5 ms·

Its actually not that unexpected, a big contributor is inflation. If you've any experience with Argentina, or other hyper-inflationary events, there comes a po

by than3 4y ago

Its actually not that unexpected, a big contributor is inflation. If you've any experience with Argentina, or other hyper-inflationary events, there comes a point where your labor is more valuable to you than what others are willing to pay you for. When the store of value is degrading rapidly, and wages in general always lag, those with options will do something else. Most companies I know simply are unwilling to adjust their wages for inflation. When we were in a 2% inflationary environment, and that 2% could be counted on year after year as being stable, it was more reasonable. With inflation in the double digits, with real inflation according to previous more accurate methods showing roughly a ~33% loss in value YOY, and the corresponding increase in taxes (as inflation increases your taxes increase as you enter higher tax brackets for the same value), it makes a lot more sense to use your efforts for yourself instead of being on the open market. Factor markets and producers decide what they are willing to accept, and with a moving goal post in terms of a currency store, it makes more sense to wait in sheltered assets and produce goods you'll use. People in general won't accept doing $1,000 in work and by the time they can spend it only having $700, or worse for example $1. Do you think they will continue doing that work moving forward if they have no expectation of getting anything comparable in value in return?

QLazuli 4y ago
This is the best little nugget of wisdom I've come across in a while, thank you for sharing it. It was well written and concise, and I feel like I understand the world a little better
moonchrome 4y ago
We are talking about people making above >150k/year here right ? At no point does 10-20% inflation mean they are better off growing their own food or some shit like that. Your point is probably applicable in less developed economies/low paid positions. For highly specialized well paid positions if this was the case you'd probably have a societal collapse.
- makerdiety 4y ago
  Actually, increasing rates of inflation do mean people are better off sustaining themselves and leaving the credit based economy that has a rising inflation rate with its credit based currency. The weak buying power of an individual currency unit, like a United States dollar, indicates a geopolitical state and economy that is beginning to lack the ability to sustain further revenue increases in a generalized shareholder account of wealth. And middle class or bourgeois laborers are those general shareholders in the hypothetical credit based economy and state I'm talking about here. Basically, a credit bubble is naturally popping to combat real overpopulation and making a lot of money (like a billion dollars, actually) here might actually be a fool's game. So investing in outside assets, relative to the indicated failing state and the credit based assets its domestic production offers its domestic shareholders, is the rational move to make in this theoretical game. So the question now is: what can we do and invest in as part of our survival motivated escape from the failing society?
- than3 4y ago
  Lets do some basic math, and then afterwards I think it will be clear how it might be better to grow your own food. Also, not everyone makes that much, and you seem to think that's a lot but its really not, especially if inflation is eating away at your stores regularly (over a greater time period than a year). So, here comes the basic math available from looking up some publicly available figures. I only say this because some people have past trauma associated with math in general, but its really critical to make any kind of rational comparison. The Federal tax rate above 89K is $15,213.50 in taxes plus 24% of the amount over $89,075 for Federal up to ~170k, and then you also have State taxes which may be as high as 13.3%; more if you own property (% based on fixed value), plus its counted as ordinary income so social security and medicare take off another 15.3%. Anything you buy has sales tax so another ~7%, and fuel/vehicle taxes. Overall, at 89K ordinary income, 15213 = ~17% +15.3%+13.3% = ~45.6%, nearly half of what you get paid on goes to the government. Now comes along 20% inflation, and this is a tax because they printed too much money and couldn't balance a budget. So 65.6%, assuming inflation is at 20% and not much higher, then there's taxes on various goods you have to purchase such as fuel and general sales tax, property taxes, it varies, but we'll say 7% or more on any dollar you spend, and depending how much you have to drive, that could be about 3% (to make it round), since vehicle costs and taxes are non-deductible. So factoring in all taxes on that income you receive, somewhere between 65 and 75.6% with 20% inflation goes to government. If you are self employed, you have more options to make certain costs deductible, and if you are not its about half of that 15.3% less so there's some leeway. So, you can work 80 hour weeks, stressful job, making that 89K/year or more, and only take home ballpark around 30,616 after factoring in inflation, and taxes. If you don't reinvest in an asset that sheltered from inflation you lose that much or more of your surplus/stores the following year and each subsequent year thereafter whereas business simply passes it through to you in higher costs. Alternatively, you can grow your own food, produce your own products, work less, and keep 100% of what you produce and use, and if you have surplus sell some of it if the price is right and they'll tax you on that small amount. Should you trade 4160 hours of your life for 89K, when, by the time you get it and can spend it, you only take home about 30K and the prices may have risen just as quickly during that time to net 0 or negative. That's part of the horror of hyper-inflation, and while it hasn't by definition hit 50%/month yet, nothing fundamentally has changed to stop inflation despite what the news may be saying. Those that have lived through similar situations know they have to invest their efforts in producing their own goods such as raising chickens, goats, milk and cheese. Without food security and having people who have specialized labor that can help out, you are at the mercy of creditors and the producers you depend on for daily necessities and they will pass inflation costs on.
bernawil 4y ago
I'm from Argentina, even now with 100% inflation YoY I wouldn't call it "hyper-inflationary". We had hyper-inflation in 1989 and that was 79% monthly. People in general won't accept doing $1,000 in work and by the time they can spend it only having $700, or worse for example $1. nobody is quitting their jobs because the currency is losing value. You cash your salary and just buy stocks, bonds, crypto, foreign currency and obviously groceries. Most companies I know simply are unwilling to adjust their wages for inflation With inflation in the double digits, with real inflation according to previous more accurate methods showing roughly a ~33% loss in value YOY, and the corresponding increase in taxes yes, some real wisdom here. Here, anybody that's in demand becomes self employed and that brings two benefits: first you can raise your rate as often as you want. Second, your tax rate decreases and gets more predicable for the fiscal year.
- than3 4y ago
  We had close friends growing up who were originally from Argentina during that time period in the early 90s, they were clearly traumatized by it. They told stories of raising chickens for eggs, and goats for milk/cheese/food, and the father credited that as the only reason they made it. Their stories left a real impression on me growing up. I ended up doing a lot of research during my college years. By definition hyper-inflationary is >50%/month, but it always lags and government isn't incentivized to keep it accurate. Year over year stateside is relatively tame in comparison except its not going to taper off as long as they keep printing increasing amounts of money. The Fed also broke banking when they departed from fractional banking in 2020 by setting the required deposits to 0% and went with capital requirements which use Basel III (counting capitalization on the stock market as backing deposits), which as we've seen with FRC, stock market exposure for banks in general is a bad idea.
JanisErdmanis 4y ago
This was actually my thought process to postpone job searching among many other things after my physics PhD graduation last year. I had managed to make substantial savings during the Covid period. I didn’t find ethical to invest them in stocks and the interest rates for government bonds were not close to match the inflation. So I took a time off to allocate time for spending/investing, learning new skills and working on an open source project full time. So far managed to install 5kW solar panel arrays at two family properties connecting that to the grid and figuring out a way to get reimbursed by government and so lowering final costs around 2500 euro for each installation. Now I have an excess electricity so I invested in a sawmill and hopefully soon will slice a timber for a joy of doing so. Being able to build my own sauna and get some wood for roofing could potentially break it even. Also investing time and attention into my open source project gives me the basic fulfilment for purpose and creativity urgently needed after experiencing academia. Learning a lot of new stuff - HTTP, onion architecture, QML, public key cryptography and zero knowledge proofs - among many other things. While also being able to express myself creatively in software development than I ever could be in academia. Does not matter much if the developed idea fails, I just really want to know how.
- chalcolithic 4y ago
  > I didn’t find ethical to invest them in stocks Please elaborate
  - than3 4y ago
    > I didn't find it ethical to invest in the stock market. Ethics are individual, but I can totally agree with this sentiment. To effectively make money in up, down, or sideways markets you need to be able to trade options. Options are risky, but you can structure them in combinations to reduce risk, but those positions are handled differently depending on whether you are a primary dealer, or an individual investor. When certain options are coupled in certain structures, they form synthetic shares at the broker dealer level which can exceed the amount of shares in the float, and the market maker assumes the risk because they delta hedge to facilitate selling and clearing contracts. As a result, with sufficient capital you can manipulate the market price down since a synthetic share is counted indistinguishable from a real share and with sufficient capital this can be an arbitrary amount. The basic mechanics of the market are when there are more sellers than buyers the price goes down, the opposite causes the market to go up. Algorithmic trading capitalizes on volumes/churn, and can trigger intentional volatility halts with sufficient churn which almost seemed targeted when it might go against a short seller (i.e. moving up). Overall the markets today from what I've seen are just a very clever way to fleece people's retirement money. For someone to gain, someone must lose. Ethically, its quite tainted, but other avenues for capital investment are generally not easily accessible to accounts less than 100k. Additionally, while individual investors may be fined for breaking SEC laws, the fines for broker-dealers and hedgefunds almost never come close to the profits (fraud is baked in) at least in any action taken in the last two decades that I've seen. You have dark pools also that don't have to register the sales with an exchange sometimes until end of day (which isn't reflected in the exchanges market price, at least afaik). It is also possible to fix prices with two colluding parties through opposite ended contract legs for prices based on volume/active futures/contracts by creating a net zero position between those parties (spot price gold/silver; eligible vs registered), yes, its against the law but the SEC is toothless against the major players doing this, and they can't force the visibility needed to go after them. They lose in court(https://www.youtube.com/watch?v=-Eyo0u4_sYI&ab_channel=TheProblemWithJonStewart https://www.youtube.com/watch?v=-Eyo0u4_sYI&ab_channel=ThePr...). In short, its on their honor as broker dealers that their numbers at the COMEX are accurate, and there has never been an independent audit. JPM manipulated the silver market for decades and got off free and clear with only a small fine, moved operations overseas and continued doing more of the same in the London Exchange (from what I've heard, though that's strictly rumor so take that for what it is). Gamestop was another where they were testing gamma with contracts forcing the market maker to induce a short squeeze to cover, The regional bank FRC most recently with a well timed media package (inducing a bank run) after two other bank failures which were known well in advance. Was just criminal. I saw a completely fake video show up on youtube about that time with people lined up outside a building on a Sunday to get their money with the video headline showing "FRC bank run in progress". Driving down the street filming a building where storefront windows with the reflected text in the wrong direction and a line outside (it was a sunday, banks aren't open). What was done with the media coverage looked totally criminal for a bank that was on solid foundations and practices (as a model of good banking). With the exception of aggregated indebtedness requirements for a publicly traded company which was caused by the shorting and subsequent drop in share price which forces the bank to have liquidity issues. If there was not some level of tacit approval for additional consolidation of an already consolidated business sector, where they mention the risks in the previous FOMC meeting for regional banks. Its pretty clear there should have been much more action taken after the third bank failed(Credit Suisse), which didn't happen. Standard SEC Disclaimer, I hold a long position on FRC which will probably expire worthless at a loss.

by than3 4y ago

QLazuli 4y ago

This is the best little nugget of wisdom I've come across in a while, thank you for sharing it. It was well written and concise, and I feel like I understand the world a little better

moonchrome 4y ago

We are talking about people making above >150k/year here right ? At no point does 10-20% inflation mean they are better off growing their own food or some shit like that. Your point is probably applicable in less developed economies/low paid positions. For highly specialized well paid positions if this was the case you'd probably have a societal collapse.

makerdiety 4y ago
Actually, increasing rates of inflation do mean people are better off sustaining themselves and leaving the credit based economy that has a rising inflation rate with its credit based currency. The weak buying power of an individual currency unit, like a United States dollar, indicates a geopolitical state and economy that is beginning to lack the ability to sustain further revenue increases in a generalized shareholder account of wealth. And middle class or bourgeois laborers are those general shareholders in the hypothetical credit based economy and state I'm talking about here. Basically, a credit bubble is naturally popping to combat real overpopulation and making a lot of money (like a billion dollars, actually) here might actually be a fool's game. So investing in outside assets, relative to the indicated failing state and the credit based assets its domestic production offers its domestic shareholders, is the rational move to make in this theoretical game. So the question now is: what can we do and invest in as part of our survival motivated escape from the failing society?
than3 4y ago
Lets do some basic math, and then afterwards I think it will be clear how it might be better to grow your own food. Also, not everyone makes that much, and you seem to think that's a lot but its really not, especially if inflation is eating away at your stores regularly (over a greater time period than a year). So, here comes the basic math available from looking up some publicly available figures. I only say this because some people have past trauma associated with math in general, but its really critical to make any kind of rational comparison. The Federal tax rate above 89K is $15,213.50 in taxes plus 24% of the amount over $89,075 for Federal up to ~170k, and then you also have State taxes which may be as high as 13.3%; more if you own property (% based on fixed value), plus its counted as ordinary income so social security and medicare take off another 15.3%. Anything you buy has sales tax so another ~7%, and fuel/vehicle taxes. Overall, at 89K ordinary income, 15213 = ~17% +15.3%+13.3% = ~45.6%, nearly half of what you get paid on goes to the government. Now comes along 20% inflation, and this is a tax because they printed too much money and couldn't balance a budget. So 65.6%, assuming inflation is at 20% and not much higher, then there's taxes on various goods you have to purchase such as fuel and general sales tax, property taxes, it varies, but we'll say 7% or more on any dollar you spend, and depending how much you have to drive, that could be about 3% (to make it round), since vehicle costs and taxes are non-deductible. So factoring in all taxes on that income you receive, somewhere between 65 and 75.6% with 20% inflation goes to government. If you are self employed, you have more options to make certain costs deductible, and if you are not its about half of that 15.3% less so there's some leeway. So, you can work 80 hour weeks, stressful job, making that 89K/year or more, and only take home ballpark around 30,616 after factoring in inflation, and taxes. If you don't reinvest in an asset that sheltered from inflation you lose that much or more of your surplus/stores the following year and each subsequent year thereafter whereas business simply passes it through to you in higher costs. Alternatively, you can grow your own food, produce your own products, work less, and keep 100% of what you produce and use, and if you have surplus sell some of it if the price is right and they'll tax you on that small amount. Should you trade 4160 hours of your life for 89K, when, by the time you get it and can spend it, you only take home about 30K and the prices may have risen just as quickly during that time to net 0 or negative. That's part of the horror of hyper-inflation, and while it hasn't by definition hit 50%/month yet, nothing fundamentally has changed to stop inflation despite what the news may be saying. Those that have lived through similar situations know they have to invest their efforts in producing their own goods such as raising chickens, goats, milk and cheese. Without food security and having people who have specialized labor that can help out, you are at the mercy of creditors and the producers you depend on for daily necessities and they will pass inflation costs on.

bernawil 4y ago

I'm from Argentina, even now with 100% inflation YoY I wouldn't call it "hyper-inflationary". We had hyper-inflation in 1989 and that was 79% monthly. People in general won't accept doing $1,000 in work and by the time they can spend it only having $700, or worse for example $1. nobody is quitting their jobs because the currency is losing value. You cash your salary and just buy stocks, bonds, crypto, foreign currency and obviously groceries. Most companies I know simply are unwilling to adjust their wages for inflation With inflation in the double digits, with real inflation according to previous more accurate methods showing roughly a ~33% loss in value YOY, and the corresponding increase in taxes yes, some real wisdom here. Here, anybody that's in demand becomes self employed and that brings two benefits: first you can raise your rate as often as you want. Second, your tax rate decreases and gets more predicable for the fiscal year.

than3 4y ago
We had close friends growing up who were originally from Argentina during that time period in the early 90s, they were clearly traumatized by it. They told stories of raising chickens for eggs, and goats for milk/cheese/food, and the father credited that as the only reason they made it. Their stories left a real impression on me growing up. I ended up doing a lot of research during my college years. By definition hyper-inflationary is >50%/month, but it always lags and government isn't incentivized to keep it accurate. Year over year stateside is relatively tame in comparison except its not going to taper off as long as they keep printing increasing amounts of money. The Fed also broke banking when they departed from fractional banking in 2020 by setting the required deposits to 0% and went with capital requirements which use Basel III (counting capitalization on the stock market as backing deposits), which as we've seen with FRC, stock market exposure for banks in general is a bad idea.

JanisErdmanis 4y ago

This was actually my thought process to postpone job searching among many other things after my physics PhD graduation last year. I had managed to make substantial savings during the Covid period. I didn’t find ethical to invest them in stocks and the interest rates for government bonds were not close to match the inflation. So I took a time off to allocate time for spending/investing, learning new skills and working on an open source project full time. So far managed to install 5kW solar panel arrays at two family properties connecting that to the grid and figuring out a way to get reimbursed by government and so lowering final costs around 2500 euro for each installation. Now I have an excess electricity so I invested in a sawmill and hopefully soon will slice a timber for a joy of doing so. Being able to build my own sauna and get some wood for roofing could potentially break it even. Also investing time and attention into my open source project gives me the basic fulfilment for purpose and creativity urgently needed after experiencing academia. Learning a lot of new stuff - HTTP, onion architecture, QML, public key cryptography and zero knowledge proofs - among many other things. While also being able to express myself creatively in software development than I ever could be in academia. Does not matter much if the developed idea fails, I just really want to know how.

chalcolithic 4y ago
> I didn’t find ethical to invest them in stocks Please elaborate
- than3 4y ago
  > I didn't find it ethical to invest in the stock market. Ethics are individual, but I can totally agree with this sentiment. To effectively make money in up, down, or sideways markets you need to be able to trade options. Options are risky, but you can structure them in combinations to reduce risk, but those positions are handled differently depending on whether you are a primary dealer, or an individual investor. When certain options are coupled in certain structures, they form synthetic shares at the broker dealer level which can exceed the amount of shares in the float, and the market maker assumes the risk because they delta hedge to facilitate selling and clearing contracts. As a result, with sufficient capital you can manipulate the market price down since a synthetic share is counted indistinguishable from a real share and with sufficient capital this can be an arbitrary amount. The basic mechanics of the market are when there are more sellers than buyers the price goes down, the opposite causes the market to go up. Algorithmic trading capitalizes on volumes/churn, and can trigger intentional volatility halts with sufficient churn which almost seemed targeted when it might go against a short seller (i.e. moving up). Overall the markets today from what I've seen are just a very clever way to fleece people's retirement money. For someone to gain, someone must lose. Ethically, its quite tainted, but other avenues for capital investment are generally not easily accessible to accounts less than 100k. Additionally, while individual investors may be fined for breaking SEC laws, the fines for broker-dealers and hedgefunds almost never come close to the profits (fraud is baked in) at least in any action taken in the last two decades that I've seen. You have dark pools also that don't have to register the sales with an exchange sometimes until end of day (which isn't reflected in the exchanges market price, at least afaik). It is also possible to fix prices with two colluding parties through opposite ended contract legs for prices based on volume/active futures/contracts by creating a net zero position between those parties (spot price gold/silver; eligible vs registered), yes, its against the law but the SEC is toothless against the major players doing this, and they can't force the visibility needed to go after them. They lose in court(https://www.youtube.com/watch?v=-Eyo0u4_sYI&ab_channel=TheProblemWithJonStewart https://www.youtube.com/watch?v=-Eyo0u4_sYI&ab_channel=ThePr...). In short, its on their honor as broker dealers that their numbers at the COMEX are accurate, and there has never been an independent audit. JPM manipulated the silver market for decades and got off free and clear with only a small fine, moved operations overseas and continued doing more of the same in the London Exchange (from what I've heard, though that's strictly rumor so take that for what it is). Gamestop was another where they were testing gamma with contracts forcing the market maker to induce a short squeeze to cover, The regional bank FRC most recently with a well timed media package (inducing a bank run) after two other bank failures which were known well in advance. Was just criminal. I saw a completely fake video show up on youtube about that time with people lined up outside a building on a Sunday to get their money with the video headline showing "FRC bank run in progress". Driving down the street filming a building where storefront windows with the reflected text in the wrong direction and a line outside (it was a sunday, banks aren't open). What was done with the media coverage looked totally criminal for a bank that was on solid foundations and practices (as a model of good banking). With the exception of aggregated indebtedness requirements for a publicly traded company which was caused by the shorting and subsequent drop in share price which forces the bank to have liquidity issues. If there was not some level of tacit approval for additional consolidation of an already consolidated business sector, where they mention the risks in the previous FOMC meeting for regional banks. Its pretty clear there should have been much more action taken after the third bank failed(Credit Suisse), which didn't happen. Standard SEC Disclaimer, I hold a long position on FRC which will probably expire worthless at a loss.