What is the purpose of acquiring wealth perpetually until death? The implication by the author is that non-essential purchases are a complete waste of money.
Going out for a nice meal with friends is an experience. Experiences are valuable. Saving a giant pile of money for your 70s and beyond accomplishes very little.
Sure, we don't want to ever run out of money. But we also don't want to avoid experiences in our lives to build up a pile of money in old age.
Enjoying experiences while you are young and healthy is important for a fulfilling life. You're going to have more fun with $100 at 25 years old than $100 at 65 years old, inflation adjusted.
Enjoy your youth and find a balance between spending and saving. Lifestyle creep absolutely can be a problem, but so can living so frugally that you avoid valuable and unique experiences.
I think the argument is that "experiences" can be just another form of consumerism. You've replaced buying stuff with buying "experiences". But that's the great thing about experiences - they don't have to cost any money at all. A backyard campfire with friends, beer, and good conversation is just as memorable as a meal at a restaurant. And way cheaper to boot.
Some of my most cherished experiences have cost a lot. Others have cost very little. It's clear that the value of an experience is entirely unrelated to how much we spend on it. The key to avoiding lifestyle inflation is selecting more of the cheaper memorable experiences.
The purpose of accumulating wealth (not necessarily into old age) is to have security and freedom. Someone who is financially independent at 45 has way more opportunity to experience life than someone chained to a desk until 65 because they have to pay for their "experiences".
I understand your point but when most Americans can't put together $1000 for an emergency[1] it's clear that the majority don't have their finances in order.
It's also important to remember that for most activities there are alternatives that cost little to nothing but offer the same fulfilment. I enjoy having my family around for a meal as much as going out to a restaurant with them.
I'm reminded of David Graeber's writing in "Debt". Apologies for the long quote; I find the whole text goes together, and I can't see what part can be edited out.
Graeber writes:
All these moral dramas start from the assumption that personal debt is ultimately a matter of self-indulgence, a sin against one's loved ones — and therefore, that redemption must necessarily be a matter of purging and restoration of ascetic self-denial. What's being shunted out of sight here is first of all the fact that everyone is now in debt (U.S. household debt is now estimated at on average 130 percent of income), and that very little of this debt was accrued by those determined to find money to bet on the horses or toss away on fripperies. Insofar as it was borrowed for what economists like to call discretionary spending, it was mainly to be given to children, to share with friends, or otherwise to be able to build and maintain relations with other human beings that are based on something other than sheer material calculation. One must go into debt to achieve a life that goes in any way beyond sheer survival.
...
To this, most ordinary Americans have responded with a stubborn insistence on continuing to love one another. They continue to acquire houses for their families, liquor and sound systems for parties, gifts for friends; they even insist on continuing to hold weddings and funerals, regardless of whether this is likely to send them skirting default or bankruptcy — apparently figuring that, as long as everyone now has to remake themselves as miniature capitalists, why shouldn't they be allowed to create money out of nothing too?
Granted, the role of discretionary spending itself should not be exaggerated. The chief cause of bankruptcy in America is catastrophic illness; most borrowing is simply a matter of survival (if one does not have a car, one cannot work); and increasingly, simply being able to go to college now almost necessarily means debt peonage for at least half one's subsequent working life. Still, it is useful to point out that for real human beings survival is rarely enough. Nor should it be.
>One must go into debt to achieve a life that goes in any way beyond sheer survival.
I strongly disagree with this. Personal debts aren't like government debt, they need to be repaid. The interest rates on personal loans and credit cards are high.
Being indebted closes off opportunities that are available to people with savings. It enslaves you to your job.
Note this has very little to do with being rich or poor. Anybody can spend more than they earn. In fact the poorest need to be most careful because they are the ones most exposed to usurious interest rates.
> Personal debts aren't like government debt, they need to be repaid.
Why?
Serious question. Do you mean this morally (like, "you gave your word"), practically ("if consumers defaulted in high numbers, it would cause economic ruin"), or something else?
As Graeber points out, many ancient societies had a notion of jubilee years, where all outstanding debts were forgiven and debt-servitude eliminated. There doesn't seem to be a fundamental reason why personal debt should be somehow fixed.
Or did you mean that all just practically: in the US (??), one ought to avoid debt, because it's hard to escape in the current legal regime? (Which I'm not entirely sure I agree with; personal bankruptcy is quite common, but, sure, it wouldn't be my first choice.)
Practically. The banks can come after all your money if you default. It's unlikely you can organize a debt strike personally. The government has way more leverage when it owes money.
Practically. If you fail to make payments then they will attempt to recover their money, often with violence.
As a lender, if I expected a debt jubilee then I would stop lending. But I suspect that was the purpose. It's interesting that most religions have an aversion to debt.
Yes, practically, Graeber is not suggesting consumers go out and take on debt willy nilly. He's suggesting rather that we stop moralizing the issue of debt.
The religious connotations of debt are more subtle and surprising than that, at least in Graeber's telling. But I'll leave that to him. The book, by the way, is free: https://archive.org/details/Debt-The_First_5000_Years. ;)
I really don’t know more on the subject than Graeber writes. He describes it as a fairly regular occurrence in some societies, associated with upheaval (like citizens getting angry about overburdening debt or a new regime wanting to ingratiate itself).
I agree. The graph basically just shows that compounded interest makes a big difference long term, but it doesn't address the larger issues from everyone saving
First of all, the money for a salary needs to come from somewhere, and if people don't spend, then that money can't be used for paying other people's salary
Going out for dinner is also a good way to spend money in an environmentally responsible way. You have to eat any way, but in this fashion you contribute to someone else's salary, if the restaurant is well run there's less food waste, and if you don't enjoy cooking, you can spend the energy you would have used on cooking for other things
To me it would be interesting to see a graph, that showed happiness during a lifetime based not only on earnings, but how those earnings are spend
I think it would show that the best strategy for optimising happiness is to spend on social activities and "experiences" over wealth accumulation and material possessions
> What is the purpose of acquiring wealth perpetually until death?
Reducing uncertainty and increasing opportunity, to put it simply. Money dictates the decisions and choices you can make, the more you have, the less restricted you are.
I think the point is that $100 at 25 is potentially not as nice as ~$400 at 65 (includes doubling every twenty years due to compound interest at historical market rates). Even with the inevitable inflation adjusted cost to a nice meal over forty years, historically speaking someone who invests $100 at 25 instead of eating it will be able to afford more nice meals forty years from now - of course only provided you live that long.
You're guilty until proven innocent on nearly every regulated financial service platform. Prepare to explain with evidence how you got the money, why it's being sent, and who it's being sent to, at a moment's notice. Otherwise expect to be separated from your balance on said platform indefinitely.
Exactly. Money is treated differently than every other medium. As soon as you use it, traditional democratic principles are ignored, and the population is largely okay with that.
The public support for this kind of double standard translates to: "we support you being secure in your rights, unless you want to do something meaningful, like send, receive or possess economic value".
As long as these broad invasions of AML laws into privacy are in place, the West's support for the principles of liberal democracy looks superficial.
You can try to write all the laws you want, eventually it boils down to manually reviewing a ton of transactions and everyone loses. The bank needs to pay for growing compliance departments, customers are scrutinized on a growing number of transactions.
Small businesses who are in higher risk industries, however that is chosen to be defined, become inundated with KYC tasks. Every transaction needs an accompanying stack of documents showing the entire trail.
Finance is becoming a bureaucratic hellhole which disproportionately affects lower income people and small businesses. If you don't have a hired compliance agent you will spend your time as a business owner complying to endless demands for onboarding/KYC/transaction reporting.
What you don't see in this article is that HSBC has tons of false positives and the scrutinization of transactions slows everyone down. The more strict they need to be with money flow, the more regular people suffer from crippling KYC and financial reporting.
Do we want every transaction we send out to require an accompanying invoice and paper trail? Payment reviews, account freezing, in-depth explanations for every transaction?
Moving money has become tedious and a bureaucratic nightmare. I doubt HSBC is doing this on purpose, they just have so many obligations already from their transaction volume that it's nearly impossible to comply with regulations.
This year they quadrupled their harassment of the common customers with the updates in the KYC and antifraud policy. It's close to be completely unbearable.
As we can see all these regulations do not help at all. It's better to scrap them whatsoever and just let law enforcement to do their job on following the trails themselves.
They are applying scrutiny to the wrong parties. Ever-more-strict KYC for individuals will never catch commercial clients, by design. That is not a reason to just give up.
> the scrutinization of transactions slows everyone down
I really don't know if this is a problem. "It is hard to follow the law" doesn't tend to be an excuse for individuals. I have to scrutinize my tax return pretty closely and "it would take a lot of time" isn't going to convince the IRS that I should be let off the hook.
Law enforcement could help. Compared to things like the drug war, we have very few people investigating financial crimes. This appears to be by design, where our society is so invested in enabling the rich to make money that anything that stands in their way is unacceptable.
The Federal Reserve seems primarily focused on keeping asset prices high. Their policies seem to react directly to downward pressure in the equity markets.
When you consider that the appreciation of these markets only serves to widen the wealth gap, it becomes clear that the Fed's mandate is to preserve the wealth of the rich. They're pursuing "trickle down" economics at full speed, despite the overwhelming evidence that "trickle down" is a myth.
The US population is too busy arguing over race issues and partisan politics to realize the financial system is stealing from the poor and giving to the rich.
> The Federal Reserve seems primarily focused on keeping asset prices high
Pshh - the Fed is focused on hitting unemployment and inflation targets. Low yields in the credit market shifts investment demand towards equity.
The "downward pressure in the equity market" is also deflationary pressure and accompanied by a rise in unemployment. Just because the two coincide doesn't mean the Feds principal goal is high asset prices.
The race issues are part of the financial theft. Racism is used as a tool of division to keep the poor fragmented, people are rightfully trying to destroy that tool.
It's crazy to me that if I want to buy Ray Ban sunglasses off Amazon, I am routed by default to random third party sellers. I have purchased these once before and I'm almost positive that I received a fake product.
How can I know for sure though? How does Amazon know for sure? Since that experience I have looked at Amazon in a different light, and I've realized how difficult it is to source name brand products with confidence.
This is as good a time for blockchain as any. Register genuine products on a blockchain and have them scanned once they hit the Amazon warehouse to ensure they are authentic.
How does blockchain help here? The database would be extremely large - too large to hold for any ordinary computer system.
The basic problem is solveable without blockchain by simply registering products by their serial number on the brand's website, which a lot of brands actually already do for higher priced products.
You don't need to link it to any customer details. The way it usually works is the website records every serial number checked, and warns you if somebody has already checked that serial number. For additional assurance the serial number can also be concealed with tamper-evident packaging, e.g. scratch-off paint.
D’Addario has a “serial number” check webpage for their guitar strings. If you enter an invalid (or previously used) serial number, supposedly (I’ve never had a counterfeit set) they’ll send you a genuine set for free.
Sure, some people will input fake serial numbers to get a free product, but they probably weighed the cost of counterfeit strings affecting brand image (if I don’t know mine are counterfeit, I’ll assume it’s D’Addario’s fault if they’re bad) with the cost of sending a free set of $5 strings.
> How does Amazon know for sure? Since that experience I have looked at Amazon in a different light, and I've realized how difficult it is to source name brand products with confidence.
> Since that experience I have looked at Amazon in a different light, and I've realized how difficult it is to source name brand products with confidence.
This has been a solved problem for any legitimate business. The only other place I've seen such lack of quality control were at flea markets, which doesn't say anything good about Amazon.
They already have exactly that, minus the unnecessary blockchain bit. It's called Transparency.
The problem is that manufacturers need to opt into it and there is no way as a consumer to tell on a product listing whether or not the product is part of the registry.
They'll need to survive for 10 years losing billions annually if that is their goal. And it will take them years to scale up automated rides/food delivery even after it becomes available.
Bitcoin has really settled down in terms of price swings over the last year. It did have a major covid crash, but aside from that it's been very stable for the past year.
Keep in mind that the price moves also attract attention, and act as a sort of advertisement of its existence. It wouldn't get any mainstream coverage without the price moves.
> Bitcoin has really settled down in terms of price swings over the last year. It did have a major covid crash, but aside from that it's been very stable for the past year.
lol what? It went from $7000 to $10500 to $4000 to $10400... Blame it on covid if you want but the whole year has been this violent zigzag
Yep, from the point of stability that sucks obviously; there are stablecoins though. I still like BTC as a speculator (and I know it's almost nothing more than gambling, but considering coin tossing, dart throwing or monkeys outperform professional stock investors/fund managers (at least there are a ton of articles saying that), it all sounds like gambling), I create a nice living wage doing nothing at all but clicking buy/sell a few times a year. And that is only running on profits (so all money I 'invest' is profits made with btc alone) from when I bought a stack of btc end of 2016 because something seemed to be happening and by golly it was. As long as it works, it works.
Good or bad; whatever works... It's a nice extra on top of my day job.
Pegging your currency to another currency and claiming it's more stable is cheating and doesn't really solve the problem.
Like the US can stop PayPal from providing financial services, they can too stop banks from storing USD collateral to such parties.
Also I don't agree with your "tracked better than that" claim: DAI/USD has a 15% drop and increase in a few months, about the same as USD/EUR in 5 years.
Sure tell that to the Zimbabwe dollar, the South African Rand.. the Yen, etc. This is an ideal that doesn't exist in practise for all but a small handful of actual currencies.
The market seems to be pricing in the best case scenario here. They're saying that almost everything is back to normal by Q3.
This would be 4 really bad months (March-June) total. The reality is that the future is very uncertain at this point. The market drastically underestimated the virus in early February, and it appears the same phenomenon is happening now.
Covid 19 will eventually (a year or 2) go through the whole population and kill a lot of people, especially pensioners. Then it will be a background level killer like flu and cars. This is bad for many humans and people who love them but it's not bad for the economy.
The stimulus packages seem more focused on ensuring that asset prices remain inflated. The idea that the average person will see any major impact from the S&P500 dropping to 2000 points is laughable.
How many people do you know that truly had their lives ruined by the 2008 crash? Allowing the markets to find a bottom and recover creates opportunities for social mobility.
The people who don't want asset prices to drop are rich people. They are the ones who own the assets.
Going out for a nice meal with friends is an experience. Experiences are valuable. Saving a giant pile of money for your 70s and beyond accomplishes very little.
Sure, we don't want to ever run out of money. But we also don't want to avoid experiences in our lives to build up a pile of money in old age.
Enjoying experiences while you are young and healthy is important for a fulfilling life. You're going to have more fun with $100 at 25 years old than $100 at 65 years old, inflation adjusted.
Enjoy your youth and find a balance between spending and saving. Lifestyle creep absolutely can be a problem, but so can living so frugally that you avoid valuable and unique experiences.