Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: How to prosper under negative interest rates?

news.ycombinator.com

Post reply on HN
Print view View original

191–200 of 259 posts

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

#191

Post by bryanrasmussen »

solaxun wrote: post #134
hluska wrote: post #130

Earlier quoted context omitted.

When I was 19, I had an economics professor who did a great job of explaining that idiom to our young ears. He talked about feudal times when landowners had to store their gold. So they had to build these massive castles with walls, hire professional soldiers, train their kids to wield weapons and even give some of their land to particularly good soldiers. That system was really expensive so they needed slaves to kee…

That analogy works when everybody is doing the same thing and it's common knowledge that the average person has their assets sitting in their castle, but we're talking about 2020 when that would be the exception, not the norm. You're acting like I would go on hackernews and tell everybody where my money is or something...

I assume if you were going to tell hackernews it would be with a Show HN post for your new pirate app that allows users to find where you have hidden the treasure in your house.

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

#192

Post by ls612 »

rayuela wrote: post #151
bwanab wrote: post #121

Earlier quoted context omitted.

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!

I think you are misunderstanding what he said. He's saying you have never gotten better off by betting against the United States in the long run, not that now is the time to bet against the United States.

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

#193

Post by mrec »

mdorazio wrote: post #107
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…

1) Once again, inflation does not work that way. If it did, it would have been out of control in 2009. Instead, it was near zero. The same thing is happening right now. 2) The idea that 2-3% inflation is "really really serious" is completely absurd. I'm guessing you're young because historical US inflation prior to the ridiculous post-2009 financial situation had long periods of being well above 3% and the sky didn't…

> historical US inflation prior to the ridiculous post-2009 financial situation had long periods of being well above 3% and the sky didn't fall

True, but misleading; again, it's real rather than nominal rates that matter to most people. Before the GFC you could get interest on savings above the rate of inflation, even after tax. Not spectacular gains, but saving was at least possible.

After the GFC your choices are to either a) join the long queue of ever-greater fools piling into the casino, or b) watch central banks confiscate your money, year after year, forever.

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

#194

Post by mindslight »

tathougies wrote: post #181
mindslight wrote: post #146

Earlier quoted context omitted.

You didn't actually respond to my points, but just pointed out the existence of other types of business where the centralizing flow is less obvious than real estate.

If everyone participates in acquiring assets, then everyone builds wealth. Your claim is that real estate builds wealth for one person (or in aggregate, particular people). This is certainly true. If there are 300 million Americans, then, if everyone were a landlord holding 4 other properties (other than their house), only 60 million Americans could benefit from real estate. However, the other 240 million could benef…

> Your claim is that real estate builds wealth for one person (or in aggregate, particular people).

No, leaving out the critical piece does not represent my claim. Rather you're just shoehorning into the traditional narrative that each person trying to build the most individual wealth inductively extrapolates to society as a whole becoming richer.

The critical part of my claim is:

> For the larger system consisting of all 6 people, it's a net loss

Not merely a loss for 5 and a gain for 1, but a net loss for all 6 parties summed together. Draw a boundary around them and analyze cross-boundary flow. The interest payments flow away, meaning the group is worse off even though the landlord individually benefits.

Our economy is based around debt rather than positive wealth. For someone to have financial wealth, others must be in debt. The shining ideal where everybody is financially independent is impossible under the current system. And the more the financial bubble grows in relation to actual physical wealth, the truer this becomes.

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

#195

Post by pjc50 »

Rury wrote: post #99
toomuchtodo wrote: post #95

Earlier quoted context omitted.

> the money printer going "brrrrr" For those who have yet to have the enjoyment of the experience: https://brrr.money/

Can someone explain the 'going brrrrr' meme to me? I've seen it used in other contexts but can't quite fully grasp what is meant by it.

https://knowyourmeme.com/memes/money-printer-go-brrr

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

#196

Post by 6gvONxR4sf7o »

> I was brought up to work diligently, not take on debt, and save

Just keep doing that. Let's talk a worst case. Say coronavirus lasts 18 months and negative interest rates last that long afterwards too. That's three years of negative rates. If it's in the 1-2% range, That's about 3-6% lost by keeping it in cash. So your worst case is 3-6% lost.

Compare that to not working diligently, taking on too much debt, or not saving enough, your worst case of 3-6% is a drop in the bucket. We're likely to do much better than that worst case.

I would, however add an item to your list which might be implicit. Invest your long term savings once you have more than a solid emergency buffer. Find a robo-advisor if you want to keep it simple. In 30 years it'll have grown a ton.

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

#197

Post by daxorid »

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).

Hoarding is a small aspect of current shortages. I'll pick one example at random:

Gyms are closed, so go try to find a squat rack, a bar, and some bumper plates for a home gym. Or dumbbells. Or even some crappy resistance bands. You can't. Nobody is hoarding 45lb plates for future use, they're demanding them for use now. Expand this for every industry impacted by shutdown orders. It wouldn't take long to think of hundreds of examples of non-hoarding shortages.

Inflation is coming. Shortages are the market telling you that price MUST increase to equalize demand. And it will.

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

#198

Post by pjc50 »

MuffinFlavored wrote: post #93
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…

> The Fed is unlikely to go negative as they face a very different beast. Does the United States risk doing damage to our currency and how other nations use it with the stimulus/money printing that is going on?

Like the old joke about only having to outrun the other guy but not the bear, the US is only at risk if it ends up less stable than somewhere else and doesn't manage to trip them up on the way down. It's still hard to see any more realistic alternative; the EU is struggling with the same crisis, and the Chinese government doesn't even want its currency externalised.

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

#199

Post by viklove »

thorwasdfasdf wrote: post #82
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…

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…

There's less supply of what? We still have plenty of food, plenty of homes, plenty of water. Yeah, we have less Airbnbs getting booked, and Ubers being called, but does that really fucking matter? It only matters to the VCs who have invested in these companies.

Americans don't need to buy their 6th iPhone to save this economy, we just need to focus on what's important. It's very telling of the state of current US politics that when a crisis emerges, everyone says we have to help rich corporations stay rich.

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

#200

Post by pjc50 »

thorwasdfasdf wrote: post #78

>> I was brought up to work diligently, not take on debt, and save It absolutely will put you at a huge disadvantage, through no fault of your own. The whole point is to transfer money from savers to debtors. And, there's no getting away from it, unless you take on large risks. The govt is pushing for more and more inflation. We've already had high inflation for the last couple of years of over 2%, and they're still…

2% is not high inflation.
Post reply on HN