5 ms·

Every time the US Federal Reserve prints money, it's devaluing anyone that has cash or equivalents. Edit: that was not worded strong enough. It hurts everyone,

Every time the US Federal Reserve prints money, it's devaluing anyone that has cash or equivalents. Edit: that was not worded strong enough. It hurts everyone, but is unbelievably regressive against new savers and the impoverished. An average person is unlikely to win this game. Our real returns are not 10% per year, they're closer to 4%. The 1%ers that hold top tier offices in this country voted themselves out of this game.

laughing_man 2y ago
One thousand times this. The government punishes those who save. It's going to get worse, too when Social Security is means tested, which, is pretty much inevitable at this point. When that happens you'd have to be an idiot to save for retirement unless you're wealthy enough to take advantage of loopholes rich people put into the tax code.
- BigParm 2y ago
  I don't understand. If you buy an S&P500 ETF you are crushing.
  - ttt3ts 2y ago
    https://www.statista.com/chart/30224/share-of-americans-who-own-stock/ https://www.statista.com/chart/30224/share-of-americans-who-... Only 60% of us own any stock at all and often through 401k or other indirect investment.
  - laughing_man 2y ago
    Last year, sure. Not over the long run. If it's outside your 401(k) the value of your money is going down due to inflation and taxes.
  - Reubend 2y ago
    I think they're distinguishing between "saving" vs "investing". Investment carries risk.
chowchowchow 2y ago
Isn’t it nearly entirely the commercial banks “printing” money by fractional-reserve lending? Low interest rates mean more, bigger loans from banks, ergo more money out there.
- ImJamal 2y ago
  The Federal Reserve chooses the amount that the banks are required to have on hand. They could ban the practice tomorrow if they wanted to.
  - chowchowchow 2y ago
    It’s not really the fed printing money though is it. It’s private banks meeting demand for loans.
    - ImJamal 2y ago
      If you want to be that pedantic it hasn't been printing money for decades since it is all digital. The fed, in essence, delegates the printing of money to banks since they are on the ground and should understand if more loans are necessary.
      - chowchowchow 2y ago
        What do you mean "necessary?" It's a function of demand, they only write the loans for borrowers who want and qualify for them. It's not pedantry. It's understanding the model of attribution which blames the "fed" for this when it clearly seems like a function of the systemic design of our economy and financial system. Put another way - abolish the fed, and I'm not sure how this would change. And in fact it might get worse as you've removed an oversight and controlling body.
        ImJamal 2y ago
        When people talk about ending the fed they don't just mean the actual Federal Reserve. They mean the Federal Reserve along with everything they control such as fractional reserve banking, quantitative easing, etc. Perhaps there is somebody out there who wants to end the fed, but keep fractional reserve banking, but I haven't seen them. Fixing that will, potentially fix the issue ... Or completely crash everything.
ericmcer 2y ago
Just invest in the market or you get your savings chewed up. I think it unlikely that the government, the Fed and huge corps are going to stop printing money because it has been working great (for them). Almost 100% of my money is in VOO and VOOG ETFs. Maybe 5% in cash, no real estate or other assets.
thoughtstheseus 2y ago
You can see this dynamic in various investment markets. Stocks are priced according to their expected earnings while fart coin is a repository of excess liquidity. If you massively increase liquidity through money/debt creation you pump asset prices. Assets with a well determined return profile are inflated, but those with an unknown distribution (speculation)see an explosion of value. Only people with large stores of wealth can invest in the memes without risking financial ruin from crashes. Terrible policy choice imo

laughing_man 2y ago

One thousand times this. The government punishes those who save. It's going to get worse, too when Social Security is means tested, which, is pretty much inevitable at this point. When that happens you'd have to be an idiot to save for retirement unless you're wealthy enough to take advantage of loopholes rich people put into the tax code.

BigParm 2y ago
I don't understand. If you buy an S&P500 ETF you are crushing.
- ttt3ts 2y ago
  https://www.statista.com/chart/30224/share-of-americans-who-own-stock/ https://www.statista.com/chart/30224/share-of-americans-who-... Only 60% of us own any stock at all and often through 401k or other indirect investment.
- laughing_man 2y ago
  Last year, sure. Not over the long run. If it's outside your 401(k) the value of your money is going down due to inflation and taxes.
- Reubend 2y ago
  I think they're distinguishing between "saving" vs "investing". Investment carries risk.

chowchowchow 2y ago

Isn’t it nearly entirely the commercial banks “printing” money by fractional-reserve lending? Low interest rates mean more, bigger loans from banks, ergo more money out there.

ImJamal 2y ago
The Federal Reserve chooses the amount that the banks are required to have on hand. They could ban the practice tomorrow if they wanted to.
- chowchowchow 2y ago
  It’s not really the fed printing money though is it. It’s private banks meeting demand for loans.
  - ImJamal 2y ago
    If you want to be that pedantic it hasn't been printing money for decades since it is all digital. The fed, in essence, delegates the printing of money to banks since they are on the ground and should understand if more loans are necessary.
    - chowchowchow 2y ago
      What do you mean "necessary?" It's a function of demand, they only write the loans for borrowers who want and qualify for them. It's not pedantry. It's understanding the model of attribution which blames the "fed" for this when it clearly seems like a function of the systemic design of our economy and financial system. Put another way - abolish the fed, and I'm not sure how this would change. And in fact it might get worse as you've removed an oversight and controlling body.
      - ImJamal 2y ago
        When people talk about ending the fed they don't just mean the actual Federal Reserve. They mean the Federal Reserve along with everything they control such as fractional reserve banking, quantitative easing, etc. Perhaps there is somebody out there who wants to end the fed, but keep fractional reserve banking, but I haven't seen them. Fixing that will, potentially fix the issue ... Or completely crash everything.

ericmcer 2y ago

Just invest in the market or you get your savings chewed up. I think it unlikely that the government, the Fed and huge corps are going to stop printing money because it has been working great (for them). Almost 100% of my money is in VOO and VOOG ETFs. Maybe 5% in cash, no real estate or other assets.

thoughtstheseus 2y ago

You can see this dynamic in various investment markets. Stocks are priced according to their expected earnings while fart coin is a repository of excess liquidity. If you massively increase liquidity through money/debt creation you pump asset prices. Assets with a well determined return profile are inflated, but those with an unknown distribution (speculation)see an explosion of value. Only people with large stores of wealth can invest in the memes without risking financial ruin from crashes. Terrible policy choice imo