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Comment by hakfoo | Hacker News Reader

I suspect there are three flavours of gold bugs:

1) Wealthy + Paranoid + Stupid. They'd rather keep their money in sovereigns under their mattress, than put it into any sort of productive economic activity. On a long term, especially in the US, you could pretty much throw darts and build a portfolio that competes with, or beats, inflation.

2) Conspirational: "fiat currency is a grand scheme to undermine our savings for (insert nefarious bugaboo of the day)"

3) Arguably a subset of 2) but Apocalypse Enthusiast. "When civilization crumbles, the obvious trade unit won't be something like grain, alcohol, or bullets, but my bags full of low-grade silver dimes! I'll be King of the Wasteland!"

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> fiat currency is a grand scheme to undermine our savings

How exactly is it not? Inflation = stealing value from people, that they have already created, time-limiting their spending power so that there's no way to actually save money in the long-term.

Money printing is theft, indirect taxation without consent.

> no way to actually save money in the long-term

The idea is that you'd save by investing into productive enterprises (and or government bonds) obviously that doesn't necessarily function as well as one would hope for but it's an better solution than hoarding cash/gold/bitcoin/etc.

> so that there's no way to actually save money in the long-term.

Besides equities? Besides TIPS?

* https://www.investopedia.com/terms/t/tips.asp

Do you literally keep bills under your mattress or buried in your backyard? There's your problem.

> Do you literally keep bills under your mattress or buried in your backyard? There's your problem.

No, there's not my problem. The problem is that the government keeps printing money, so my bills under my mattress or buried in my backyard keep dropping in value. The fact that there are securities that are literally called "Inflation-Protected" as an antidote to that only serves as a proof of the original problem.

> But you can save money!

No, you can invest money. But investing should not be mandatory just to keep your wealth from rotting.

> The problem is that the government keeps printing money […]

Except that it doesn't. Money is created by private banks through credit (loan, mortgage) creation:

* https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...

* https://www.bankofengland.co.uk/explainers/how-is-money-crea...

> […] so my bills under my mattress or buried in my backyard keep dropping in value.

Yes, this is a feature: the discouragement of the non-productive uses of capital and hoarding à la Scrooge McDuck.

> No, you can invest money.

Most people actually save and do not invest:

* https://www.pragcap.com/saving-is-not-the-key-to-financial-s...

> Yes, this is a feature: the discouragement of the non-productive uses of capital and hoarding à la Scrooge McDuck.

I sincerely doubt that "disouragement of the non-productive uses of capital" is the main reason for inflation. Linear tax on having money would do much better. Besides, except for a pathological example where scarcity of money causes deflation, why would it matter if someone is hoarding money?

If they're saving for something that costs e.g. 10 years wage, "hoarding" money is the only way they'd ever save that much. But with constant inflation, it's basically impossible - the only way to "save" money for something that expensive is to take a loan... Which again seems to lead back into banks' pockets. Who actually hoard money.

The game seems rigged, and all "explanations" for inflation just sound like bad lies given by Wall Street brokers high on coke.

> Money printing is theft, indirect taxation without consent.

I think this characterization is incorrect.

Couldn't we bifurcate it, though?

I mean, I'm fucked. I've effectively lost between 10-20% of my purchasing power out of what ultimately equates to a relatively small sum in the first place because my time horizon was pretty small, I put a trust fund together for myself. Whole I was doing this bond yields were negative, and had been for a long while, and I'd posit they still are (last I looked the $1 pound loaves at Walmart were $1.50). I just did not and do not have the buffer money for investing, not to mention a need for liquidity and possible penalties. It would be nice to have something more stable. Of course, Au and Ag haven't yet reared their imaginary powers yet in any case, though many portend they will.

Ideally though, an ounce of gold is an ounce. But a dollar can be anything. The question is one of making gold, silver, or some other fixed-quantity, portable, arbitrarily valuable substance into legal tender, right?

Gold coins are beautiful liquid assets. Why not keep part of your retirement or emergency fund in gold and silver? I can just go down to one of many local coin stores and sell them if I need the cash.

> 3) Arguably a subset of 2) but Apocalypse Enthusiast. "When civilization crumbles, the obvious trade unit won't be something like grain, alcohol, or bullets, but my bags full of low-grade silver dimes! I'll be King of the Wasteland!"

Yes, direct trade may definitely be grains, alcohol or bullets - but as soon as economies more complex than a self sufficient farm village crop up, eventually some form of token will be required.

For that, historically gold and silver have been the established tokens of choice for millennia, and even today's currencies are backed by insane amounts of gold in central bank vaults - it's not a bad assumption per se to think that gold and silver will outlast even our modern civilization. Come to think of it, most of the world's currencies sans the Swiss Franc and the US dollars are barely decades old.

We're already seeing a switch from the US dollar as the universally accepted international reserve and trading currency - only 60% of reserves and 40% of trades are valued in dollars, mostly towards the Euro and, in smaller amounts, yen, yuan and a bit of Francs. Think forward a few decades... what humans create can vanish in a very short time.

"fiat currency is a grand scheme to undermine our savings"

imagine writing this as ironic mockery during an ongoing inflation crisis.

Note also that historically, the gold standard didn't actually prevent inflation.

The operative portion was the other half of the sentence.

It's never a "they're targeting a number that they believe in good faith will maximize economic activity on a national level", it's always "devaluing my existing holdings gives $boogeyman_ethnic_or_political_group an advantage" like you're somehow prohibited from investing.

So because someone has a different worldview, you're gonna call them stupid? Cool. In the meantime, look how much purchasing power your dollar has lost since 1971. In your first point, you're also only taking into account the government-reported inflation. Go to your local grocery store and run the numbers yourself and you'll get a much higher number. After a certain percentage, inflation just becomes a tax unless you have it sitting in assets.

And I don't understand your second point either. Your savings have most definitely been undermined. Your nominal wages might be up, but your purchasing power is way down since after the stimmys. To calculate the difference, compare how many hours you'd have to have worked in the past to how many hours you'd have to work now to achieve the same standard of living.

Maybe cut out the pretentiousness and dismissiveness and listen to what people who are generally concerned about you and your purchasing power are saying.

> In the meantime, look how much purchasing power your dollar has lost since 1971.

See also the amount of deflation that has occurred over the decades:

* https://www.huffpost.com/entry/radio-shack-ad_b_4612973

Cool, now do housing and university in real wages (non-nominal).

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