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Comment by bcrosby95 | Hacker News Reader

Inflation calculator says about $70k. But I do agree with your message, stuff like this definitely should be tied to inflation.

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I guess it's an instance of legislative #TODO comments.

No, it's a feature not a bug. If you don't index things to inflation you can eventually cover average and middle-class amounts of money under the law - you just have to be patient.

More likely the number 10000 is now entrenched in so many varied locations in the last 50 years that it would be a monumental undertaking to try and adjust it successfully.

If the rule is > $100k, can't businesses just continue reporting everything > $10k until they get around to updating their systems?

Some countries phrase monetary fines and thresholds in terms of some inflation-indexed value (e.g. "penalty units" in Australia) to as to avoid having to manually update every single value in the laws when they get around to it. I wish the US would do the same.

https://en.wikipedia.org/wiki/Penalty_unit

The point above is fair but also I can't help but think a lot of people who are bitcoin hardcores really overestimate historical inflation.

I'm a thirty-something and when I was born money was worth roughly twice as much as it is today. When my grandfather was born, it was worth ten times as much as it is today. But you're right, I think us Bitcoiners in particular have a very allergic reaction to inflation and overestimate it's affects accordingly.

That's completely irrelevant because you're not supposed to stash it in a mattress you're supposed either spend it on basic needs or to invest it.

If you started with $10K in 1970, sure, the value is reduced by a factor of 7. Intentionally to incentivize investment.

If you started with $10K in 1970 and put it into the S&P 500, you'd have a 4162/83.15= 51X return, adjusted for inflation is still a 7X return. Notionally $510,000 - excluding dividends/re-investment thereof.

If you started with $10K in 1970 and put it into an average home in the US you'd have $70K today, adjusted for inflation. (Average $/sqft on an inflation adjusted basis in the US is the same now as it was in 1973 [1] - you'd have way, way, way more if you'd bought property in a major metro - I'm just being conservative).

You save value not money. The idea you should save money is a severe misunderstanding of basic economics.

It's really not that hard: don't save money, save value. Your narrative is as harmful as it is straight-up wrong.

[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...

I think it’s BS that everyone has to participate in the rigged game. Saving your money should be a valid option.

Ok, let's dig in.

> ... everyone has to participate in the rigged game.

In what way exactly is the current system of separating a long-term store of value and a short-term medium of exchange a "rigged game?"

In what way would fusing the two change that?

Are you not able to replicate that which you desire by simple purchasing an asset that does that? For instance, let's say you're a coiner and think that's a better way to store value - does the current system prevent you from backing your personal economy with bitcoin? How about gold? Why would you force me into the one of your choice when maximum freedom dictates giving me the choice on how to store value?

Further, how would you propose keeping the unit of value at a specific pegged constant value without managing the supply actively? When the population changes? Productivity changes? Transient shocks like COVID leading to massive drops in velocity? After all, a constant supply does not mean a constant value.

You realize the fed literally avoided a catastrophic deflationary spiral and held the value of money to within +/- 0.6% last year. That's a heck of an accomplishment.

Well, they've never been at a full match with inflation but banks did use to actually pay interest on savings accounts once upon a time.

I think it's reasonable to allow members of society that want to sit on cash to preserve their quantity to a certain extent in that manner - even if it will fall short of gains expected by inflation.

They sort of can. There are CDs, treasuries, money market funds. Interest rates at the moment are pretty awful and I'm pretty much out of all that sort of thing. But they do exist.

Well, for one, you didn't really answer any of the questions I posited.

But further, you have to consider the flip-side of receiving interest: paying it. Having low-cost access to capital makes businesses more efficient. It also makes your personal life cheaper as the average homeowner ends up on a 30-year fixed rate mortgage. A mortgage rate of 2.5% leaves you with way, way, way more free money than the 12% you'd have payed in the 70s. That's true even after factoring in inflation and historic wages.

It's important to consider that converting between the long-term store of value and the short-term medium of exchange is a taxable event, so if your asset gains value at exactly the same rate as inflation, you still end up losing money.

It's not clear to me what that means. I suppose you can go all Scarlett O'Hara and Land is the only thing that matters. But there has never in human history been some value store that was guaranteed to maintain value over time through war, technology changes, cultural/demographic/migration shifts, and yes inflation with modern currency instruments.

If you put the cash into gold, real estate, stocks, etc. it will maintain most of its value if not grow faster. Even putting it into low-interest CDs would help you preserve most of it.

>That's completely irrelevant because you're not supposed to stash it in a mattress you're supposed either spend it on basic needs or to invest it.

Says who? And why has saving become something only stupid people do? This idea that you MUST invest is pure evil and is designed to make the rich richer and the poor poorer.

Saving value is smart, saving money, is stupid. You can tell because on the sticker it says "will lose 2% per year in value."

Exactly, cash has an opportunity cost which is the interest not earned by holding cash instead of investing it at the risk-free rate, and this is true regardless of whether there is inflation or not. Therefore what makes cash a sub-optimal savings vehicle is the existence of risk-free investment opportunities with a positive rate of return. Nothing to do with inflation.

>"Your narrative is as harmful as it is straight-up wrong."

I don't know what narrative you are alluding to. All I was trying to do was provide a human relatable example of how much inflation had happened over three generations. Sure, each individual dollar has less purchasing power but that's supposed to be balanced out by having more of those dollars. But if the reporting threshold doesn't also inflate then you've got an issue.

The narrative is suggesting it at all matters that the units of stored value have changed over time is a bad thing. It's roughly speaking a neutral thing. Like switching between Celsius and Fahrenheit. You just have to plan accordingly.

That wasn't my intention. My intent was to show that the units of stored value changing over time, in this case, is a bad thing when the reporting threshold doesn't rise for inflation as well.

I apologize if I misread, by the way! I know tone doesn't always carry well over the internet.

No worries, and you're spot-on about storing value and not money.

Well if the government mandates that the thermostat must be set to 72 degrees no matter what, that switch from Fahrenheit to Celsius is going to be pretty uncomfortable.

Yes in general we care more about what we can buy with our money than how many pieces of green paper it takes to represent that value, but there are many laws on the books where something bad happens if you have too many or too few pieces of green paper regardless of what they're worth.

> When my grandfather was born, it was worth ten times as much as it is today.

And this is concerning why...?

Alternatively some people miss that asset inflation in the crypto currency space is happening at 1000s of percent of even high consumer inflation. Same with houses, rising 20% in less than a year, some assets are rocketting, inflation or not.

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