If you're still not sure why inflation is bad, or what it's doing to the value of your money, you need to click over to Aesop's place and read his brutally acerbic article "Economics 101: Inflation". This is why:
From 1932 to present, decoupled from actual gold backing, the Fed has stolen 98.9 cents on every dollar via inflation, by printing literal trillions of dollars of fiatbux, backed by nothing but love and kisses. The dollar bill in your pocket is worth less than its actual cost in ink, paper, and printing press energy to make. It's finely-engraved toilet paper.
Inflation of US dollars, over 90 years' time, stands at 8950%. It's at 918% since just 1970.
. . .
What we call a "millionaire" today? That was the guy with only $11,000 in his pocket in 1930.
There's more at the link.
It's an excellent article to show to family and friends who continue to maintain that inflation is "only 7% - the Government says so!", or who can't or won't accept that they're getting poorer each and every day because of it. It lays the smackdown on those who refuse to face reality.
Highly recommended.
Peter
36 comments:
Bottom line, we're poorer every day... sigh
Yes, the dollar is worth less now than it was a hundred years ago. That doesn't mean that it is worthless. There are a few hard, cold realities that the gold bugs get wrong. I say the following as a person who both owns gold AND has investments valued in dollars.
1 There is a buy in penalty to owning gold. Although gold is "worth" $1810 an ounce as I write this, buying a single 1 ounce gold Eagle right now will cost you about $1915 right now. That is a 4.5 percent loss right there.
2 Gold is a nonperforming asset. That is, it holds its value. That means that you don't INVEST in gold. It isn't an investment, it won't grow in value.
2a Let me explain: He is correct that the DJIA isn't a reliable marker. That is why investors use indexes like the S&P 500. Let's say that you had bought an ounce of gold 15 years ago and an equivalent amount in an S&P500 fund (SPY) at the same time. That gold coin would have cost you about $650. That same $650 would have bought you 4.5 shares of SPY.
3 Gold has a selling cost. You can't sell it for "spot" value, because the dealer needs a profit. Right now, a 1 ounce gold Eagle can be sold for $1780, if you find the right buyer.
4 So now here we are, 15 years later. Your 1 ounce of gold is worth $1,780. Your 4.5 shares of SPY are worth $2,055.
Now this is dependent on when you buy. If you had bought 20 years ago, the gold would be worth $1780, but the stock would be worth $1300. If you had bought ten years ago, the stock would be worth $5600.
It's cyclical. Sometimes, it is better to buy gold and hide from the bad times. Other times, it's better to buy stock and invest.
It's a question that makes people both rich and poor, depending on your timing.
Gold, silver, etc are stores of value, not investments. Gold is money, not currency.
Stocks, the way people view them are not investments either - theybare speculation.
The one concept most people leave out of discussions on inflation, is that the cost of your assets will inflate in cost as well, more or less depending on what asset being discussed. Inflation only kills dollars held in hand. Investment prices rise with everything else, again more or less depending on the specific investment. Bottom line, inflation isn't stealing crap from my savings as my savings is invested in various diverse holdings that match or outperform inflation for the last 25 or so years. It is not difficult to do this, even for low earning households.
Where it hurts most is the fact that wage inflation is slow to catch up, so earnings suffer reduced buying power.
The real fun is determing how much of my retirement fund buildup is real growth and how much is simply inflation driving up prices. Real growth means progress to retirement, inflation growth is just treading water.
And everything goes to zero on the internet when the Democrats leave and the system implodes due to lack of maintenance by companies that no longer exist.
The 'Great Reset' is also the great escape as even communications no longer work.
Hence this 'genocide program' and Chaos that they're currently creating.
The dollar isn't worth the paper and ink it's printed on but the Sawbucks the FED creates out of thin air and direct deposits into bank accounts are free. Electrons cost nothing. You won't even be able to burn your cash for fuel like in Weimar Its all on a chip. This is gonna be a bit different from Weimar or Kublai Khan or the late Romans painting lead coins gold.
In my corner of the interweb, gold/ silver has never been considered a vehicle for growing wealth or hedging inflation per se. It's main value is, well, value. It's mainly a convenient form of protection against the increasingly likely day that those paper things we carry around stop being accepted as a medium of exchange. And for the likely event that the Regime decides that the paper will suddenly be replaced by digital. In either event, we may well find ourselves in a Kunstler world where anyone w gold or silver can still buy what he needs without Regime permission or hauling around a wagon load of barter goods. But i could just as well invest in other valuable commodities rather than metals-- coffee, seeds, ammunition, etc... But having coins sure is alot more convenient.
When folks talk about the relative value of Fiat Money (as defined as No Gold Backing) I remember mt Grandmother's story of seeing her Marks saved for a lake house later used for a Pair of Boots.
Her family sold their family gold for tickets to escape Weimar Germany just after Kristallnacht. Some small coins were hidden from the German Guards, but they had to "gift" them their wedding rings to leave on the train.
Her stories might have been scrambled over the decades but when well off German Bankers fled Germany to work on the docks in New York City to put a roof over their heads THAT tells me Fiat Money is only worth what it can buy.
Grandmothers Truck Garden in Golden CO was something she was Very Proud of.
And I am feeling more proud of my ever-expanding gardens and fruit trees-bushes. I think Grandmother would have approved.
One thing else different from Weimar or Zimbabwe is that most Americans are up to their eyeballs in debt. When the FED is force to raise the prime rate to combat inflation those monthly payments will Skyrocket. People will go bankrupt.
I'll look for analysis elsewhere. won't go to his site
I was a millionaire in 2019 before the market went to shit. About 9 months ago I am back in the club. Ten years ago I was told I needed a million dollars for retirement at age 60. Now that I am 60 I am being told that I need $1.5 million by age 62. It is a moving target.
Aesop hasn't gotten much right over the years. He like to pontificate, but listen to him at your own risk. He's right about 1 in 7 times, at best.
He seems to assume that measuring gold vs dollars is a good method of measuring inflation. It isn't.
Nor is gold a means of investing and growing your money. Investing is a means to grow the buying power of your fortune.
I'd be careful listening to his advice.
YMMV.
When it comes to inflation, I'll put more trust in the Tomato Soup price history at the Political Calculations blog than in the 9000% inflation claim of someone talking their investment up. You can quite clearly see when Nixon closed the gold window and the effect since ... but the preceding inflation claimed? Not so much, or at least it wasn't showing up in the cost of a basic food item.
@Divemedic:
Natzsofast, Guido:
"With so many components and such stringent criteria, the S&P 500 is dynamic. S&P Dow Jones Indices, the subsidiary of S&P Global, Inc. that determines the components of the index, has little patience for slackers.
Case in point: United States Steel Corp. (X), one of the stalwarts of 20th-century industry, had been listed on the S&P 500 since its inception. In fact, at one point, U.S. Steel was the largest company in the world. Alas, it hasn’t turned a profit in years. When it fell below the $4 billion threshold in 2013, the index booted it out and made room for Martin Marietta Materials Inc. (MLM), a construction aggregate producer."
https://www.investopedia.com/articles/investing/090414/sp-500-index-you-need-know.asp
As I covered in the article linked to, that's the S&P betting on the roulette ball after it drops. Bullshit flag thrown. I can grow from $650 to $2055 too, by betting on horses, if you'll let me place my bets after the horses cross the finish line, like both the Dow and the S&P do.
You also conveniently forgot the costs to trade in and trade out of stocks, just like with gold (commissions, broker fees, and other miscellaneous rose fertilizer padding that eats your so-called "profit"), and then there's Uncle's inescapable Capital Gains Tax, always based on the downstream inflated dollar valuation at sale. 20% of your notional $2055 = $410. So the value of that stock "investment" is now $1645, before we subtract out fees and commissions. So when we compare apples to apples, the gold worth $1780 (your estimate) is less money than the stocks' value of
(now) $1645 (or less, after trading commissions and fees are deducted) in what universe?
I'm wasn't telling people to buy gold.
I was telling them that inflation makes you her bitch, and that fiatbux (dollars, pounds, marks, francs, yen, yuan, pesos, etc.) aren't money, they're simply currency, and thus inherently and intrinsically worthless. Weimar, Zimbabwe, and Venezuela say "Hi."
Gold and silver are actual money, and they hold their value over time. You buy them to not lose value over time, not to make a profit (except insofar as a dollar of something that's still worth a dollar (in constant terms) over 6 millennia is a profit over something now only worth 1.12¢, from 1932 to present, which is the US dollar.
@B,
Gainsaying is cheap. The Golden Rule is put up or shut up.
Show where I got this wrong (as if you can).
I advised nothing, other than that dollars (and anything valued in them or any other version of fiatbux) has been rotted to dust by inflation.
If you could show differently, you'd shine that light, instead of trying to throw shade, right?
@CDH,
So, tell us: In what medium of exchange are your "investments" valued?
Peanuts?
Puuka shells?
Hen's teeth?
Quatloos?
Or would it be...dollars?
You're thinking your investments are rising.
As noted with Divemedic's example above, not so much.
They're merely inflating.
Welcome to the party, pal.
Aesop:
Let's explain why you are giving bad advice.
1 Yes, the S&P500 picks winners. That is why using an index fund like SPY is a good choice. The heavy lifting has been done for you. You don't need to try and pick a winner. The other advantage is, being an index fund of 500 stocks, there is built in diversification that shields you from a lot of risk. One or two stocks might tank, but it is unlikely that all 500 will. Keep in mind that this strategy is for long term investing- not making a quick daytrader buck, which is VERY risky and much like gambling in a casino.
2 You pay taxes on gold, too. Yep, gold is an investment, just like land, or collectable Lego sets. If you make a profit, you pay taxes on it. Most gold sales are taxed as capital gains on Schedule D. Hold it for more than a year, and pay the long term capital gains rate. Interestingly, if you buy gold eagles, they are taxed as collectables at 28 percent. Now if you are talking about not reporting your profits, that is a different conversation about making money on criminal enterprise. You could also try bank robbery or perhaps drug dealing.
3 I use Etrade for stocks and bonds. There are no broker fees, commissions, or other charges. There is an administrative fee charged for SPY by the quarter, but that is built into the price and was already factored in to my example.
4 Yes, gold and other metals hold their value over time. That is a good thing during inflationary periods. They also don't appreciate (hence, holding value) which is also what makes them a nonperforming asset. This is a detriment during times of economic prosperity. That is why it is good to increase your gold holdings in bad economies (which are inflationary) and decrease them in good economies.
You maintain wealth with gold. You increase wealth with investing. If you want to gain wealth and keep it, you need to
both invest to increase your wealth, and find a store of value (like gold) to maintain it.
Diversification is the key. I own stocks (although I am mostly out of the stock market right now. The economy is bad, so I sold most of my stocks back in November.) I own investment real estate. I own precious metals like gold, silver, and platinum. They all have their uses, but to say that one is better than the other is ridiculous. Each of those vehicles has advantages and disadvantages.
Merely buying and holding gold won't do both. You are handing out shitty, stupid advice. You also clearly do not understand investing and wealth building.
Let me add a couple of things:
I use SPY as the S&P500 index fund I invest in. There are others: VOO, SPLG, and IVV come to mind. Each of these funds also pay dividends, which I didn't include in my example above. The average is about 1 percent per year. I was trying to keep things simple, in keeping with a comments section.
There are other funds that do other things, like dividend funds. For example VIG is a fund that invests only in companies that pay dividends. Again, the heavy lifting is done for you by the people who manage the fund.
Growing and maintaining your wealth is much more complicated than "buy gold, you'll be OK."
Aesop:
I'll not clog the comments here beyond this:
Where were the massive deaths from Ebola you predicted:
The hospitals that shut down from Covid? The end of civilization as we know it that you have predicted time and time again.....
Your predictions seldom turn out. Perhaps you could clear this up by telling me where you *were* correct? You can't show more than 10% that turned out (if that). You purport to be an expert in so many things, yet you ain't rich, yer not independently wealthy (BTW, I am wealthy) and all you have is a blog, so folks should take your advice with a jaundiced eye. you obviously have a poor understanding of "money" and wealth. Feel free to show me where I am wrong.
At the end of things, the buying power of my assets has increased over time. Your method will not do that.
Yer a blowhard with a poor understanding of how most things work who like s to predict doom and gloom and who oversells himself.
The last work is yours. I'll not clog up Peters comment section in a contest of wits with a half armed man.
In 1972 my parents (dad working of course) made somewhere around $24k per year, we lived in a nice home on acreage, drove decent vehicles, never went hungry, went to the shore for a two week vacation, politicians were in DC and weren't "everything in the news", and we were very happy. Today one would require $145K to come anywhere close. With all these "financial advisers" shilling their snake-oil, we're poorer than our parents and the goal posts continue to move further afield.
LOL AESOP, reading comprehension much? I clearly said inflation was involved in the rise in price of investments and stock mrkets. The advantage of real investments over gold (store of value) is that they rise *MORE* than inflation, where your precious metals merely keep track. My 25 year average investment growth rates are about *double* the most pessimistic estimates of inflation, and I am a very conservative investor. Precious metals have their use, but they are not the end-all. Yes, stocks/bonds/etc can drop and lose value. Gold can be stolen. Gold drops in value too. There are no perfect answers, just smart plans.
B,
I "predicted" no such Ebola deaths as inevitable.
What I predicted was that Ebola would spread, would get here, that we wouldn't contain it, and that we weren't prepared for it. Contrary to both the then-head of the CDC, and contrary to serial idiot Fauci. I got all that 100% correct, and months in advance, when nobody else did, and the "experts" were 0 for 2014. The posts are all there right where I left them; you could look them up.
The number of hospitals strained to the breaking point by COVID was well-documented, in China, Italy, Nawlins, NYFC, Atlanta, and elsewhere, times beyond counting. The number I "predicted" would close remains at zero.
I have "predicted" no such EOTW scenarios as you try to strawman your way into claiming.
You keep using - or insinuating - the word "predicted"; I do not think it means what you think it means.
You're rich enough to fly a plane. Kudos. Really.
That confers what financial expertise?
You too have a blog. With a far smaller audience than mine, at least per the folks on the internet who measure those things. Jealous much?
The financial value of your assets has been inflated over time. Purchasing power? Not so much. You maintain differently. Fair enough. Show your work.
But again, you resort to simple gainsaying regarding my understanding of "money" and wealth.
You showed no such faux reticence with clogging up the blog with your earlier unsupported sour grapes, but when called on it, you continue to demure, because you cannot back it up.
My method was never suggested as a way to increase wealth, merely as a better way to preserve it from the ravages of inflation, by using actual assets and real money. You should look up "Straw Man Fallacy". In your dictionary, it will probably send you to the cross reference of "one trick pony".
As for blowhards, you're the one who came here to throw shade, but can't back it up when pressed. Your gripe in this instance was because someone else, in this case the bloghost, doesn't share your opinions of me (how upsetting that must be), as I neither sell myself, let alone oversell myself, nor do I like predicting doom and gloom. On the contrary, I would love to report sunny days and clear skies ahead, but if wishes were horses, no one would walk. Your assets are about to crater in a system that's reaching the tipping point; I merely pointed out how intrinsically helpless you are in the face of that, and all you can do in response is hurl grade-school insults with a wit that must have been the envy of the schoolyard playground in your day, but all it sounds like now is whistling past the graveyard of systemic correction likely to be best described as "biblical".
"Go to now, ye rich men, weep and howl..."
Be sure and call us back with how "wealthy" you are after that happens, but if you can't back up your opinions in the meantime, it's probably best to keep them to yourself, to avoid the embarrassment of supporting evidence as bankrupt as your stock futures are likely to become.
Had you any wisdom on the topic, you could have offered actual information to illuminate this conversation, but instead, focused on trying to pull me down, because of your prior butthurt. (Wealthy? I'm living in your head, rent free.) So instead you show your own backside, beggar the comments, and deprive all and sundry of any actual insight you might possess, just to waggle your wedding tackle and call names.
Well played, sir.
But good luck looking for that one armed man, Dr. Kimball.
CDH,
BS flag formally thrown.
"The advantage of real investments over gold (store of value) is that they rise *MORE* than inflation, where your precious metals merely keep track. My 25 year average investment growth rates are about *double* the most pessimistic estimates of inflation, and I am a very conservative investor."
The "official" rate of inflation over that period is laughingly referred to as 90-100%.
https://www.officialdata.org/1990-dollars-in-2018?amount=1650
I do not doubt your "investments" have doubled that. Call it 200%. Well done.
Trouble is, actual constant-dollar inflation, over the last 25 years, ignoring utterly the government happy-gas, has been 557%, in real terms.
In 1997, the average price of gold was $332.
It's now $1850.
(1850 ÷ 332 = 5.57. That's a 557% change in what a dollar will - and won't - purchase, then vs. now.)
That's not an "estimate", unlike government-sponsored happy-gas. A paper dollar (or anything valued in them, like stocks) from 25 years ago is now worth under 18¢.
A stock doubling the "most pessimistic rate" of inflation is now worth $2.
Even if we were generous, and spotted you double double that, your stock is worth $4.
But a dollar's worth of gold from 1997 is now worth $5.57.
However comforting it may be to tell yourself you're winning, you didn't increase the value of your assets by the 557% appreciation gold achieved, let alone by your claimed 1114%, nor anything remotely close, as a "conservative investor". But I'm sure your broker is happy that you think otherwise.
QED
If you invested substantially in Bitcoin in 2010, which would be anything but "conservative" investment, we can talk about that sort of ridiculous level of return.
Or even if you'd invested in Monster Beverage Corp (MNST), Tractor Supply Co. (TSCO), Old Dominion Freight Lines (ODFL), Holly Frontier Corp.(HFC), or Altria Group Inc.(MO) (formerly Phillip Morris brands) over that same 25-year time frame, you could have done that well. But if you'd done that, you'd be Warren Buffett and Jim Cramer's in vitro love child. If anyone could pick 10- and 20-bagger stocks 25 years out, stock investing would be so easy, a caveman could do it.
https://www.investopedia.com/articles/investing/022716/5-best-performing-stocks-last-20-years-gmcr-celg.asp
But average-performing stocks? Bonds? Similar "investments"? Pfft. Hokum and hogwash, demonstrably. Designed to sucker people into thinking they're winning.
Pretty much like the bright lights and spinning wheel at the roulette table. With about the same house odds.
Unless you achieved 557% return since 1997, you didn't equal just having actual money.
But if you did beat that, good for you. Now take your winnings, and get out of the casino, before you piss it all away.
Mathematics comprehension much?
Aesop: That isn't how any of this works. The problem here is that you clearly don't understand even the most fundamental mathematics. Let's illustrate that:
Let's say that 25 years ago, you bought 100 ounces of gold. Remember that buy in cost? In 1923, it would have cost you roughly $34,500 to purchase 100 Gold Eagles.
Let's say that I were to purchase the same amount split between two funds: A dividend fund (VEIPX) and an S&P fund, SPY. I could buy
827 shares of VEIPX @ 20.75 and 229 shares of SPY @ 75.25. Over the past 25 years, the two funds have averaged dividend yields of 2.4 and 1.8. I choose to reinvest those dividends on a quarterly basis. That means after 25 years, I end up with:
1,250 shares of VEIPX@ 44.64, worth $55,800 and
1,500 shares of SPY @ 448.92, worth $673,800. My total investment is now worth $729,800. The annual rate of return there is 12.270%.
That gold you bought 25 years ago? It's now worth about $178,000. That works out to an annual rate of return of 6.581%
That is called the power of compounding. Gold doesn't compound. It doesn't produce income. It doesn't appreciate. That is the very definition of "storing value." Its value doesn't change.
@Divemedic,
I wasn't giving investment advice. I was pointing out that inflation is eating your imaginary savings and investments like a T rex, 24/7/365/forever.
Feel free to show where that's wrong. Show your work.
Gold's value not changing is a feature, not a bug. What you're selling (whether you realize it or not) is a perpetual motion machine.
And stocks do indeed compound. Einstein even pointed out that the greatest force in the universe was compound interest. Unfortunately, that works the same way for investors as it does against governments that borrow multiples of their entire national GDP.
Which has a wee effect on world markets. That great investment you're touting.
In fact, stocks are such a great investment, you're mostly out of the market entirely. Thanks for the honesty.
As to who doesn't understand the most fundamental mathematics, let's try this one:
"In 1923, it would have cost you roughly $34,500 to purchase 100 Gold Eagles."
Really???
I'm just spitballing, but as the price of gold was $20.67/oz in 1923 (which was nearly 100 years ago, not 25), I'm pretty sure that purchase price would have been a wee bit closer to $2067 that to $34,500.
Maybe check your work...
But let's spot you the sloppiness of that, and assume you meant to pick a point in time when gold was in the vicinity of $345/oz.
So when you sell those S&P shares, worth $729,600, not $729,800 (assuming you multiplied the fund prices correctly - you're on your own there - math is hard, huh?), and pay your 20% Capital Gains tax, you now have something closer to $583,680.
Woo hoo. Yes. You totally smoked gold.
Over those 25 years.
Go back 60 years.
I'll help you out with my half: the gold would've cost $3500, not $35,000.
Now find an S&P index fund and break it down for us poor mathematical bumblers.
(cont.)
(cont.)
Then try it for 90 years. Oh, wait, you can't.
Because the S&P didn't exist before 1957.
You could try the DJIA, but there'd be that nasty Great Depression to deal with.
And both of them shift stocks in and out after they've already won.
(Hint: I saw this scam in The Sting. Past posting. it only works out in the end for Henry Gondorf and Johnny Hooker.)
And as long as the US dollar isn't regarded as a Zimbabwean dollar, a killer profit might mean something. Until five seconds after the two become indistinguishable.
Which was the whole point of the exercise.
I'm betting that's going to happen.
You're betting it never will.
But that notional 100 ounces of gold?
Still 100 ounces of gold.
Still will be when your grandkids retire.
Suitcase full of fiatbux?
Kindling. Toilet paper.
Unlike 1929, holding cash won't help you, because whether it's 1s and 0s, or stacks of paper cash, it's worth exactly the same: nothing.
If someone is willing to bet their entire future on the idea that the economy or the currency will never collapse before they die, they should, by all means, go with investments that have performed from mediocre to middling, on average.
Over 90 years' time, however, they haven't returned 89,500%.
Gold has.
So you want to bet you die before any financial collapse occurs?
Okay. Go ahead on with that plan.
You might be right. For a while.
Or, you're five seconds late getting out, lose everything, and have the brightest and finest engraved toilet paper in the shantytown.
Now, tell us why you're almost entirely out of any market, if it's such a great investment plan?
It'd be a fine thing to win the lottery yesterday, and convert the winnings into actual tangible assets before any calamity tomorrow.
But as an investment plan going forward? Riiiiiight.
Tell me what they call it over at the federal courthouse when the early in-early out guys make metric buttloads of money, but the later investors get bilked out of everything, and get left holding a worthless bag of air?
Tell us how the folks with stock in Sears, Pan Am, Studebaker, US Steel, etc., feel about stocks as a way to grow your money.
I'm looking at things now, not 25 years ago, and looking forward.
Oh, and what's that Golden Rule of stock investing?
Oh yeah:
Past behavior is no guarantee of future performance.
Nobody ever has to tell people that with gold and silver.
Weird, huh?
It gets better: Cherry pick an investment from 1992.
Only 30 years ago, but then you run into a problem: SPY doesn't exist. In fact, no index funds existed.
And when they came out, they were regarded as shaky.
Having the markets crap the bed twice in that timeframe since hasn't helped.
That's before we talk about randomly making your past investment in Lehman Brothers. Or Enron.
Like I said, you're simply past-posting.
Hindsight is 20/20.
Anybody can, as Motley Foole likes to do, point at that "If you'd bought 1 share of Coca-Cola in 1919, you'd be a gazillionaire now".
Well, sure.
And if you'd bought two ounces of gold instead, you'd only have $3700.
But if you'd bought a share of RC instead, or any of twenty other soda upstarts Coca-Cola drove out of business, you'd be out the money entirely.
None of which anybody had any inkling of in 1919.
I said 25 years ago and then typed 1923. Typo. I was plainly talking about 1997, when gold's price was $330 an ounce. The entire post was based upon that. I don't know why I put 1923. Mea culpa. Inflation eats into investment returns. No one is saying that it doesn't. That is why you need to make sure your average return is greater than inflation.
Gold's unchanging value is a feature in years with high inflation. A bug in years with economic growth. Of course stocks compound. That's what I said. It's gold's value that doesn't compound.
I also want to reiterate that you also have to pay taxes when you sell your gold. In fact, gold pays the same cap gains rate as any other asset, except gold eagles, which pay a 28% collectables tax. So that is a wash between stocks and gold.
I wasn't alive 90 years ago, so cherry picking data from before I was born is fucking ridiculous.
Why am I out of the market? I got out of the market and into stable assets back in November. Because inflation. Because even an idiot could see that the market would enter correction territory once the Fed even mentioned raising interest rates.
The point is that I made a pile of money because I know when to get in and when to get out, and I understand that gold is not an investment. You are doing what you always do. The end of the world is nigh. Ebola is gonna kill us all. No wait, COVID. You are always forecasting the end of the world, but it never materializes.
You are a fucking idiot.
TO ALL COMMENTERS: People, could we please have some civility here? You're free to disagree, and to advance reasoned arguments in support of your position or against someone else's - but please do so as adults, discussing the issues at hand, not making personal attacks against each other.
This sort of name-calling and mutual denigration has GOT to stop. There are plenty of places on the Internet where it's the norm. This blog is not, repeat, NOT one of them. Kindly do better.
Oh my goodness, the comments take a dive after aesop gets involved. What a surprise right?
Someone else is uncivil, offers personal attacks instead of illumination, and EM Johnson incorrectly points at me, after failing to notice that he, B., CDH, and Divemedic led the race to the bottom.
What a surprise, right?
I left you out, EM, because your earlier attempt at response was beneath reply, but you evidently wanted to be counted with your peers.
If you can't take it, Sport, don't dish it out.
Friendly fire is always returned with a smile.
Look Divemedic, let's get serious: You've just admitted the exact same point I made in the referenced post at my blog, and the same thing Peter has noted here multiple times:
INFLATION IS DEVOURING THE ENTIRE ECONOMY.
Like it's done, relentlessly, since before any of us were born.
Which is exactly all I pointed out, then or ever.
In your mutual haste to claim everything I say wrong, you admit the very point I made. Bravo.
Is inflation going to end the world? I dunno.
I suspect it's liable to be worse, rather than better. But I'm going with my assessment on the basis of world history, and not personal animus.
You got out of the stock market, so you've already answered that question for yourself, haven't you?
Methinks, therefore, you doth protest too much.
Despite all I've said, I wasn't offering "investment" advice.
Because exactly as I said in the OP (you could look it up) Gold Never "grows".
It also never shrinks.
But fiatbux DO, because of INFLATION.
(cont.)
(cont.)
That makes PMs a stable store of actual intrinsic value, which is exactly what you want looking forward, instead of backward. (Which, I daresay, is exactly why you're into them, and out of the stock market, . Oops.) Those of you touting the stock market all want to throw out that whole "past behavior is no indicator of future performance" rule, like it never existed.
Gold (or silver) is a store of value, not an "investment".
In a stable, well-managed, and sensible economy, (which hasn't been the case in the U.S. since 1928), investing in stocks, for all the reasons you, and B., and CDH laid out, would be an excellent plan. Because as even Einstein observed, "compound interest". Which usually runs around 1% in such times. Not 10%. Certainly not 18%.
But we haven't had a stable, well-managed, nor sensible economy for nearly a century.
In one of those economies, actual constant dollars mitigate fiscal stupidity, and inflation. You also don't get 20% or 10%, or even a lousy 3% investment growth in stocks, EVER, under those conditions. (Something else you baby duck stockhounds "forget" to mention. Hint: History is a thing.) Nearly all the growth in the markets in our lifetimes is owed to wild inflationary pressure, necessarily. The only other way you strike it rich, literally, is to strike oil (or gold, or diamonds), or, literally, to invent a better mousetrap (telephone, automobile, airplane, television, cellphone, jetpack, or flying car.) The only other gains were boom-and-bust cycles that inevitably happen, from tulipomania to whatever, exactly as has happened for centuries. Until people screw around with debasing the currency, and inflating the money supply. It's human nature to want to cheat reality. But I'm only basing my comments on 6000+ years of recorded human history, rather than cherry-picking wild inflationary growth since FDR took the US off the gold standard, and then again on steroids when Nixon completely decoupled the dollar from gold in any way whatsoever, and the Fed's presses started whirring like a propeller at full throttle. (Pro tip: History is never wrong. Life is funny like that.)
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The one time during the era of stable money when there was notable inflation from 1800-1932: it was because the US Federal Government printed fiatbux without actual assets to back them up, to fund the Civil War, and it took a decade to winnow those airbux out of the system, and return to stability, for another 50 years or so, until FDR grabbed the wheel with both hands, and drove us into the current ditch.
Even in a mildly inflationary one (like we had most times in the U.S. from 1929-maybe five minutes ago), it's not a completely terrible idea. If you can pick the stocks that will outperform inflation, and the mean of the market.
Which is one YUUUUUUUUUGE "if".
If you pick Coca-Cola or Ford, you win. RC or Studebaker, and you're broke. You guys always want to soft-soap that reality too, I notice.
The fact is, that you, and B, and CDH have a solid investment strategy to grow your assets.
For 1950. Or 1970. Or even for 2001.
The problem you all seem hell-bent on avoiding, in your haste to one-up me, denigrate my statement of obvious facts, and despite B.'s consistent and tiresome attempts to introduce Straw Men as logic, is that 2001 is 21 years ago in the past.
Your own personal admissions and honesty regarding getting out of the stock market yourself, into actual assets, and out of paper and fiatbux, underlines this rather eloquently.
So is it "Do as I say", or "Do as I do", for the rest of us?
Which course of yours is all and entirely the course I suggested might be a prudent course, right now, since some good amount of time prior (using paltry actual data), and looking forward towards likely developments, not backward in time to sunnier skies.
(But if they invent a stock market where anyone can retro-actively buy the IPOs of Apple, Microsoft, and Bitcoin, give a holler. I'd like to get in on that deal.)
So maybe get off the spring-loaded "Aesop is an effing idiot" default when you paint yourselves into a corner, and note that all I said, you've completely agreed to, and repeated verbatim, in both word and deed.
So please, get off your high horse, and clean up your attitude, or at least your language, on someone else's blog comments. Your butthurt is showing, and it's neither pretty nor flattering to the lot of you.
I wrote what I wrote originally to make a point. The responses were written to make enemies. I leave it to you all to figure out which course is more profitable in the grand scheme of things.
I humbly beg the bloghost's indulgence for defending myself from scurillous and baseless attacks by the perpetually bum-chapped platoon. If they could have sticked to the facts I wrote, instead of personalities, we could have left things at the OP. "Do't start nothin', and there won't be nothin'."
Not looking for response dude. Hopefully this ridiculous exchange gives people insight into the type of content you provide. Anyone with the temerity to question him is met with an over the top response. Like I said originally unless you want to troll guys like that its not worth the time.
Actually, EM this "ridiculous exchange" has indeed shown the quality of Aesop's oft acerbic and for this exchange CORRECT information.
Once DM admitted he already sold out of the Stock market his argument of success became moot. Otherwise, he would *Still* be IN and making "Profits".
Nothing in the Bitcoin-stock market "Profits" are worth anything until converted into REAL Assets (ah like Gold? Storage Foods? etc.).
But then again, I am short US Dollars and long trusted friends (you know the folks that WILL tell you when you're about to make an idiot mistake), small livestock and a well-developed garden and firewood lot.
Knocking over the chess board isn't a success story.
EM, you haven't "questioned" anything.
You simply drop your drawers and plop out your vilifictions, as again in this case, evidently because you cannot help yourself.
No matter your misimpression, character assassination and discussion are not interchangeable.
It is kinda fun watching the ever increasingly frantic flailings as he tries to defend a stance based upon something he really doesn't understand, innit?
I think I'll make some popcorn and watch the rest of the shitshow.
Yea ok, I never even engaged in the particular discussion regarding investment so there's that. As for character attacks,no not really. I don't follow him specifically because of his over the top responses to anyone who might disagree or even question his perspective. In my opinion most folks can see that but don't bother to feed the rant.
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