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Comment by cblconfederate | Hacker News Reader

This argument is old and useless now. It is a ponzi if you are ideologically inclined to believe it is a ponzi, and people will keep handwaving around it.

Each generation chooses its bubbles. The younger generations have been told in no uncertain terms that they are locked out of investment in real estate and many other instruments that are controlled by the aging generations. So they create their own bubbles and they will keep supporting them because every generation wants to achieve some level of wealth. People keep underestimating the intrinsic value of bitcoin as a store of wealth and a means to devalue the unequal economy. Many things look like ponzi but are not, because they never burst. People putting themselves outside the bitcoin bubble are willinging missing the future.

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I'm sure glad you didn't work at SEC Enforcement when they finally went after Madoff.

> The younger generations have been told in no uncertain terms that they are locked out of investment in real estate and many other instruments that are controlled by the aging generations.

Sure, so they should petition for zoning reform not engage in Ponzi schemes.

> Many things look like ponzi but are not, because they never burst.

That's not really the definition, though.

> People putting themselves outside the bitcoin bubble are willinging missing the future.

The definition of the "future" isn't "Ponzi scheme that will never burst probably, because real estate is unfair."

> Sure, so they should petition for zoning reform not engage in Ponzi schemes.

Demographically, post-boomer generations can never win the vote

Voice does not work in this case, so they choose exit

I guess they are also sick and tired being told what they "should" do

> Demographically, post-boomer generations can never win the vote

You don't think the "boomers" will die?

> I guess they are also sick and tired being told what they "should" do

Petulance isn't a value proposition either.

now that sounds like a boomer opinion ;)

The size of that generation and the great increase in lifespan ensures that "boomers" will stay dominant longer than any other. Millenials don't want to wait until they 're 50 to start making wealth

> now that sounds like a boomer opinion ;)

I'm a median millennial.

> The size of that generation and the great increase in lifespan ensures that "boomers" will stay dominant longer than any other.

I didn't realize wealth made you live longer. It actually doesn't by the way, it's not particularly correlated after a certain point. Charts available on request.

> Millenials don't want to wait until they 're 50 to start making wealth.

Good news is they're not. Adjusted for inflation they're exactly on track with previous cohorts. [1] But Ponzi schemes do not create wealth. Crypto redistributes wealth from new participants to old ones, and miners/validators, while not creating any value.

[1] https://economistwritingeveryday.files.wordpress.com/2021/08...

I don't believe your chart at all. It's literally just a random excel chart with no source or authority. This is also the first time I've heard someone say millennials are keeping pace with previous generations in terms of wealth. See this[1] article for example. It mirrors exactly mine, and many of my friend's and family's experience. It is also a "real" source for the data.

> I didn't realize wealth made you live longer. It actually doesn't by the way, it's not particularly correlated after a certain point. Charts available on request.

You must be kidding right? https://www.aarp.org/retirement/planning-for-retirement/info... https://www.nytimes.com/2020/01/16/science/rich-people-longe...

I would love to see your charts. Not just some random jpeg, but a link to an actual article from someone "authoritative".

[1] https://www.businessinsider.com/millennials-1-trillion-debt-...

Is that trillion dollars millenials have in debt per capita? And further is that comparison against previous generations adjusted for inflation? How much more debt do they hold on a per capita basis adjusted for inflation than past generations? Or is that just clickbait :)

I mean, read the article you linked, here’s some quotes:

> According to a 2018 report from the St. Louis Federal Reserve Bank, mortgage debt is about 15% lower for millennials and credit card debt among millennials was about two-thirds that of Gen X.

> Another marked behavioral difference between generations is the higher levels of retirement savings among millennials than any previous generation at the same age. While Gen Xers had acquired about $13,600 at around the same point in time, millennials have saved $15,500 in retirement accounts on average.

> Millennials are also more committed to higher education. Between 2001 and 2016, the number of people aged 25 to 29 with at least a four year degree grew by 25%.

Which is why they have more student loan debt. Something that definitely needs to be addressed.

It’s not the hair on fire crisis the title would have you believe.

Which is why the chart I showed you, restated on a per capita basis instead of “wealth share” (while not standardized against a rapidly changing population and a growing wealth pie) makes both intuitive sense and the math works.

Yes certain “the rich” may live longer but I was referring to the correlation between health care expenditure and life expectancy - which is weakly correlated and only to a point. I may have don’t a poor job framing that [1]. Given you linked AARP I suspect that has more to do with unequal access to care earlier in life when poor, amortized to the limit, a uniquely American problem among developed nations.

[1] https://ourworldindata.org/grapher/life-expectancy-vs-health...

Here's[1] a more recent article from the St. Louis Fed. In no uncertain terms the current generation is behind in wealth accumulation. The best case scenario is since the delta has been reduced since the last time this study was done, hopefully the trend continues. Covid threw a wrench in everything, but as it stands, current generation is worse off (even without taking covid into account).

The above study looks at it on a per capita basis adjusted for inflation. The conclusion is pretty straightforward and clear.

> Yes certain “the rich” may live longer but I was referring to the correlation between health care expenditure and life expectancy - which is weakly correlated and only to a point. I may have don’t a poor job framing that [1]. Given you linked AARP I suspect that has more to do with unequal access to care earlier in life when poor, amortized to the limit, a uniquely American problem among developed nations.

Of course, but there's also plenty of other countries, in fact most of the world, where there's no healthcare safety net and being wealthy could literally mean decades if difference in life span. If the year being being born influences that, it's an incredibly unfair advantage. Yes the bar is being raised, but you can't simply isolate it as a uniquely American problem. Most of the developing world has this problem too. As a quick example look at the cancer survival rates by country [2]. Being rich lets you live longer in most countries. Its not the case only in a few select countries.

[1] https://www.stlouisfed.org/on-the-economy/2021/march/millenn...

[2] https://worldpopulationreview.com/country-rankings/cancer-su...

Life expectancy (at age 40) and income is very well correlated, though starts to plateau around $150K/year [1].

We know that most of Americans' wealth today comes from the value of their home rather than retirement savings (and/or pensions before that). Look at this chart of housing prices (inflation adjusted) and see if you can tell a difference between when the boomers entered the housing market and today[2].

[1] http://www.equality-of-opportunity.org/health/

[2] https://inflationdata.com/articles/wp-content/uploads/2021/1...

I don't believe your graph

https://www.washingtonpost.com/business/2019/12/03/precariou...

i never said their wealth made them live longer, science did

The chart I provided is the same data re-stated per capita instead of as a share of all wealth (after all the population had almost doubled since 1990 alone, and with it the amount of wealth in total) - and adjusted for CPI-U. It’s just a different perspective on the same numbers but far less click baity.

You do know that life expectancy has been declining in the US for a while now right?

And that s why that chart is misleading, because prices of e.g. houses have gone up and millenials are called to manage with just 3.5% of the total wealth while boomers had 21% in their age. This clearly sets the dynamics of which generation will be working for whom. And while there is a temporary reduction of life expectancy due to various factors, incuding covid, millenials will most likely see extension of their own life expectancy within their lifetimes due to medical advances.

The share of wealth is irrelevant because the pie grew. It would only matter if the pie stayed the same size. You were asking if millennials are doing worse than their parents, but worse is an individual thing, a per-capita thing. And they're simply not. They're doing just about as well as all the other past generations were at their age in constant dollar terms. The old adage goes "it takes money to make money" and their wealth will increase exponentially as they get older too. But they're not doing worse. Sorry. And they're going to inherit boomer wealth soon, collecting the share too.

[edit] (In fact the WaPo article you linked mentions the same exact thing I'm telling you, and makes a half-hearted attempt to compensate - failing to also account for the total amount of wealth on a per capita basis. This article is clickbait.

> One important caveat to the chart above is that the three generations aren’t the same size, population-wise. In 1990, for instance, boomers accounted for 31 percent of the total U.S. population. In 2008, GenXers were only 22 percent of the population.)

Some things are a lot more expensive, some things are a lot less expensive, but even ones you pick are misleading. For instance, housing. 1 square foot of house in America on average costs the same as it did in the 1970s adjusted for inflation. [1] However the average house is twice as big and the average family smaller. With drastically higher interest rates back then, and most people on a 30 year fixed, housing is much more affordable on a square foot basis. It could be better, and zoning rules are at issue.

But a lot of things are cheaper too. Basically anything that doesn't require human labor to assemble. TVs. Computers. Tons of stuff.

> This clearly sets the dynamics of which generation will be working for whom.

The only dynamic you're seeing is time value.

> And while there is a temporary reduction of life expectancy due to various factors, incuding covid, millenials will most likely see extension of their own life expectancy within their lifetimes due to medical advances.

That's (a) not the current trend, though it may reverse and (b) the opposite of the argument you were making about boomers earlier.

> And while there is a temporary reduction of life expectancy due to various factors, incuding covid...

Also, COVID killed boomers not millenials.

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

There are many things where relative value is more important than absolute value. In questions of mating and evolutionary selection, for example - it doesn't matter how much you have in absolute terms, it matters than you have more than your competitors. And questions of mating and reproduction are some of the most basic and fundamental (and important) to any animal/human, no matter how many abstractions we put on top of that.

In a capitalistic society, money is power - if a generation has 3% of the wealth they necessarily have less power than a different generation that had 22% of the wealth in their time.

The average house in America is not a very useful statistic today since a lot of those houses are in areas with no economic opportunity because of decisions taken to offshore labor - they used to have opportunity ~50 years ago, but that is now gone. You have to look at houses near urban areas (since those places retain the opportunity that was more spread out before). And then you'll see that costs have actually gone up.

It's not nearly as simple of a comparison.

> But a lot of things are cheaper too. Basically anything that doesn't require human labor to assemble. TVs. Computers. Tons of stuff.

this is bullshit, it's the "why don't they eat cake" argument. the world is not going backwards, of course TVs have gotten cheaper, for millenials and boomers alike.

I don't think there is any sense of evenness in the fact that 21% of the US population holds 51% of the wealth, and a younger 21%, which naturally works harder controls 5%. What matters is not being merely able to buy 1 TV, but who can buy most of the TVs. What you 're saying is "Yeah they should be fine with breadcrumbs", and that they should tolerate this inequality until death meets the boomers. That's basically generational serfdom

The reason the generation holds this wealth is because it spent its life working and accumulating it. Is it really surprising that someone who worked for 40 years, including the prime productive years of their career, has received more money in aggregate, than someone who has worked for 10, just starting their career?

Even without compounding returns (i.e. economy growing), and given a fixed spending/saving rates over time, you would expect the former to have vastly more saved money.

> You don't think the "boomers" will die?

And in the meantime?

I’m not sure what you mean. Vote.

> So they create their own bubbles and they will keep supporting them because every generation wants to achieve some level of wealth.

You are talking about things like equity and real estate which have actual utility. Sure they might be overpriced now, I agree with that. But their prices are backstopped by the utility they provide.

A lot of crypto does not have any utility and never will. Nobody is supporting the beanie baby bubble or the tulip bubble. The idea that bubbles are not just ok, but should be encouraged, is very troubling.

Bitcoin has utility; it separates money from the State.

If that's not useful, I don't know what is. When the State deliberately debases its own currency year on year, and suddenly there is a useful option for saving, which nobody can debase, then it has provided something quite profound.

And this is also why it is unlike any other 'bubble'. Whenever the perceived value of an asset increases quickly, many people scramble to produce more of that asset in order to take advantage of the higher prices. This overproduction then leads to prices dropping, or the bubble popping. What makes bitcoin different, is no matter how much work they put in to create more bitcoin, they cannot release more than the amount that was pre-determined for that ~10 minute period. The supply of bitcoin is completely decoupled from its demand. There has never been a 'bubble' in history with this property.

> Bitcoin has utility; it separates money from the State.

This is, and always has been, wishful thinking.

To the extent that it could be true, it is near-guaranteed that, given enough time, the State will ban the use of Bitcoin and other cryptocurrencies—whether "to maintain their monopoly" or "to protect people from scams", depending on your point of view.

But there was never even a realistic possibility of Bitcoin becoming currency in a real sense. Its two biggest downfalls (that I can recall off the top of my head) are:

- It cannot act as a reliable store of value. Because it is used extensively by speculators, its value is extremely volatile. Because its legal status is still unclear or in flux in many jurisdictions (including major ones), its value could fall to zero or near-zero with very little warning.

- It has high transaction costs. This makes it prohibitive to use for everyday transactions without some kind of central authority to batch the transactions—and then you've just invented a new State, but with extra steps.

There are other problems with it, but these two are more than enough to make it utterly unsuitable as currency.

It's been great at making money for those who got in early, though. What do we call those kinds of schemes again...?

Edit to add: All of this also presupposes that "separating money from the State" is actually a good thing. Most of us are not hardcore libertarians or anarchocapitalists, so we don't actually believe that it is.

> This overproduction then leads to prices dropping, or the bubble popping.

This is absolutely not what causes most bubbles to pop. Pick any major bubble, it did not pop because suddenly we produced more of some thing.

That was true initially, but because of its price it became impractical as a currency.

People are now only buying it as an investment, investment in what? It inherently doesn't have any value or utility.

Speculation is a distraction from the greater goal. When there are volatile exchange markets, people will always try to take advantage of them to make money.

The fact that people see bitcoin as an investment is really a testament to just how awful fiat money is. Is bitcoin going up, or is fiat going down? It's probably both, but the reason people expect bitcoin to continue going up is precisely because the fiat money is being expanded and their purchasing power is being robbed via the inflation caused by that expansion.

The expectation to continue going up isn't just guesswork or gambling either. If you study the history of money, then you learn that almost any time two monies are competing, the harder money displaces the easy money.

All value is subjective, and always has been. If it the case that historically, people subjectively prefer to save the harder money (Gresham's Law), then what reason do you have to think this time is any different?

> The fact that people see bitcoin as an investment is really a testament to just how awful fiat money is.

I'd interpret that differently. The fact that people see bitcoin as an investment is really a testament to just how awful it is as money and how awful fiat money is as an investment. Basically what I'm saying is that majority of people view crypto as an investment not because fiat money is awful but because in its short lifespan crypto has had crazy returns.

People see bitcoin as an investment because that is what it is to them and they invest in it because they hope they'll become crypto millionaires with a small investment.

> The expectation to continue going up isn't just guesswork or gambling either. If you study the history of money, then you learn that almost any time two monies are competing, the harder money displaces the easy money.

There is something wrong here. Gresham's law is about good and bad money not hard and easy. People prefer to save in good money and use bad money. Meaning that bad money displaces good money not the other way around. This applies when both currencies are considered legal tender. It is the other way round when there is no legal tender. Considering that USD is legal tender and BTC is not there is little point in invoking Gresham's law.

> All value is subjective, and always has been. If it the case that historically, people subjectively prefer to save the harder money (Gresham's Law), then what reason do you have to think this time is any different?

I'd argue, in this instance, that it is not about bad/good money here but about bitcoin being unusable as a currency so it pivoted in to being a "store of value".

People spend billions to buy real estate and leave it empty. Finance is not about utility (anymore; was it ever?), but about perception. Bitcoin wins because it is mathematics; everything else is coercion and persuasion/marketing.

This is of course ridiculous.

Leaving real estate empty changes then utilization rate, not the utility function.

If I have a loaf of bread that I haven’t eaten yet, that bread still has utility to me or other people.

If i have a bitcoin that i haven't used, that bitcoin still has utility to me or other people

Yes, I never said it didn’t. What I said was the utility of other assets are backstopped by things that aren’t first order price appreciation.

The overwhelming majority of people are interested in bitcoin and crypto due to speculative properties. The utility of being able to interact with these blockchains right now (which is the utility provided by the L1 tokens) is drastically reduced if the bubble bursts. We see this with Ethereum gas fees. There is a positive feedback loop, which of course cuts both ways.

In real estate, the utility is overwhelmingly the shelter provided, and the price is backstopped by this utility.

In equities, price appreciation is the dominant utility, but is backstopped by the underlying business (as the business returns capital to shareholders). The price is a function of utility, as opposed to the utility being a function of the price (as is the case in crypto).

There's no doubt there's money to be made, but fundamentally bitcoin represents a threat to the existing power's ability to control financial markets. I see so many people hoping that they'l give that power up .. and then we have a nation like China go and ban crypto and EU legislating it like crazy.

I'm sure crypto will exist in the future, to me the big question will be how painful will a government make it for you to own crypto.

Sing it with me, "Ev-ry bo-dy wants to be rich-er"

(to the tune of "Everybody Wants To Rule The World")

Maybe I'm beating a dead horse, but it seems to me that if bitcoin investors care about its status as a Ponzi scheme or its greater merits at all, they certainly don't care as much as they do for its potential to multiply their investment.

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