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$1 put into the S&P 500 with dividends reinvested would be more than $6 today. That more than offsets the inflation. It also gives some clues about why the raw

$1 put into the S&P 500 with dividends reinvested would be more than $6 today. That more than offsets the inflation. It also gives some clues about why the raw dollar purchasing power has been lost to inflation. Don’t keep your retirement savings all in cash.

JumpCrisscross 7mo ago
> $1 put into the S&P 500 with dividends reinvested would be more than $6 today On April 7 2000 a 30-year Treasury 5.71%. It would be worth $1,063 today and have paid out $1,484.60 in coupons to date. Even if you held those coupons in cash, you'd still have 2.5x'd your money. Modern currencies split their medium-of-currency and store-of-value functions. The plain dollar is for transacting. Cash and cash equivalents are for transporting value across time.
slg 7mo ago
It's a problem that our society is designed for and judged in relation to capital. Most people are paid in dollars, not shares of the S&P 500. 38% of the population doesn't even own any stocks[1]. We can't act like the dropping dollar value is fine simply because stock investments are outpacing those losses. Maybe that tradeoff benefits the people reading this, but it hurts a huge number of Americans. [1] - https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...
- JumpCrisscross 7mo ago
  > Most people are paid in dollars Real wages are up since 2000 [1]. (Even the federal minimum wage went up 40% in nominal terms [2], though that is less than inflation.) [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q [2] https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007 https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007
  - Avicebron 7mo ago
    Measurements like this obfuscate other costs that aren't well tracked. Healthcare and housing being two big ones.
    - JumpCrisscross 7mo ago
      > Healthcare and housing being two big ones Almost all BLS price indices, including CPI, include housing. (CPI measures the “rent of primary residence, owners' equivalent rent, utilities, bedroom furniture” [1].) That said, this is the second time I've come across this myth on HN in less than a week. Where did you hear that price indices don't track healthcare and housing costs? [1] https://www.bls.gov/opub/hom/cpi/concepts.htm#the-cpi-as-a-cost-of-living-framework https://www.bls.gov/opub/hom/cpi/concepts.htm#the-cpi-as-a-c...
      - Avicebron 7mo ago
        The point isn't that CPI excludes healthcare and housing, CPI shelter sub-index https://fred.stlouisfed.org/series/CUSR0000SAH1 https://fred.stlouisfed.org/series/CUSR0000SAH1 and the medical care sub-index https://fred.stlouisfed.org/series/CUSR0000SAM2 https://fred.stlouisfed.org/series/CUSR0000SAM2 have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated. So if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest. EDIT: saying real wages is deflated is ambiguous, the headline CPI understates the effective inflation experienced by people whose spending consumption is weighted towards housing and healthcare. So the "real wage" is inflated relative to the lived experience of those people.
        JumpCrisscross 7mo ago
        > have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated If you spend a third of your income on housing and 8% on healthcare [1], then those components–assuming your 5x and 7.7x multiples–will raise your cost of living by 2.25x. That leaves 1.75x for the other components (to get to the overall 3x). That sounds reasonable as a median estimate. > if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest Sure. If you spend a lot on imported dates, your purchasing power will currently be declining faster than the median American's. This is a problem. But it's almost by definition not one that can be widespread. > the "real wage" is inflated relative to the lived experience of those people Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living. Paying attention to lived experiences or whatever is important, especially in politics. But it's no substitute for broad measures when conducting a national economy. [2] https://www.bls.gov/opub/btn/volume-9/how-have-healthcare-expenditures-changed-evidence-from-the-consumer-expenditure-surveys.htm#:~:text=In%202018%2C%20U.S.,their%20total%20spending. https://www.bls.gov/opub/btn/volume-9/how-have-healthcare-ex...
- Aurornis 7mo ago
  > It's a problem that our society is designed for and judged in relation to capital. Cash is also capital. If you were trying to say it’s a problem that our economic system favors deploying capital into investments instead of hoarding cash, I disagree. An economy where everyone is incentivized to hoarde cash instead of deploying it to investments doesn’t progress because the smartest thing you could do with your money is to not invest it in new businesses or buildings. It doesn’t work. > Most people are paid in dollars, not shares of the S&P 500. You’re conflating income and savings. It wouldn’t matter if you got paid in dollars or in S&P 500 shares of the same dollar value. You can exchange one for the other. In the year 2026 you can do that instantly from your phone with an app and not pay any fees. The point was not that S&P 500 shares are a superior unit of trade, because they’re not. I’m trying to explain that long term savings needs to be in an investment, not sitting around in actual cash.
  - slg 7mo ago
    >Cash is also capital. It's funny you say this and also this: >You’re conflating income and savings. You're doing the same thing. The problem I was hitting on is that large portions of our population don't have any investments are therefore are being left further behind by this tradeoff of stocks in favor of cash. You can't just tell people not to leave their cash sitting around when they don't actually have any cash sitting around.
  - throwaway173738 7mo ago
    I think the problem here isn’t the preference that we create with the way inflation is chosen as a target but that we try to exert influence at all. It should be possible for many people to lead good lives without investing cash in the stock market. And the stock market should be a good place to raise capital. But when our retirement savings are bundled up in the stock market it creates a perverse incentive to manipulate the market to prevent us from losing our retirement savings.

JumpCrisscross 7mo ago

> $1 put into the S&P 500 with dividends reinvested would be more than $6 today On April 7 2000 a 30-year Treasury 5.71%. It would be worth $1,063 today and have paid out $1,484.60 in coupons to date. Even if you held those coupons in cash, you'd still have 2.5x'd your money. Modern currencies split their medium-of-currency and store-of-value functions. The plain dollar is for transacting. Cash and cash equivalents are for transporting value across time.

slg 7mo ago

It's a problem that our society is designed for and judged in relation to capital. Most people are paid in dollars, not shares of the S&P 500. 38% of the population doesn't even own any stocks[1]. We can't act like the dropping dollar value is fine simply because stock investments are outpacing those losses. Maybe that tradeoff benefits the people reading this, but it hurts a huge number of Americans. [1] - https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own...

JumpCrisscross 7mo ago
> Most people are paid in dollars Real wages are up since 2000 [1]. (Even the federal minimum wage went up 40% in nominal terms [2], though that is less than inflation.) [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q [2] https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007 https://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007
- Avicebron 7mo ago
  Measurements like this obfuscate other costs that aren't well tracked. Healthcare and housing being two big ones.
  - JumpCrisscross 7mo ago
    > Healthcare and housing being two big ones Almost all BLS price indices, including CPI, include housing. (CPI measures the “rent of primary residence, owners' equivalent rent, utilities, bedroom furniture” [1].) That said, this is the second time I've come across this myth on HN in less than a week. Where did you hear that price indices don't track healthcare and housing costs? [1] https://www.bls.gov/opub/hom/cpi/concepts.htm#the-cpi-as-a-cost-of-living-framework https://www.bls.gov/opub/hom/cpi/concepts.htm#the-cpi-as-a-c...
    - Avicebron 7mo ago
      The point isn't that CPI excludes healthcare and housing, CPI shelter sub-index https://fred.stlouisfed.org/series/CUSR0000SAH1 https://fred.stlouisfed.org/series/CUSR0000SAH1 and the medical care sub-index https://fred.stlouisfed.org/series/CUSR0000SAM2 https://fred.stlouisfed.org/series/CUSR0000SAM2 have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated. So if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest. EDIT: saying real wages is deflated is ambiguous, the headline CPI understates the effective inflation experienced by people whose spending consumption is weighted towards housing and healthcare. So the "real wage" is inflated relative to the lived experience of those people.
      - JumpCrisscross 7mo ago
        > have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated If you spend a third of your income on housing and 8% on healthcare [1], then those components–assuming your 5x and 7.7x multiples–will raise your cost of living by 2.25x. That leaves 1.75x for the other components (to get to the overall 3x). That sounds reasonable as a median estimate. > if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest Sure. If you spend a lot on imported dates, your purchasing power will currently be declining faster than the median American's. This is a problem. But it's almost by definition not one that can be widespread. > the "real wage" is inflated relative to the lived experience of those people Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living. Paying attention to lived experiences or whatever is important, especially in politics. But it's no substitute for broad measures when conducting a national economy. [2] https://www.bls.gov/opub/btn/volume-9/how-have-healthcare-expenditures-changed-evidence-from-the-consumer-expenditure-surveys.htm#:~:text=In%202018%2C%20U.S.,their%20total%20spending. https://www.bls.gov/opub/btn/volume-9/how-have-healthcare-ex...
Aurornis 7mo ago
> It's a problem that our society is designed for and judged in relation to capital. Cash is also capital. If you were trying to say it’s a problem that our economic system favors deploying capital into investments instead of hoarding cash, I disagree. An economy where everyone is incentivized to hoarde cash instead of deploying it to investments doesn’t progress because the smartest thing you could do with your money is to not invest it in new businesses or buildings. It doesn’t work. > Most people are paid in dollars, not shares of the S&P 500. You’re conflating income and savings. It wouldn’t matter if you got paid in dollars or in S&P 500 shares of the same dollar value. You can exchange one for the other. In the year 2026 you can do that instantly from your phone with an app and not pay any fees. The point was not that S&P 500 shares are a superior unit of trade, because they’re not. I’m trying to explain that long term savings needs to be in an investment, not sitting around in actual cash.
- slg 7mo ago
  >Cash is also capital. It's funny you say this and also this: >You’re conflating income and savings. You're doing the same thing. The problem I was hitting on is that large portions of our population don't have any investments are therefore are being left further behind by this tradeoff of stocks in favor of cash. You can't just tell people not to leave their cash sitting around when they don't actually have any cash sitting around.
- throwaway173738 7mo ago
  I think the problem here isn’t the preference that we create with the way inflation is chosen as a target but that we try to exert influence at all. It should be possible for many people to lead good lives without investing cash in the stock market. And the stock market should be a good place to raise capital. But when our retirement savings are bundled up in the stock market it creates a perverse incentive to manipulate the market to prevent us from losing our retirement savings.