Inflation, Redux

Poor Peter, over at Bayou Renaissance Man, had the temerity and unmitigated gall to point to last week's post here on Inflation, because he thought foolishly that I had explained things pretty clearly. Silly me, so too did I.

What we failed to account for was the irritated asses (I mean that in every possible sense of those words) of the Butthurt Platoon.

The ones for whom it's not wrong because it's wrong, it's wrong because *I* said it.*

Which is good, because Peter and I are not the only ones saying this.

Divemedic is apparently still butthurt because Alec Baldwin is still free, because he's legally and morally blameless, exactly as I noted, however much it pains him and sets his teeth on edge. Sorry, man. It's not what I'd wish for either, but I call it like I see it. Better luck next time.

But to his credit, he at least engaged the argument on the merits, and made a valiant effort.

Right up until he admitted that, no he wasn't in stocks and such anymore, and had converted all his investments out of the exact stock investment he was touting like a mofo for three posts, and had moved everything into real property, including *gasp*...PMs like gold. Because of looming INFLATION.

Geez, if only someone had suggested doing that, somewhere, where other people could see it, like, I dunno...maybe on a blog page??

And then, caught hand-in-the-cookie-jar, his brilliant retort was

"You are a fucking idiot."

 QED.

Game. Set. Match.

Clearly, me pointing out the obvious truth: that dollars, or stocks valued in them, were not a wise future repository of value, exactly as he had concluded on his own, some months back, was the last straw.

Mad props, man. Well-played.

Because the guy who gets check-mated and flips the board over in disgust always wins, right?

I'm a fucking idiot for stating the obvious truth that inflation has been the driving force for most, if not all, of the recockulous growth in stocks since 1932 others keep wanting to pretend is both normal, and perpetual.

Because back when money was stable and solid, 1% was seen as a good annual rate of return, for, oh, about a hundred and fifty years, back to the founding of the Republic.

For anyone who came here on the short bus, yet again, YOU COULD LOOK IT UP.

I even took the time to explain this, laboriously, in multiple comments at Peter's blog.

For the TL;DR crowd, here's the DK picture dictionary version:

IOW, to be a millionaire in terms understood in as recently as 1932, you'd need to have $89M now. ($89,501,150, to be precise.) But if you'd had as little as $11,000 dollars then, and simply converted it to gold, and buried it in your back yard, you'd be worth $1M now. But if you'd kept the cash in your pocket, and never spent a penny, that same $11,000 would be worth $122.90 right this minute. Next year, it might be worth $92.18. (Maybe even less than that.) 

That's INFLATION. 8950%, and counting, since 1932, in the U.S.

It also illustrates rather vividly the difference between what you have when you hold money, versus when you hold fiatbux, or anything valued in them.

That's why a $2000 car back when my old man made $10K/yr now costs twice as much, in real terms, at $40K when I make $100K/yr., ten times what dad pulled down. I'd need to be making $200K, just for parity with a guy in the 1960s with a high school diploma working a low-level purchasing job. BTW, the same job he had now? $77K/yr, top tier. The new car he could have paid for with 3 months' salary would currently take his modern counterpart six months' salary.

Inflation makes everyone a serf, working more and harder for less and less, every single year. As it's designed to do.

Let's be fair: People, like Divemedic, and most of the stock-enamored whiners commenting at BRM or anywhere else, are absolutely right in one respect:

Stocks can compound growth.

They are a great investment idea.

In 1940. Or 1970. Or even in 2001.

If, IF, IF you pick the right ones. And/or you die, or bail out of the market, before the bottom drops out.

If you acquired Ford, or Coca-Cola in 1920, you would have done okay.

If you'd picked RC Cola and Studebaker, not so much.

Index funds?

Suuuuuuuuure.

If we assume a stable sensible economy, with sound money (neither of which we've had since 1928), that will never, ever go tits up. Like it never did in Weimar. Zimbabwe. Venezuela.

Show of hands: How many people think the next 40, 30, 20, or even 10 years, financially and economically, are going to be anything like as stable, with the same sort of stock growth, as anytime in the last 80 years have been??

Beuller? Beuller...? Ferris Beuller?? Anyone???

What's the FIRST RULE OF INVESTING?

Don't believe me. Look at the people who bought shares of Sears, Pan Am, US Steel, RC Cola, for just a few examples. Or who invested with Lehman Bros., or in ENRON.

Literally anybody can pick stock winners in hindsight. Going forward, not so much.

You've seen this con before. It's called past posting.

You can read about it, or just watch The Sting.

Spoiler Alert: It pays off great for Henry Gondorf and Johnny Hooker.

Not so much for Doyle Lonnegan.

That's why he's called "the mark".

All I've suggested is that you don't be the mark. And that you check your calendar before putting your money down, and decide whether you're betting on the past, or the future.

The future for both fiatbux and stocks doesn't look so good.

But then again, no one's ever invented $15,000,000,000,000.00 in just a couple of years by pulling it out of their own ass before. Well, almost no one.

So, how did that work out?

Make that, "No one in the U.S." Or... hey waitaminute!

So consider your options, and then decide what to do, based on your own analysis.

After that, YOYO.

You're On You're Own.

This man is not your friend, (rarely ever has been)
but he does have a bridge for sale. Cheap.

If anyone has a quibble with any of that on the merits, have at it. Bring your calculator, and your history book. I put up the original post to make a point, not to make enemies. I've never been shy about good give and take, and as I've stuck to unassailable historical facts in this, I like my odds. But if you're just looking to display your amazing total inability to marshal facts and logic on your side of an argument, showcase your shocking lack of manners and abysmal upbringing, and flaunt your rhetorical shortcomings:

Who'da thunk common sense and stating the obvious would be such a hard sell, right?

*[Shout out to B:

Dude, you argue like a jealous little bitch. And I mean that clinically: bringing up imaginary past sh*t, and a continued inability to come up with any reason for your current hissy fit in the moment. We're not dating, we aren't related, and this is the only time I've mentioned you spontaneously in recorded history, because like Herr Steiner, my instincts about certain things are similarly infallible. My comments are unwelcome on your blog, which is entirely your prerogative, and you're utterly incapable of admitting when anyone points out where you've made an error (hey, I feel your pain), but much as it stings, you're not logical enough to examine the error without taking the correction as a personal slight. I hope that's not how you navigate and aviate, or you're going to have a shorter career at it than you'd have hoped, and end up landing into a mountain somewhere. And despite your shock, even I don't want that.

So please, get over the fact that your little blog isn't much of a draw, and either up your wordsmithing game, or just hold your peace. I'm living in your head rent-free, and that's all your problem and your choice, not mine. You're smart enough to fly planes, and wealthy enough to pay for them. Good for you. Sincerely. But that's not the global rarity you think it is, so either up your game, get used to a life of constant disappointment, or go out in that big wide internet, and just mind your own business in your little corner, without flinging sh*t you can't back up on other people's blogs because you can't control your impulses. It just looks catty and juvenile. Unless that look is what you were going for from the outset. If that's the case, You go, girl! But I'm still not interested in you, and my utter unconcern for your personal opinions of me cannot be measured with existing instrumentation. Scuttle back off to whatever it is you do, and we can both happily ignore each other endlessly, m'kay?]