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The money I saved as a child would buy one picogram of gold today

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Re: The money I saved as a child would buy one picogram of gold today

#201

Post by _yoqn »

epgui wrote: post #33
Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

I don’t understand why so many people “save money” but then just keep cash under a mattress or in a savings or checking account. If you want to win at life, you “save money” by purchasing non-cash assets like stocks.

Money is a representation of energy. If you used it like you would electricity you would be better off. Sure, store some in batteries but know that they dissipate over time. Stocks should only be purchased when you want to literally invest in a company or industry because you think it has major growth potential, not for speculation. Non-cash assets could also mean precious metals as they have conversion power over any fiat currency. As we're watching the neo-liberal global world order collapse with the war in Russia I think gold and silver will win out over any other non-cash asset. However it still doesn't make any money. The way to make money with money is to buy things that appreciate in value over time. Real estate is one of the most available things that fit this category. My parents bought a house in Florida last year at the "top of the market" and their property is now worth about 20% more. And if they rented it out they could recuperate some of the capital outlay that they invested.

Re: The money I saved as a child would buy one picogram of gold today

#202

Post by xiphias2 »

seoaeu wrote: post #197
anonporridge wrote: post #108

Earlier quoted context omitted.

Bitcoin is an unbelievably stable platform with an uptime of 99.98% with only 13 years to draw from. It's been sticking with it's algorithmically defined inflation rate with perfect predictability, unlike any other currency or scarce asset like gold, which depends heavily on incentives to mine and accessible reserves. Don't mistake the volatility of the USD price of bitcoin (which is based on the erratic, unpredictab…

Saying that bitcoin has a stable algorithmically defined inflation rate is a hilarious redefinition of terms. Over the last year, one Bitcoin lost approximately 40% of its purchasing power relative to a basket of consumer goods and services. The year before, the opposite happened with bitcoin increasing in purchasing power by a factor of 5-10x.

,,A historical look at the origin and uses of the word inflation, arguing that although the term has become nearly synonymous with "price increase," its original meaning - a rise in the general price level caused by an imbalance between the quantity of money and trade needs - is the definition driving many of those who advocate an anti-inflation policy for the Federal Reserve.''

Austrian economics still uses the original meaning of inflation (increase in monetary supply), while Keynsian economics uses the change in consumer price index, or more broadly the change in prices.

I prefer to always distinguish the two by writing monetary supply inflation and price inflation instead of just writing inflation, as this conflict between definitions always comes up.

Re: The money I saved as a child would buy one picogram of gold today

#203

Post by bombcar »

Jiro wrote: post #181
MerelyMortal wrote: post #97

Earlier quoted context omitted.

Did they at least give it back to you? I don't know how much they sell for now, but I was lucky to get one for $20 when they were normally going for $40 on eBay. I forgot the exact result, but I once calculated the value of a 100 trillion Zimbabwe dollar bill when it was printed, and it came to something like 0.06 USD (6 cents).

I just checked ebay. Real ones sell for $100-200 US. There are also fakes, most of which admit in the description that they are fakes, and include extremely large numbers like 10^33. The highest number that you can get cheaply and that is not fake seems to be the 50 billion. They sell for about five dollars, which given the economics of ebay is probably as low as you can expect.

The one trillion ones are more rare, as Germany if I recall correctly stopped printing them for Zimbabwe soon afterwards.

At one point I had a hundred stack of them somewhere.

Re: The money I saved as a child would buy one picogram of gold today

#204

Post by SahAssar »

anonporridge wrote: post #108
shadowgovt wrote: post #43

Earlier quoted context omitted.

I hope this works out for you in the long term; BTC isn't the most stable platform, but it could certainly be more stable than some national currencies.

Bitcoin is an unbelievably stable platform with an uptime of 99.98% with only 13 years to draw from. It's been sticking with it's algorithmically defined inflation rate with perfect predictability, unlike any other currency or scarce asset like gold, which depends heavily on incentives to mine and accessible reserves. Don't mistake the volatility of the USD price of bitcoin (which is based on the erratic, unpredictab…

Inflation (at least in it's common usage) tracks the price of goods, not the supply of currency. While those traditionally affect each other strongly you cannot say that bitcoin has a stable or well defined inflation/deflation curve because the price of goods denoted in bitcoin are extremely volatile.

You can say that the monetary supply is very predictable, but that doesn't do much good if the price of goods fluctuate.

Re: The money I saved as a child would buy one picogram of gold today

#205

Post by supersync »

t43562 wrote: post #3

I remember my dad encouraging me to save my dollars and not spend them on choc-99 double ice-creams ($2.13). These were soft whip ice-creams with 2 cadbury's flake chocolates stuck in the side and they seemed like the closest thing to heaven on earth to me. What my dad said seemed logical though and I saved. When I was 16 I had a holiday job that earned me many ice-cream-worths but I kept it - didn't buy a bicycle or…

Thanks for sharing. A book “The Psychology of Money” talks about this. How people handle money (successful or not) is very different depending on whether or not they experienced inflation as a child.

Re: The money I saved as a child would buy one picogram of gold today

#206

Post by jasonhansel »

Taek wrote: post #12
Certhas wrote: post #8

Earlier quoted context omitted.

As a childhood lesson you don't need crazy inflation for this to hold true though. Anything that takes more than a few of months to save up to just doesn't make sense as a kid. Your disposable income goes up by factors of ten every few years. You have 2$ to spend at 5, 20$ at 10, 200$ at 15. Then it slows down but you might still get to 2000$ at 25. Saving as a kid really never seemed worth it to me.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

IMHO the saving you do as an adult is a very different kind of activity from the saving you learn to do as a child. Saving as a child is more about delaying gratification by not acting on one's desires; saving well as an adult is more about taking action by making prudent financial decisions. I'm not sure if learning the former really helps you much with learning the latter, though it is a useful lesson in its own right.

Re: The money I saved as a child would buy one picogram of gold today

#207

Post by CamelCaseName »

01100011 wrote: post #194

We're seeing more and more economic focused posts making it to the front page lately. We're all thinking about it due to high inflation and few options to protect our cash savings. That said, the quality of HN comments regarding economics tend to be, in my experience, quite low. I'd suggest anyone interested go seek out more qualified analysis beyond a weekend HN thread full of people like me regurgitating half under…

Where would you suggest?

I recently purchased a subscription to The Economist and have been listening to the top stories on a daily basis. That said, it seems to be more politics than economics.

Re: The money I saved as a child would buy one picogram of gold today

#208

Post by ajross »

zmgsabst wrote: post #20
Certhas wrote: post #10

Earlier quoted context omitted.

I looked up the definitions: Theft: an unlawful taking (as by embezzlement or burglary) of property. Inflation: a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services. There you go, proved you wrong.

In definition 1: > as by embezzlement In definition 2: > attributed to … volume of money and credit We’d be able to conclude that “inflation is theft” from noting that inflation is driven by “printing money”, whether paper or credit, and that the benefits illicitly go to those in control of the financial system to the detriment of others — which the other poster would likely characterize as “embezzlement”. So you pro…

> from noting that inflation is driven by “printing money”

It's not. Or it can be, in the case of the linked article referencing Argentine hyperinflation. But what we're seeing right now isn't. The US government does not, as a rule, "print money" to create funds. That happens in the banking system. Like for example the government can sell a bond; existing holders of statically invested dollars (foreign governments who sold stuff here, say) give the federal government a bunch of cash in exchange for the promise of interest paid over time. Now the government spends that money (on a pandemic relief bill, say), putting it into circulation among a different demographic (poorer people and not money market investors) who do different things with it (buy consumer goods). Well, now demand for those consumer goods is higher than it would have been. If you're in a pandemic trying to keep the economy afloat, that's a good thing. But if you overshoot by a bit, then there's too much money for the goods available. Inflation! Despite no money having been created; it just changed hands.

Now do the same thing for a supply shock: if manufacturers scale back production (due to a pandemic) and then can't scale it back up fast enough (chip shortage!) then prices... go up! Inflation again!

Likewise trade goods can create supply shocks too. Maybe some product (Russian petroleum) can't be obtained anymore. Less fuel to go around, but all the existing consumers have the same requirements and start bidding against each other for it. Yup, inflation!

People who repeat this "bitcoin can't inflate because mining" idea are selling you a line, basically. And the proof is, in fact, that crypto has been basically flat vs. traditional currencies at this very moment where we're seeing global inflation. If you could ever see this effect, this would be the time to measure it. And it's not there.

Re: The money I saved as a child would buy one picogram of gold today

#209

Post by sacrosancty »

grog454 wrote: post #184
sacrosancty wrote: post #175

Earlier quoted context omitted.

> that anyone who has built themselves serious amounts of wealth typically does so by making high risk/high reward choices. You have the logic backward. If it was "typically, anyone who made high risk/high reward choices has built themselves serious amounts of wealth", it would be good advice, but what if most of those people failed terribly? An example is pursuing a career as an artist/sportsman which are common hig…

> Luckily, I learnt it by buying a house which appreciated fast and showed what a disaster savings would have been. The better way to learn this is to be able to look at a graph like this: https://inflationchart.com/spx-in-m3 understand it, and make an informed decision taking in to account your personal risk tolerance.

Probably, but that's why it's luck, not sat down and planned life.

Re: The money I saved as a child would buy one picogram of gold today

#210

Post by bombcar »

paganel wrote: post #152

When Ceausescu's regime fell in late 1989 a piece of bread was costing 3.75 lei. About 10 years later, late '90s-early 2000s, a piece of bread was costing 3,000 lei. Hight inflation is a bitch.

An, but it wasn’t the same piece of bread. :)

I’ve always wondered what happened to mortgages and loans during those periods. Did borrowers effectively get free houses? Did borrowers not exist?

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