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by trgn 389 days ago
savings are a thermodynamical impossibility. real wealth decays (livestock will die, the roof over your head will leak, the bushel of corn will rot, ...). savings must be invested for it to have future value.
3 comments

Money was traditionally a way to store value, and not all things decay at a rate that matters. Roman roads still exist. The Parthenon still exists. Roman coins still exist. In any inflationary currency value erodes, and it also encourages the production of less durable goods as time pressure encourages speed of production and not durability.
An underrated fact. The only savings that doesn't decay is someone else's debt, too.
yes thank you, I paraphrased Soddy, and for him debt was virtual wealth (and not subject to decay).
If only there was some material that didn't degrade over time and is hard to produce. Somebody should invent something like that.
It's circular. Sure it's pegged to metal, but won't tell you how much corn or land or homes you can buy with it. What should one oz of gold, hoarded in 2025, be able to buy you in 2050? Many factors will determine that. Theres no such thing as fixed value, unless the definition is self referential.

The only thing to do is turn present day savings in capital, it's the only claim one can have on wealth in the future.

Its value goes up and down, and is as speculative as anything else.
Price does not equal value. One oz today will buy you about the same as 1 oz 100 years ago.
Yes, it'll buy you an oz of gold.

https://www.macrotrends.net/1333/historical-gold-prices-100-...

What does equal value?

Whatever people buy. If you are looking at the dollar value of gold you have to look at what a dollar would buy that year. That is the value. You will find that a similar amount of gold buys the same amount of things throughout time regardless of the dollar price.

Another way to say that is that the dollar price of gold is correlated with the cumulative inflation of the dollar0 over time.

Thats the inflation adjusted curve, meaning it's what gold can buy relative to what a dollar can buy.