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This is one of the reasons why poor people stay poor, because they typically have a wildly disproportionate value of their household's portfolio in jewelry or g

by patio11 12y ago

This is one of the reasons why poor people stay poor, because they typically have a wildly disproportionate value of their household's portfolio in jewelry or gold (+), often explicitly because of the ability to use it as savings or collateral. It happens to be an abominably bad vehicle for both. + I'm trying to find the citation but I think the average value in the US for households in the lowest wealth quintile is > 25% of their assets.

prawn 12y ago
There is a great meme photo around of a wealthy celebrity and their entourage. The wealthy guy is dressed normally. Each member of the entourage is laced with a giant gold chain. Can't find it now to verify with Snopes though.
bcg1 12y ago
I wonder if you might be oversimplifying? There are many reasons why one might not want to hold cash or traditional investments. Especially if you are subject to wage garnishments, judgments, etc. As someone who has been pretty much as poor as you can be, I can say with confidence that those in the lowest wealth quintile don't have what most would consider to be a "portfolio", they are just getting by... its not a good plan to have a bunch of gold to pawn, but at least it is something that is highly liquid if necessary, as long as you can do math yourself to avoid being scammed. Also, all investments go in cycles... if you bought and held gold instead of tech stocks in 1999-2000 you're killing it right now... if you bought gold in 2011 not so much. Poor people aren't poor because of their investment choices - they're poor because they live beyond their means and don't save.
- eigenvector 12y ago
  Living beyond your means is pretty easy when your means aren't enough to live on.
  - kefka 12y ago
    Not to mention, companies "give you" involuntary credit, which they then pass on to collections.
Frondo 12y ago
Poor people stay poor because there are so many systems in place that squeeze them, from usurious payday/title loan shops to rent-to-own places; and the stuff poor people buy is never built to last. There's something to the Vimes theory of socioeconomic unfairness. The people who run these systems have free reign to squeeze the poor because the poor have virtually no political power. (When was the last time you saw a politician throw a 50c/plate dinner?) Assigning any part of poverty to poor people's inability to assess gold seems bafflingly detached from reality.
- patio11 12y ago
  Jewelry/gold, when used as financial instruments, form one more "system in place to squeeze." (We may have to agree to disagree regarding to what extent that system is created by poor people.) A $500 ring that is repeatedly used to secure pawn loans to cover short-term cashflow deficits is a lot like a savings account which seizes 80% of value on deposit and charges a $15~25 convenience fee on withdraws. bafflingly detached from reality You'll find alternative financial services, including voluminous material on jewelry as a store of value and collateral for pawn loans, well-represented in the academic literature. Would you like citations?
  - idlewords 12y ago
    Citations on what? No one is arguing that gold rings are an excellent investment strategy. Rather, you're being called out on the claim that 'this is one of the reasons the poor stay poor'. The implication there is that the poor deserve their poverty, or at the least are kept mired in it by their own inadequacy.
    - swatow 12y ago
      I think it follows pretty directly that if poor people are using jewelry as a store of value, then it's going to being making their financial situation even worse, and therefore can be considered one of the reasons the poor stay poor. You also are committing a fallacy of "if X is true, then I must hold an immoral position Y, so X cannot be true". But logically either Y does not follow from X, or Y is not really immoral. (X = "poor people make bad decisions", Y = "the poor deserve their poverty") This logical fallacy has got you rationalizing everything that poor people do.
fnordfnordfnord 12y ago
>It happens to be an abominably bad vehicle for both. Precious metals are like an insurance policy in that you hope they never pay off.

by patio11 12y ago

prawn 12y ago

There is a great meme photo around of a wealthy celebrity and their entourage. The wealthy guy is dressed normally. Each member of the entourage is laced with a giant gold chain. Can't find it now to verify with Snopes though.

bcg1 12y ago

I wonder if you might be oversimplifying? There are many reasons why one might not want to hold cash or traditional investments. Especially if you are subject to wage garnishments, judgments, etc. As someone who has been pretty much as poor as you can be, I can say with confidence that those in the lowest wealth quintile don't have what most would consider to be a "portfolio", they are just getting by... its not a good plan to have a bunch of gold to pawn, but at least it is something that is highly liquid if necessary, as long as you can do math yourself to avoid being scammed. Also, all investments go in cycles... if you bought and held gold instead of tech stocks in 1999-2000 you're killing it right now... if you bought gold in 2011 not so much. Poor people aren't poor because of their investment choices - they're poor because they live beyond their means and don't save.

eigenvector 12y ago
Living beyond your means is pretty easy when your means aren't enough to live on.
- kefka 12y ago
  Not to mention, companies "give you" involuntary credit, which they then pass on to collections.

Frondo 12y ago

Poor people stay poor because there are so many systems in place that squeeze them, from usurious payday/title loan shops to rent-to-own places; and the stuff poor people buy is never built to last. There's something to the Vimes theory of socioeconomic unfairness. The people who run these systems have free reign to squeeze the poor because the poor have virtually no political power. (When was the last time you saw a politician throw a 50c/plate dinner?) Assigning any part of poverty to poor people's inability to assess gold seems bafflingly detached from reality.

patio11 12y ago
Jewelry/gold, when used as financial instruments, form one more "system in place to squeeze." (We may have to agree to disagree regarding to what extent that system is created by poor people.) A $500 ring that is repeatedly used to secure pawn loans to cover short-term cashflow deficits is a lot like a savings account which seizes 80% of value on deposit and charges a $15~25 convenience fee on withdraws. bafflingly detached from reality You'll find alternative financial services, including voluminous material on jewelry as a store of value and collateral for pawn loans, well-represented in the academic literature. Would you like citations?
- idlewords 12y ago
  Citations on what? No one is arguing that gold rings are an excellent investment strategy. Rather, you're being called out on the claim that 'this is one of the reasons the poor stay poor'. The implication there is that the poor deserve their poverty, or at the least are kept mired in it by their own inadequacy.
  - swatow 12y ago
    I think it follows pretty directly that if poor people are using jewelry as a store of value, then it's going to being making their financial situation even worse, and therefore can be considered one of the reasons the poor stay poor. You also are committing a fallacy of "if X is true, then I must hold an immoral position Y, so X cannot be true". But logically either Y does not follow from X, or Y is not really immoral. (X = "poor people make bad decisions", Y = "the poor deserve their poverty") This logical fallacy has got you rationalizing everything that poor people do.

fnordfnordfnord 12y ago

>It happens to be an abominably bad vehicle for both. Precious metals are like an insurance policy in that you hope they never pay off.