Comment by tcbawo | Hacker News Reader

Comment by tcbawo | Hacker News Reader

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Money is stored wealth, the ability to buy goods and services in the future. The problem seems to be that we live in a time of societal upheaval. The future of stored wealth becomes cloudier and more uncertain the further you go out in time. So, what is the best place to store wealth? Will my wealth be eroded by inflation? Will the companies I invest in become obsolete by technology or market-manipulating nation states? Will regulation changes suddenly damage the value of my investment? Will changes in tax regime eat my earnings? Will corruption and crime take my wealth? Clearly, some people are getting out of hand with speculation and credit (a suitcase full of lottery tickets is not diversification). As Warren Buffett says, when the tide goes out you learn who's been swimming naked. The economy has its ups and downs and speculative fervor ebbs and flows. There are no certainties, but IMHO all you can do is stay diversified and maximize the probability of your success.

I heard of a wealthy family that had managed to maintain their wealth in Europe across multiple generations, through lots of war, upheaval, regime change, and so on. Their formula was "one third gold, one third art, one third land". You could lose any piece of it in any upheaval, but you wouldn't be likely to lose all of it.

that's a good strategy, but I'd change one thing: instead of art, use equities, and broden gold to commodities. so then you have: 1/3 real estate, 1/3 equities, 1/3 commodities (mostly gold and bitcoin with some other precious metals thrown in). It's hard to get more diversified than that.

Their formula was being wealthy enough to float above war, upheaval, regime change and so on. If they were wealthy enough, they probably triggered some of that and capitalized on war profiteering.

I don't like this comment, but I can't put my finger on why exactly.

I think it's the drive-by, reflexive assignment of guilt, while knowing nothing of the circumstances.

This strikes me as the opposite of thinking. What you said might be true, it might not, what have you added to the world?

The gold, land, art reference 2 posts above yours almost certainly refers to the Rothschilds, so I don't know why solosoyokaze is being downvoted as the Rothschilds most definitely funded wars to their own profit.

Well actually if solosoyokaze had said something more like

"This is probably referring to the rothschilds based on (link to historical information). It's reasonable to extrapolate that they were war profiteers based on (reasoning)"

Then I think it really could have added some insight into the world instead of being like the drive-by ignorance the parent comment refers to.

The parent comment had no more sourcing than my comment, I'm not sure why you're singling my comment out. Yes the Rothschilds fit my description, but I'd argue anyone who maintained generational wealth in the time of colonization, slavery and zero labor laws, did so through non-ethical means.

I believe it was the Rothschilds, yes. I suspect solosoyokaze is being downvoted for the word "triggered". That's a long step past "funded".

> Money is stored wealth

This is sort of a tautology. I like the explanation better that money is a "call option on goods and services."

My answer to these questions and other unknowns about the fed, fiscal policy, America and its role in the world, the economy etc. is that the future will be a lot like the present, but more so. So extent the current trends into the future. Sure, things sometimes change, even dramatically such as the fall of the USSR or 911, but we are living in a steady-state world in which the underling trends do not change. Inflation will remain low in spite of printing, America remain on top economically and militaristically. Stock market keep going up. US dollar remain strong.

inflation has been much higher than reported. Just look at the big mac index, which shows nearly 4% inflation for the last 20 years. Cape shiller housing index, also nearly 4% for the last 20 years. According to Peter Schiff, "Trusting the CPI from the labor department is like trusting the Mob to report on crime."

The current president is attempting to bring things back to normal and the USA will stay strong because of that. The EU and Japan are not doing what they really should be doing.

I bet the romans said the same thing

Most of them were right. Rome lasted for 950 years. All things must pass, but it isn't likely to happen in your lifetime.

Sure and like America eventually, they'll be taken out by ecological collapse (Rome was dealing with exhausted agricultural soils for much of it's collapse).

But in the wake of that, the idea that you're going to be holding onto much of anything that'll matter globally is laughable.

The current trend is record breaking wealth inequality. We already have rampant inflation in the form of housing, education and health care costs. It's an unsustainable situation near its breaking point.

My take was always that money is a medium of exchange. A mechanism by which you can buy or sell things.

Wealth is something that people want. Lawnmowers or a movie stream.

One consequence of this distinction is that if money fails as a medium of exchange (eg everyone loses confidence in the dollar) then those dollars are now useless. But no wealth has been destroyed.

So I conclude money is not a store of wealth.

> But no wealth has been destroyed.

No, that's not true. One of the things that people want is the ability to easily acquire new things that they need. If there is no universally accepted medium of exchange, that adds friction to the economy which destroys actual wealth.

It's kind of like if you drain the oil out of your car. The value of the car goes down by more than the cost of the oil.

> No, that's not true.

That's an interesting but slightly pedantic point. If we continue that line of thinking, if the "end of the dollar" is actually caused by switch to (say) the euro as a currency in our hypothetical world, then the "loss of medium exchange as a loss of wealth" argument no longer holds, but your original mechanism has been destroyed, so I think my point stands.

Well, yeah, but that's a big if. A switch from the dollar to the Euro is unlikely to be seamless, especially in the U.S. which is still the world's biggest economy.

> Money is stored wealth...

That is merely one function of money, and as the marginal cost of production plummets that role becomes less useful.

In a modern economy it’s also, for example, a signaling mechanism (arms-length communications tool), with pricing guiding production and effort.

Money is a representation of stored wealth. An important distinction. Live in a country that has an unstable currency for a while and money is a liability and may show what it's truly worth. Nothing.

>> The problem seems to be that we live in a time of societal upheaval

What time wasn't a time of societal upheaval? The Great Depression? World War 2? The Cold War? The Sixties? Stagflation? The Reagan era? The Clinton era? Post-9/11? Trump?

Markets climb a wall of worry.

We didn’t start the fire ...

it may be that crypto is seen as a way to mobilize untapped wealth that currently sits in cash (for whatever reason); with cryptocurrencies you have something that is relatively unregulated, so that crypto may mobilise that kind of money.

Money isn't really stored wealth, it's a transferable debt obligation from the government. It's guaranteed to be redeemable to settle up taxes and court rulings, and entitles you to some estimate of the productivity of it's jurisdiction - enforced by the government.

> it's a transferable debt obligation from the government

But isn't Bitcoin money as well, not guaranteed by the government?

Only in the sense a goat is when you happen to be contemplating doing business with someone looking to acquire a goat.

Assets are less ephemeral stored wealth. Money facilitates transactions, but it is not a factor of production, it is not a consumption good, and it is not backed up by any of these things, so it is a very nebulous type of wealth.

I would agree with a previous poster that money is a debt obligation. If you have "money" in bank, what does it mean? It means the bank has a debt-obligation to pay you back with other type of debt-obligation, the government sanctioned cash.

Money is definitely an interesting concept. I'm not sure I fully understand it. But I use it.

I don't get how it contradicts what I've said.

Money is a debt that grants you to the right to someone else's labor, the reason you work for money is that someone else promises to work for you in exchange. It doesn't store wealth. If you do not utilize your money, then someone else doesn't work and that person's time is irreversibly lost, despite no work being performed. That is why money is losing value over time, I mean, money should be losing value over time. The "should" is just a political decision because we consider it fairer, than the inverse, letting someone become unemployed and then you ask for even more work from them because your money has appreciated.

This is why you must put your money into a bank account, because someone else out there will use that unemployed person's time to create value on behalf of you.

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