The wealth-building thread

[droid2000]

OK, hot shot. Here's a graph of US GDP growth rate over a long period of time, going up to present day. Spot 1971 on this chart.

View attachment 301212

Also, the gold standard was first abandoned in 1933, before a lot of the inventions you mentioned. I've also never heard the phrase "inflation kills innovation" before, not even in economics class in a survey of fringe theories, but it sounds like something you'd agree with?

The gold standard was abandoned and only reinstated in a weakened form, largely because deflation is generally much worse than inflation for the broader economy. The gold standard is generally considered the reason why the great depression was as bad as it was. Which, of course, is something that would be even worse with Bitcoin than gold, since at least you can in theory keep mining gold indefinitely, and the assets of dead people who forgot their passwords don't simply disappear forever if they exist in physical form.

monkey demands I spot trend on a graph with no legend lol

 

[JeffS7444]

I found this video by Patrick Boyle who covers among other things, how the author of Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay, was himself not immune to getting sucked into them. Tulip Bulbs, Bored Apes and Bubbles:

 

[OCA]

Fictitious narrative is central to human cohesion!

 

[DonH56]

 

[JeffS7444]

In PRC, deficit spending by the government is down, consumer buying power is rising, and this has analysts concerned.
https://www.economist.com/finance-a...10/deflation-and-default-haunt-chinas-economy

 

[r042wal]

Somewhat. I didn't have the capital set aside to do what I really wanted, though. Probably true for a lot of people.

I bailed out of tech stocks Dec 2019 because they were way overvalued. I 4x on Microsoft and 5x on Amazon. When tech crashed I saved about a 30% decline in my portfolio. I took all my tech gains and put it into passive income stock in 2020 and 2021.

I am 69 years old and it is not important to me if Nvidia or Tesla stock doubles because if it does, there is capital tax gains to be considered, plus, I don't need a Porsche in my 70s. It is nice to be getting 8% - 14% returns on my investments to help supplement my income.

 

[JeffS7444]

I chanced upon this video by The Minimalists with Ramit Sethi, and though the topic of the show was particularly germane: Why accumulate wealth at all (is it just another sort of hoarding?) and ventures into what it means to live a "rich life".

 

[droid2000]

It can be confusing for sure. Nothing like this has ever existed before, and there is nothing to relate it to. To help clarify the questions you have about “asset” and “medium of exchange, it helps to understand that free market money evolves through four stages:

1. Collectible
2. Store of value
3. Medium of exchange
4. Unit of account

Bitcoin is currently transitioning from a store of value (asset) to a medium of exchange. El Salvador declared bitcoin legal tender. It’a a medium of exchange there. More will follow.

To answer your question about the fixed number of coins. It’s important to realize that bitcoin is the first money with rules. It is entirely governed by math. I attached the formula below it uses to create new blocks that contain new bitcoin. At any point you can personally verify the total number of bitcoin in existence. The ledger is completely transparent.

Finally, bitcoin is not a bubble. It’s the pin

View attachment 300500

Halving in 5 months. Game on, again. Seems some straining at the leash already. The largest wealth transfer in history is happening and most are oblivious.

 

[ahofer]

I agree that the US financial markets seem to be pricing in the best of all possible worlds, which is dangerous.

However, until we get rid of the nation state, there are fewer substitutable blockchain assets, transaction costs in blockchain can scale well, and there is some legal killer application of blockchain assets, I don’t think they make a good store of value.

 

[TheWalkman]

Halving in 5 months. Game on, again. Seems some straining at the leash already. The largest wealth transfer in history is happening and most are oblivious.

Perhaps some of our French members can remind folks how great wealth disparity played out for them in the 1790s.

 

[ahofer]

I chanced upon this video by The Minimalists with Ramit Sethi, and though the topic of the show was particularly germane: Why accumulate wealth at all (is it just another sort of hoarding?) and ventures into what it means to live a "rich life".

Listening now, but first answer:

Wealth is a hedge against future uncertain consumption needs. Investing it makes it a better hedge, as you can often preserve your purchasing power and potentially grow in excess of that (increase the value of the hedge). Long-run stock investing is hardly gambling, it is participating in the efforts of people working really hard (mostly) to earn a return on productive assets*. This is the fundamental, measurable reason to do it, and it depends on your sense of what those consumption needs will be, particularly in the years when you will not be able to, or want to, work.

Certainly for other people, wealth is a way of keeping score, or gives a sense of self-worth. This is sort of the golden ear/hifi status part of the argument, and is similarly worthless.

* I would argue that the *earnings* part of stock returns is not a gamble, as the podcast question suggests, but the increase or decrease in *multiple* put on those earnings probably is. Although multiples seem subject to some mean-reverting properties.


UPDATE/PERSONAL OBSERVATION:
One of the things that confounds my retirement planning is my own lifestyle inertia. I live in New York City, own a country home, and like to travel. I have enough money to safely choose any two of these things. My wife is particularly resistant to moving out of the city, but I am very attached to the concert-going and ease of restaurants and transportation. So I find myself continuing work to grow the travel budget. Will I feel like traveling and for how long? Could I be happy living somewhere cheaper (probably, although it might be in some non-US city). It's hard to know future me.

 

[droid2000]

Perhaps some of our French members can remind folks how great wealth disparity played out for them in the 1790s.

Things are radically different now. You can become a sovereign individual. You can move to where you are treated best. You don't have to stay trapped in your castle collecting income from the peasants that work your land. You're coming for me because you consider me too wealthy? Later dudes.

 

[ahofer]

Things are radically different now. You can become a sovereign individual.

I'm afraid that is wildly overstated. Have you tried exiting the US dropping US citizenship with a significant net worth?

 

[blueone]

I'm afraid that is wildly overstated. Have you tried exiting the US dropping US citizenship with a significant net worth?

Yup. The USG websites on this topic are difficult to follow. This page from a law firm is easier to follow (and potentially giggle at or puke over):

What if I Give up My U.S. Citizenship: Taxes and Immigration

What if I Give up My U.S. Citizenship: Taxes and Immigration. Learn about taxes that may be due when you give up your U.S. Citizenship.

www.expatriationattorneys.com

 

[droid2000]

I'm afraid that is wildly overstated. Have you tried exiting the US dropping US citizenship with a significant net worth?

I wouldn't suggest renouncing US citizenship. Things would have to be really bad before anyone should ever consider that. But you are correct, it's a nightmare to leave. I think the US is the only country that taxes you no matter where you live on the planet. And I think they also tax you if you renounce citizenship.

The solution is to have enough money so it doesn't matter. Have enough so that after the tax hit, well, you still have enough. The goal is not to keep every last dollar, the goal is to remain independent of any shenanigans that seem to continuously arise.

 

[madrac]

Skimming through the link blueone posted above, one will most likely need to pay tax in the US if you renounce citizenship. Looks to be a potential loophole(s) but probably nearly impossible to qualify for as Uncle Sam will take his pound of flesh somehow.

I don't think the US is the only one that taxes you even if you live elsewhere, particularly on income. I know Brazilian citizens/permanent residents need to pay income tax in Brazil on income earned outside of Brazil. That said, there are many countries where there are reciprocal tax arrangements where you don't pay income tax in one country if you've paid it in another.

 

[droid2000]

Can't say I didn't try. You can either adapt or stay the course. Good luck.

 

[Blumlein 88]

The line must go up........right?

 

[droid2000]

spend more than 5 minutes you might find out

 

[droid2000]

dis yo find out?

spend more than 5 minutes you might find out

did you find out