4 ms·

> the government would still extract taxes from it, taxes which I would be obliged to pay, and thus I would necessarily require some income. To solve this, you

> the government would still extract taxes from it, taxes which I would be obliged to pay, and thus I would necessarily require some income. To solve this, you need to balance your obligations to the government (property taxes), against obligations from the government (bonds of some kind). I'll use TIPs for my example, because it's harder for the government to inflate away these obligations. A plot of land might have taxes of $1,000/yr. It looks like TIPs give a fixed real rate of 1.3%. So, $77k in TIPS will balance out your taxes. You need to add that to the true price of the land. Obviously, there is the question of how you obtain that capital. So in a sense we are generally born "in the red", and need to work our way out of these implicit debts. But it can be done, even within the system.

azmodeus 3y ago
Really cool perspective
FooBarBizBazz 3y ago
Two corrections: 1. If you look at recent Treasury auctions, 30-year TIPS are actually yielding 1.5%, not 1.3% (https://treasurydirect.gov/auctions/announcements-data-results/ https://treasurydirect.gov/auctions/announcements-data-resul...). 2. In reality, you have a finite lifetime, so you can spend down the principal. Suppose you are 30 years old (about the youngest I could imagine this being possible), and that you plan on living to 100 (most people don't). That's 70 years. If you do the math, and use the 1.5% rate, it works out that you only need $43k, not $77k, to hit that $1k/yr number.
- ac29 3y ago
  > 1. If you look at recent Treasury auctions, 30-year TIPS are actually yielding 1.5%, not 1.3% Auction results only show the coupon rate on the TIPS, not the total yield. All TIPS are currently yielding more than 2.1%: https://www.wsj.com/market-data/bonds/tips https://www.wsj.com/market-data/bonds/tips
ac29 3y ago
> A plot of land might have taxes of $1,000/yr. It looks like TIPs give a fixed real rate of 1.3%. So, $77k in TIPS will balance out your taxes. This math is wrong because you have to pay tax on the income from TIPS (unless you are low income enough that you net tax rate is 0%). The real problem with that idea is that one's living expenses are almost certainly going to be more than $1000/year, even if you are able to grow enough calories and generate enough watts to be self sufficient. In order to live off interest alone, you'd probably need $1M in assets or more. At that point, you could just live off the principle.

azmodeus 3y ago

Really cool perspective

FooBarBizBazz 3y ago

Two corrections: 1. If you look at recent Treasury auctions, 30-year TIPS are actually yielding 1.5%, not 1.3% (https://treasurydirect.gov/auctions/announcements-data-results/ https://treasurydirect.gov/auctions/announcements-data-resul...). 2. In reality, you have a finite lifetime, so you can spend down the principal. Suppose you are 30 years old (about the youngest I could imagine this being possible), and that you plan on living to 100 (most people don't). That's 70 years. If you do the math, and use the 1.5% rate, it works out that you only need $43k, not $77k, to hit that $1k/yr number.

ac29 3y ago
> 1. If you look at recent Treasury auctions, 30-year TIPS are actually yielding 1.5%, not 1.3% Auction results only show the coupon rate on the TIPS, not the total yield. All TIPS are currently yielding more than 2.1%: https://www.wsj.com/market-data/bonds/tips https://www.wsj.com/market-data/bonds/tips

ac29 3y ago

> A plot of land might have taxes of $1,000/yr. It looks like TIPs give a fixed real rate of 1.3%. So, $77k in TIPS will balance out your taxes. This math is wrong because you have to pay tax on the income from TIPS (unless you are low income enough that you net tax rate is 0%). The real problem with that idea is that one's living expenses are almost certainly going to be more than $1000/year, even if you are able to grow enough calories and generate enough watts to be self sufficient. In order to live off interest alone, you'd probably need $1M in assets or more. At that point, you could just live off the principle.