[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

[reedjosh]

Thanks! I'll do some more research.

[pjc50]

That's not usually how capital gains tax works.

[reedjosh]

Please elaborate.