Author Topic: Precious Metals  (Read 31648 times)

Paul990

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Re: Precious Metals
« Reply #300 on: December 04, 2019, 08:19:45 AM »
It's no coincidence that this increase of wealth inequality has been boosted after the GS was abandoned by the USA.


I am a bit curious what caused high incomes to start growing rapidly in the mid 80's.

In the same post I quoted Peter Shiff
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When you buy an asset and you incur debt, inflation makes you rich because it wipes out the value of the money you borrowed and now youíre left with the real asset that you purchased.
But who gets wiped out? The savers.
Who are the savers? The average guy whoís got a 401K or a pension. Heís got an annuity. Heís got cash value in life insurance. Heís got bonds. Heís got some savings ó heís getting wiped out.

And so the people who levered up to buy assets, which are generally richer people, have gotten richer, and the people who havenít done that, who arenít as sophisticated, donít have the incomes or the assets to do that, you know, theyíre just trying to save their money.
Well, theyíre getting eviscerated.

This was his explanation.
This is mine: the amounts of new money created by the central banks have gone into the financial markets.
The participants to the financial markets have profited from it.
Those who weren't into the financial markets didn't.

The chart that you provide does not show how abandoning the gold standard leads to wealth inequality.
That's why I quoted Peter Shiff
« Last Edit: December 04, 2019, 08:23:12 AM by Paul990 »

Paul990

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Re: Precious Metals
« Reply #301 on: December 04, 2019, 08:30:48 AM »
There was plenty of inflation back when we were on the gold standard.  There was plenty of deflation too.   Unstable pricing under the gold standard meant recessions occurred every one to three years.  No thanks.
Under the gold standard there was never a currency crises.
Under the gold standard there was never hyperinflation.

You think always only USA telecaster.
The USA is not the whole world.
Let's compare the average inflation in ALL fiat-led-countries worldwide with the average inflation under the gold standard?

Paul990

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Re: Precious Metals
« Reply #302 on: December 04, 2019, 08:35:36 AM »
Can someone please explain to me:

If the gold standard is the ideal economic underpinning then why did all countries eventually leave the gold standard?

Were they tired of ideal economic fundamentals?
Were they annoyed at all the prosperity they enjoyed as a result of the gold standard, so they sought to set their entire nation back a few pegs?
Could they just not handle the moral weight and responsibility of owning all that gold?

I'm always shocked about people who want a return to the gold standard who have absolutely no idea what that would imply. Fortunately today, one need not be informed to have an opinion.

Governments were keen to abandon the GS because it acts as a constraint on government spending. With fiat money they can just print however much currency they require to fulfill whatever promises have been made, and socialise the cost via the inflation tax which robs existing holders of the currency of its purchasing power.

If that were true, wouldn't the US have been mired in hyperinflation for the past several years? Is this theory consistent with observation?
Yes it is.
"wouldn't the US have been mired in hyperinflation for the past several years?" Yes, if the trillions had poured in the economy.
Instead they have mostly remained within the financial markets, inflating those assets (bonds, stocks, every kind of derivatives etc.), making rich those who participate in them, who are the rich, i.e. making the rich richer, creating wealth inequality (see my posts above)

Paul990

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Re: Precious Metals
« Reply #303 on: December 04, 2019, 08:40:05 AM »
Can someone please explain to me:

If the gold standard is the ideal economic underpinning then why did all countries eventually leave the gold standard?
It wasn't all countries.
It was the USA who left unilaterally the Bretton Woods agreements after De Gaulle asked to exchange US dollars with gold

Paul990

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Re: Precious Metals
« Reply #304 on: December 04, 2019, 09:10:51 AM »
Look, you still gotta explain why the US economy would have done better if we'd been on the gold standard for the last ~50 years.
@ W, when you compare fiat standard with gold standard, I don't think that it's reasonable to consider only one country (and incidentally, the economic superpower) instead of talking about the world economy.

But my point was another one.
You and bwall keep pointing to the well-being caused by currency production.
What you both don't mention is the fact that this well-being increase is debt-based.
It seems to me that you consider this fact a minor one. Well-being is well-being, it doesn't matter if debt-based or not.

I admit that I don't fully understand the relation between currency supply expansion and overall debt increase, but my point is that increasing your well-being through debt is never a good idea.
Every debt spiral like the one that the world (and the USA) are experiencing has a day of reckoning.
It seems to me that when you repeatedly mention the wealth increase experienced after 1971, you are blocking out this fact from the discussion.


@vand, you are the specialist for the Austrian economics model: is there any explaination about the relation between fiat currency expansion and public and/or overall debt level increase?
« Last Edit: December 04, 2019, 09:40:45 AM by Paul990 »

waltworks

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Re: Precious Metals
« Reply #305 on: December 04, 2019, 09:35:31 AM »
I admit that I don't fully understand the relation between currency supply expansion and overall debt increase, but my point is that increasing your well-being through debt is never a good idea.

You don't like capitalism? Seriously? No mortgages, no business loans, no buying or selling of bonds? Because debt is just bad?

Oh, man, where to start with that one...

I'm starting to think this is just a troll account. I'm too lazy to look, but are you the same guy who thought investments couldn't beat inflation?

-W

bwall

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Re: Precious Metals
« Reply #306 on: December 04, 2019, 09:48:16 AM »
Look, you still gotta explain why the US economy would have done better if we'd been on the gold standard for the last ~50 years.
@ W, when you compare fiat standard with gold standard, I don't think that it's reasonable to consider only one country (and incidentally, the economic superpower) instead of talking about the world economy.

But my point was another one.
You and bwall keep pointing to the well-being caused by currency production.
What you both don't mention is the fact that this well-being increase is debt-based.
It seems to me that you consider this fact a minor one. Well-being is well-being, it doesn't matter if debt-based or not.

I admit that I don't fully understand the relation between currency supply expansion and overall debt increase, but my point is that increasing your well-being through debt is never a good idea.
Every debt spiral like the one that the world (and the USA) are experiencing has a day of reckoning.
It seems to me that when you repeatedly mention the wealth increase experienced after 1971, you are blocking out this fact from the discussion.

If you do not understand the relationship between monetary (or as you say, 'currency supply') expansion and overall debt increase, then I'm not sure that it's possible to have a meaningful conversation.

You are welcome to have an opinion on gold standard, debt and the like, lots of people have opinions on lots of things, like taste in music, food, cars, partners, etc. But, it's harder to have opinions on facts like what constitutes a fixed money supply, gold standard (Bretton Woods wasn't a gold standard, btw), inflation, debt, etc.

Have you ever considered taking some classes on economics? It seems that you're very interested in the subject and you'd probably do very well.

bwall

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Re: Precious Metals
« Reply #307 on: December 04, 2019, 10:47:17 AM »

The supply of natural resources also stays the same in an economy where money is created by fiat rather than supplied by accidents. The difference is if the population of 35 people expands to 70, or if the amount of economic activity doubles, the islanders will have to hope a storm comes along to double the money supply or else there will be a shortage of money (deflation) which will result in hoarding and desperate price-cutting (depression). It may sound like fun to live in an economy with falling prices, where one gets relatively richer than one's neighbors just by hoarding money, but people who lived through such episodes will disagree. When everyone is hoarding during a money shortage, there's no way to make a living. It's a game of chicken with starvation, where people get to decide how long they can hold out before they spend their last dollar / gold chain link on food.

In the U.S. in 1960, MI (cash, traveller's checks, etc.) was about $140 billion. We are now at $3,930 billion. This is like the storm hit the island and multiplied the number of trading shells 28x. Also in that timeframe, real (inflation-adjusted) GDP per capita increased from about $18k to about $58k. Meanwhile, the population increased from about 178M to about 330M.

https://fred.stlouisfed.org/series/M1NS
https://fred.stlouisfed.org/series/A939RX0Q048SBEA
https://fred.stlouisfed.org/series/POPTHM

So, more people producing more economic output with more money. What would have happened if a law was passed in 1960 saying the US had to maintain M1 at $140 billion forever, and could never expand the amount of cash in circulation? I'm guessing something similar as would have happen if the food supply were arbitrarily frozen at a 1960 quota - disaster!

Here's a second point. The supply of gold is expanding too. Thousands of tons of the stuff are produced every year, and production has accelerated over time. The price of gold in fiat money would crater due to oversupply if it were not for an expanding world population and GDP - i.e. more people with fiat money buying engagement rings, computer processors, and whatnot. The supply is highly cyclical because mining investment lags and attempts to predict demand by many years (see chart below). But my question is, how is it more "sound" to constrict money supply based on these fluctuations in industrial commodity supply, rather than the more data-responsive approach that is possible with fiat currencies?

That is, how would the economy be more stable and prosperous if the expansion of the money supply looked like the gold production chart instead of the smooth line chart for M1?

Third question. In a gold based economy. What is the ideal percentage of economic activity devoted to digging up gold? 0.5%? 1%? 20%? 68%? I suspect it would be much higher than we have today, which raises the question: If a large percentage of the population had to labor in mines just to maintain the growth of a monetary system, wouldn't a competing economy that could expand the monetary base effortlessly and employ all those miners in more productive pursuits experience higher growth and living standards? This is a play on Keynes' question about whether paying people to dig holes and fill them back in should be considered economic growth. A gold-based economy would have to occupy lots of people and resources doing exactly that.

Fabulous post, @ChpBstrd. Very well explained and in plain English.

I suspect that many people have nostalgia for the gold standard like they have nostalgia for anything--based more on emotions than on any sound reasoning or logic. Nostalgia/emotions are a great way to pick a sports team, or your favorite vacation spot, or favorite drink, but no way to run an economy.

maizeman

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Re: Precious Metals
« Reply #308 on: December 04, 2019, 10:57:05 AM »
@W, @ Radagast, I thought if someone buys a house with a loan, if the house's value sinks the bank will ask for more security, with eventual foreclose.

No, this is not correct. That's part of what makes long term fixed rate mortgages such a good deal for individuals. They are long term uncallable leverage.

Radagast

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Re: Precious Metals
« Reply #309 on: December 04, 2019, 08:17:29 PM »
This line of your post stroke me "You do the math, feel free to neglect growth of principal."
It seemed to me that your post was neglecting the other direction.
I'm not saying that you should had invested in gold instead of RE.
Sorry, that was poorly worded. What I meant was "neglect repayment of principal (and also growth of house price)." Since I took a loan for 80% of the value, that means I was assuming my house would never be worth more than 20% of its price when I bought it. I was baking in an 80% loss. At that point you could just go ahead and neglect principal entirely, which is often done by real estate investors, it is called cash-on-cash return. Assume you will sell the property for scrap, with the value of the land paying for the value of demolishing the structure(s). Cash flow is all that matters for this analysis.

With this property there are two ways I can earn money: 1) I can rent it for gain, 2) I can hope to sell it in the future for more than 20% of its price when I bought it. Contrast with gold, which only has 3) hope to sell it in the future for more than its price you bought it. The house is by far the more conservative investment. Some real estate investors are flippers who only rely on price, but like I said, I am more the "total return" type.

@W, @ Radagast, I thought if someone buys a house with a loan, if the house's value sinks the bank will ask for more security, with eventual foreclose.
No, this is not correct. That's part of what makes long term fixed rate mortgages such a good deal for individuals. They are long term uncallable leverage.
As maizeman says, once the loan has been issued, the bank can do nothing except sit back and expect payments for the next 30 years. As long as they are receiving those they are essentially powerless. They can demand that I have insurance and pay taxes, but those are only to be sure I will always pay. In fact, in recent times the bank which issues the mortgage will rarely keep it, and will instead bundle it up and sell the mortgage to other investors via the markets. All the other cards are in my hands. I can hold, fold, refinance, remodel, sell, rent, whatever. That is why US-based mustachians are generally big proponents of long term home mortgages: they are one of the financial instruments which most strongly favors little people.

Paul990

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Re: Precious Metals
« Reply #310 on: December 10, 2019, 10:04:37 AM »
@Radagast : )
the time you spent writing that post won't be wasted.
I'm going to delve into it.


That is, how would the economy be more stable and prosperous if the expansion of the money supply looked like the gold production chart instead of the smooth line chart for M1?



... the smoothly exponentially ascending line chart...

As the economy is not increasing at that pace, where is ending up all the M1 money?


Change of subject.
We talked about inflation, whether the official CPI is trustable or not.
I found this food for thought

Quote
Gordon Haskett Research Advisors conducted a study by purchasing a basket of 76 typical items consumers buy at Walmart and Target.  The study showed that from June 2018 to June 2019, prices increased about 5%.
Walmart and Target are good proxies for consumer buying experiences. Walmart is the largest retailer in the U.S. with over 3,000 locations marketing to price-conscious consumers. Target has 1,800 locations in the U.S. and is focused on a similar consumer buyer profile, though a bit less price sensitive. Importantly, both Walmart and Target have discount food sections in their stories.




Quote
Housing has been rapidly increasing in cost as well.  Rental costs have soared in 2019 as the following chart shows a month over month shift to .45%, which is an annualized rate of 5.4%.



It concludes this way
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John Williams calculation using the earlier basket formula sets the present inflation rate at nearly 10%.  Based on our research on various price reporting services, we think the real consumer inflation rate is probably about 5 to 6%.
« Last Edit: December 10, 2019, 10:08:29 AM by Paul990 »

waltworks

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Re: Precious Metals
« Reply #311 on: December 10, 2019, 12:41:07 PM »
US GDP in 1960 was around $500 billion. It's now around $20 trillion. So roughly 40x larger.

Money supply (squinting at the chart) was around 150k in 1960 and 3500k today, so 23x larger.

So the economy is actually growing, in general, faster than the money supply over that period you are looking at.

You want to look at inflation over longer terms, IMO, since political issues (think tariffs affect the cost of goods at Walmart?) can have a big effect if you're just looking at one year.

Here's a good article on consumer inflation, including some data on inflation on basic consumer goods since the early 1980s, using old newspaper ads:
https://moneymaven.io/economonitor/emerging-markets/deconstructing-shadowstats-why-is-it-so-loved-by-its-followers-but-scorned-by-economists-DWhA0PwhhkOHkzTLLeCvpQ/

I'll agree that housing, education, and healthcare have all increased in cost much more rapidly than core CPI or wages. That, however, is a separate problem from going back to the gold standard vs fiat.

-W


maizeman

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Re: Precious Metals
« Reply #312 on: December 10, 2019, 02:06:24 PM »
Change of subject.
We talked about inflation, whether the official CPI is trustable or not.
I found this food for thought

Quote
Gordon Haskett Research Advisors conducted a study by purchasing a basket of 76 typical items consumers buy at Walmart and Target.  The study showed that from June 2018 to June 2019, prices increased about 5%.
Walmart and Target are good proxies for consumer buying experiences. Walmart is the largest retailer in the U.S. with over 3,000 locations marketing to price-conscious consumers. Target has 1,800 locations in the U.S. and is focused on a similar consumer buyer profile, though a bit less price sensitive. Importantly, both Walmart and Target have discount food sections in their stories.



Something really major has happened in the last year that has absolutely nothing to do with the currency supply. The US entered a major trade war with China, with a 10% tariff on Chinese imports. I suspect an awful lot of the goods sold in Walmart and Target are made in China, so a 5% across the board increase based on a 10% tariff sounds pretty reasonable.

Telecaster

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Re: Precious Metals
« Reply #313 on: December 10, 2019, 03:24:10 PM »
More food for thought:  MIT's Billion Prices Project which compares daily prices among thousands of retailers in dozens of countries.

When you boil it down, actual price movements in the US are about the same as the CPI:

http://www.thebillionpricesproject.com/usa/

Re:  Shadowstats.  John Williams comes up a lot, but IMO he's obviously a crackpot.  If inflation was cooking along at 10%/year as he claims, then we'd see prices double every seven years.  Unless wages were also doubling at that rate (and I'm quite certain they are not), then our standard of living would be rapidly deceasing. 

maizeman

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Re: Precious Metals
« Reply #314 on: December 10, 2019, 03:35:09 PM »
You can hide or miss inflation for a couple of years and it's possible no one will notice, or will think their particular situation is an outlier. Much harder to hide it over the long term.

If inflation is 7% higher than reported for a decade prices will be twice as high the official numbers would predict. That's really really hard to miss.

robartsd

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Re: Precious Metals
« Reply #315 on: December 10, 2019, 05:21:03 PM »


CPI is the low line here. Contrary to the headline of the chart, I see the housing as fairly reassuring: overall housing is slightly more affordable than it was 20 years ago. Yes, housing costs are currently going up faster than wages, but it appears to mostly be recovering from the dip in housing costs after the great recession. Plenty to be concerned about for health care and education costs, but I don't really think those are primarily driven by monetary expansion which would be controlled with a gold standard.

ChpBstrd

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Re: Precious Metals
« Reply #316 on: December 11, 2019, 07:29:30 PM »


CPI is the low line here. Contrary to the headline of the chart, I see the housing as fairly reassuring: overall housing is slightly more affordable than it was 20 years ago. Yes, housing costs are currently going up faster than wages, but it appears to mostly be recovering from the dip in housing costs after the great recession. Plenty to be concerned about for health care and education costs, but I don't really think those are primarily driven by monetary expansion which would be controlled with a gold standard.

Incidental note: Education, housing, and healthcare are the 3 most government subsidized industries in the US. Powerful stakeholders would intervene with fat campaign donations if these subsidies or their duopolies were ever threatened. Government policy is driving the inflation.

Makes one wonder what would CPI be if not for these 3 industries?

Paul990

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Re: Precious Metals
« Reply #317 on: December 12, 2019, 02:16:07 AM »
Incidental note: Education, housing, and healthcare are the 3 most government subsidized industries in the US. Powerful stakeholders would intervene with fat campaign donations if these subsidies or their duopolies were ever threatened. Government policy is driving the inflation.

Makes one wonder what would CPI be if not for these 3 industries?
5%, according to the Gordon Haskett Research Advisors study mentioned above

pecunia

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Re: Precious Metals
« Reply #318 on: December 14, 2019, 10:28:35 AM »
What is driving the cost of education up?

Telecaster

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Re: Precious Metals
« Reply #319 on: December 14, 2019, 11:08:22 AM »
Education costs are mostly labor, and wage inflation is faster than regular inflation (which is good because it means standard of living is increasing).  As long as that remains true education costs will always increase faster than inflation. 




maizeman

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Re: Precious Metals
« Reply #320 on: December 14, 2019, 12:37:02 PM »
What telecaster said but specifically the issue is that Education (and Healthcare) suffer from Baumol's cost disease.

Our productivity per worker really hasn't increased at all. One professor probably teaches about the same number of students per class. A city with 100,000 people probably still needs about 200-300 doctors.

Yet at the same time workers in a lot of other parts of the economy have been getting much more productive (overall productivity per worker is something like 5x was it was in the 1950s), which means salaries go up in those fields. More people want to work in high paying fields and labor is ultimately fungible. That means even in fields with flat per worker productivity, wages (and hence prices) have to go up or the size of the field has to shrink as it recruits fewer people to work at the same wages.

Healthcare and education tend to be fields people will pay whatever it takes as long as they have the money, so costs and prices have had to go up to keep enough workers to provide those services.

In other fields where productivity hasn't increased, Baumol's cost disease means the number of people working in the field has declined dramatically. Live performing classical musicians and shoeshiners would be examples of other professions where productivity didn't grow but Baumol's cost disease resulted in the decline of that type of work more than a big increase in wages.

ice_beard

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Re: Precious Metals
« Reply #321 on: December 14, 2019, 04:49:00 PM »
I asked for some silver for Chirstmas this year. 

robartsd

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Re: Precious Metals
« Reply #322 on: December 17, 2019, 08:34:32 AM »
What telecaster said but specifically the issue is that Education (and Healthcare) suffer from Baumol's cost disease.

Our productivity per worker really hasn't increased at all. One professor probably teaches about the same number of students per class. A city with 100,000 people probably still needs about 200-300 doctors.

Yet at the same time workers in a lot of other parts of the economy have been getting much more productive (overall productivity per worker is something like 5x was it was in the 1950s), which means salaries go up in those fields. More people want to work in high paying fields and labor is ultimately fungible. That means even in fields with flat per worker productivity, wages (and hence prices) have to go up or the size of the field has to shrink as it recruits fewer people to work at the same wages.

Healthcare and education tend to be fields people will pay whatever it takes as long as they have the money, so costs and prices have had to go up to keep enough workers to provide those services.

In other fields where productivity hasn't increased, Baumol's cost disease means the number of people working in the field has declined dramatically. Live performing classical musicians and shoeshiners would be examples of other professions where productivity didn't grow but Baumol's cost disease resulted in the decline of that type of work more than a big increase in wages.
This explanation makes sense to a point, but cost inflation in these fields is much higher than overall wage increases (overall wages up 65%, healthcare up 95%, education up 230% in the chart shared earlier). I can imagine that education is even more sensitive to labor than health care, but education costs have grown 3.5x more than wages have.

maizeman

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Re: Precious Metals
« Reply #323 on: December 17, 2019, 11:39:28 AM »
Yes in education and healthcare there are two additional issues, one shared and one unique to each:

-In both fields there has been a growth in the ratio of administrators (broadly defined) relative to the folks directly providing the product/service (medical care or education). There's a lot of speculation about why this is happening, but would be great to reverse if possible.

-For professors in in demand STEM fields universities really are competing with private industry and often losing out and they're competing in fields where salaries have grown a lot faster than the national average wage. For fields in the humanities where there is a lot less private sector demand salaries do get tugged up to some extent just by comparison, although their salaries haven't grown as much.

-For MDs, production of new MDs has been constrained by other the number of seats in accredited med schools and number of residencies available to med school graduates (you need the residency in order to actually practice medicine, the degree by itself doesn't cut it). From 1985 to 2010 the number of med school graduates was flat at about 16k/year even as the US population grew from 240M then to 330M today. Since then, the number of med school graduates has finally started to climb again but this, combined with the cap on residency positions created an artificial shortfall of MDs, driving up salaries and costs.

forestj

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Re: Precious Metals
« Reply #324 on: December 21, 2019, 12:37:14 PM »
I think accreditation, regulation, and the monopolies / cartels that precipitate from that are the real reason medical care and education have become so expensive.  Its like this because because no one can participate in the market.  You can't just open a school and start teaching or buy an industrial site and start manufacturing asthma medications.  These things are not too hard for the average person to do because of some natural phenomenon, they are simply prohibited by law. If you try to start an organization, whether for profit or not, in education or medicine, usually either you or your customers/students will be arrested, assaulted, or denied access to the market (Job market, Bachelors Degree market, Pharma market, walk-in-clinic market, etc)  by the incumbent system / government / law / mafia. 

Either that or you have to play by their rules, which puts you at an inherent dis-advantage and forces you to over-charge for everything because you have to pay the mafia dues, and they are really REALLY expensive.

Personally I think whats gonna happen, eventually these things (education, healthcare, etc) will be only available to top 20 - top 10% of people in terms of wealth, and at that point as long as the internet still exists and functions similarly to how it does today,  illegal clinics and illegal universities will start popping up and a new generation of businesses will spring up which cost 100x Less while providing better care and products.
« Last Edit: December 21, 2019, 01:33:50 PM by forestj »

ChpBstrd

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Re: Precious Metals
« Reply #325 on: December 22, 2019, 04:03:32 PM »
I think accreditation, regulation, and the monopolies / cartels that precipitate from that are the real reason medical care and education have become so expensive.  Its like this because because no one can participate in the market.  You can't just open a school and start teaching or buy an industrial site and start manufacturing asthma medications.  These things are not too hard for the average person to do because of some natural phenomenon, they are simply prohibited by law. If you try to start an organization, whether for profit or not, in education or medicine, usually either you or your customers/students will be arrested, assaulted, or denied access to the market (Job market, Bachelors Degree market, Pharma market, walk-in-clinic market, etc)  by the incumbent system / government / law / mafia. 

Either that or you have to play by their rules, which puts you at an inherent dis-advantage and forces you to over-charge for everything because you have to pay the mafia dues, and they are really REALLY expensive.

Personally I think whats gonna happen, eventually these things (education, healthcare, etc) will be only available to top 20 - top 10% of people in terms of wealth, and at that point as long as the internet still exists and functions similarly to how it does today,  illegal clinics and illegal universities will start popping up and a new generation of businesses will spring up which cost 100x Less while providing better care and products.

I agree. Regulations that ostensibly are to protect consumers have been used to entrench monopolists and raise the barriers to entry in those industries.

I thought about starting a medical tourism business. It would basically be a travel agency putting people in touch with Caribbean, Canadian, European, or Asian hospitals where folks could get their knees or hips redone, get liposuction, get heart surgery, go through chemo, or just get a ton of diagnostic work done without destroying the family wealth they worked a lifetime for. By the time you need one of these procedures, you're not in a good position to explore the world looking for escape the med-mafia.

I bet the regulators would come for me eventually. 

maizeman

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Re: Precious Metals
« Reply #326 on: December 22, 2019, 04:18:36 PM »
There was a story earlier this fall about an insurance company in Colorado that will pay their customers $5,000 to fly down to mexico to have various necessary-but-non-emergency surgeries done in a Mexican hospital by an american doctor that they also fly from the states.

The example they followed along with in the story was a woman who was getting a knee replacement.

https://www.nytimes.com/2019/08/09/business/medical-tourism-mexico.html

The doctor makes 3x what he would doing the same surgery at home, plus gets a nice evening on a beach in mexico, the patient gets the new knee, all travel expenses paid, and a $5,000 check, and the insurance company still comes out ahead.

Paul990

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Re: Precious Metals
« Reply #327 on: January 06, 2020, 03:17:35 AM »
So, more people producing more economic output with more money

... and more debt

       


I don't understand why in the picture you describe, you leave the debt factor aside, as if it were irrelevant

Paul990

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Re: Precious Metals
« Reply #328 on: January 06, 2020, 03:28:05 AM »
In the U.S. in 1960, MI (cash, traveller's checks, etc.) was about ...

What would have happened if a law was passed in 1960 saying the US had to maintain M1 at...

... if the expansion of the money supply looked like the gold production chart instead of the smooth line chart for M1?

While I don't understand also why you talk only about M1, and not MZM, M0, or M2...




... I wonder, as the US GDP is not growing at that pace, where is ending up all that M1 money?

vand

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Re: Precious Metals
« Reply #329 on: January 06, 2020, 04:13:46 AM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.
« Last Edit: January 06, 2020, 04:18:23 AM by vand »

markbike528CBX

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Re: Precious Metals
« Reply #330 on: January 06, 2020, 09:18:42 AM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

Quoted to avoid future deletion on the appearance of contradictory data.

Gold bull market? Based on a weeks worth of upswing?

dougules

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Re: Precious Metals
« Reply #331 on: January 06, 2020, 09:52:54 AM »
So, more people producing more economic output with more money

... and more debt

       


I don't understand why in the picture you describe, you leave the debt factor aside, as if it were irrelevant

Your second chart would be much more readable on a logarithmic scale.  Linear charts like that distort the comparison between old and new for anything that grows by percentage instead of linearly. 

dougules

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Re: Precious Metals
« Reply #332 on: January 06, 2020, 10:04:53 AM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

What are you expecting to drive gold higher?  You may be right, but you're just expecting some other person down the line to pay more for the exact same lump of metal you bought.  There's no actual return, only speculation. 

Davnasty

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Re: Precious Metals
« Reply #333 on: January 06, 2020, 10:09:16 AM »
So, more people producing more economic output with more money

... and more debt

I don't understand why in the picture you describe, you leave the debt factor aside, as if it were irrelevant

Your second chart would be much more readable on a logarithmic scale.  Linear charts like that distort the comparison between old and new for anything that grows by percentage instead of linearly.

This has been explained to Paul990 at least once before:

https://forum.mrmoneymustache.com/investor-alley/capitalism-mercantilism-and-the-gold-standard/msg2515226/#msg2515226

I don't think this person actually has any interest in discussing or gaining knowledge on the topic, only pushing their current opinion. Motive unclear. Lots of thoughtful responses to their posts have been completely ignored.

JAYSLOL

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Re: Precious Metals
« Reply #334 on: January 06, 2020, 10:20:41 AM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

No sure if you mentioned before but just wondering, what percentage of your invested net worth do you have in gold?  Just gold or a combination of gold and silver?  Is it all physical, all etf, or a combination? 

RWD

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Re: Precious Metals
« Reply #335 on: January 06, 2020, 10:26:03 AM »
I don't think this person actually has any interest in discussing or gaining knowledge on the topic, only pushing their current opinion. Motive unclear. Lots of thoughtful responses to their posts have been completely ignored.

It was an easy decision to put Paul on my ignore list almost immediately.

BobTheBuilder

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Re: Precious Metals
« Reply #336 on: January 06, 2020, 11:17:20 AM »

... I wonder, as the US GDP is not growing at that pace, where is ending up all that M1 money?

Well, some things are build to last. If an economy e.g. build significantly more houses starting after WW2 (since less war goods produced which have a tendency to just blow up at some point), most of these houses are still usable. Meaning in a society of increasing and preserved wealth, money increases too. You don't need more houses each year if the previously build houses don't disintegrate at the same rate.

Not a scientific explanation, but maybe... money and credit represent (to some degree) wealth instead of productivity.

vand

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Re: Precious Metals
« Reply #337 on: January 07, 2020, 06:07:23 PM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

Quoted to avoid future deletion on the appearance of contradictory data.

Gold bull market? Based on a weeks worth of upswing?

Based on the definition of a bull market. Duh.

vand

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Re: Precious Metals
« Reply #338 on: January 07, 2020, 06:13:51 PM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

No sure if you mentioned before but just wondering, what percentage of your invested net worth do you have in gold?  Just gold or a combination of gold and silver?  Is it all physical, all etf, or a combination?

About 25% in the metals; gold silver, platinum, mix of physical and etfs. About a further 4% in the miners. This has actually come down in the last year as Iíve diversified by accumulating more financial assets.

markbike528CBX

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Re: Precious Metals
« Reply #339 on: January 07, 2020, 07:38:32 PM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

Quoted to avoid future deletion on the appearance of contradictory data.

Gold bull market? Based on a weeks worth of upswing?

Based on the definition of a bull market. Duh.

Please define.  Please define in such a way that it the bull market is known before the top (sorry, top is always IN :-).  but still....

vand

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Re: Precious Metals
« Reply #340 on: January 08, 2020, 01:09:29 AM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

Quoted to avoid future deletion on the appearance of contradictory data.

Gold bull market? Based on a weeks worth of upswing?

Based on the definition of a bull market. Duh.

Please define.  Please define in such a way that it the bull market is known before the top (sorry, top is always IN :-).  but still....

A bull market is one where you can buy a male cow. I mean, itís OBVIOUS. DUH.

TomTX

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Re: Precious Metals
« Reply #341 on: January 09, 2020, 04:46:10 PM »
I should dig out my old class ring and sell it off to a gold scrap place. I never wear the thing.

Hm, Can't seem to remember the company I used last time - been years.
« Last Edit: January 09, 2020, 05:11:07 PM by TomTX »

markbike528CBX

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Re: Precious Metals
« Reply #342 on: January 09, 2020, 10:48:27 PM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

Quoted to avoid future deletion on the appearance of contradictory data.

Gold bull market? Based on a weeks worth of upswing?

Based on the definition of a bull market. Duh.

Please define.  Please define in such a way that it the bull market is known before the top (sorry, top is always IN :-).  but still....

A bull market is one where you can buy a male cow. I mean, itís OBVIOUS. DUH.
While bull=male cattle may be OBVIOUS, again, how do you determine that gold is a market with near exponential growth?
NOW, without the benefit of hindsight?

freya

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Re: Precious Metals
« Reply #343 on: January 11, 2020, 09:21:37 AM »
Gold is doing its job now just as it's done since Bretton Woods, and in a larger sense for the past several thousand years....

It is a hedge against stock market corrections, same as long-duration bonds.  Both have extended periods where they are uncorrelated with stocks.  If you own all three as part of a structured portfolio AND you are disciplined about tracking asset proportions and sticking with rebalance bands, you get a much more even ride for your portfolio (i.e. reduced standard deviation).  The opportunities to profit from rebalancing are helpful too.  That's the reason to own gold.  In fact, the combination of long bonds + gold is far more effective than the total bond market funds advocated at Bogleheads - those only soften the blow of a stock market correction but they don't compensate for it.

If you are just trying to invest in it on its own as a speculation, well, there are certainly better choices out there.

BobTheBuilder

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Re: Precious Metals
« Reply #344 on: January 11, 2020, 10:09:14 AM »
Gold is doing its job now just as it's done since Bretton Woods, and in a larger sense for the past several thousand years....

It is a hedge against stock market corrections, same as long-duration bonds.  Both have extended periods where they are uncorrelated with stocks.  If you own all three as part of a structured portfolio AND you are disciplined about tracking asset proportions and sticking with rebalance bands, you get a much more even ride for your portfolio (i.e. reduced standard deviation).  The opportunities to profit from rebalancing are helpful too.  That's the reason to own gold.  In fact, the combination of long bonds + gold is far more effective than the total bond market funds advocated at Bogleheads - those only soften the blow of a stock market correction but they don't compensate for it.

If you are just trying to invest in it on its own as a speculation, well, there are certainly better choices out there.

Well said.

vand

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Re: Precious Metals
« Reply #345 on: January 12, 2020, 11:54:00 AM »
Gold is now very clearly in a bull market.

I think we are still in the early adoption stage. Stage 2 doesn't really get going until we take out the old USD high at $1920, which could easily come this year. A 5-fold trough to peak move is my conservative forecast, playing out over most of the 2020s.. still supremely confident in my 10-year bet.

If you don't hold any PMs then I would seriously advise to reconsider this. There will come a time when every dumb money stock market indexer on these forums who never read past JL Collins' "investing for dummies" had wished they had weighted more heavily in the PMs sector.

Quoted to avoid future deletion on the appearance of contradictory data.

Gold bull market? Based on a weeks worth of upswing?

Based on the definition of a bull market. Duh.

Please define.  Please define in such a way that it the bull market is known before the top (sorry, top is always IN :-).  but still....

A bull market is one where you can buy a male cow. I mean, itís OBVIOUS. DUH.
While bull=male cattle may be OBVIOUS, again, how do you determine that gold is a market with near exponential growth?
NOW, without the benefit of hindsight?

A bull market by most definitions follows the "Dow theory" of higher highs and highers lows of the same timeframe, such that the overall trend is up. There is absolutely no requirement for exponential growth, or even steady growth. None at all. So long as Dow theory holds then the overall trend remains intact.

Trend theory does not try to predict tops and bottoms; it merely establishes the main direction of the market.
« Last Edit: January 12, 2020, 11:57:03 AM by vand »

SurpriseButtsecks

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Re: Precious Metals
« Reply #346 on: January 15, 2020, 02:07:43 AM »
If you are going to put money into gold and silver, you may as well just buy some cryptocurrency. It's basically the same thing. The value of it comes from expecting someone else to want to buy it from you. There is no intrinsic value to any of it. Ask a pawn shop owner if you don't believe me.

That's a strange idea. As I know, gold is something existing in real life. And so you can just buy a gold ingot and hide it somewhere just in case. But you can't do the same stuff with cryptocurrency. I don't buy ingots of gold, to be honest, but it's something that you actually CAN do with gold. As a matter of fact, I buy gold at gold ira companies. So it's not the same stuff as just buying real gold. But! When you buy gold this way, you still buy something that is based on real stuff, not on some fancy calculation. Am I wrong?
« Last Edit: January 16, 2020, 01:03:49 PM by SurpriseButtsecks »

vand

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Re: Precious Metals
« Reply #347 on: January 15, 2020, 03:05:50 AM »
Gold is doing its job now just as it's done since Bretton Woods, and in a larger sense for the past several thousand years....

It is a hedge against stock market corrections, same as long-duration bonds.  Both have extended periods where they are uncorrelated with stocks.  If you own all three as part of a structured portfolio AND you are disciplined about tracking asset proportions and sticking with rebalance bands, you get a much more even ride for your portfolio (i.e. reduced standard deviation).  The opportunities to profit from rebalancing are helpful too.  That's the reason to own gold.  In fact, the combination of long bonds + gold is far more effective than the total bond market funds advocated at Bogleheads - those only soften the blow of a stock market correction but they don't compensate for it.

If you are just trying to invest in it on its own as a speculation, well, there are certainly better choices out there.

Gold and stocks can and sometimes do go up together, also. The period from 2002-2007 was a good example of this, tailwinded by a weakening USD.

ChpBstrd

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Re: Precious Metals
« Reply #348 on: January 15, 2020, 11:07:48 AM »
If you are going to put money into gold and silver, you may as well just buy some cryptocurrency. It's basically the same thing. The value of it comes from expecting someone else to want to buy it from you. There is no intrinsic value to any of it. Ask a pawn shop owner if you don't believe me.

That's a strange idea. As I know, gold is something existing in real life. And so you can just buy a gold ingot and hide it somewhere just in case. But you can't do the same stuff with cryptocurrency.

My complete collection of Crystal Gayle vinyl albums from the 70ís also exists in physical reality, but my problem is that no one is willing to barter them in exchange for food, shelter, clothing, energy, or medicine. The property of having value is something assigned by human cultures. Value is always and everywhere a creation of human minds, not something existing in physical reality, and so it is with the value assigned to gold, cryptocurrencies, and sovereign currencies, fiat or not. The ultimate currency is work. Who is willing to work for whom and for how much of what? Unfortunately for my asset collection, Crystal Gayle albums arenít worth a bologna sandwich or a new pair of socks these days. But at least I didnít work years in exchange for them. (In fact, WTF do I still have them?)

celerystalks

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Re: Precious Metals
« Reply #349 on: January 15, 2020, 06:51:29 PM »
I asked for some silver for Chirstmas this year.

did you get any? if so what?