Currency

 

I’ve just started rereading Terry Pratchett’s Discworld series. In the first book, he talks about the debasing of the currency of the realm. Has there ever been a government that didn’t debase the currency? The Federal Reserve was established to preserve the value of the currency, and a dollar is worth about $0.03 of what it was when the Federal Reserve was established.

So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

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  1. The Scarecrow Thatcher
    The Scarecrow
    @TheScarecrow

    I’m pretty sure it was the genius Kamala who said we should not worry about inflation, just learn to economize – shop smarter!

    All fixed.

    • #1
  2. Hang On Member
    Hang On
    @HangOn

    The Scarecrow (View Comment):

    I’m pretty sure it was the genius Kamala who said we should not worry about inflation, just learn to economize – shop smarter!

    All fixed.

    Better to go to San Francisco and smash and grab.

    • #2
  3. Django Member
    Django
    @Django

    Brian Wilson — not the Beachboy, but rather a Libertarian who had a talk show on KSFO around 2000 — had a guest on who explained why the guvvies want inflation. You’ll find a lot of “economists” who will tell you why inflation is a good idea. This guy gave a practical reason. I never heard from him again. 

    • #3
  4. kedavis Member
    kedavis
    @kedavis

    Randy Webster: So, my wife and I have a good chunk of change in the bank.  The Fed shoots for an inflation rate of about 2%.  Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years.  How fast is it losing value at the present inflation rate of 11%?  What’s the point of saving if the government is just going to inflate your savings’ value away?

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    • #4
  5. kedavis Member
    kedavis
    @kedavis

    Django (View Comment):

    Brian Wilson — not the Beachboy, but rather a Libertarian who had a talk show on KSFO around 2000 — had a guest on who explained why the guvvies want inflation. You’ll find a lot of “economists” who will tell you why inflation is a good idea. This guy gave a practical reason. I never heard from him again.

    Maybe that was an unidentified body found in Ft Marcy Park?

    • #5
  6. Flicker Coolidge
    Flicker
    @Flicker

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    • #6
  7. kedavis Member
    kedavis
    @kedavis

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    Oh, food that lasts, appliances that may be difficult, more expensive, or just plain impossible to replace later…

    I realize though that not everyone has the storage space that I now do.  But it might be smart to park your car(s) in the driveway and keep spare appliances etc in the garage.

    • #7
  8. Nohaaj Coolidge
    Nohaaj
    @Nohaaj

    kedavis (View Comment):

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    Oh, food that lasts, appliances that may be difficult, more expensive, or just plain impossible to replace later…

    I realize though that not everyone has the storage space that I now do. But it might be smart to park your car(s) in the driveway and keep spare appliances etc in the garage.

    I just read today that tires are up over 20% in the past 12 months.  Solid maintenance projects done now, will be 20% less than a year from now.  (roofing, new water heaters, tires, etc)  I just bought a water heater NIB at an auction for $140 yesterday.  I will install it in my barn/out-building, along with similarly acquired SS commercial sink and faucet.  My goal is to set up my brewing system again.  Talk about a way to avoid inflation… Brew your own beverages! 

    • #8
  9. Ekosj Member
    Ekosj
    @Ekosj

    Randy Webster: What’s the point of saving if the government is just going to inflate your savings’ value away?

    Well …let’s see … you are paying the bank 15% to hold your money in a government guaranteed account for 10 years.   Theoretically, that means you believe that at some point in the next 10 years the probability of losing more than 15% of your money in the next-best alternative is pretty darn certain.

    And government doesn’t care.   As long as there is somebody, somewhere who is willing to lend $ to the government under these conditions they are thrilled.   They get to pay creditors back in devalued currency.   That is, they borrowed enough to buy $100,000 worth of stuff, but only pay back enough currency to buy $85,000 worth of the same stuff.   

    The question is, for how long can this go on?

    • #9
  10. Flicker Coolidge
    Flicker
    @Flicker

    kedavis (View Comment):

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    Oh, food that lasts, appliances that may be difficult, more expensive, or just plain impossible to replace later…

    I realize though that not everyone has the storage space that I now do. But it might be smart to park your car(s) in the driveway and keep spare appliances etc in the garage.

    Food, liquor, and toilet paper, perhaps.  But if you’re talking about emptying your 401k, that’s a lot of stuff to buy.  In Zimbabwe they bought up refrigerators and washing machines.  Also, some things lose all their value when there’s no more electricity or fuel.

    And everyone would know you have it.  You’d need a close community to stave off gangs of robbers.

    • #10
  11. kedavis Member
    kedavis
    @kedavis

    I’ve also stocked up on toilet paper of course, and people might be surprised how many things come from China:  aluminum foil, plastic wrap…  You don’t have to worry about any of those “going bad” before use.

    And I’ve picked up a couple spare toasters of the Procter Silex brand that I like.

    Toothpaste, toothbrushes, mouthwash, deodorants, shampoo…  Lots of those things will last a long time “on the shelf.”  And what would you do if you found you couldn’t get them when you run out?

    People who use a microwave oven a lot, should probably get a couple spares too.  Those also mostly come from China.  Also things like coffee-makers if you use them…  Maybe don’t worry about getting extra $200 Keurigs.  Get some spare Mr Coffees so you can at least MAKE COFFEE.  Even if it’s not gourmet.

    And think about your refrigerator.  People comment sometimes in various media, and on Ricochet too, about how long it’s taking them to get a new fridge, or stove…  We’re used to being able to go to Home Depot or whatever and get a new fridge if the one we have goes out.  But how would your life be if your fridge goes out and you have to wait MONTHS for a replacement?  IF you can get one at all?

    I also rely on a couple prescriptions for my ulcerative colitis.  Fortunately this year, since a couple different pharmacies sometimes didn’t have what I needed for months in a row, I got my doctor to send my new prescriptions to TWO pharmacies, and I was able to buy them from both.  So now I have a 2-year supply and I’m still getting my daily doses from yet another place.  Mine are tablets, not something perishable like insulin, but it still seems very smart to have a backup supply.  Then keep getting the current doses, and “rotate” them like grocery stores – and Mormons – do.

    LED light bulbs mostly come from China too.

    • #11
  12. Nohaaj Coolidge
    Nohaaj
    @Nohaaj

    Randy, more to the point of your post:  Inflation is an insidious and voracious eroder of long term, hard fought for, savings.  I have no idea what your numbers are.  But I can relate that in my case, after years of struggling, I felt I had finally uprighted the canoe in calm waters, and was looking forward to smooth paddling… That is more in doubt now.  I tend to get anal sphincter cramps about spending anything, to try and save for retirement.  LOL, I once mentioned at a family gathering, that “I was born a poor black boy during the depression” to explain my extreme frugal tendencies, only to have my delightfully 100%  Northern European descent Mom, declare: “you weren’t born in the depression!” totally ignoring my inherited fair complexion.  Back, to your point, it is frustrating and worrisome to be on the cusp of retirement and watch the future value of my nest egg wither away because of ignorant and destructive government policies. 

    • #12
  13. kedavis Member
    kedavis
    @kedavis

    Nohaaj (View Comment):

    kedavis (View Comment):

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    Oh, food that lasts, appliances that may be difficult, more expensive, or just plain impossible to replace later…

    I realize though that not everyone has the storage space that I now do. But it might be smart to park your car(s) in the driveway and keep spare appliances etc in the garage.

    I just read today that tires are up over 20% in the past 12 months. Solid maintenance projects done now, will be 20% less than a year from now. (roofing, new water heaters, tires, etc) I just bought a water heater NIB at an auction for $140 yesterday. I will install it in my barn/out-building, along with similarly acquired SS commercial sink and faucet. My goal is to set up my brewing system again. Talk about a way to avoid inflation… Brew your own beverages!

    Also good ideas.  Home projects won’t be getting LESS expensive, that’s for sure.  I would add, don’t just buy ONE water heater.  Buy TWO.  In case the first one stops working, and a replacement is unavailable or unaffordable.

    Also, if you always wanted a fancy bed or something, get it NOW.  It won’t be cheaper in the future, AND your money will be worth less too!

    • #13
  14. kedavis Member
    kedavis
    @kedavis

    Flicker (View Comment):

    kedavis (View Comment):

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    Oh, food that lasts, appliances that may be difficult, more expensive, or just plain impossible to replace later…

    I realize though that not everyone has the storage space that I now do. But it might be smart to park your car(s) in the driveway and keep spare appliances etc in the garage.

    Food, liquor, and toilet paper, perhaps. But if you’re talking about emptying your 401k, that’s a lot of stuff to buy. In Zimbabwe they bought up refrigerators and washing machines. Also, some things lose all their value when there’s no more electricity or fuel.

    And everyone would know you have it. You’d need a close community to stave off gangs of robbers.

    I don’t know about that, if you put a lot of valuable stuff in your garage and can’t keep the cars in there any more, put junk in front so it looks like you’re just a pack-rat or a hoarder.  IF you open the garage door at all.  If people ask about new appliances etc, just say you’re updating your kitchen.  Who would notice that the old appliances didn’t get taken away?

    • #14
  15. kedavis Member
    kedavis
    @kedavis

    Having some lumber tucked away could be smart too.  Not because you plan to add a room, but because if you need roof repair, the plywood etc may not be available or affordable.

    • #15
  16. kedavis Member
    kedavis
    @kedavis

    Extra glasses and/or contact lenses…  Yes contact lenses may have a “use by” date, that’s another thing you can get a stockpile and then start “rotating” through the oldest ones first.

    • #16
  17. kedavis Member
    kedavis
    @kedavis

    And for women, “feminine hygiene” products don’t expire either.  But how would your life be if you ran out and couldn’t get more?

    • #17
  18. Mark Camp Member
    Mark Camp
    @MarkCamp

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    S&P 500 index fund?

    • #18
  19. The Reticulator Member
    The Reticulator
    @TheReticulator

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72.  At 11 percent inflation you lose half of it 6.5 years.   (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.) 

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    • #19
  20. The Reticulator Member
    The Reticulator
    @TheReticulator

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    I went down to the local pa & ma hardware store today to buy a small tool. The posted price was $13, but at the cash register they rang it up at something a little under $17. That’s the new price–almost a 30 percent increase.  They sold it to me at the posted price, as I think they are required to do in Michigan. The next person who wants one will probably have to pay the inflated price.  Some people aren’t messing around with this inflation thing.  

    • #20
  21. kedavis Member
    kedavis
    @kedavis

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    I’ve got spam.  And other stuff too.  Canned roast beef with gravy…  (I’ve tried that too, it’s very good!  And spam is good too if you fry it.)

    • #21
  22. kedavis Member
    kedavis
    @kedavis

    The Reticulator (View Comment):

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    I went down to the local pa & ma hardware store today to buy a small tool. The posted price was $13, but at the cash register they rang it up at something a little under $17. That’s the new price–almost a 30 percent increase. They sold it to me at the posted price, as I think they are required to do in Michigan. The next person who wants one will probably have to pay the inflated price. Some people aren’t messing around with this inflation thing.

    Yep I’ve been seeing that for a couple months.  Several items at Family Dollar suddenly jumped from $1 to $1.25 or more.  1lb packages of frozen ground beef went from $4.50 to $6.35.

    • #22
  23. Randy Webster Member
    Randy Webster
    @RandyWebster

    Nohaaj (View Comment):

    Randy, more to the point of your post: Inflation is an insidious and voracious eroder of long term, hard fought for, savings. I have no idea what your numbers are. But I can relate that in my case, after years of struggling, I felt I had finally uprighted the canoe in calm waters, and was looking forward to smooth paddling… That is more in doubt now. I tend to get anal sphincter cramps about spending anything, to try and save for retirement. LOL, I once mentioned at a family gathering, that “I was born a poor black boy during the depression” to explain my extreme frugal tendencies, only to have my delightfully 100% Northern European descent Mom, declare: “you weren’t born in the depression!” totally ignoring my inherited fair complexion. Back, to your point, it is frustrating and worrisome to be on the cusp of retirement and watch the future value of my nest egg wither away because of ignorant and destructive government policies.

    I’m 70, my wife’s 73.  We don’t have any debts.  Without inflation, we’d probably have enough to keep ourselves 15 years, which is probably enough.

    • #23
  24. Randy Webster Member
    Randy Webster
    @RandyWebster

    Mark Camp (View Comment):

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    S&P 500 index fund?

    What are your thoughts on precious metals?

    • #24
  25. Randy Webster Member
    Randy Webster
    @RandyWebster

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    My wife hates Spam.

    • #25
  26. kedavis Member
    kedavis
    @kedavis

    Randy Webster (View Comment):

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    My wife hates Spam.

    It’s very different once cooked/fried.  If you make omelets, try making them with diced fried spam.  (Low-sodium version if necessary.)  Or scrambled eggs with diced fried spam, plus chopped peppers, onions, whatever.  There’s also stir-fry and many other options.

    • #26
  27. Randy Webster Member
    Randy Webster
    @RandyWebster

    kedavis (View Comment):

    Randy Webster (View Comment):

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    My wife hates Spam.

    It’s very different once cooked/fried. If you make omelets, try making them with diced fried spam. (Low-sodium version if necessary.) Or scrambled eggs with diced fried spam, plus chopped peppers, onions, whatever. There’s also stir-fry and many other options.

    Don’t get me wrong.  I like it.  I’ll eat it cold out of the can, fried, or nuked.  But then, I like deviled ham, too.

    • #27
  28. kedavis Member
    kedavis
    @kedavis

    Randy Webster (View Comment):

    kedavis (View Comment):

    Randy Webster (View Comment):

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    My wife hates Spam.

    It’s very different once cooked/fried. If you make omelets, try making them with diced fried spam. (Low-sodium version if necessary.) Or scrambled eggs with diced fried spam, plus chopped peppers, onions, whatever. There’s also stir-fry and many other options.

    Don’t get me wrong. I like it. I’ll eat it cold out of the can, fried, or nuked. But then, I like deviled ham, too.

    I meant for options to get your wife to like it.  Especially if you don’t announce in advance “okay this is a spam omelet.”

    It might be easier if you get a few of the Singles, rather than opening a can which may be hard to hide.

    • #28
  29. The Reticulator Member
    The Reticulator
    @TheReticulator

    Randy Webster (View Comment):

    The Reticulator (View Comment):

    kedavis (View Comment):

    Randy Webster: So, my wife and I have a good chunk of change in the bank. The Fed shoots for an inflation rate of about 2%. Even at that rate, the money we have in the bank will have lost about 15% of its value in 10 years. How fast is it losing value at the present inflation rate of 11%? What’s the point of saving if the government is just going to inflate your savings’ value away?

    Rule of 72. At 11 percent inflation you lose half of it 6.5 years. (72/11 = a little more than 6.5 years, but if they say 11 percent, you can be sure it’s worse than that.)

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Fruit cake and cans of Spam are good. I would tend to eat the fruit cake, though.

    My wife hates Spam.

    Then you can be sure it will last.

    • #29
  30. The Reticulator Member
    The Reticulator
    @TheReticulator

    Randy Webster (View Comment):

    Mark Camp (View Comment):

    Flicker (View Comment):

    kedavis (View Comment):

    That’s why “saving money” seems like a chump’s game, better to buy things immediately, especially things that last.

    Like what?

    S&P 500 index fund?

    What are your thoughts on precious metals?

    It seems there is a lot of overhead cost in buying and selling it. But I think some people here have talked about how to do it without all that. 

    • #30