting on debt, that helps you. So it's much more past tax payers than future ones who are hurt by this. On the other hand, decreasing the value of accumulated wealth is exactly what ought to happen here. We're not producing very much, and everyone will have less actual stuff. The question is how the banking system adjusts. If we see deflation (prices go down, salaries go down, revenues go down), people will default on debts and other fixed obligations, and the whole thing blows up in structural damage from bankruptcies, mortgage defaults, layoffs, etc. If we see inflation, a lot less structural damage happens. COVID19 is destroying value. What the fed is doing -- inflation in the stock market to keep prices where they were -- is exactly what ought to happen. Inflation will continue to happen elsewhere in the system. The flip side is you don't want starving, homeless people in the streets -- that will destroy massive wealth. We'll deal with that with inflation too, most likely.
  - vkou 6y ago
    No, that $1,200 didn't come out of the Fed printing press. It came out of the general budget, so taxpayers are going to be on the hook for paying it back, in the future. The trillions the Fed is printing aren't being sent out as stimulus cheques. They are being used to provide short-term liquidity (Which does not cause inflation), and to buy junk bonds, (Which does cause inflation, and also happens to prop up the stock market.) Some of that money is also being lent to the government - if those loans are paid back, they will cause net zero inflation. (Because once the money is paid back to the Fed, it is destroyed.) This is precisely why we have central banks that are independent of government budgets. It creates checks and balances against a government choosing to print its way out of budget troubles.
    - wegs 6y ago
      In the very short term, that's true. In the medium-to-long term, they're kind of the same thing. Fiscal and monetary policy are handled by independent bodies, but they're not entirely uncoordinated. They're both different hands of the same overarching body too: the US government.
icu 6y ago
Protecting my purchasing power and accumulating wealth has worried me since 2008. I initially looked long and hard at trying to implement my own copy of Ray Dalio's "All Weather Portfolio". I really recommend reading up as much as you can about Ray Dalio and this portfolio. To create this portfolio for US investors you can follow this website: http://www.lazyportfolioetf.com/allocation/ray-dalio-all-weather/ http://www.lazyportfolioetf.com/allocation/ray-dalio-all-wea... Having done all that research, I've started to modify my approach according to Chris Cole's "Dragon Portfolio". You can learn about it here: https://youtu.be/SkfgEZtJ9LA https://youtu.be/SkfgEZtJ9LA and read how to implement it yourself here: https://docsend.com/view/taygkbn https://docsend.com/view/taygkbn Just to be clear, I have no connection to any of the people and companies mentioned. Also, you may have higher risk tolerance, and want a higher level of return, so these portfolios may not be for you. Either way, you should always seek the advice of multiple fiduciary financial advisers before deciding what to do.
wil421 6y ago
Read about where the $1200 is coming from. It’s not free money it’s a future tax break for 2020 tax returns.
fbonetti 6y ago
Buy the stuff the Fed is propping up - stocks and real estate.
deleted 6y ago
[deleted]

cft 6y ago

Buy Bitcoin

Qasaur 6y ago
This may not be the most popular opinion, but Satoshi Nakamoto invented Bitcoin precisely because he wanted to separate money and state. The main purpose of crypto has always been to be hard money in the age of the internet and institutionalised money printing.

vkou 6y ago

The $1200 money isn't free, it is borrowed from future taxpayers. The money the Fed prints doesn't go to Joe Average. It goes to investors who are selling the Fed junk bonds. (They then turn around, and buy stocks with those dollars, which is why the market is soaring.)

rapsey 6y ago
> The $1200 money isn't free, it is borrowed from future taxpayers. That is a pretty outdated view. More like the money supply grew and everyone's money is a bit less worth.
- RobertoG 6y ago
  >>"[..] everyone's money is a bit less worth. " Only if the economy is at full utilization. The reason for the stimulus is that the economy it's not at full utilization, ergo, there will be not accelerated inflation.
  - rapsey 6y ago
    Not now.
lifty 6y ago
"The $1200 money isn't free, it is borrowed from future taxpayers." That is debatable. They say this but at some point you have to wonder, will they have the capacity to take it off the balance sheet without massive inflation? Historically, there are two ways governments went out of huge debt: default or massive inflations. I doubt the USG will ever let itself default so inflation is more likely. One advantage that the US has is that it has the world reserve currency.
- wegs 6y ago
  I think that's more a disadvantage. If the US starts to inflate too much, it may be dumped as the world's reserve currency. A global run on the dollar could convert modest, manageable inflation into hyperinflation. If dollars are worth 1/2-1/10th of what they are now in three years, that's kind of okay, and in-line with the damage of COVID19. If they are worth 1/1000th, we're looking at a serious, structural collapse.
  - rapsey 6y ago
    > If dollars are worth 1/2-1/10th of what they are now in three years, that's kind of okay That is massive inflation.
    - wegs 6y ago
      Yes. It is. It's frighteningly high, but likely necessary: We have a massive crisis. It seems like the least of all evils, unless we somehow are able to act with focused intelligence. On the one hand: Look at unemployment rates, business failure rates, mortgage defaults, people unable to pay for food/medicine/shelter, or any other economic metrics, and plot even conservative predictions even a month or two out. The economy will be dead very quickly if we don't do something drastic. On the other hand: If we let it burn: look at COVID19 mortality rates, and multiply by a significant fraction of the US population. You land on numbers greater than WWI casualties, and likely greater than all previous wars combined. Heck, looking at permanent lung damage alone, we're already tanking our economy. These are exceptional times. They take exceptional measures. The metrics I care about are: (1) Structural damage to the economy (layoffs, defaults, bankruptcies, etc.). (2) The number of people working (likely in pandemic-adapted industries) (3) Deaths. To minimize those, we'll either need to be clever or to inflate. So far, we've been really bad at clever.
wegs 6y ago
It isn't free, but that isn't really true. The $1200 comes out of inflation, which decreases the value of accumulated wealth (at least to the extent it sits in cash). If you're sitting on a retirement fund, that hurts you. If you're sitting on debt, that helps you. So it's much more past tax payers than future ones who are hurt by this. On the other hand, decreasing the value of accumulated wealth is exactly what ought to happen here. We're not producing very much, and everyone will have less actual stuff. The question is how the banking system adjusts. If we see deflation (prices go down, salaries go down, revenues go down), people will default on debts and other fixed obligations, and the whole thing blows up in structural damage from bankruptcies, mortgage defaults, layoffs, etc. If we see inflation, a lot less structural damage happens. COVID19 is destroying value. What the fed is doing -- inflation in the stock market to keep prices where they were -- is exactly what ought to happen. Inflation will continue to happen elsewhere in the system. The flip side is you don't want starving, homeless people in the streets -- that will destroy massive wealth. We'll deal with that with inflation too, most likely.
- vkou 6y ago
  No, that $1,200 didn't come out of the Fed printing press. It came out of the general budget, so taxpayers are going to be on the hook for paying it back, in the future. The trillions the Fed is printing aren't being sent out as stimulus cheques. They are being used to provide short-term liquidity (Which does not cause inflation), and to buy junk bonds, (Which does cause inflation, and also happens to prop up the stock market.) Some of that money is also being lent to the government - if those loans are paid back, they will cause net zero inflation. (Because once the money is paid back to the Fed, it is destroyed.) This is precisely why we have central banks that are independent of government budgets. It creates checks and balances against a government choosing to print its way out of budget troubles.
  - wegs 6y ago
    In the very short term, that's true. In the medium-to-long term, they're kind of the same thing. Fiscal and monetary policy are handled by independent bodies, but they're not entirely uncoordinated. They're both different hands of the same overarching body too: the US government.

icu 6y ago

Protecting my purchasing power and accumulating wealth has worried me since 2008. I initially looked long and hard at trying to implement my own copy of Ray Dalio's "All Weather Portfolio". I really recommend reading up as much as you can about Ray Dalio and this portfolio. To create this portfolio for US investors you can follow this website: http://www.lazyportfolioetf.com/allocation/ray-dalio-all-weather/ http://www.lazyportfolioetf.com/allocation/ray-dalio-all-wea... Having done all that research, I've started to modify my approach according to Chris Cole's "Dragon Portfolio". You can learn about it here: https://youtu.be/SkfgEZtJ9LA https://youtu.be/SkfgEZtJ9LA and read how to implement it yourself here: https://docsend.com/view/taygkbn https://docsend.com/view/taygkbn Just to be clear, I have no connection to any of the people and companies mentioned. Also, you may have higher risk tolerance, and want a higher level of return, so these portfolios may not be for you. Either way, you should always seek the advice of multiple fiduciary financial advisers before deciding what to do.

wil421 6y ago

Read about where the $1200 is coming from. It’s not free money it’s a future tax break for 2020 tax returns.

fbonetti 6y ago

Buy the stuff the Fed is propping up - stocks and real estate.

deleted 6y ago

[deleted]