Topic: the huge Problem that most people doesn't really understand - page 3. (Read 9405 times)

So if I have five hundred cooked dinners, you would think it wise and prudent for me to eat one & shove the rest under my mattress?  I saved those dinners by not consuming them.
That's exactly what you are doing with money, expecting it to be just like you have left it when you finally decide to come back for it and use it.
The result is I have wasted 499 dinners, dinners which could have fed 499 people, as I "saved" those dinners.  You, apparently, have done something similar with your money, and are now wondering why you weren't rewarded for your brilliant strategy.

It is saved by not consuming. They come from trade of course, for instance sale of your work hours.

No, saving money is nothing like waiving your place (...).  Where did you hear such an absurd comparison?  Who told you that "You should be free to consume or invest at the time of your own choice"?  Rubbish.
What you call "saving money" is called hoarding.  It is called gluttony and greed.
Who/what are you saving this money from?
Don't let the words fool you, you are saving this money so you can have it later.
You, not anyone else.  That's hoarding.

Is he god now? Or should I say she?

Saving money is like waiving you place in the queue for resources to consume or invest. You should be free to consume or invest at the time of your own choice.

If you let a socker team of five year olds with mums go before you in the queue to the pissoir, should you only be allowed to lighten yourself half way afterwards?

Exactly, because money (the dollar) is bad money.

I agree, for average person it is true. However, there are exceptions.
For people who own things outright inflation is an issue.
I own my house, cars and all other things paying no interest on anything.
Granted, I pay some interest indirectly, for me inflation is a problem.
Keeping my cash in the savings account is plain stupid.
I would need to keep my wealth in "inflation-resistant assets".
What are those?

Additional requirement: these "inflation-resistant assets" must also be "manipulation/speculation-resistant"
Therefore, they will exclude housing/land, metals, diamonds, stocks, bonds.
What's left?

Tip: see Buffet comment above 

I don't mind the interest, because I agreed to those terms when I bought the house.  I could have chosen to not buy a house, and then I wouldn't have a mortgage.  There is no negotiation with inflation.


By artificial inflation, I mean inflation that isn't the result of fluctuation in the market, nor changes in the business cycle, but due to the deliberate expansion of the money supply.  In any other context, that would be market manipulation, or even fraud.  It's just that we've been conditioned to believe that the market for money is special.  It's not, it responds to supply and demand like any other.


Getting rid of interest will not get rid of the kinds of inflation that I am concerned with, and I think that you know that already.  Some portion of the interest rate is a market response to the demand for credit, some of it is a response to the perception of loss due to inflation, some of it is due to other factors.  So you can't get rid of interest in a market economy, it arises naturally.  It might be called something different, but the cost & risk of credit will be paid somehow, or credit will not exist.  Without a working money market (credit industry) the economy becomes very inflexible in the sense that it's not quick to resond to changes in the market conditions.  Credit & interest have their place, so long as they don't become the majority of the marketplace, which is what we've seen occur to fiat currencies since WW2.

What is your view on having half your earnings taken by Interest?  And why dose it bother you sooooo much less then losing a pittance to inflation?  Is it all wrapped up in this 'artificial' label, artificial = evil while 'natural' = good?  Do you consider interest natural and their-for good no matter how much it takes from you?

Do you realize that MONEY and everything about it is purely artificial, every culture had to invent money just as they invented agriculture, language, roads, bronze tools etc.  Interest exists as a quality of a particular TYPE of money, hard money and their is nothing 'natural' about it's or it's equally artificial alternative soft-money.  So pick which Artificial socially created economic paradigm you want to live in, the one with or without interest. 

Get rid of interest and you can also do away with inflation at-least in the nominal sense of the monetary units purchasing power changing.  But your not going to ever have the ability to just hold money, enjoying it's liquidity without that costing you something, their is no free-lunch.  Give up liquidity and you can preserve purchasing power, take risk and your entitled to return, no risk no return.

If you have any significant amount of money uninvested, you are quite silly. I know investing requires trust, research and maturity, but it yields more than inflation, so please don't justify stupidity with morals.

Instead, learn to live with little and profit from the all-time-high labour income in order to profit from the even higher capital gains in this century. I recommend you start here:

http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

Speaking for myself, this point has never been relevant.  It doesn't matter that there are things that the average, or even anyone, could do to mitigate the effects upon personal buying power by artificial causes of inflation.  The only thing that matters is that they are artifical.  If some hacker (who knows superman, perhaps) steals only a penny from each of the paychecks of every person at the company that he works for, is it not theft?  Who does he steal it from, the company or the employees?  Is it okay, just because each victim is harmed very little; or may not even be aware of the theft?

Saving 10% of monthly income and having 3 months income as cash on hand is what is considered Prudent for a middle class person.  I was trying to make a generous case for you inflation haters, using a high savings individual and a high inflation rate, a worst case scenario for losses incurred from inflation.  If I had modeled a person with no savings you would have legitimately accused me of having a biased model, but even a model which is savings heavy dose NOT lose significant purchasing power to inflation.

Obviously many many people do not save that much (And I'm certainly on the side that says we all SHOULD save like that), but that is irrelevant to my point.  No one is stepping up to challenge my numbers or my conclusion that inflation dose not cost real people squat, while interest robs them blind.

Well, I had a rainy day fund that was over $30K only a few months ago.  One car smashed on a crowded, snowy freeway in November; another had an engine block freeze up and crack; a $5K furnace replacement; a $1500 refrigerator stolen off the back porch of my unsold house that has been on the market for nearly a year, because the workmen put it out there to fix the floor and didn't consider that it might be valuable enough to steal (that's what they told me, anyway; I'm still suspicious) and paying two mortgages for the last 8 months.  So I know that I've had more than my fair share of rainy days during 2013.

You didn't trigger it because 25%/month inflation is NOT what is happening, and therefore does not explain the tiny propension to save.

It is clear to me that people are sucked into consumerism, thus regarding their salary as their budget, thinking that spending always increases happiness, looking for that dopamine shot caused by buying something new and shiny.

What lies beneath is in my opinion a bad management of risk. They don't save for a rainy day because, in their state of helplessness, every other day is rainy and they get used to it, in the same way they get used to acquiring new consumer products. The human mind has a huge power to become accostumed to both suffering and joy.

It is better to have negative dollars and save in things. Why? Because the dollar is bad money.

NOBODY in the US saves.  We had a financial seminar at church (Dave Ramsey) and they did a show of hands for who has no debt except for their house.  My wife and I were the only ones in a roomful of over 100 people that raised our hands.  Then they said houses and cars and again it was only about 7-8 people.  Everyone else has credit card debt or student loans.

I hoped to trigger this thought: Why not buy 5 beers today, in stead of saving to 4 next month.

It could just be the other way about. Shiny days all year round (well, almost), so no use saving too much (makes some reason, lol)...

Why? Why do they not save for a rainy day?

Would you nitwits at least ATTEMPT to distinguish between demand-pull inflation and cost-push inflation.  The recent rise in oil and food prices (as oil is the main input to create food) is an example of cost-push inflation and it is not caused by the expansion of the money supply.  Cost-push inflation is terrible for workers because wages will lag the prices of goods, a demand-pull inflation tends to produce full employment and higher wages, only later do these costs work into the price of goods.  The whole notion that inflation happens always and only because of a change in the money supply has been completely debunked.

People who stuff money under a mattress do NOT deserve to preserve their purchasing power, they are taking money out of circulation which is damaging to the wider economy.  IF they merely deposit that money in a savings account their purchasing power will be almost entirely preserved, and if they make an actual investment (with risk) they will on average see a good return.

Lastly the inflation rate is NOT picking the pocket of the average worker, the average worker spends 90% of their income within a month of receiving it and holds savings equal to only 3 months income if they are especially prudent, even at your ludicrous estimates of 11% inflation this would effectively cost 0.33 months on their savings (if they mattress stuffed thouse savings) and .099 months worth on their monthly spending, for a grand total of 2 weeks of income per year.  In reality inflation is not 11% and people lose on the order of days worth of income in spending power from inflation.  This is why economies routinely continue to function at double digit inflation rates, it is a painful cost but not an unbearable one.

But if ANY of you people have ever bought a home you should have an idea how much people actually spend on INTEREST which is the real means that the financial system uses to to pick your pocket.  A Typical home loan amount is 1/3 of income and over the course of the loan HALF the total payment is interest so your looking at 1/6 of income to pay interest on just your home, that 2 months of income a YEAR, 4 times the cost of the absurd inflation rate and probably ~20 times the real inflation cost.  And that's just one item, your paying interest indirectly in everything you buy because every business is paying interest and passing its costs on, by the time your done it's on the order of HALF of income.

Claiming to want a better economic order for the common man by bitching about inflation while ignoring interest has to be the most misplaced concern trolling ever.  The whole modern libertarian monetary obsession is perfectly crafted to fit the interests of the very banks you claim to be opposed too, hard money, low inflation or even deflation, high interest rates and deregulation on top.  How long is it going to take you to realize your whole ideology is being actively stoked by thouse elites for THEIR benefit?