myths about the federal reserve

[Dr.3D]

From a previous post:

Exactly my point....
There has been no deflation at all since 1950. And it doesn't matter where one keeps their money, it still get stolen from them by inflation.

Edit: And here is a better representation of that same chart.

 

[Teaser Rate]

You want to use the guns and violence of the state to interfere between two people making a contract. I oppose to that and you call it "an ideological argument". You're an authoritarian. If any nut uses guns to attempt against your life of liberty, you have no bases for criticizing him, as he is just doing the same thing you defend.

By that kind of logic, everyone who refuses to accept anarcho-capitalism in its purest form is a violent authoritarian who deserves to be mugged.

 

[low preference guy]

By that kind of logic, everyone who refuses to accept anarcho-capitalism in its purest form is a violent authoritarian who deserves to be mugged.

No. I'm not even an anarcho-capitalist.

And you go way further than those who just defend taxation. You also attack freedom of contract.

By your logic, any authoritarian dictator should just defend himself by saying this:

By that kind of logic, everyone who refuses to accept anarcho-capitalism in its purest form is a violent authoritarian who deserves to be mugged.

 

[Teaser Rate]

Exactly my point....
There has been no deflation at all since 1950. And it doesn't matter where one keeps their money, it still get stolen from them by inflation.

Edit: And here is a better representation of that same chart.

There's no transfer of wealth if the rate of inflation meets its expected value. Wages, government benefits, prices, etc. all anticipate and adjust to it. As I mentioned in my previous post, if you were to keep all your money in your mattress, then yes, it would lose value over time, however if you keep it in a savings account or pension fund, then you'll be fine.

 

[Dr.3D]

There's no transfer of wealth if the rate of inflation meets its expected value. Wages, government benefits, prices, etc. all anticipate and adjust to it. As I mentioned in my previous post, if you were to keep all your money in your mattress, then yes, it would lose value over time, however if you keep it in a savings account or pension fund, then you'll be fine.

So my pension, I am now collecting is going to rise with inflation? Doesn't say that in my contract.

 

[low preference guy]

There's no transfer of wealth if the rate of inflation meets its expected value. Wages, government benefits, prices, etc. all anticipate and adjust to it. As I mentioned in my previous post, if you were to keep all your money in your mattress, then yes, it would lose value over time, however if you keep it in a savings account or pension fund, then you'll be fine.

I.e., there is a transfer of wealth.

 

[efiniti]

If you’re going to make ideological arguments to address utilitarian concerns, you might as well say that the state shouldn’t exist because all taxation is theft.

Your post seems to rely on the assumption that we're on the verge of a financial abyss. What do you base this on ?

That's the avg-to-avg change. That tells you how much the Fed is inflated on top of the already existing inflation. Do you understand what kind of effect a positive year to year average has every single year?

Here is the outcome:

ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

The annual average is what you should be looking at. Notice how its NOT linear after the US cut its ties to gold. Its parabolic. The income disparity is about to get torn a new asshole.

 

[efiniti]

There's no transfer of wealth if the rate of inflation meets its expected value. Wages, government benefits, prices, etc. all anticipate and adjust to it. As I mentioned in my previous post, if you were to keep all your money in your mattress, then yes, it would lose value over time, however if you keep it in a savings account or pension fund, then you'll be fine.

Yes there is a transfer of wealth, as long as there is a positive inflation rate.

Secondly, there are no guaranteed minimum returns on savings rates unlike the minimum wage. Bank of America's regular savings account interest rate is 0.05%. What's the inflation rate again? ...

 

[efiniti]

Actually, you have it backwards, the dollar's store store of wealth is predictable because there is a central bank which controls the inflation rate. Assuming that the Fed continues to meet its target of ~2% inflation, the value of your dollars is going to remain stable, unlike something like a piece of gold or silver whose value can sporadically appreciate or depreciate at any given time.

Did you forget about the pesky little fractional reserve ratio?

Here's a question for you: if people only use dollars because they're forced too; then why is it that people across the world accept US dollars ?

People are forced to pay in dollars due to legal tender laws in the local country. People across the world accept dollars because they know we are forced to use them.

 

[japes]

Your post seems to rely on the assumption that we're on the verge of a financial abyss. What do you base this on ?

I don't know that we're on the "verge" of anything calamitous. I can't predict the future but I do see a decline happening and I'm lacking confidence in the Federal Reserve. The more I understand how the Fed works the less I want to use FRNs. The more I see how our congress is spending our nations wealth, the less I want to use FRNs. There are many other reason I think we are headed for a financial disaster (could be 10-15 years down the line, who knows?). Everyone has to make his own choices based on the facts at hand. At this point I'm short the Fed and long gold and silver based on what I'm seeing. I'll continue to use FRNs as long as I'm forced to. If you're confident in FRNs then by all means stock up (pun intended).

 

[Carson]

A stable currency you can bank on for your future should be a fact of life not a game.

 

[japes]

For all intents and purposes, the value of a currency over 50 or 100 years doesn't matter, no one keeps their money in their mattresses anymore and prices and interest rates adjust to the inflation rate...

The reason people do not hold on to FRNs is because people intuitively understand they are worth-less as time goes on. People hold on to things that are worthy of being held on to. I have an 1883 silver Morgan dollar my great-great-grandpa stored away under his mattress. In 1940 that dollar would buy about 5 gallons of gas. Today it can buy about 8 gallons of gas. Right now my one dollar FRN can buy about 1/4 gallon of gas.

I favor a society that rewards savers. A financial system in which the wealth of hard working producers is passed on to future generations.

 

[ababba]

I favor a society that rewards savers. A financial system in which the wealth of hard working producers is passed on to future generations.

A dollar invested in the S&P 500 in 1940 would be worth 18 times more in real terms today. Stocks are claims to those hard working producers. Dollar bills and gold have no link to hard working producers.

 

[Travlyr]

A silver dollar saved from 1964 is worth 26.72 times more in real terms today.

Random Year Morgan / Peace Silver Dollar (Cull)
Off Quality, Cull, Damaged, Cleaned, Polished, etc! (Dates from 1878 - 1935)
APMEX Buy Price - $26.72

 

[japes]

A dollar invested in the S&P 500 in 1940 would be worth 18 times more in real terms today.

Does that take into account inflation and the tax on capital gains? I didn't do the math, I'm just curious. I have nothing against the S&P.

Stocks are claims to those hard working producers.

So? Where did I say anything contrary to this? Why did you even bring this up? I was not comparing silver to stocks or even denigrating stocks. I have nothing against investing in companies that produce.

Dollar bills and gold have no link to hard working producers.

Dude, what he hell are you talking about? My point was that a silver dollar from 1883 held its buying power. Would you like to take umbrage with that? It took work to produce the silver dollar. My great-great-grandpa was paid in silver for his hard work. He would be happy to know his silver dollar, which was "linked" to his "productive" hard work, held its value.

 

[ababba]

Does that take into account inflation and the tax on capital gains? I didn't do the math, I'm just curious. I have nothing against the S&P.


So? Where did I say anything contrary to this? Why did you even bring this up? I was not comparing silver to stocks or even denigrating stocks. I have nothing against investing in companies that produce.


Dude, what he hell are you talking about? My point was that a silver dollar from 1883 held its buying power. Would you like to take umbrage with that? It took work to produce the silver dollar. My great-great-grandpa was paid in silver for his hard work. He would be happy to know his silver dollar, which was "linked" to his "productive" hard work, held its value.

It includes CPI inflation (real terms) but not taxes.

Your point was that you want an economy that rewards saving and investing in productive businesses. This is the thing that is most highly rewarded in the US (over bonds, money and gold). This is true even in an environment with very high inflation.

Saving dollar bills in a mattress or holding gold doesn't directly contribute to expanding the economies capital stock like investing in firms does. The thing that results in economic growth is rewarded the most.

The OPs point was that people don't invest in currency so the long run value of currency is irrelevant to whether the economy rewards or punishes savers.

 

[ababba]

Travlyr

How did you adjust for inflation there, with the CPI or some other measure?

I think you're clearly wrong, but I want to give you a chance to prove me wrong.

 

[Mogambo Guru]

<facepalm> @ all the misinfo appearing in this thread.... ugh.

 

[Dr.3D]

It includes CPI inflation (real terms) but not taxes.

Your point was that you want an economy that rewards saving and investing in productive businesses. This is the thing that is most highly rewarded in the US (over bonds, money and gold). This is true even in an environment with very high inflation.

Saving dollar bills in a mattress or holding gold doesn't directly contribute to expanding the economies capital stock like investing in firms does. The thing that results in economic growth is rewarded the most.

The OPs point was that people don't invest in currency so the long run value of currency is irrelevant to whether the economy rewards or punishes savers.

Bull shit! People should be able to save without being robbed. They should also be able to invest as they wish without having to be forced to do so to keep their money from becoming less valuable. A good currency retains it's value over time, it doesn't slowly become less valuable.

As it is right now, no one is free to save their money without changing it over to gold and silver, then surprise of all surprises, some asshole decided if they did that, they should have to lose some of what they saved through a capital gains tax. It's a rigged system and it's rigged to keep people in poverty.

 

[japes]

Your point was...

Nope, you missed the point and I have no compulsion to try explaining it again. You seem to be more interested in fighting straw men than actually understanding.