[jr3592]

This actually makes 0 sense. Like, do you even understand what you're saying? The value of your savings is decreasing at a faster rate than ever before, so its a good time to stop saving and spend it?

The stock market increasing is not the same thing as inflation. What you're saying makes sense only if you are referring to stock market valuation... strictly retiring because inflation is high makes no sense.

[markerz]

> Like, do you even understand what you're saying?

That comment is unnecessary and has the effect of making people feel bad.

I think the rationale is that wages are stagnant in comparison to investments (stocks) and costs (inflation). So there's decreased incentive to focus on wages as a form of income, and more incentive to focus on investments.

I've definitely felt this personally, as my income shifts towards investments, my will to work for a wage has decreased. That shift has increased because I've accured more investments, but also because investments have grown kind of ridiculously compared to my wage.

[thrance]

> So there's decreased incentive to focus on wages as a form of income, and more incentive to focus on investments.

That's been the case for a while now, and is steadily getting worse. But the issue is, workers usually rely on their wages to live. It's not a choice for the vast majority of people.

And it's unsustainable. You can't build a society of exclusively parasites that feed on the work of fewer and fewer hands.

[PearlRiver]

Most people do not have money to invest. There should be a law that forces the rich to go on an annual safari to see how poor people live because we are literally entering "let them eat cake" levels and it will not end well.

[bachmeier]

> This actually makes 0 sense. Like, do you even understand what you're saying?

It makes perfect sense if the decision to work is based on real, after-tax income. Change the comment to say "the tax rate keeps climbing so I quit working" and it would not occur to anyone to challenge it.

Once you have enough saved to generate income covering the very basics (probably somewhere around $30k/year in a LCOL area in the US) it becomes a question of whether selling a 40-hour block of your time on a weekly basis is worth it. For this individual, it is not.

[mancerayder]

Not 30k a year, even in a LCOL area. Where's your health insurance? Do you even bother with it at that level?

[danaris]

> Change the comment to say "the tax rate keeps climbing so I quit working" and it would not occur to anyone to challenge it.

Um, what?

Many people would challenge that, because it's absolutely bonkers.

The only way it could possibly make sense is if you're already wealthy enough to be able to retire. Which cuts out nearly everyone, even on this hopelessly-skewed forum.

[casey2]

If you don't understand second-order effect that is. What happens when everyone stops working, either QoL falls or prices rise. Labor force rate is at 83.8% for prime age workers. (Most of the QoL add comes from immigrant labor while most of the QoL extraction comes from high tech. So this does complicate the math) The govenment then lacking revenue extracts more from prime age workers and raises the retirement age and early withdrawal penalties.

[inigyou]

That's going to happen regardless of your individual action. You can take a sabbatical and suffer a raised retirement age, or you can not take a sabbatical, and still suffer a raised retirement age. If you want to solve it, a collective action (i.e. government regulation) is necessary.

[vinyl7]

I saw this coming from a mile away. Jobs just don't pay enough anymore, especially with inflation eating away at money faster than pay raises and housing becoming unaffordable for the majority. It's barely worth it to work. But that is what US capitalism has optimized for. Prioritizing the rich capital owners over the proletariat with tax cuts, regulation cuts, not enforcing monopoly laws, spending money on wars and bailing out the large companies etc.

[JKCalhoun]

"This actually makes 0 sense … What you're saying makes sense only…"

I take issue with the phrase "makes 0 sense". Maybe it's just a common refrain these days?

Because you then explain how it could make sense. So it wasn't really zero, just required a narrow interpretation?

[fluoridation]

>The value of your savings is decreasing at a faster rate than ever before, so its a good time to stop saving and spend it?

Inflation does incentivize spending, yes. Would you rather have 100 kilos of rice today, or wait and have 99 kilos of rice tomorrow for the same price?

[jr3592]

> Inflation does incentivize spending, yes.

All inflation incentivizes is finding an asset class that isn't devaluing. If that is what you mean by "spending" then we align. But does inflation incentivize spending money on depreciating assets? Only for fools.

[inigyou]

Everything depreciates in a long enough term. What would you rather own?

[fragmede]

Does it? Outside of a couple of rich island city-states, they're not making more land, so on a long enough timeline, that asset class is bound to go up eventually. Same with gold – there's a limited supply of it on Earth, so at some point we'll mine it all, and then what? The question is how assets perform on a given timeline, and how it does relative to inflation. I could guarantee you 1% a year returns if you give me money, but no one would do that because that's less than inflation, as well as a number of other classes of assets.

[fluoridation]

The price of land is approximately correlated to the total population, because that's the variable part of the supply-demand equation. If there's fewer people there's less need to grow a lot of food, less space needed to manage waste, less space needed to house them, etc. etc. There's nothing productive you can do with land that would justify a very high price if there's only 50 thousand humans in the world; if one parcel of land is too expensive just go find and claim a different one for yourself.

So, yes, on a long enough time frame, land also goes down in value, because human population is likely to at some point go down.

>I could guarantee you 1% a year returns if you give me money, but no one would do that because that's less than inflation

What do you mean, "no one would do that"? If you're guaranteeing that ROI, someone who's investing with you instead of holding currency at 2% inflation would see their savings depreciate by only half as much, at no risk, perhaps with just some liquidity loss depending on what your terms are for pulling out. I assure you there's people out there who would take that deal.

[fluoridation]

??? "All" it incentivizes? Uh, no. The vast majority of people don't treat their salaries as an investment opportunity, they have to live off it. If you need to fix your water heater, you might get it fixed now while inflation is high than wait until winter (not a great example given the time scales involved, but it gets the point across). Even if you have nothing that you desperately need, if inflation is really high you might blow it on something frivolous because if you try saving it it won't be worth anything in one or two year's time.

Inflation doesn't push people towards non-devaluating assets, it pushes people to get rid of currency by any means they have available.

[jr3592]

???

OBVIOUSLY if you absolutely HAVE to spend money because your life depends on it (ex: hot water) then you're going to be incentivized to spend it sooner rather than later in an inflationary market.

I'm referring to discretionary spending. Eating out. Buying a new laptop. Traveling. Etc.

This statement: "it pushes people to get rid of currency by any means they have available." is just flat out wrong. If you're draining your bank accounts on discretionary purchases right now, that's your mistake.

I would include retiring before you absolutely have to as "discretionary". Now is not the time to make a decision like that, when the alternative is a smarter financial decision (work, save, invest in assets that aren't devaluing at the same rate as currency).

[phil21]

Inflation absolutely stimulates spending. Especially if it's predictable and people are paying attention.

Peak COVID it was obvious inflation was going to hit hard in some sectors. So I loaded up on durable goods like HVAC, hot water heater refreshes, major appliances, and even pushed some home maintenance forward where labor and materials were likely to skyrocket.

I certainly made a bet, and a lot of it had to do with "lifestyle" - in that I wanted upgrades of most of those things either way over the next 5 years. I just pushed the spending forward by a whole lot since money was going to be rapidly worth less and those specific goods I predicted were going to outpace generalized inflation. I also wasn't certain my income was going to be secure for the long haul so I'd rather spend the money while it was still regularly coming in vs. being stuck later.

Same went for looking at laptops late last year. Since I'm in the IT industry it was obvious memory and flash storage prices were going to go parabolic, and consumer pricing was lagging the market at the time. If you saw this happening you'd be pretty silly to sit and wait on it for another 6mo.

And the same goes for investment class assets. As those outpace wage growth by multiples, your salary becomes less and less important. Once your salary is in the low double digits of your total income in a given year I'd say it's probably time to take a hard look at continuing to work. The juice no longer becomes worth the squeeze. And asset price inflation means this decision point is brought forward years - perhaps decades - for some people.

It obviously doesn't mean go YOLO in your 20's. But if you're 58 years old and were thinking you'd work another 8 years - perhaps it's time to reevaluate the situation. Adding another 3% a year to your dragon hoard via wage savings might not pencil out how you think it will.

[danaris]

> OBVIOUSLY if you absolutely HAVE to spend money because your life depends on it

Food. Clothing. Shelter.

For most people in the world, all or nearly all (or, in some cases, more than all!) of their annual earnings go toward these absolute necessities.

The way you talk here makes you sound incredibly out of touch, as if you think everyone has vast amounts of disposable income they can just chuck toward whatever investment opportunity looks best at the time.

[fluoridation]

It's not flat out wrong. If the means you have available include investing, you might do that. If they don't, you're still better off spending it on something not strictly necessary now that you're able to than saving it to have its purchasing power be eaten away by inflation.

[inigyou]

Would you rather spend your savings before or after they become worthless?

[mancerayder]

He's saying there's no direct connection between effort and wealth. He works and made 140k, seeing his portfolio go up 140k a year by itself. So what's the point?

You and he are in different language games. His is an existential philosophical one, yours is the financial planning one.

Both make sense. I'm trying to transition to his, but I'm not ready yet.

What's the Point? is exactly the question we should be asking ourselves.

[wat10000]

Stock market returns will tend to exceed inflation. Salary may not. It's quite possible for inflation to make your salary shrink in real terms, making it no longer worth working if you can afford to retire.

[inigyou]

There is absolutely no guarantee that stock market returns exceed inflation. The big US indices have for the last few decades, but they're extreme outliers.

[wat10000]

I said "tend to," not "guarantee."

You'd expect this to happen with a couple of reasonable assumptions, like stock prices being somewhat based on real value most of the time, no wide-scale long-term economic collapse, and new companies replacing incumbents over many years rather than very quickly. If the real value of a company stays constant, then the stock price should, on average over the long term, rise at a pace that matches inflation.