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0 pointsceejayoz3y ago0 comments

> If you had $8M in 1923 and kept it under a mattress, it would still be $8M today

Saving account interest rates haven't been 0% for the whole last 100 years.

It's not a great investment, but you'd have substantially more than $8M.

0 comments

The parent specifically refers to holding it as cash (“under the mattress”), though. And of course, if you do put it in the bank 1923, there’s no deposit insurance for the first ten years, any possible bank might just go under in the first ten years…

edgyquant3y ago

How many of them did though?

karatinversion3y ago

The numbers I find are that some 11,000 out of 25,000 U.S. banks failed between 1929 and 1933 - the key words to search for are “bank failure” and “Great Depression”

Dylan168073y ago

How much more would you have with a savings account?

Apparently the $140M number was bonds. Edit: Or, theoretical bonds that match inflation and don't actually exist?

onlyrealcuzzo3y ago

In a non-funny-money-world, government bonds would yield more than expected inflation.

No one would ever give the government money expecting to lose money.

Only in a world where you can always count on the government to lower interest rates ad-infinitum to keep itself solvent which pushes up the value of your bonds to someone who's willing to pay more money to lose the same amount of money later (a greater fool - although, are you a fool if you've been able to count on this like clockwork for the last 30 years?).

kgwgk3y ago

> In a non-funny-money-world, government bonds would yield more than expected inflation. > No one would ever give the government money expecting to lose money.

What would they do? Is there a dominating (stochastically) alternative?

Dylan168073y ago

I don't follow your argument here.

How about a hypothetical?

Let's say government bonds pay 3%, they have done so for decades, and we're confident they will keep doing so for decades.

So right off the bat, no lowering of interest rates ad-infinitum.

Let's also say inflation is 4%.

Everyone wants to beat inflation. But you need to find an investment opportunity for that. And the higher an investment yields, the riskier it is.

If you can't find a good investment, what's plan B? Surely it's not putting your money in a vault and losing 4% a year. Isn't plan B buying the government bonds and losing only 1% a year?

1 more reply

roflyear3y ago

This isn't true.

If you had a bunch of gold, for example, you'd have to pay for security to... secure it.

People are willing to "pay a premium" to store money somewhere risk-free.

j / k navigate · click thread line to collapse

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karatinversion3y ago

edgyquant3y ago

How many of them did though?

karatinversion3y ago

The numbers I find are that some 11,000 out of 25,000 U.S. banks failed between 1929 and 1933 - the key words to search for are “bank failure” and “Great Depression”

Dylan168073y ago

How much more would you have with a savings account?

Apparently the $140M number was bonds. Edit: Or, theoretical bonds that match inflation and don't actually exist?

onlyrealcuzzo3y ago

In a non-funny-money-world, government bonds would yield more than expected inflation.

No one would ever give the government money expecting to lose money.

kgwgk3y ago

> In a non-funny-money-world, government bonds would yield more than expected inflation. > No one would ever give the government money expecting to lose money.

What would they do? Is there a dominating (stochastically) alternative?

Dylan168073y ago

I don't follow your argument here.

How about a hypothetical?

Let's say government bonds pay 3%, they have done so for decades, and we're confident they will keep doing so for decades.

So right off the bat, no lowering of interest rates ad-infinitum.

Let's also say inflation is 4%.

Everyone wants to beat inflation. But you need to find an investment opportunity for that. And the higher an investment yields, the riskier it is.

If you can't find a good investment, what's plan B? Surely it's not putting your money in a vault and losing 4% a year. Isn't plan B buying the government bonds and losing only 1% a year?

1 more reply

roflyear3y ago

This isn't true.

If you had a bunch of gold, for example, you'd have to pay for security to... secure it.

People are willing to "pay a premium" to store money somewhere risk-free.

j / k navigate · click thread line to collapse