7 ms·

If I was alive in 1923 and stashed away $8 million in ̶c̶a̶s̶h̶ (Edit: 100y bonds) would only be worth about $140 million today. Had I put it into some fancy

If I was alive in 1923 and stashed away $8 million in ̶c̶a̶s̶h̶ (Edit: 100y bonds) would only be worth about $140 million today. Had I put it into some fancy ETF (Recall Vanguard dates back only to 1975, but whatever) I'd be a billionaire. That's it, that is the entire difference of less than an order of magnitude. Don't reckon the nickels and the dimes matter much to centenarians. Most people don't even have $8000 to invest so they plow it all into crypto and beanie babies and we scoff at them trying to x10. Food for thought. Memento Mori. Edit for clarity: I obviously didn't mean stash cash under the mattress. Sorry for the confusion.

jldugger 4y ago
10x matters quite a bit in generational wealth terms. If every generation doubles the number of plausible claimants to the wealth, thats about what is needed to balance out. On the other hand: > If I was alive in 1922 and stashed away $8 million in cash it would only be worth about $140 million today. Why would it not be worth $8 million?
- quickthrowman 4y ago
  It should read “If I was alive in 1923 and invested $8M in 100y bonds that return the exact rate of inflation, I’d have $140M today” Plugging it into a USD inflation calculator checks out.
  - bobleeswagger 4y ago
    $8 million in cash will always be $8 million in cash. "Stashed it away" is pretty vague but cash is cash.
    - tarboreus 4y ago
      Only if you literally mean physical cash. Banks offered pretty significant interest rates historically.
      - jldugger 4y ago
        With the slight caveat that the FDIC wouldnt exist until a decade after you put your money in and in no case would it protect all 8 million dollars.
      - kgwgk 4y ago
        Why say “stash away” if not to suggest the literal “hiding the money somewhere” meaning rather than “opening a savings account”?
  - jldugger 4y ago
    Unfortunately we don't have such a thing. Especially in 1922, we didn't even have TIPS, or 100 year bonds. The best case scenario you're looking at something like 10 year treasuries at 4.3 percent[1] in 1922. Shorter durations will help match dramatic inflation moves things get weird in the great depression -- a bout of 10 percent deflation happened in 1933. [1]: https://www.multpl.com/10-year-treasury-rate/table/by-year
- recuter 4y ago
  From peasants shoes to peasants shoes all in three generations, signore Medici. > Why would it not be worth $8 million? https://www.in2013dollars.com/us/inflation/1923 https://www.in2013dollars.com/us/inflation/1923
  - sieabahlpark 4y ago
    [dead]
  - lkbm 4y ago
    You've got it backwards. In 1923, your 8 million 1923-dollars was worth what $138 million 2023-dollars is today. You started with $138 million 2023-dollars, but denominated in 1923-dollars that's $8 million. If you just hold on to it your 1923-dollars have become 2023-dollars, but there's still exactly $8 million of them. You've lost nearly 95% of the value.
    - ByersReason 4y ago
      however, given that your 1923 dollars were likely silver dollars which currently trade for $32 (for junk grade) and up ... I made that 8m * 32 = 256m :) - and better if you were sensible and stored un-circulated dollars
      - kgwgk 4y ago
        >> If I was alive in 1923 and stashed away $8 million > your 1923 dollars were likely silver dollars It's unlikely that you had 200 metric tons of silver coins stashed away.
        tristor 4y ago
        > It's unlikely that you had 200 metric tons of silver coins stashed away. I think the grandparent was imagining they were silver certificate dollars[1], not actual silver dollar coins. That said, silver certificate dollars needed to be converted at some point in the past, in 2023 they can't be converted and only have collector value, and $8 million worth would dilute their collector value substantially. [1]:https://www.investopedia.com/articles/markets-economy/090116/what-silver-certificate-dollar-bill-worth-today.asp https://www.investopedia.com/articles/markets-economy/090116...
- knodi123 4y ago
  > Why would it not be worth $8 million? mice ate some.
  - psychlops 4y ago
    Meaning trust fund children.
roflyear 4y ago
What return are you assuming for cash?
- deleted 4y ago
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ilikehurdles 4y ago
If you had $8million in 1923 cash stashed away, you’d have $8million in 2023 cash today. Ie you’d have lost about 94% of your buying power.
- tarboreus 4y ago
  Through most of that history, interest rates in savings accounts exceeded inflation, often significantly so. So I find this unconvincing. Obviously not a great investment comparatively, but the number in the account is going to be significantly higher.
  - roflyear 4y ago
    Really? I can't easily find a chart going past 1980 for "savings rates" nevermind that these accounts often have a $ cap, and nevermind going back to 1920.
- pixl97 4y ago
  And if you had 8 million in a bank in 1923 there's a good chance it would have all been gone when the bank collapsed and there wasn't FDIC insurance.
- astrange 4y ago
  1923 dollars are worth more than face value to collectors, but that's marginal value so you'd have to sell them pretty slowly. Anyway, that's what you get for not contributing to money velocity. It's not designed as a savings product, so don't save with it.
- int_19h 4y ago
  If we're being pedantic, it depends on what kind of cash. A silver 1923 dollar coin goes for $20-30 today.
onlyrealcuzzo 4y ago
> If I was alive in 1923 and stashed away $8 million in cash it would only be worth about $140 million today. Stashed it away as cash where? If you had $8M in 1923 and kept it under a mattress, it would still be $8M today - the difference is due to inflation - in 1923 you would've been the equivalent of a Billionaire today - and today... you'd have $8M. I think things like this matter a lot. If you invested in treasuries or only had a savings account with interest - you're going to get eaten alive by inflation, and over a long period of time - your wealth will decrease enormously - maybe as much as 50%+ (with a savings account). If you instead had invested in the S&P - and it did what it did over the last 100 years - you'd have 2-3x what you started with in real terms. Although, past performance != future performance. No one knows what the future will hold. Maybe the US won't even be around. Maybe we'll move to socialism. Maybe private companies get overrun with crooks and everyone loses most of their money because the whole S&P goes Enron/Wirecard. Who knows! But my guess is I'll be better off with equities than cash medium & long term. And fortunately, I'm not too concerned about short-term.
- ceejayoz 4y ago
  > If you had $8M in 1923 and kept it under a mattress, it would still be $8M today Saving account interest rates haven't been 0% for the whole last 100 years. It's not a great investment, but you'd have substantially more than $8M.
  - Dylan16807 4y ago
    How much more would you have with a savings account? Apparently the $140M number was bonds. Edit: Or, theoretical bonds that match inflation and don't actually exist?
    - onlyrealcuzzo 4y ago
      In a non-funny-money-world, government bonds would yield more than expected inflation. No one would ever give the government money expecting to lose money. Only in a world where you can always count on the government to lower interest rates ad-infinitum to keep itself solvent which pushes up the value of your bonds to someone who's willing to pay more money to lose the same amount of money later (a greater fool - although, are you a fool if you've been able to count on this like clockwork for the last 30 years?).
deleted 4y ago
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b33j0r 4y ago
Not fair. That Princess Diana beanie baby is a hold. Take a long position, you're going to be looking at it until you die! I wish I still had my pogs! (Almost not kidding that it's due for a re-commercialization or embedded marketing for some comic book franchise)
verteu 4y ago
The article provides a counterpoint: If you invested in "the market" in 1851, you'd still be underwater (in real terms) in 1932. See page 44.
- deleted 4y ago
  [deleted]
- kgwgk 4y ago
  A counterpoint to what? What's your definition of "underwater (in real terms)"? That investment would have been paying dividends for decades. What happens with those cash flows?
  - verteu 4y ago
    It was a counterpoint to the common wisdom that "stock returns beat inflation over long-term periods." But I didn't realize the author discarded dividends -- that makes the entire analysis suspect.
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- deleted 4y ago
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jldugger 4y ago

10x matters quite a bit in generational wealth terms. If every generation doubles the number of plausible claimants to the wealth, thats about what is needed to balance out. On the other hand: > If I was alive in 1922 and stashed away $8 million in cash it would only be worth about $140 million today. Why would it not be worth $8 million?

quickthrowman 4y ago
It should read “If I was alive in 1923 and invested $8M in 100y bonds that return the exact rate of inflation, I’d have $140M today” Plugging it into a USD inflation calculator checks out.
- bobleeswagger 4y ago
  $8 million in cash will always be $8 million in cash. "Stashed it away" is pretty vague but cash is cash.
  - tarboreus 4y ago
    Only if you literally mean physical cash. Banks offered pretty significant interest rates historically.
    - jldugger 4y ago
      With the slight caveat that the FDIC wouldnt exist until a decade after you put your money in and in no case would it protect all 8 million dollars.
    - kgwgk 4y ago
      Why say “stash away” if not to suggest the literal “hiding the money somewhere” meaning rather than “opening a savings account”?
- jldugger 4y ago
  Unfortunately we don't have such a thing. Especially in 1922, we didn't even have TIPS, or 100 year bonds. The best case scenario you're looking at something like 10 year treasuries at 4.3 percent[1] in 1922. Shorter durations will help match dramatic inflation moves things get weird in the great depression -- a bout of 10 percent deflation happened in 1933. [1]: https://www.multpl.com/10-year-treasury-rate/table/by-year
recuter 4y ago
From peasants shoes to peasants shoes all in three generations, signore Medici. > Why would it not be worth $8 million? https://www.in2013dollars.com/us/inflation/1923 https://www.in2013dollars.com/us/inflation/1923
- sieabahlpark 4y ago
  [dead]
- lkbm 4y ago
  You've got it backwards. In 1923, your 8 million 1923-dollars was worth what $138 million 2023-dollars is today. You started with $138 million 2023-dollars, but denominated in 1923-dollars that's $8 million. If you just hold on to it your 1923-dollars have become 2023-dollars, but there's still exactly $8 million of them. You've lost nearly 95% of the value.
  - ByersReason 4y ago
    however, given that your 1923 dollars were likely silver dollars which currently trade for $32 (for junk grade) and up ... I made that 8m * 32 = 256m :) - and better if you were sensible and stored un-circulated dollars
    - kgwgk 4y ago
      >> If I was alive in 1923 and stashed away $8 million > your 1923 dollars were likely silver dollars It's unlikely that you had 200 metric tons of silver coins stashed away.
      - tristor 4y ago
        > It's unlikely that you had 200 metric tons of silver coins stashed away. I think the grandparent was imagining they were silver certificate dollars[1], not actual silver dollar coins. That said, silver certificate dollars needed to be converted at some point in the past, in 2023 they can't be converted and only have collector value, and $8 million worth would dilute their collector value substantially. [1]:https://www.investopedia.com/articles/markets-economy/090116/what-silver-certificate-dollar-bill-worth-today.asp https://www.investopedia.com/articles/markets-economy/090116...
knodi123 4y ago
> Why would it not be worth $8 million? mice ate some.
- psychlops 4y ago
  Meaning trust fund children.

roflyear 4y ago

What return are you assuming for cash?

deleted 4y ago
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ilikehurdles 4y ago

If you had $8million in 1923 cash stashed away, you’d have $8million in 2023 cash today. Ie you’d have lost about 94% of your buying power.

tarboreus 4y ago
Through most of that history, interest rates in savings accounts exceeded inflation, often significantly so. So I find this unconvincing. Obviously not a great investment comparatively, but the number in the account is going to be significantly higher.
- roflyear 4y ago
  Really? I can't easily find a chart going past 1980 for "savings rates" nevermind that these accounts often have a $ cap, and nevermind going back to 1920.
pixl97 4y ago
And if you had 8 million in a bank in 1923 there's a good chance it would have all been gone when the bank collapsed and there wasn't FDIC insurance.
astrange 4y ago
1923 dollars are worth more than face value to collectors, but that's marginal value so you'd have to sell them pretty slowly. Anyway, that's what you get for not contributing to money velocity. It's not designed as a savings product, so don't save with it.
int_19h 4y ago
If we're being pedantic, it depends on what kind of cash. A silver 1923 dollar coin goes for $20-30 today.

onlyrealcuzzo 4y ago

> If I was alive in 1923 and stashed away $8 million in cash it would only be worth about $140 million today. Stashed it away as cash where? If you had $8M in 1923 and kept it under a mattress, it would still be $8M today - the difference is due to inflation - in 1923 you would've been the equivalent of a Billionaire today - and today... you'd have $8M. I think things like this matter a lot. If you invested in treasuries or only had a savings account with interest - you're going to get eaten alive by inflation, and over a long period of time - your wealth will decrease enormously - maybe as much as 50%+ (with a savings account). If you instead had invested in the S&P - and it did what it did over the last 100 years - you'd have 2-3x what you started with in real terms. Although, past performance != future performance. No one knows what the future will hold. Maybe the US won't even be around. Maybe we'll move to socialism. Maybe private companies get overrun with crooks and everyone loses most of their money because the whole S&P goes Enron/Wirecard. Who knows! But my guess is I'll be better off with equities than cash medium & long term. And fortunately, I'm not too concerned about short-term.

ceejayoz 4y ago
> If you had $8M in 1923 and kept it under a mattress, it would still be $8M today Saving account interest rates haven't been 0% for the whole last 100 years. It's not a great investment, but you'd have substantially more than $8M.
- Dylan16807 4y ago
  How much more would you have with a savings account? Apparently the $140M number was bonds. Edit: Or, theoretical bonds that match inflation and don't actually exist?
  - onlyrealcuzzo 4y ago
    In a non-funny-money-world, government bonds would yield more than expected inflation. No one would ever give the government money expecting to lose money. Only in a world where you can always count on the government to lower interest rates ad-infinitum to keep itself solvent which pushes up the value of your bonds to someone who's willing to pay more money to lose the same amount of money later (a greater fool - although, are you a fool if you've been able to count on this like clockwork for the last 30 years?).

deleted 4y ago

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b33j0r 4y ago

Not fair. That Princess Diana beanie baby is a hold. Take a long position, you're going to be looking at it until you die! I wish I still had my pogs! (Almost not kidding that it's due for a re-commercialization or embedded marketing for some comic book franchise)

verteu 4y ago

The article provides a counterpoint: If you invested in "the market" in 1851, you'd still be underwater (in real terms) in 1932. See page 44.

deleted 4y ago
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kgwgk 4y ago
A counterpoint to what? What's your definition of "underwater (in real terms)"? That investment would have been paying dividends for decades. What happens with those cash flows?
- verteu 4y ago
  It was a counterpoint to the common wisdom that "stock returns beat inflation over long-term periods." But I didn't realize the author discarded dividends -- that makes the entire analysis suspect.

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