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Random Guy

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Here's a quick and elementary video about inflation and the fix. Simple straightforward and what most on here have been saying.  Get rid of fiat currency and attach our currency to something with intrinsic value (gold, silver, platinum, etc). The standard puts checks on government (why the end of the standard was initiated in 1933 by the douchebag FDR - and finished in 1973 by Nixon) and prevents them from turning cash into fancy toilet paper. It would cause some disruptions/issues as we worked through it, but would be beneficial to our long term existence as well as return some confidence in our government.

 

 

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On 8/2/2022 at 4:16 AM, bfargin said:

Here's a quick and elementary video about inflation and the fix. Simple straightforward and what most on here have been saying.  Get rid of fiat currency and attach our currency to something with intrinsic value (gold, silver, platinum, etc). The standard puts checks on government (why the end of the standard was initiated in 1933 by the douchebag FDR - and finished in 1973 by Nixon) and prevents them from turning cash into fancy toilet paper. It would cause some disruptions/issues as we worked through it, but would be beneficial to our long term existence as well as return some confidence in our government.

 

Thanks for sharing. I want to debunk alot of what's offered in this video, so I'm going to go through section by section, starting with the components that are most commonly misunderstood (myths), especially the 1921 hyperinflation in Germany. I know that most people here might not like Tooze as a source, instead many republicans rally around people like Scott Sumner, so I'll provide a link to his work as well. In short, the rise of national socialism in Germany was caused by deflation, not the hyperinflation which occurred over a decade earlier. 

 

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This myth tends to be commonly understood by everyone in the US, while an actual understanding of money dynamics are not. In fact, the austerity policies following WW1 which were implemented in Germany were universally pursued and the largest contributor of deflation-induced political unrest which began in the 1930's. 

 

Which brings us to the first two sections of the video: coinage and the history of money in Rome & British Isles. What causes coinage to have value, why did rulers 'cry-up' or 'cry-down' their currencies, why was metal content often changed, and how did this affect prices. Generally, Desan is the best source for a modern understanding of coinage, although there are many others. The video begins with Rome, but this is some 3000 years later than the earliest recorded money known today, which is best represented in the clay tablets used for recording ledger entries in early Sumer (modern day Iraq). They even developed a method of signing ledgers, not unlike modern cryptographic hash functions (it's not ironic that many of these artifacts wound up in the personal libraries of bankers like J.P. Morgan, who themselves sought a deeper understanding of 'how money worked'). Many of us may have walked over the ground or even seen archaeological pieces of this society during our deployments and not noticed it, including the salt deposited throughout the territory, which accumulated over time from the irrigation ditches used to cultivate the land. The water from the Turkish mountains contains trace amounts of salt which became lethal to wheat and later barley over 2000 years of irrigation. It was these ditch digging activities which led to some of the earliest forms of money. Contrary to the video, we should really begin our investigation of money and inflation at the beginning, with the Sumer clay tablets, silver coinage, and barley unit of account. This was a monetary economy, with commodity money settlement (silver and barley), executed almost entirely with complex credit systems recorded on ledgers.  

 

Edited by Random Guy
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We can trace the origin of money from early civilization in Sumer through Egypt, Greece, and Rome. The video claims that what gave Roman coins value was the metal itself (with silver being more valuable than copper, because metal has intrinsic value). This is false. Here are excerpts from Desan covering the creation of money as instruments of 'value' (links available in earlier in the thread), and how the origin of value in fungible units was not the metal itself: 

 

 

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Edited by Random Guy
page order of screenshots
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When the video claims that constraints in supply always lead to inflation (non-monetary inflation), we can provide examples of industries with very visible shortages but no price changes, typically because there is no relative power of producers or customer themselves hold power. Example, toilet paper and other sanitary paper products during the lockdowns. Despite frequently empty shelves prices were constant:

 

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Re: fixed currency systems (such as a gold standard). 

The US current account is -$291B and it has ~8000 metric tons of gold, or $459B in terms of USD, given current prices per metric ton of $57M. How long do we think the US would be able to maintain gold outflows if import settlement is demanded in gold, especially when we consider domestic demand for USD conversion to gold? It's possible the US wouldn't be able to maintain a gold peg for even one year, maybe even a single quarter.

I'm curious how you imagine the US fixing its currency to gold would turn out. Is the US gov depleted of gold a net win? Would something cause the US to be less reliant on imports? How would the US conduct domestic investment to reduce dependency on imports with gold settlement in place?

 

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  • 1 month later...
On 5/20/2022 at 2:27 PM, nsplayr said:

The ability to borrow at low interest rates, as the US government can, is a tremendously powerful tool. The price of having that tool is paying some interest. Just ask anyone with bad/no credit history how much you get jammed up when you can't take out a loan when you need one. At the rates Uncle Sam gets, I'm fine with borrowing, in fact I wish we would borrow more for things that have a tremendously positive return on investment and less on things that are just a straight-up cost.

Basically: borrow to invest, don't borrow as a shortcut to spending above your means.

All caveated with the idea that the sovereign debt of the country wielding the world's reserve currency is not like a household budget, that really can't be said enough.

“Expected Interest Rate Hike Will Add $2 Trillion to the Deficit”

This is why the government shouldn’t keep on spending money it doesn’t have.  If the Dems wanted to, they could have raised income tax rates without a single Republican vote, but they didn’t.

https://reason.com/2022/09/20/expected-interest-rate-hike-will-add-2-trillion-to-the-deficit/

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Sort of related to money. If you haven’t read Sapien by Yuval Noah Harrari, you absolutely should. He puts forth the idea that Homo sapiens came to dominate the planet (as opposed to other species of humans) because of our ability to believe in “myth” or “a thing that only exists in the mind.” The reason why we can cooperate better than any other animal or species is that we can believe in a shared myth, such as the lion deity that will grant you good luck if you do a particular ritual, or in an afterlife which allows warriors to fight better than warriors who are afraid of death, or corporations that can exist across multiple countries, or money, which is the most powerful and common myth that nearly all cultures believe in. Because money is something that other people also place value in (as opposed to, say, bartering firewood or chicken eggs) then we can go anywhere on the planet and find people who believe in the same kind of value. His other book 21 Lessons for the 21st Century is also fantastic. 

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What're you boys doing with bonds? Series I are paying almost 10%; 6 month treasuries are at or near 4%. Any reason to even have CDs if they're paying the same amount as treasuries? JPow is planning on raising rates through the end of the year it sounds like.

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16 hours ago, Royal said:

What're you boys doing with bonds? Series I are paying almost 10%; 6 month treasuries are at or near 4%. Any reason to even have CDs if they're paying the same amount as treasuries? JPow is planning on raising rates through the end of the year it sounds like.

Wife and I each got 10k, planning to get another 10k through the "gift" allowance before the rates drop in November. If you have a company you control or a family trust, that's another few sets you can purchase

 

Our "emergency fund" of ~ 6 months expenses are in the process of being converted from a high yield savings account (2%) to 26 week t-bills (3.5-4%). Just put 1/3 into the t-bills every 8 weeks with the auto-reinvest option. Now if you need the emergency fund, disable the reinvestments and you'll get the first 1/3 no later than 8 weeks, with the rest every two months after that. 

 

Still got to maintain enough cash in the high yield savings account to get you through that first two months.

 

Depending on your situation, you can modify this plan using a rotation of longer (or shorter) duration bonds, but that's going to depend mostly on how much cash you want to keep on hand.

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  • 5 weeks later...

State income tax question:

When I separate from Active duty and I’m working airlines and reserves, what are my options?

I have a home/business in WA which has no income tax, will commute for airlines but also own a home in AZ where my wife works and I’ll do my reserve job.

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12 hours ago, disgruntledemployee said:

180+ day living location.

Mess around with it at your tax penalty peril.  I've heard of some in our biz try that, but I like freedom and I prefer the IRS chase rich douches rather than me.

Preach.  I've heard too many new balance wearing, iphone holster toting, cheapskate airline left seaters try to explain how I can dodge taxes through creative residency, airbnb'ing my own house, or other such interstate tax nonsense.  I'm not buying.  Don't mess with IRS...especially not with those extra 87,000 agents who are specifically targeted at exactly our demographic.

Post year-one airline pilots make a metric ton of money.  Pay your taxes, or give it to charity to lower your tax bill.  If you're having a hard time living within your means, go visit Dave Ramsey.

Edited by FourFans130
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15 hours ago, di1630 said:

State income tax question:

When I separate from Active duty and I’m working airlines and reserves, what are my options?

I have a home/business in WA which has no income tax, will commute for airlines but also own a home in AZ where my wife works and I’ll do my reserve job.

As others have said, be careful here. If you’re claiming a non-income tax state, but own property somewhere else, be prepared to answer questions like: Where do your kids live/attend school? Where does your wife live? Where do you get your mail? Where do you receive medical care? Also, providing proof you spent 180 days + somewhere gets difficult when you spend a good chunk of your life on the road. 
 

States are serious about hunting you down for taxes these days and, like trying to maintain multiple simultaneous romantic relationships, the effort required in dodging & deflecting the probing questions of a spouse or state tax agent usually outweighs the benefit being sought (though we all have our theoretical “worth it” scenario pretty well thought out), with the added detriment that you’re only one slip up away from an expensive trip to a lawyer and/or accountant. 
 

IMHO: not worth it. YMMV. 

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On 10/24/2022 at 7:55 PM, di1630 said:

State income tax question:

When I separate from Active duty and I’m working airlines and reserves, what are my options?

I have a home/business in WA which has no income tax, will commute for airlines but also own a home in AZ where my wife works and I’ll do my reserve job.

This is easy, where do you predominantly live (180+/yr), WA or AZ? If you plan on snowbirding and living both places, then it’d be advantageous to spend 181 days in WA. Don’t overthink TDY time, reserve days, etc. - you know where you’re home/point of origin for travel is.

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https://www.yahoo.com/news/whoops-might-not-able-last-193501051.html

"Plenty of people bought I Bonds this year, though I wrote in an earlier column this week that some savers saw incredible hurdles trying to open their accounts because they had to go through extra steps verifying their identity, steps that add several weeks to the process.

More than $24 billion in I Bonds were sold via TreasuryDirect during this year through Oct. 14, according to the Treasury's data. That's up from about $5 billion in 2021. That amount is net of any returned money that is over the limit allowed for purchase in a year."

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6 hours ago, torqued said:

The US Federal Government debt interest payments just hit $736.5 Billion annualized.

For the first time, the interest on our debt exceeds the DoD budget of $715 Billion.

Inflation or Insolvency. Choose one.

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https://fred.stlouisfed.org/series/A091RC1Q027SBEA

I kind of hope we choose both. We're just going to have to accept some level of inflation to accommodate our obscene amount of debt, but insolvency is going to be the only thing that implements the austerity required to dig out of this hole. Zero and negative interest rates for a decade didn't save Europe from their debt, and it won't save us.

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7 hours ago, ViperMan said:

Aren't those things one and the same?

I believe the end result is the same. We can take the medicine now or try to experiment with MMT and kick the can down the road at greater cost. 

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16 hours ago, torqued said:

I believe the end result is the same. We can take the medicine now or try to experiment with MMT and kick the can down the road at greater cost. 

Ahhhh, yes.  MMT.  The gift that just keeps on giving.

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