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Author Topic: I think the concept of saving has been lost with this generation.  (Read 2722 times)
Timo Y
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February 22, 2013, 11:47:54 PM
 #21

It's about taking responsibility for your actions and having a reliable place to save the money rewarded for your hard work.

Nobody ever got rich through hard work alone.  Making money is all about controlling capital. Money is poorly correlated with work.  Why does a quantitative analyst earn 10 times the salary of a physics professor, even when they have similar skills, and even when a physics professor's job is 10 times more intellectually demanding? It's because the quantitative analyst controls a huge amount of capital and the physics professor almost none.  

It has always been like this, but this generation is more aware of it. If you have a friend who makes easy money in finance, real estate, or whatever the next bubble is going to be, then you are going to think, why should I bother working my ass off as a teacher so that I can save $200 a month?  I want to have a good life too. Fuck the future.

The fact that savers are being punished by governments and debtors rewarded aggravates the situation even more.

  

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February 25, 2013, 10:43:50 PM
 #22

It's about taking responsibility for your actions and having a reliable place to save the money rewarded for your hard work.

Nobody ever got rich through hard work alone.  Making money is all about controlling capital. Money is poorly correlated with work.  Why does a quantitative analyst earn 10 times the salary of a physics professor, even when they have similar skills, and even when a physics professor's job is 10 times more intellectually demanding? It's because the quantitative analyst controls a huge amount of capital and the physics professor almost none.  

It has always been like this, but this generation is more aware of it. If you have a friend who makes easy money in finance, real estate, or whatever the next bubble is going to be, then you are going to think, why should I bother working my ass off as a teacher so that I can save $200 a month?  I want to have a good life too. Fuck the future.

The fact that savers are being punished by governments and debtors rewarded aggravates the situation even more.

  
This is the fallacy of special pleading. We are living in a unique time in history when scammers are able to bilk fortunes without penalty. It has not always been like this, in fact, it hasn't been like this since the Robber Baron age of the 19th Century. After we start punishing the thieves that caused the economic collapse, we'll need a currency that brings balance back to the economy.

I'm not saying that capitalists cannot get rich with executive skills. I'm just saying that people should be able to save liquid assets like money as a store of value. In fact, banks themselves should be incentivized to pay compounded interest through the privilege of Bitcoin deposits if they earn the trust of depositors.

Bubble economics is the sign of the end of a civilization. Enjoy it while you can, but what will your skill set be when it is gone? What place in society will you have? None in mine.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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February 26, 2013, 10:36:28 AM
 #23

I hear people using terms like hoarding, trading, investing etc. Bulls and Bears argue about who predicted the latest rally or trap. A recent thread boasted about selling Bitcoins to buy a new car. I mentioned that I would have financed the vehicle with a low interest rate over years because Bitcoin's ROI outperforms everything. Somehow, I just think that there is a generation that wants everything now and doesn't really think long term.

You would borrowing money to buy a depreciating asset?  The average depreciation for a car is 15% a year.  That is like borrowing money in USD and holding it when it has an inflation rate of 15% a year.

Introducing constraints to the economy only serves to limit what can be economical.
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February 26, 2013, 02:38:28 PM
 #24

I hear people using terms like hoarding, trading, investing etc. Bulls and Bears argue about who predicted the latest rally or trap. A recent thread boasted about selling Bitcoins to buy a new car. I mentioned that I would have financed the vehicle with a low interest rate over years because Bitcoin's ROI outperforms everything. Somehow, I just think that there is a generation that wants everything now and doesn't really think long term.

You would borrowing money to buy a depreciating asset?  The average depreciation for a car is 15% a year.  That is like borrowing money in USD and holding it when it has an inflation rate of 15% a year.

Presumably the car is a sunk cost, and necessary for driving to work and going to the grocery store. Borrowing at crazy low interest rates for cars (sub 3%) is usually a better financial choice, assuming the borrower believes he/she can obtain USD easier in the future, to keep up with the deflation of the dollar. Of course, that's a gamble, but it's not a particularly bad one.
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February 27, 2013, 05:22:45 PM
 #25

I hear people using terms like hoarding, trading, investing etc. Bulls and Bears argue about who predicted the latest rally or trap. A recent thread boasted about selling Bitcoins to buy a new car. I mentioned that I would have financed the vehicle with a low interest rate over years because Bitcoin's ROI outperforms everything. Somehow, I just think that there is a generation that wants everything now and doesn't really think long term.

You would borrowing money to buy a depreciating asset?  The average depreciation for a car is 15% a year.  That is like borrowing money in USD and holding it when it has an inflation rate of 15% a year.
I can think of a lot of things that have a better than 15% ROI. Dumping liquidity on a car is a poor investment. In fact, leasing a car is probably a much better idea. In the case of Bitcoin, it's like throwing away three cars for the price of one when we are seeing a 300% or higher performance every year.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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February 27, 2013, 07:09:03 PM
 #26

I hear people using terms like hoarding, trading, investing etc. Bulls and Bears argue about who predicted the latest rally or trap. A recent thread boasted about selling Bitcoins to buy a new car. I mentioned that I would have financed the vehicle with a low interest rate over years because Bitcoin's ROI outperforms everything. Somehow, I just think that there is a generation that wants everything now and doesn't really think long term.

You would borrowing money to buy a depreciating asset?  The average depreciation for a car is 15% a year.  That is like borrowing money in USD and holding it when it has an inflation rate of 15% a year.
I can think of a lot of things that have a better than 15% ROI. Dumping liquidity on a car is a poor investment. In fact, leasing a car is probably a much better idea. In the case of Bitcoin, it's like throwing away three cars for the price of one when we are seeing a 300% or higher performance every year.

I suspect "correct" answer #1 was to liquidate a little bitcoin and buy a cheaper used vehicle. Correct answer #2 would have been to do the same with borrowed money rather than case in everything bitcoin. Exchange the order of these based on your aversion to debt (Though I believe money was borrowed to buy the bitcoins in this case which clouds the issue).

However, the simple fact is that Rassah wanted a shiny new car, had the funds to do so, cashed out, taking good profit and got something he wanted and paid off some debt to boot (I believe). There is nothing wrong with that in my book.

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February 27, 2013, 10:13:57 PM
 #27

There are no incentives to save anymore. Here is a short list of what I mean:

  • Inflation makes your savings worth less every year (as opposed to deflation on the gold standard)
  • The government will cover your retirement in the form of Social Security so no need to save for retirement. Or so people believe.
  • Low interest rates entice people to acquire lots of loans.
  • Bankruptcy laws make it easy for someone to acquire lots of debt and then default on them and walk away clean
  • No financial education in public schools

Just to name a few.

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nobbynobbynoob
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February 27, 2013, 10:28:39 PM
 #28

Saving is fine, but it has to be done in precious metals (or now, cryptocurrency) rather than fiat, obviously. Otherwise you lose your money.

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