Friday, February 4, 2022

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?]

18 comments:

  1. Saw that "exchange". Honestly - my 2 cents - it is never worth the brain damage getting into pissing contests with nitpickers who may be sitting in their basement drinking Red Bull and looking to pick a fight...it's like wrestling the pig, you get cruddy, and the pigs likes it. Changing minds, especially in this age of self-centered righteous mentality, is a worthless pursuit...just ask Jesus.

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  2. I understand that perspective, but...

    The pigs I slaughter for bacon and ham.
    There may be one person out there watching the contest who's still unsure.
    It's worth it for them.

    And I cannot overstate the value of the clarity and certainty that comes from digging into your own position, seeing that it was sound all along, and then beefing up the foundations.

    IRL, I've learned that the more you argue with someone, the greater the likelihood that they might be right.

    On the internet, it's pretty much just the opposite.

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  3. Hey, let's not be beating up TOO hard on Brother Paul. I knew and worked for his uncle and favorite aunt at the family store(s). This was the uncle who chased him into acting. I also knew Paul minorly as a racecar driver by being a Corner F&C worker at Nelson and Mid-Ohio when PLN was driving.

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  4. I'm fine with Paul.

    It's the Duke Brothers (Randolph and Mortimer), and the Henry Gondorfs in three-piece suits to whom I'm referring; they ruin people's lives and livelihoods for entertainment.

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  5. Aesop for Caesar of the future Wastes. BCE for Imperator.

    Unfortunately I'm late to the game being a fairly young man with little knowledge (or care in my early years). No teaching either thanks to public schools uneducated descendants of generational bad decisions and South Eastern poverty. Better late than never though. All of my early investing besides food storage consisted of lead and steel. Later it's been knowledge in the trades. Still going to add to that because I enjoy it. PMs are the next step. Going to hammer down some debts so that I'll end this year completely debt free. Still going to drop some USD TP on some silver and gold. Physical metal though. Not promissory notes.

    I'm not upside down, but the biggest one is half my yearly income. Decided to help my younger brother out with starting his trucking business. That way at least one of us can break the cycle. I've managed to convince him into putting more investment in our little plot of dirt so his little brood won't have to worry about eating if worst case happens.

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  6. to the point, concise, logical, and with humorous. Good job

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  7. I personally think that you have knocked it out of the ball park-the entire game. As I am working at a BigBox now, I can tell you the number one complaint from customers is rising prices. On Everything. Asprin, chicken, dog food, outdoor furniture-you name it. My friend in Ohio drove to 3 grocery stores looking for hamburger. All sold out, and it is only going to get worse. I made a promise to myself to pay off all credit cards and any bills. It is amazing what you can do when you set your mind to it. I am also stacking cash but in honor of Aesop's advice, I am going to my local gold dealer and getting some spendable old silver. Nothing like old money that is REAL metal to help a girl out at the local 5 & 10. Inflation may nip my wigglebutt, but it won't get a bite of me.

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  8. All excellent points. Just like we have a legal system in this country now, instead of a justice system, we have a casino that calls itself Wall Street instead of an investment vehicle in the free market. The FED Central planning, the resulting inflation that is robbing everyone that actually works for a living, the bailouts of businesses "too big to fail," "payment for order flow," it's all bullshit now.

    What amazes me is that I still have captains I fly with, certainly above average functioning individuals, that still have their 401k retirements invested in stocks and funds, looking for some return. The downside risk with so many of them being close to retirement is enormous. Now, to be sure there are quite a few that understand the market is rigged and have also invested in PM's. But waaay too many still think things are business as usual. Sadly I think a lot of them will be in the retail side of the market that will get crushed. You can lead a horse to water, but getting them to change preconceptions that aren't based on the facts anymore is too big a paradigm shift for most.

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  9. Yep, all this is why I took the only IRA I could do anything with (inherited from my late Aunt), cashed out most of it and bought another property. You can argue about drawbacks like property taxes (and the god awful income tax I'm having to pay on an extra ~140k this year) but once I get it fixed up and move over I'll have 50% more space for growing food and 3x more living and storage space. Land value has never gone to zero.

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  10. It is very hard to take you seriously about any financial matters when you choose to live in California.

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  11. @Aesop...Points taken...especially the bacon part.

    Not to flog the semi-dead horse...

    I too prefer clarity over agreement (h/t Prager for that concise nugget). Belief and truth are very different things, and are routinely misused.

    While I have my opinions and principles fairly well sorted out these days, I'm always open to new information or a more convincing argument. Many people are not, mainly because they are too lazy...won't do the research to support their claims or are simply parroting someone else's idea (that bar scene in Good Will Hunting comes to mind).

    Keep up the great work, not easy what you do to inform.

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  12. A point which is never mentioned:

    Counterfeiting is illegal because it diminishes the value of the (legitimate) currency in circulation.

    Shouldn't the same standard apply to the Fed, and their policy of Quantitative Easing?

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  13. Funny story but Blackrock told their people to bail on insurance stock and invest in mortuary stocks.

    Exile1981

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  14. @Anon 11:04,

    I was born here, I've lived here all of my life (outside of the military), and I'll probably die here.
    I've been to 22 other states and two US territories. I've lived in four other states long enough to qualify to vote. While there are some very nice other places to live, none of them were home to me.

    And if once you start running away, where do you or can you ever draw the line?
    Practice becomes habit; habit becomes character.

    I plan to be a thorn in the side and a PITA to TPTB until I either die, or the statues of Lenin and Marx come down hereabouts (and for the same reason as always: because they've run out of other people's money, and the peasantry revolts).

    It's hard for me to take anyone seriously on anything if they've cut and run rather than cowboyed up and made a stand. I've seen my fill of rootless vagabonds, and they're largely the exact toothless banjo-playing kinfolk from other states that have ruined mine (along with a literal plague of illegal aliens). They've never built anything.

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    Replies
    1. Aesop, I agree with your rebuttal to Anon 11:04 about staying where you are, as opposed to not 'fleeing' to another state. Especially liked your quote, "It's hard for me to take anyone seriously on anything if they've cut and run rather than cowboyed up and made a stand."

      I have never left the New England state I grew up in. My wife, who grew up in another state, keeps saying we should move to a state that is not a 'nanny state.' If I was younger, didn't own property and didn't have family here, I'd consider it. But, I've worked hard to get what I have here, and no way I'm going to leave my elderly mother and disabled brother.

      As a former AA sponsor once told me, "You grow where you're planted."

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  15. Ole Kublai Khan of the Xanadu Stately pleasure dome fame first created fiat paper money backed by air when the Mongols ruled China. It didn't work then either but the Italians brought the idea back to Europe.

    Your fiat dollars aren't safe in the market either. The market is fixed. DotGov saved the hedge fund speculators when the chans tried to bankrupt them over their short sale of gamestop stock.

    Gold ,Silver, and land are best investment along with food, guns, and ammunition.

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  16. "While there are some very nice other places to live, none of them were home to me."

    There is, I think, much wisdom in that.

    Similar story: I've lived in Indiana all my life, except for five years spent in central Florida in the 1980s. I liked Florida, a lot. Delightful weather nearly all year, golf pretty much all year, beaches within easy reach. In the end, though, it wasn't home, and I was in danger of raising my kids in a place that wasn't home, and where they were short on grandparents. So, home I went. Hell, jobs are everywhere. Home isn't.

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  17. My dad recently passed leaving my brother and I 143 pounds of rolled uncirculated silver quarters and half dollars to split. He paid face value for them buying as many as he could when he made his weekly trip to the bank to deposit his paycheck. The rolls of quarters he paid $10 for are now worth $167 each.
    Now had he just kept the money in the bank it would've lost value. Instead it gained and with no risk like the stock market.
    That was smart investing. I am currently transfering some of those precious metals into other precious metals like brass, copper, and lead.
    Back around 2000 my brother and I were doing some play stock market investing online trying to learn how to play right before going in deep. I kept noticing how gas futures would jump whenever a hurricane hit the gulf of mexico. When Katrina first started looking like a threat to hit the New Orleans part of the gulf, I told my brother its time to jump. I did but he jumped with both feet dumping his entire 10 grand life savings into the play. My expectations of doubling our money were wildly surpassed. He became financially independant enough to retire 5 years ago but decided at age 44 to become a ff/emt because balls of steel need to be tested I guess.
    Pretty good for a kid I once stuck a lawn dart in the temple from across the yard.

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