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Ask HN: How to prosper under negative interest rates?

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Re: Ask HN: How to prosper under negative interest rates?

#151

Post by rayuela »

bwanab wrote: post #121
mancerayder wrote: post #88

Earlier quoted context omitted.

I just sold a home days before the pandemic hit, and consider myself very lucky. But now I have cash and I'm nervous inflation might start becoming a real problem. I'm also worried that dense American cities are going to have a huge drop in property values, desirability, and an increase in crime. I am seeing this right now, and a lot of sentiment from people with money is to never come back. It's a tough call. Is thi…

As a regular critic of many things and ideas American, I have to point out that in the long run, you’ve never been better off betting against America.

I would love to see you take this and short the SP500, really put your money where your mouth is. Value is relative, and relative to the rest of the world the US is going to fare quite well. So good luck to you!

Re: Ask HN: How to prosper under negative interest rates?

#152

Post by jjeaff »

jnwatson wrote: post #144
thorwasdfasdf wrote: post #82

Earlier quoted context omitted.

but we're not having deflation. With fewer and fewer people working, there's less and less supply with even larger demand, now that they're printing money like never before. As a result, we're going to get really really serious inflation of over 2%, 3%, maybe even more than 3%. It doesn't sound like much because we've become innured to it. But, it's really bad. Just think, you earned 100K in 1 year and 1 year later i…

That printing money necessarily leads to inflation is not true in a situation like this. Inflation happens when there's more and more money being used to chase a finite amount of goods. In our current economic situation, there's a huge pile of money that's not chasing any goods at all. Like like after the 2008 crisis that didn't lead to inflation, this won't either, as long at they turn off the money printer when peo…

They aren't really printing money. They are buying up debt, both private and government that will eventually be sold back to the market or will mature this returning that money back, with appreciation, to the fed. Which will then make it disappear just as easily as they created it.

Re: Ask HN: How to prosper under negative interest rates?

#153

Post by tomp »

qeternity wrote: post #8

You have to look at real rates, not nominal rates. The only markets that have negative nominal rates are battling deflation (which the US is not) or have serious liquidity concerns at the moment. The Fed is unlikely to go negative as they face a very different beast. Here's a quick example. Let's say you're in a deflationary environment: in 1 year, your money actually buys you more than it did last year, let's say fo…

Good explanation. Also wrong.

Denmark has a negative interest rate [1] but has had a (positive) inflation for a while [2].

[1] https://en.wikipedia.org/wiki/List_of_countries_by_central_b...

[2] https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?location...

Re: Ask HN: How to prosper under negative interest rates?

#154

Post by brobinson »

oh_sigh wrote: post #104
Der_Einzige wrote: post #94

Earlier quoted context omitted.

No - You're wrong and the person you're replying to is right. Futures are how you multiply your money with relatively low risk. Stocks are how you get 5% returns amortized YOY if you're lucky

Why is there all this free money sitting in the futures market?

Cost of carry.

Re: Ask HN: How to prosper under negative interest rates?

#155

Post by NickM »

If you live in the US you could buy Series I Savings Bonds from the government. They have a fixed rate which is set when you buy them (currently very low) but they also return an additional rate that varies over time based on inflation. (There are also mutual funds out there like e.g. the Vanguard Inflation Protected Securities fund that are supposed to guard against inflation too.)

In the long term, I would assume these will not give you anywhere near as good returns as other higher-risk investment options, but they might work for you depending on what you're looking for.

Re: Ask HN: How to prosper under negative interest rates?

#156

Post by 1-more »

bwanab wrote: post #121
mancerayder wrote: post #88

Earlier quoted context omitted.

I just sold a home days before the pandemic hit, and consider myself very lucky. But now I have cash and I'm nervous inflation might start becoming a real problem. I'm also worried that dense American cities are going to have a huge drop in property values, desirability, and an increase in crime. I am seeing this right now, and a lot of sentiment from people with money is to never come back. It's a tough call. Is thi…

As a regular critic of many things and ideas American, I have to point out that in the long run, you’ve never been better off betting against America.

I feel gross looking at my 401k. Everything in there is a bet on the continuation of the world that led here, and that world is unjust in the extreme and needs to go. And right now I think we're on the razor's edge fo something wonderful happening. I know a few people participating in rent strikes here in NYC. Maybe this is the week where a decade happens.

Re: Ask HN: How to prosper under negative interest rates?

#157

Post by krallja »

abstractbarista wrote: post #64
qeternity wrote: post #8

You have to look at real rates, not nominal rates. The only markets that have negative nominal rates are battling deflation (which the US is not) or have serious liquidity concerns at the moment. The Fed is unlikely to go negative as they face a very different beast. Here's a quick example. Let's say you're in a deflationary environment: in 1 year, your money actually buys you more than it did last year, let's say fo…

I'd just put it in a safe, and work from home with guns by my side. Saves the extra 0.5%. Rest of my money is in equities anyways, so I really only need the "emergency savings" in cash. (Obviously big businesses can't do this.)

you’re gonna shoot the fire out? shoot away the flood? or tornado?

Re: Ask HN: How to prosper under negative interest rates?

#158

Post by fauigerzigerk »

jjeaff wrote: post #150
fauigerzigerk wrote: post #137

Earlier quoted context omitted.

I agree that 2-3% inflation is nothing to worry about. But what's happening now is not quite the same thing as in 2009. For the first time in a very long time we actually have a shortage of supply. We didn't have that in 2009. But I think/hope it will be short lived, and depending on how we act now it could easily turn into a shortage of demand once again.

Do we really have a shortage of supply? For what products? The only shortages I have seen are for toilet paper and a few random grocery store products that maniacs decide to stockpile next. (in my community, there is all the sudden a run on ice cream now that bread is back in stock).

We have a shortage of farm labour for instance, which may soon turn into a shortage of fresh produce and into massive food price inflation. We have a shortage of home delivery capacity.

If stuff doesn't get manufactured for months, we will have a shortage of many other things as well. Obviously we have a lack of demand for other things at the same time.

I don't think there is that much unreasonable stockpiling. People are no longer eating out. Kids are no longer eating at school. So people buy more at supermarkets. They also buy for a week, quite sensibly, to avoid making a trip to a crowded supermarket every day.

Combine that with finely tuned just in time logistics and you get a bit of a crunch. There's simply a misalignment of capacity right now, but there could be a real shortage of some essentials soon.

Re: Ask HN: How to prosper under negative interest rates?

#159

Post by amiga_500 »

chvid wrote: post #25

You don't build wealth by saving. You do it by investing using leverage. The system subsidises debt and risk-taking (within limits) by inflation and the structure of the tax system. You need to let go of the idea that it is immoral. Buy a house and when you can buy a bigger house. Put your money in the growth part of the stock market (technology ... big names like Apple and Amazon is good). Use your income to take on…

> You need to let go of the idea that it is immoral.

How are living standards versus the '60s? It's not just immoral, it's bad news.

If your country has too many wealth appropriators and not enough wealth creators you are going to have a bad time.

Re: Ask HN: How to prosper under negative interest rates?

#160

Post by erehweb »

Eric_WVGG wrote: post #29

for a science fiction take: the economy is in negative inflation in Frederik Pohl’s _The Other End of Time_. There is a scene where some astronauts are on their way home from a day of preparation, and as part of their routine convert their paychecks into cash and browse various sidewalk tables full of collectibles and antiques on the way home, converting their cash into miscellaneous items that would cling to or appr…

Wait, if there's negative inflation, wouldn't you want to hang onto your cash? Sounds more like hyperinflation.
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