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$10,000 makes absolutely no sense in this day and age. The Bank Secrecy Act was made in 1970 and 10k was >250k in todays dollars. It is borderline authoritarian

by wand3r 5y ago

$10,000 makes absolutely no sense in this day and age. The Bank Secrecy Act was made in 1970 and 10k was >250k in todays dollars. It is borderline authoritarian to audit all transactions over 10k now.

nrmitchi 5y ago
> 10k was >250k in todays dollars Source? A basic inflation calculator tells me that 10k in 1970 is ~70k in 2021. Yes, that's more, but it's significantly less than 250k.
- DataDaoDe 5y ago
  This made me wonder if inflation is enough to account for price increases. For instance, it could be the case - I don't know since I'm not an acquainted with the field/data - that the costs of important goods such as homes, cars, education, health care, etc. has increased more or less that what that 10k approx. 70k figure tells you. For instance, maybe its the case that for a generic 10k its worth 70k distributed over all goods and services, but for those that matter most maybe its 250k or 20k, I don't know. Does anyone know more about this topic? I think they use a basket of goods to calculate inflation, but how has that basket changed / been updated over time? Can any economist weigh in here?
  - JorgeGT 5y ago
    You are right. Inflation is usually computed by tracking the price of a "basket of goods". But this only makes sense in the short term and doesn't account for profound societal changes that technology, ideology, etc. brings to that basket. Consider this quote by Agatha Christie (1890-1976): I never thought I would be so poor as to not have live-in staff, or so Rich as to have a car.
  - distortedsignal 5y ago
    I think you're referring to the CPI (https://en.wikipedia.org/wiki/Consumer_price_index https://en.wikipedia.org/wiki/Consumer_price_index), which, as I understand it, is a pretty hotly contested tool in econ/business circles today. If you want to check out the raw data for the CPI that the US Federal Reserve uses, check out https://fred.stlouisfed.org/ https://fred.stlouisfed.org/ - though I couldn't begin to recommend how to navigate that site.
  - mandevil 5y ago
    Two points on the market basket mechanism for measuring inflation: One is that I think lots of people over-focus on specific sectors: sure houses and college education have gotten more expensive, but clothes, travel and computers have gotten much cheaper. Most of the complaints about "hidden inflation" that I've seen are basically ways of saying 'if you only look at the things that have grown much faster than the inflation average, then it looks like inflation is much greater than average.' Now the question of 'hedonic adjustments' (how do you account for the problem that no amount of 1970 money could buy you an iPhone, or a car as safe and reliable as any car made in 2021) is a tricky one. As I recall from my macro class <mumble mumble> years ago, economists basically introduce fudge factors to account for that. I recall some speculation that the fudge factors in the health care sector (of the US) were systematically wrong, because the population isn't actually getting healthy or living longer as those numbers would suggest.
    - ndbfjd 5y ago
      I over-focus on those sectors because the proportion of my budget that is spent on clothes, travel, computers, iPhones, etc. is a small fraction of that spent on housing, college education, and healthcare. I'm not interested in hearing the CPI tell me how many fewer televisions I can buy this year due to inflation when those other sectors dominate my spending.
      - pwinnski 5y ago
        It seems self-evident that the anything for which the cost has gone up will take up a greater proportion of your budget than anything for which the cost has gone down, no matter what the things are. I, for one, own a house and am not currently paying for anyone's college education, so the proportion of my budget going to food and clothing is more relevant to me. Should I say that I'm not interested in hearing people tell me how many fewer students I can send to college when I don't have any students to send? CPI items were picked precisely because they apply to everyone. Raises in housing cost renters more, but increase my net worth as an owner, so it's left out of the CPI. Health care costs in the US are ridiculous, but they're also widely disparate depending on more factors than can be accounted for in a simple measurement like CPI.
  - lovecg 5y ago
    Cost of some these things you mentioned definitely went up by a lot and is not fully explained by inflation. A good blog post on the topic: https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...
- cat199 5y ago
  Depends on what you are buying - relative prices of various goods change over time; many are critical of things like CPI as being a stand in for inflation for exactly this reason Example: 1970 corvette: $5,192.00 (Coupe), $4,849.00 (Convertible) 2021 corvette: $59,900 >>> int(10000 \* (59900 / 5192)) 115369 so, using 'a corvette' as the 'basket of goods' has a ~65% higher inflation rate than the inflation calculator, vs for the big mac: >>> int(10000 \* (5.66 / .65)) 87076 which is ~24% higher than the 70k you mention.
  - nrmitchi 5y ago
    > which is ~24% higher than the 70k you mention. Which is still not 250k. Either way, I see the point you're trying to make, but when people discuss "how much was X in todays dollars" they don't mean "go find a 'basket of goods' to reflect whatever value they want". CPI is the go-to measure that is understood. Yes, some things are more expensive relative to CPI (housing, education, medical care), but using a non-standard measuring stick is not intellectually honest (unless you make it clear and disclose your reason for why you think it should be different).
  - jjk166 5y ago
    I think it's important to note that a 2021 corvette is not a 1970 corvette. Think of all the additional safety features, the different materials of construction, the vastly better electronics, etc. If you could transport a 2021 corvette back to 1970, there's no way it would sell for only $5,192. This is actually a serious issue with many products, for example cleaning supplies that are sold for the same price but in different bottles with different internal volumes. Even for something as simple as bread, the average loaf on a modern shelf has many chemicals which would not have been present 50 years ago, and if you do go for a loaf comparable to what used to be available you're paying some markup for "organic" or "artisanal" labelling. Indeed virtually no where can you find a good whose price has not been affected by changes to technology, marketing, customer demographics, supply chains, etc. All of these obfuscate the change in the value of money. A reasonable basket-of-goods comparison requires looking at multiple goods and trying to normalize for all these changes. Also a Big Mac in 2021 is 3.99. A meal is 5.99, which would have been $1.11 in 1970. Although even here, McDonalds is a very different restaurant now, it's impossible to say how much is inflation and how much is the big mac no longer being one of 6 items on the menu.
- wand3r 5y ago
  Sorry, I am past the edit window. I was on mobile and used 1913 not 1970. The point still stands but obviously to a lesser extent. Thank you for correcting me
bcrosby95 5y ago
Inflation calculator says about $70k. But I do agree with your message, stuff like this definitely should be tied to inflation.
- handmodel 5y ago
  The point above is fair but also I can't help but think a lot of people who are bitcoin hardcores really overestimate historical inflation.
  - BitwiseFool 5y ago
    I'm a thirty-something and when I was born money was worth roughly twice as much as it is today. When my grandfather was born, it was worth ten times as much as it is today. But you're right, I think us Bitcoiners in particular have a very allergic reaction to inflation and overestimate it's affects accordingly.
    - arcticbull 5y ago
      That's completely irrelevant because you're not supposed to stash it in a mattress you're supposed either spend it on basic needs or to invest it. If you started with $10K in 1970, sure, the value is reduced by a factor of 7. Intentionally to incentivize investment. If you started with $10K in 1970 and put it into the S&P 500, you'd have a 4162/83.15= 51X return, adjusted for inflation is still a 7X return. Notionally $510,000 - excluding dividends/re-investment thereof. If you started with $10K in 1970 and put it into an average home in the US you'd have $70K today, adjusted for inflation. (Average $/sqft on an inflation adjusted basis in the US is the same now as it was in 1973 [1] - you'd have way, way, way more if you'd bought property in a major metro - I'm just being conservative). You save value not money. The idea you should save money is a severe misunderstanding of basic economics. It's really not that hard: don't save money, save value. Your narrative is as harmful as it is straight-up wrong. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...
munk-a 5y ago
I strongly disagree that it's authoritarian to audit lots of transactions - 10k is high enough that most people will only hit it when 1) buying a car (or other vehicle - i.e. boat) 2) purchasing a house 3) doing a renovation. Otherwise most normal transactions will be well below this level. I do think that eventually it'd be good to revisit the specific threshold for reporting but 10k still feels incredibly reasonable to me and calling it borderline authoritarian seems quite hyperbolic. Bear in mind that money laundering is extremely effective and difficult to combat without really strong reporting laws and that the detection of money laundering is what leads to take downs of most large criminal organizations since, once you take away their wallet, most of them wither in efficacy.
- ghaff 5y ago
  A $10k credit card bill isn't rare for people who do a lot of business travel. I'm not sure what "auditing" means in this context. As long as I'm not aware of it, I don't really care. It would rapidly get annoying to fill out some form whenever I had a $10K credit card payment. (Not that it's especially frequent.)
  - munk-a 5y ago
    That's alright since the credit card company is the one who'd be filling out the form - you'd only need to fill it out if it was a private transaction between two natural persons - and even then only one form needs to be submitted so if it's someone who regularly engages in such transactions (like some kind of service worker) then they'll probably submit the record of it assuming you insist on paying with cash. Nearly all of this sort of reporting is generally carried out by banks and credit card companies that are being used to execute the transaction - but the US really does want to know if you purchased a used car from someone for 13,000 dollars in cash since, you're probably laundering money at that point.
- tehwebguy 5y ago
  > 10k is high enough that most people will only hit it when 1) buying a car (or other vehicle - i.e. boat) 2) purchasing a house 3) doing a renovation Okay but in 1970 it was 7 years of median rent, 58% of the median home value and 13 months of median salary according to the census bureau.
tehwebguy 5y ago
Possibly incorrect rates aside, inflation also greatly affects what charges someone could face for property crimes.
nvarsj 5y ago
Ditto. Also, FBAR reporting of any account with 10k+ in it. Like seriously, the IRS/US is concerned about 10k in a bank account? Gotta get those tax evaders!
- BruiseLee 5y ago
  No, it's worse. FBAR is required if you have $10k in total. If you do, then you have to report all accounts, even the ones that have just one dollar on them.
elevation 5y ago
Remember, all transactions over $10,000 are suspicious, but transactions under $10,000 are considered "structuring". "All transactions" will be suspect independent of where the threshold is set.
- bsagdiyev 5y ago
  Transactions under $10k that are performed in such a way to move more than $10k but keep from the reporting requirements for bigger transactions are structuring, not just any transaction under $10k is considered “structuring”.
- jjnoakes 5y ago
  This is not correct. "Structuring" has a specific meaning and transferring $9,000 (or any other amount under $10,000) is not enough on its own.
- mandevil 5y ago
  Banks and financial institutions (in the US or that are in some way regulated by the US Treasury- which in practice means everyone who uses USD, including such surprising places as casinos in the Philippines) are required to make Suspicious Activity Reports (SARs) when they suspect foul play no matter what size of transaction. But only when they suspect it: not every transaction gets a SAR, but if you do, then it might be structuring no matter the size. The most notable person ensnared in structuring case is, of course, former House Speaker Denny Hastert (R-IL). He was being blackmailed to keep his sexual assaults of children secret. He went to the bank to withdraw lots of money to pay his blackmailer, and they filed a document with the FinCEN network. When he realized this, he asked about it and was told that everything above 10k needed to be filed, so he stood in line ~150 times and withdrew 5k each time. That's pretty obviously structuring, and because they couldn't get him for child abuse (because it was so long ago and the victim had committed suicide in the interim), he plead guilty to structuring.

by wand3r 5y ago

nrmitchi 5y ago

> 10k was >250k in todays dollars Source? A basic inflation calculator tells me that 10k in 1970 is ~70k in 2021. Yes, that's more, but it's significantly less than 250k.

DataDaoDe 5y ago
This made me wonder if inflation is enough to account for price increases. For instance, it could be the case - I don't know since I'm not an acquainted with the field/data - that the costs of important goods such as homes, cars, education, health care, etc. has increased more or less that what that 10k approx. 70k figure tells you. For instance, maybe its the case that for a generic 10k its worth 70k distributed over all goods and services, but for those that matter most maybe its 250k or 20k, I don't know. Does anyone know more about this topic? I think they use a basket of goods to calculate inflation, but how has that basket changed / been updated over time? Can any economist weigh in here?
- JorgeGT 5y ago
  You are right. Inflation is usually computed by tracking the price of a "basket of goods". But this only makes sense in the short term and doesn't account for profound societal changes that technology, ideology, etc. brings to that basket. Consider this quote by Agatha Christie (1890-1976): I never thought I would be so poor as to not have live-in staff, or so Rich as to have a car.
- distortedsignal 5y ago
  I think you're referring to the CPI (https://en.wikipedia.org/wiki/Consumer_price_index https://en.wikipedia.org/wiki/Consumer_price_index), which, as I understand it, is a pretty hotly contested tool in econ/business circles today. If you want to check out the raw data for the CPI that the US Federal Reserve uses, check out https://fred.stlouisfed.org/ https://fred.stlouisfed.org/ - though I couldn't begin to recommend how to navigate that site.
- mandevil 5y ago
  Two points on the market basket mechanism for measuring inflation: One is that I think lots of people over-focus on specific sectors: sure houses and college education have gotten more expensive, but clothes, travel and computers have gotten much cheaper. Most of the complaints about "hidden inflation" that I've seen are basically ways of saying 'if you only look at the things that have grown much faster than the inflation average, then it looks like inflation is much greater than average.' Now the question of 'hedonic adjustments' (how do you account for the problem that no amount of 1970 money could buy you an iPhone, or a car as safe and reliable as any car made in 2021) is a tricky one. As I recall from my macro class <mumble mumble> years ago, economists basically introduce fudge factors to account for that. I recall some speculation that the fudge factors in the health care sector (of the US) were systematically wrong, because the population isn't actually getting healthy or living longer as those numbers would suggest.
  - ndbfjd 5y ago
    I over-focus on those sectors because the proportion of my budget that is spent on clothes, travel, computers, iPhones, etc. is a small fraction of that spent on housing, college education, and healthcare. I'm not interested in hearing the CPI tell me how many fewer televisions I can buy this year due to inflation when those other sectors dominate my spending.
    - pwinnski 5y ago
      It seems self-evident that the anything for which the cost has gone up will take up a greater proportion of your budget than anything for which the cost has gone down, no matter what the things are. I, for one, own a house and am not currently paying for anyone's college education, so the proportion of my budget going to food and clothing is more relevant to me. Should I say that I'm not interested in hearing people tell me how many fewer students I can send to college when I don't have any students to send? CPI items were picked precisely because they apply to everyone. Raises in housing cost renters more, but increase my net worth as an owner, so it's left out of the CPI. Health care costs in the US are ridiculous, but they're also widely disparate depending on more factors than can be accounted for in a simple measurement like CPI.
- lovecg 5y ago
  Cost of some these things you mentioned definitely went up by a lot and is not fully explained by inflation. A good blog post on the topic: https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...
cat199 5y ago
Depends on what you are buying - relative prices of various goods change over time; many are critical of things like CPI as being a stand in for inflation for exactly this reason Example: 1970 corvette: $5,192.00 (Coupe), $4,849.00 (Convertible) 2021 corvette: $59,900 >>> int(10000 \* (59900 / 5192)) 115369 so, using 'a corvette' as the 'basket of goods' has a ~65% higher inflation rate than the inflation calculator, vs for the big mac: >>> int(10000 \* (5.66 / .65)) 87076 which is ~24% higher than the 70k you mention.
- nrmitchi 5y ago
  > which is ~24% higher than the 70k you mention. Which is still not 250k. Either way, I see the point you're trying to make, but when people discuss "how much was X in todays dollars" they don't mean "go find a 'basket of goods' to reflect whatever value they want". CPI is the go-to measure that is understood. Yes, some things are more expensive relative to CPI (housing, education, medical care), but using a non-standard measuring stick is not intellectually honest (unless you make it clear and disclose your reason for why you think it should be different).
- jjk166 5y ago
  I think it's important to note that a 2021 corvette is not a 1970 corvette. Think of all the additional safety features, the different materials of construction, the vastly better electronics, etc. If you could transport a 2021 corvette back to 1970, there's no way it would sell for only $5,192. This is actually a serious issue with many products, for example cleaning supplies that are sold for the same price but in different bottles with different internal volumes. Even for something as simple as bread, the average loaf on a modern shelf has many chemicals which would not have been present 50 years ago, and if you do go for a loaf comparable to what used to be available you're paying some markup for "organic" or "artisanal" labelling. Indeed virtually no where can you find a good whose price has not been affected by changes to technology, marketing, customer demographics, supply chains, etc. All of these obfuscate the change in the value of money. A reasonable basket-of-goods comparison requires looking at multiple goods and trying to normalize for all these changes. Also a Big Mac in 2021 is 3.99. A meal is 5.99, which would have been $1.11 in 1970. Although even here, McDonalds is a very different restaurant now, it's impossible to say how much is inflation and how much is the big mac no longer being one of 6 items on the menu.
wand3r 5y ago
Sorry, I am past the edit window. I was on mobile and used 1913 not 1970. The point still stands but obviously to a lesser extent. Thank you for correcting me

bcrosby95 5y ago

Inflation calculator says about $70k. But I do agree with your message, stuff like this definitely should be tied to inflation.

handmodel 5y ago
The point above is fair but also I can't help but think a lot of people who are bitcoin hardcores really overestimate historical inflation.
- BitwiseFool 5y ago
  I'm a thirty-something and when I was born money was worth roughly twice as much as it is today. When my grandfather was born, it was worth ten times as much as it is today. But you're right, I think us Bitcoiners in particular have a very allergic reaction to inflation and overestimate it's affects accordingly.
  - arcticbull 5y ago
    That's completely irrelevant because you're not supposed to stash it in a mattress you're supposed either spend it on basic needs or to invest it. If you started with $10K in 1970, sure, the value is reduced by a factor of 7. Intentionally to incentivize investment. If you started with $10K in 1970 and put it into the S&P 500, you'd have a 4162/83.15= 51X return, adjusted for inflation is still a 7X return. Notionally $510,000 - excluding dividends/re-investment thereof. If you started with $10K in 1970 and put it into an average home in the US you'd have $70K today, adjusted for inflation. (Average $/sqft on an inflation adjusted basis in the US is the same now as it was in 1973 [1] - you'd have way, way, way more if you'd bought property in a major metro - I'm just being conservative). You save value not money. The idea you should save money is a severe misunderstanding of basic economics. It's really not that hard: don't save money, save value. Your narrative is as harmful as it is straight-up wrong. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...

munk-a 5y ago

I strongly disagree that it's authoritarian to audit lots of transactions - 10k is high enough that most people will only hit it when 1) buying a car (or other vehicle - i.e. boat) 2) purchasing a house 3) doing a renovation. Otherwise most normal transactions will be well below this level. I do think that eventually it'd be good to revisit the specific threshold for reporting but 10k still feels incredibly reasonable to me and calling it borderline authoritarian seems quite hyperbolic. Bear in mind that money laundering is extremely effective and difficult to combat without really strong reporting laws and that the detection of money laundering is what leads to take downs of most large criminal organizations since, once you take away their wallet, most of them wither in efficacy.

ghaff 5y ago
A $10k credit card bill isn't rare for people who do a lot of business travel. I'm not sure what "auditing" means in this context. As long as I'm not aware of it, I don't really care. It would rapidly get annoying to fill out some form whenever I had a $10K credit card payment. (Not that it's especially frequent.)
- munk-a 5y ago
  That's alright since the credit card company is the one who'd be filling out the form - you'd only need to fill it out if it was a private transaction between two natural persons - and even then only one form needs to be submitted so if it's someone who regularly engages in such transactions (like some kind of service worker) then they'll probably submit the record of it assuming you insist on paying with cash. Nearly all of this sort of reporting is generally carried out by banks and credit card companies that are being used to execute the transaction - but the US really does want to know if you purchased a used car from someone for 13,000 dollars in cash since, you're probably laundering money at that point.
tehwebguy 5y ago
> 10k is high enough that most people will only hit it when 1) buying a car (or other vehicle - i.e. boat) 2) purchasing a house 3) doing a renovation Okay but in 1970 it was 7 years of median rent, 58% of the median home value and 13 months of median salary according to the census bureau.

tehwebguy 5y ago

Possibly incorrect rates aside, inflation also greatly affects what charges someone could face for property crimes.

nvarsj 5y ago

Ditto. Also, FBAR reporting of any account with 10k+ in it. Like seriously, the IRS/US is concerned about 10k in a bank account? Gotta get those tax evaders!

BruiseLee 5y ago
No, it's worse. FBAR is required if you have $10k in total. If you do, then you have to report all accounts, even the ones that have just one dollar on them.

elevation 5y ago

Remember, all transactions over $10,000 are suspicious, but transactions under $10,000 are considered "structuring". "All transactions" will be suspect independent of where the threshold is set.

bsagdiyev 5y ago
Transactions under $10k that are performed in such a way to move more than $10k but keep from the reporting requirements for bigger transactions are structuring, not just any transaction under $10k is considered “structuring”.
jjnoakes 5y ago
This is not correct. "Structuring" has a specific meaning and transferring $9,000 (or any other amount under $10,000) is not enough on its own.
mandevil 5y ago
Banks and financial institutions (in the US or that are in some way regulated by the US Treasury- which in practice means everyone who uses USD, including such surprising places as casinos in the Philippines) are required to make Suspicious Activity Reports (SARs) when they suspect foul play no matter what size of transaction. But only when they suspect it: not every transaction gets a SAR, but if you do, then it might be structuring no matter the size. The most notable person ensnared in structuring case is, of course, former House Speaker Denny Hastert (R-IL). He was being blackmailed to keep his sexual assaults of children secret. He went to the bank to withdraw lots of money to pay his blackmailer, and they filed a document with the FinCEN network. When he realized this, he asked about it and was told that everything above 10k needed to be filed, so he stood in line ~150 times and withdrew 5k each time. That's pretty obviously structuring, and because they couldn't get him for child abuse (because it was so long ago and the victim had committed suicide in the interim), he plead guilty to structuring.