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Well, that's only nominally true. Every single holder of USD lost around 1-2% a year to inflation, which is essentially a backdoor tax. If you were in Cypress,
by ericb 13y ago
Well, that's only nominally true. Every single holder of USD lost around 1-2% a year to inflation, which is essentially a backdoor tax.
If you were in Cypress, or had a less trustworth (irony?) government that went out of business, you probably didn't do well either.
- merloen 13y ago> Every single holder of USD lost around 1-2% a year to inflation, which is essentially a backdoor tax. That's only true of cash, and money in checkings accounts. Money deposited in savings accounts yields interest, which (on average) more than compensates for inflation.
- mcdougle 13y agoWhat banks have savings accounts that yield that much interest? The average yield on a savings account that I've seen is 0.01%. I've seen some "high yield" accounts that can get you 0.03%. If you're talking about money market accounts (where I believe you need to park a substantial amount and can't touch the money in the account for something like 10 years, but correct me if I'm wrong), you can get up to 3% yield (just beating the stated inflation of 2%). Am I missing something?
- tveita 13y agohttp://www.money-rates.com/research-center/best-savings-accounts/2014.htm http://www.money-rates.com/research-center/best-savings-acco... Interest rates are very low right now, but you appear to be off by a order of magnitude.
- mcdougle 13y agoYou're right. I was just pulling numbers from memory. Still, even those examples are an order of magnitude off from keeping up with 1% to 2% inflation.
- merloen 13y agoYeah - "on average". The last couple of years have been an exceptional situation, since the federal funds rate is almost 0%.
- fauigerzigerk 13y agoBitcoin holdings don't pay interest either and its purchasing power swings wildly. If you want to guard against inflation in the long run you have to own productive assets or lend your money to someone who uses it productively.
- FBT 13y agoWell, in theory, Bitcoin is deflationary: By holding it it goes up in value, not down, over time. This has its own problems, and it yet remains to be seen if those problems are insurmountable. We shall see. But insofar as Bitcoin is what it is, this means that it doesn't suffer from this specific problem, in theory.
- fauigerzigerk 13y agoThat theory relies entirely on the supply side. But what about the demand side? Without accounting for both you know nothing about the price of something traded on a market. What if next year some other cool new "currency" comes along and no one wants your stinkin' bitcoins any longer? Does it matter that supply has a cap? No. It matters as little as the limited supply of paintings created by some forever unknown artist.
- arethuza 13y agoIt's Cyprus and the "levy" there was only for deposits over 100,000 Euro which weren't insured anyway... http://en.wikipedia.org/wiki/2012%E2%80%9313_Cypriot_financial_crisis http://en.wikipedia.org/wiki/2012%E2%80%9313_Cypriot_financi... So the only people who suffered were those who were daft enough to deposit amounts large enough to be uninsured in a badly run bank - can't say I have much sympathy.
- pjc50 13y agoCyprus. I don't have a great deal of sympathy for people with large deposits in Cypriot banks, given how many of them were only there for the tax evasion in the first place, thereby promoting a less trustworthy government. I should probably write up a good explanation of why asking for zero inflation == asking for price controls, and is not a good idea either.
- saalweachter 13y agoAllow me to offer a new TINSTAAFL: There Is No Such Thing As A Non-Productive Perfect Store Of Value. The world don't work that way. Cash inflates. Houses decay. Land uses shift. Tastes in art change. Uranium decays. Even our gold supply increases at a rate of 1-2%. It's the Red Queen's Race. You've got to run as fast as you can just to stay in one place. The only way to maintain value is to invest in productive activities.