[n_io]

Is the money in your bank account a real store of value?

Do you not notice what’s been happening to it at an accelerated pace over the last 30 years?

I’m not arguing for bitcoin either way. But I implore you to take a hard look at your definition of real value in a system with inherent inflation that forces you to speculate in order to preserve any “real value.”

[JumpCrisscross]

> Is the money in your bank account a real store of value?

Cash encompasses physical notes, bank deposits and Treasuries. On one end, we have a form optimized for transacting. On the other, for transporting value over time [1].

Bitcoin is less efficient than Visa or Mastercard. It's more volatile than a Treasury.

[1] https://fred.stlouisfed.org/series/DLTIIT

[pjc50]

I feel that the value of my bank account has been far less relevant than (a) my salary and (b) my mortgage. And I suppose my pension, but since that's a government tax exempt deferred income mechanism it's not "mine" in quite the same way.

It always feels strange talking to people for whom the hoard of cash is the important bit. For many people it would be far more useful to stabilize house prices - which are affected by a completely different set of factors.

[imtringued]

I am honestly surprised that so many people care about what they earned in the past and did not spent, aka the portion of money they need the least, instead of what they are going to earn over the course of their life.

Even pensioners are still dependent on a young population that is earning/producing.

[reedjosh]

I think this is because the hoard of cash is obviously useless today due to inflationary pressures.

Today you get a loan (if you can) to start a business.

It used to be you saved to start a business. But today savings is literally penalized.

This debt based system makes you depend upon it. I wouldn't need a home loan (or at least not such a large one) if the government didn't subsidize loans and cause inflation.

[imtringued]

>I wouldn't need a home loan (or at least not such a large one) if the government didn't subsidize loans and cause inflation.

You are mixing up money and land. Those are completely different topics. You need a land value tax for land. Your monthly payments are going to be limited by your salary. A higher interest rate means the bank takes a bigger cut. You're spending the same amount of money either way. A higher income would help you more.

>It used to be you saved to start a business. But today savings is literally penalized.

You are saying this, while savings are at an all time high. The money supply is growing significantly faster than inflation. If anything, we are pandering to savers way too much. What people don't seem to understand is that the rich save way way more than anyone else so increasing overall savings doesn't matter for the vast majority of people.

Also, let me tell you something. Let's say you visit your family and your parents make you food. Would it be reasonable to tell them that you want to make your own food? It makes no sense, your parents already made food. Just take it. Don't pile up more food that nobody wants.

It's the same with money. The rich have saved such an incredible amount of money, that there is literally no point in saving your own money.

[pjc50]

> used to be

When?

While we've just hit an 8% inflation spike that may not persist, the past 20 or so years have been uniquely low inflation.

Please describe how loans are "subsidized", other than various countries' first-time-buyer schemes? Is your explanation US-specific?

[reedjosh]

> Do you not notice what’s been happening to it at an accelerated pace over the last 30 years?

This ^^^

Right now, if you're willing to buy in decent quantity you can still get 90% constitutional silver at only $28.64/$1 face value.

https://www.jmbullion.com/90-silver-coins-1-fv/

[reedjosh]

> inherent inflation that forces you to speculate in order to preserve any “real value.”

Wow, also this!

Say inflation is 8.5%, and you're holding an ounce of gold, then that gold raises by 8.5% in kind, you are still losing value as now you have to pay taxes on the 8.5% gained even though you didn't really gain anything.

[JumpCrisscross]

> inflation is 8.5%, and you're holding an ounce of gold, then that gold raises by 8.5% in kind

Gold is volatile in real terms [1]. If inflation is 8.5%, your gold might be worth 10% more, 100% more or 90% less.

[1] https://goldprice.org/inflation-adjusted-gold-price.html

[reedjosh]

That isn't the point. In fact you're basically illustrating my point. Without taking risk, you will lose the value of your money.

If you had some perfect asset (not gold since the volatility distracts you) that increased in dollars exactly as much as inflation, then you would still lose value to taxation even though you only gained as much as inflation.

In the real world, yes, no perfect asset like that exists, so it's worse than that. You have to risk your earned value to keep your earned value over time.

[imtringued]

Would you be willing to pay a demurrage fee on cash equivalent to inflation if it meant no inflation in the unit of account? The difference is small but important. Such a currency wouldn't lie to you. The money illusion would be gone. You can plan decades ahead. You know what the negative interest rate is going to be. Loaning out the currency avoids the demurrage fee on cash. So a 0% loan would maintain your savings.

Why doesn't this happen? Two reasons, people have loss aversion so they prefer being lied to through the money illusion. They get to blame you when the truth is that they are at fault. If they preferred taking the loss they wouldn't have to find a scapegoat. The other reason is that inflation has an uneven impact on the economy. Some gain and some lose and many people want to be winners or at least for there to be the possibility of winning, even if it is a detriment to society overall.

[JumpCrisscross]

> no perfect asset like that exists, so it's worse than that

TIPs [1] come damn close. The interest is subject to federal tax, but you're still coming out ahead.

[1] https://www.treasurydirect.gov/instit/annceresult/annceresul...

[reedjosh]

> TIPs [1] come damn close

TBH I don't know too much about them, but from what I'm seeing they're something like 1-2% interest. Inflation is > 8% right now per the government's own numbers

https://www.bankrate.com/rates/interest-rates/treasury/

Am I mistaken? If so, I'd love to find a way to get guaranteed inflation beating returns.

[JumpCrisscross]

> from what I'm seeing they're something like 1-2% interest. Inflation is > 8% right now per the government's own numbers

That's a real yield. TIPs "adjust in price (principal amount) in order to maintain their real value" when inflation rises [1].

So if you buy a TIP for 100 that pays 2%, and inflation is 8%, the face value is adjusted to 108 and you get a 2.16 coupon. (Super simplified, to the point of being technically incorrect, but framework-wise fine.)

[1] https://www.investopedia.com/terms/t/tips.asp

[pjc50]

That's not usually how capital gains tax works.

[reedjosh]

Please elaborate.