Warning, I am an internet rando and not an accountant.
Gold is quite volatile. The chart shows how inflation-adjusted gold can lose %70-80 in a very short period of time; and how it can take a really long time for the price to recover.
1. Short term: instead of CD ladder, you can do TIPS ladder.
2. Long term: correctly allocated index based portfolio.
Long term has always been stocks.
[0] https://www.treasurydirect.gov/indiv/research/indepth/ibonds...
> On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.
> In Comments
> Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
We are in an active period of economic and societal uncertainty. Hence the original post gratifies my intellectual curiosity and my comment expresses my curiosity about how to navigate the situation. If you want to be pedantic, I'm curious about how to hack this intellectually curious time to protect or grow my wealth. I appreciate your concern, but I'm not going to take some stranger's advice and follow it to a T. I'm curious to see what people's thoughts on the matter are and use that to adjust my own research.
I guess that worked out really well for lots of people?
Wow, multiple stimulus checks, unemployment benefits and employees still have no bargaining power? What is going to happen to wages once all those people come back to work? Wages are not going to grow...
Okay, this is a clear case of stagflation. Meaning inflation isn't driven by wages, which is generally where a conventional inflation spiral begins. It is driven by the inability to increase production of certain goods, primarily cars and the inability to import goods. Cutting stimulus or raising interest rates won't make this go away because the underlying reason isn't monetary at all. The $50 billion subsidies for semiconductors do make sense in this context (even if they are a net loss from a tax perspective) and they address the problem at its root.
Due to exponential growth, that would become brutal after just a few years, and you'd easily notice a diminishing standard of living as most Americans spend close to all of their paychecks on a monthly basis, without much wiggle room.
I think that's actually what we've been living through in the US for a while now, though not nearly as high 7% and real inflation has technically been limited to a subset of goods and services. Which means that it's low enough that people don't really notice things getting worse and worse, until they're shocked into realization when buying a large ticket item like a new car or a home, and they see just how much purchasing power they've lost compared to even a decade before.
Watching bankers and policymakers ignore this, everybody is gambling to try to get into the unproductive game of sitting and waiting central banks to inflate their asset prices and retire as early as possible.
Inevitably, you end up with no workforce and learned helplessness, waiting for the government to step in and guarantee jobs/UBI in exchange for everything else you got.
Houses will build themselves!
Food will magically fill your fridge!
Can we get over the old wives tales?
Scientifically people will work to support biological survival.
What they don’t want is a job for another human who has nothing more than artificial political advantage keeping them from real work.
They don’t want a job that elevates Bezos and Gates to ungodly levels of wealth, while their friends and family struggle to pay rent and buy insulin.
Our current economic reality has nothing to do with willingness to work.
It’s an emotional Ponzi scheme, properly groomed for TV and emotional manipulation: “Chase the dream.”
People will work to survive. They won’t work to help aristocrats who don’t work thrive.
Stop coddling the minority and the majority will snap to.
I live in a country that tried to ignore the problem but then came to the realization that you have to do stimulus checks (though they only sent money to the lower 10-25% tier of society).
I'd guess most countries did stimulus one way or the other; or avoided lockdown and relied less on the global economy (ie: Africa). Countries that will try to ignore it will probably collapse especially that the coronavirus is still on-going.
The Americans (and developed world) re ally did get off easy on this one. Less developed countries and those relying on Tourism did get ravaged.
I am going to disagree. The last round of stimulus by Biden the $1.9 trillion was completely unneeded and not smart. It really tipped the inflation scales. It was a political gesture as Biden wanted to appeal to his base early, but economically and financially a very poor decision and what may end up going down as the smoking gun.
The problem you hit along the way is that people get screwed out of any ability to save money toward a down payment on anything as their wages lag the increased price of everything that they need to spend those wages on.
Maybe it's not quite exactly like that, but I genuinely feel bad for anyone with USD.
Doesn't change the reality of it.
And yeah it's savings for college, so it's just a wake up call to get out of USD and into diversified investments.
Why just USD? Isn't everyone affected, including holders of Euro, GBP, etc.?
I don't.
While this isn't surprising, it does feel that this is largely due to supply chains still dragging behind and those with jobs having more discretionary income due to not spending on other things. It also wouldn't surprise me if businesses are taking liberty with bumping prices to claw back a bit of what was lost last year, and to put pressure on demand as they struggle bringing workers back into retail focused positions.
I think if we're still seeing these y-o-y figures by the end of the year, then we've got something far more serious on our hands.
75th percentile households have at least twice the income as a median household. And the 90th percentile nearly doubles in income again.
25th percentile households have half the income as a median.
If you live in an average household, and you get into a bidding war with three other households, it's pretty likely that one of those households can afford to pay at least twice what you can. Bump that up to 10 households in competition, and it's likely that someone in that group can afford to pay at least four times as much as you can.
This isn't even getting into the fact that household spending doesn't scale with income, so a doubling of income often results in more than a doubling in disposable income.
It's a little more nuanced than that.
The 75th and 90th percentiles are pissing away money sending their kids to expensive daycare.
The median and 25th are sending their kids to the lady down the street who takes cash.
The 75th and 90th care about what school district they can afford a house in. The median and 25th (if the 25th is even buying a house) know they can't afford to live in those neighborhoods so they shop elsewhere.
These are just two examples but the point is that except for some very basic necessities these groups are often not competing with each other for big ticket items and the higher income demographics spend tons more on these big ticket items eating up more of their discretionary income.
Of course they the high percentiles on average have more discretionary income than the low percentiles but you can't just look at the median car price and the median mortgage payment and use that to infer much of anything about the discretionary income at any given level because it varies so much by whether you're acting like everyone else at your income level or above/below on the big ticket items.
Percentiles aren't very helpful here because discretionary income is generally very small compared to these big ticket items that vary a ton based on social factors.
Clearly if all the actually essential things like education, housing and healthcare are manifestly unaffordable - it's not a matter of prediction - it's already here.
Conveniently these things are generally left out of the CPI that people use to claim whether inflation is happening.
>In June, the Consumer Price Index for All Urban Consumers rose 0.9 percent on a seasonally adjusted basis; rising 5.4 percent over the last 12 months, not seasonally adjusted.
>Used car and truck prices comprised about one-third of the total CPI increase, lending support to the notion that the rise in inflation could abate in coming months.
Or had to hire new employees.
I read just this morning[1] that used car prices are trending down. The leading indicator there is wholesale dealer auctions, and the the average price dropped 10% in June. So I think this aspect of inflation is starting to get itself under control.
[1]https://www.npr.org/2021/07/13/1014697915/inflation-is-still...
Used cars prices are turbofucked for a good 5-6 years. You can't just magically poof into existence all the cars that weren't produced in 2020, 2021, and beyond.
In 2009, new car production halved and it wasn't until 2015 that new car production finally matched the 2007 peak. Meaning the USA lost out on about 45 million cars which would have been produced during those six years. As a result, used car prices were elevated for quite a while. I bought two new cars in 2014 and a new 2014 model was priced at the same as a used 2012 model, and 2010 models were barely discounted.
The USA has a strong "used cars = better deals" culture. So people don't generally buy cheaper cars new, they buy more expensive used cars for a similar price. This has lead to a nearly complete removal of the cheap car segment, meaning that there very few cheap new cars that people can purchase. Which means we need a 3-4 years of good new car sales in order to start really driving down used car prices.
So I think a lot of this supposed inflation is a transient effect of the statistics re-equilibrating after an extraordinary and unprecedented year of economic numbers in 2020.
[0] https://www.usinflationcalculator.com/inflation/current-infl...
How it would work is we'd take your typical, family household in the median (not the average to be less skewed by extreme results). We'd take the income, then subtract Income Tax, the median Property Tax, the median Sales Tax paid on all purchases that month, the median State Income Taxes paid, the cost of Tax Preparation software, and basically all other essentially-necessary government expenditures for the median American family and their lifestyle.
The result would be a percentage of how much tax ultimately is paid to the government every month. Then, we adjust it every month for inflation caused by government expenditure, which has effects similar to a tax on your savings.
The result of this measure, I expect, would grab headlines everywhere. I expect the actual percentage of money paid to the government every month or lost from inflation would shock people.
