[barnbuilder]

You may feel like your accounts are stable and nothing is disappearing but by CPI inflation calculations (https://www.bls.gov/data/inflation_calculator.htm), any money you had in that account 30 years ago has lost half its buying power.

If you want to keep the money that you have worked for over the long term, your checking and savings account are not going to cut it.

[woodruffw]

I don't think the GP is saying that the don't do any investment whatsoever.

[EGreg]

Half in 30 years? That’s pretty good! Ethereum fell by that much in a couple weeks. On the way up in a bull market it’s all roses, but in a bear market, these things can crash hard.

Money losing value gradually — Demurrage — makes people actually spend money rather than hoard it. If you want the money to earn interest, you will have to take some risk. Invest in some assets. Usually, stocks or real estate or (finally thanks to the JOBS act) new startups.

I don’t know why people have “fat bank accounts”. Money isn’t meant to be stored. That’s a racket by the banks, along with the idea that you have to buy a home instead of renting. If you can rent and buy other assets that you understand better than real estate, then do that.

This is not magic .. money has to come from somewhere. It usually comes from banks themselves — who lend it to people and businesses who believe that they can pay back MORE money ! The only way everyone can pay back more money than is in existence is if the money supply is increased in the meantime. So inflation happens. The only alternative is having lots of people default and restructure their loans to owe less. This is what Ray Dalio says can be “a beautiful deleveraging”. I don’t buy it…

Learn how it all works:

https://m.youtube.com/watch?v=PHe0bXAIuk0

[chii]

> he only way everyone can pay back more money than is in existence is if the money supply is increased in the meantime. So inflation happens.

or the lent money is used to produce more goods and services, which the increased money supply would represent (otherwise, you'd get deflation, which discourages spending, and spiral downwards towards depression).

[manwe150]

Most of that sounds right, but the money to pay it back is not a zero-sum game. It can also comes from increased velocity, quantitative easing, the net present value utility function, or by temporarily exchanging it for other asset classes (eg building real estate is a form of increase to the money supply), and probably other sources too

[addcninblue]

You're saying that the value of your money in real terms is depreciating.

OP is saying the nominal value persists.

With banking, people care about nominal value.