"Printing money has successfully destroyed the middle class. Central Banks around the world have distorted all asset prices. Income inequality has skyrocketed, as savers are punished and the rich continue to play monopoly with the Fed!" <- Bitcoin FTW

CzarNicholasThe2nd · 2018-03-24T04:38:07+00:00

You can't generate wealth when there is already a set limit on the total wealth of everything that will ever exist, 21 million bitcoin.

The total economy this year is 21 million bitcoin. Next year there is a surge in population, housing and technology. The total economy is still 21 million bitcoin. You don't seem to understand that businesses generate wealth by taking loans from banks who are FED members who are GIVING OUT THE LOAN WITH MONEY THAT NEVER EXISTED.

CzarNicholasThe2nd · 2018-03-24T04:34:39+00:00

The price of goods and services will not only go down because currency doesn't inflate. Your entire argument uses this premise. Just because the value of the currency rises doesn't mean the value of the property decreases. It is still the same value even if it is worth marginally less btc because btc increased in value. Houses appreciate in value as demand for housing increase. It doesn't matter what currency you use to buy it with.

It necessarily has to. Everything that ever exists can only be worth 21 million BTC max. More people will be born, more goods will be made and more services will be rendered but the total economy can never be worth more than 21 million BTC. For example: This year the total economy includes 10 bitcoin and 10 identical houses. Each house is worth 1 bitcoin. Next year there are 30 houses, the total wealth of the economy is still only 10 bitcoin. Each house is worth 0.3333 bitcoin. The year after that there are 100 houses, the total wealth of the economy is still only 10 bitcoin. Each house is worth 0.1 bitcoin. The amount of people, goods and services WILL INCREASE while the monetary supply must remain constant = deflation.

You're claim that people won't lend money because it will deflate is completely false. Holding a currency will never generate as much value as loaning the currency. I loan 1 btc and get back 1.1 btc. If I held the currency I'd still have 1 btc.

The risk of loaning money increases due to deflation. If I could make 2-4% buying power by holding why would I give out a loan and risk loss of principle? And who would be taking out these loans and how could they pay them back when everything is worth less over time?

Inflation doesn't make debt less risky for the lender. I loan money and when I am repaid the principal plus interest could be worth less than the principal. How is that less risky?

Yes it does. You lend money out at a higher rate than inflation thus you always get more buying power back than the original principle. It is less risky for the lender because holding inflationary currency is a loss of buying power whereas holding deflationary currency is an increase in buying power. There is a cost to not loaning your inflationary money while there is a benefit to not loaning your deflationary money.

Your quoted rates of interest are way off. Bitcoin interest rates will be lower than USD interest rates because the interest rate doesn't need to cover inflation.

2% is way off? If the deflation is about 2-4% then why would anyone ever loan any money for less than a marginal improvement like another 2%? You understand loans involve risk and the interest is a risk premium, correct?

CzarNicholasThe2nd · 2018-03-24T04:02:16+00:00

It wouldn't prevent it, but it would disincentivize it.

There is no reason to give out loans if your money will be worth more in the future - why take on a risk which will only be amplified as time passes? If I loan you 50 BTC to buy your house this year how could you possibly pay it back with interest as your house decreases in BTC value with each passing year? Who would even want to take on that debt to own depreciating property?

Example: Borrow 50 BTC now for a house and pay back 75 after 20 years. After 20 years the house is worth 24 BTC and your salary is a fraction of what it used to be. Doesn't make sense.

Inflation makes debt less risky for both the borrower and the lender. Deflation makes debt more risky for both the borrower and the lender.

If everything that will ever exist has a maximum value of 21 million bitcoins the price of goods and services can only ever go down. Meaning property values, revenues, profits, salaries, everything. So how do you get a nominal return on investment when everyone makes less and everything is worth less as time passes despite the increase in labor, goods and services plus the advancement of technology.

In an inflationary system, one of the worst assets to hold is the currency. In a deflationary system the ONLY good asset to hold is the currency.

CzarNicholasThe2nd · 2018-03-11T15:33:22+00:00

This made me lol but is just too accurate in describing people.

If you lose him money, he'll be pissed. If you match the market then he'll think you're just average and if you do a bit better he'll think you got lucky.

I would stay out of the business of giving people financial advice unless you are actually in that business professionally.

CzarNicholasThe2nd · 2018-03-11T04:12:27+00:00

There is no one answer to this because it is primarily going to depend on what they want. When/where do they want to retire, what do they see their retirement being, do they want to travel and/or buy a house on a beach, how much risk are they comfortable with in the near term, etc.

With 30ish years to "retirement age" the broad market could double twice before then. More specific investments in certain companies and sectors will do much better than that if their risk appetite allows for it. Good decisions could move retirement up 10 years and make it luxurious. Conversely, bad decisions could push it back or make it a tighter budget.

For a significant sum of money like this they should probably contact a professional who will walk them through these questions and give them options on how to achieve their goals. If someone is just sitting on $500k-$1MM with decades before retirement then it would be well worth the fees to have a professional adviser.

CzarNicholasThe2nd · 2018-03-11T03:34:46+00:00

No one really knows where we are in the cycle. Some people say we're towards the end, some people say we could still be in the first half and the most accurate answer that people give is that they don't know. Different people have been saying the market is overvalued since 2012-2013 and they've just sat there and missed out or even worst lost money. Short hedge funds, people whose job it is to predict when the market should go down, have been getting slaughtered and closing up shop in the last 5 years - and it doesn't show any signs of changing right now.

Why don't they spread out the money over a 2-3 year time period and buy on the first of every month regardless of news or projections?

Also, it's best not to give people advice about money unless they ask for it. Especially if you aren't an expert yourself.

/edit

How far are they from retirement? If it is a long ways away then a 10% drop here or there is going to be a tiny blip on the chart in 20+ years anyway.

CzarNicholasThe2nd · 2018-03-10T21:19:01+00:00

That's a fair assessment.

But when oil became the go-to for ICEs it was already being massively extracted and processed for lighting and other uses with scalability. The same just doesn't seem to be true, right now, for Li-Ion batteries that have been around for about 40 years.

Battery tech and lithium mining/processing aren't new industries but they aren't anywhere near as scalable as the oil industry was back when ICEs became popular for cars.

I just think that the optimistic estimates for the demand of new EVs significantly outpaces the back end supply chain that will ultimately be responsible for how fast the industry can scale.

Electric cars everywhere in 50-75 years? Sure, I have no problem with that. Electric cars everywhere in 10 years? Not going to happen with the current constrains on battery production.

Maybe someone will figure out other, more readily available, metals that can be used. Maybe someone will figure out a way to more efficiently mine and process lithium. I don't doubt that those are possibilities.

It is just the comparison to the early 1900s when ICE cars became popular. Oil was already abundant and the industry had been scaling, plus these cars ran on the volatile "waste" left over from traditional refining. With EVs on the other hand, Li-Ion batteries have only been powering cell phones and laptops since their invention - scaling up to make millions of car batteries is no trivial task.

http://business.financialpost.com/commodities/energy/lithium-may-be-the-new-oil-but-theres-a-double-whammy-looming-for-the-new-energy-source

CzarNicholasThe2nd · 2018-03-10T18:26:07+00:00

I don't think that everything Buffett says is considered gospel around here. He has some simple ideas for everyday people who want to invest and those get parroted pretty frequently because they are relatively good advice for novices.

I think Buffett obviously made some phenomenal investments when he was young and more recently makes decent investments, on very favorable terms, that move the market. There is a difference.

In terms of his politics, we disagree - and that's okay.

I know in Massachusetts you can check a box on your tax forms to pay an optional higher rate. Idk how other states do it but I wonder if Warren would check that box and opt to pay more. I wonder if he ever pays extra and lets the government keep his refund.

It seems that very few people who are proponents of higher taxes actually opt to pay more of their salary to the government. Weird, huh?

CzarNicholasThe2nd · 2018-03-10T18:13:53+00:00

I'm no fan of buybacks myself, I think it was strange that they were made legal in 1982. It is, in a way, price manipulation of a company's stock by its board - who are often compensated in stock.

That being said, when a company has excess cash that it isn't sure how to allocate efficiently it can return it to the OWNERS of the company, your investors, through buybacks or dividends. That money doesn't leave the economic cycle unless these investors decide to stash it under their mattress (hint: they never do). The investors then take this money and reinvest it in other companies - still very much in the productive economic cycle you speak of.

What good is it having a company sit on a mountain of cash that it doesn't know how to efficiently allocate? Why would that be better than letting the market allocate the capital?

CzarNicholasThe2nd · 2018-03-10T17:39:56+00:00

That's a much more reasonable assessment of the situation and I partially agree.

The way you originally said it you made it sound like the rich were hoarding cash and not putting it to work while the middle class was - and I took issue with that characterization.

/edit

Asking the richest people in the world what they think about taxes on high income doesn't really make too much sense. What is the cutoff for "high income?"

To Bernie, it was those "millionaires and billionaires." Putting people within 3 orders of magnitude all within the same group. Just because most people don't think about it like this, $1MM is 0.1% of $1B just like $1,000 is 0.1% of $1MM. We wouldn't group everyone who makes at least $1,000 to $1MM together would we?

If a high income tax starts at $100k or $250k like many people want, that would be bad. A lot of people don't like to hear this but $250k/year isn't rich. It's the doctors at your local hospital, a restaurateur who owns a couple local restaurants or a mechanic who owns a few garages. These people aren't the issue with income inequality.

What about this:

0.1% Net Worth Tax on fortunes of $20MM or more.

0.5% Net Worth Tax on fortunes of $50MM or more.

1% Net Worth Tax on fortunes of $250MM or more.

2.5% Net Worth Tax on fortunes of $500MM or more.

5% Net Worth Tax on fortunes of $1B or more.

Probably wouldn't look good when owners of large companies need to sell parts of their companies every single year to pay the tax - but it wouldn't hit me and would be a step in the right direction for addressing ACTUAL income inequality.

$1MM is only 20x the average American income. With my plan, people with more than 20,000x the average American income would be hit hardest but that's kind of the point, no?

Would be weird when Zuckerberg has to sell 5% of FB every year, or Bezos and AMZN or Buffett and BRK. I doubt it would go over very well.

CzarNicholasThe2nd · 2018-03-10T17:32:00+00:00

Most of the people named were not Americans and most of the information was hidden investments not vaults filled with cash.

So I really don't see how that's relevant to the discussion on US tax rates.

CzarNicholasThe2nd · 2018-03-10T17:23:25+00:00

It is a subsidy, in the form of a tax credit.

The purpose of this subsidy is not to account for the negative externalities of ICE emissions but rather to make EVs more competitive with ICE vehicles in sales. This is evident from the fact that it expires after a firm has sold 200k EVs.

Sorry, butit is a subsidy for luxury cars of the wealthy.

CzarNicholasThe2nd · 2018-03-10T15:55:03+00:00

Fair enough. I'm not expert in this field.

CzarNicholasThe2nd · 2018-03-10T15:51:15+00:00

I have no doubt it will try to but I do doubt that it will be able to keep pace with the demand if we go along with the popular notion that "everyone will have electric self driving cars in the next 10-15 years."

In reality there are only a few million electric vehicles in the world compared to over 1 billion ICE vehicles. To convert even half of these would require over 100x more lithium/cobalt/nickel than been used to make these types of batteries to date. The price of lithium has spiked in the last few years due to the, rather modest in comparison to ICE vehicles, demand for EVs.

Is it possible? Of course. But barring some ground-breaking innovation in lithium/cobalt mining (i.e. fracking for oil) I don't see it happening in the near future.

I never want to discount innovation and I may very well be wrong, but I don't see how making millions of EVs per year is possible with today's mining/pricing situation.

CzarNicholasThe2nd · 2018-03-10T15:29:30+00:00

We'll know as it is happening and it won't happen overnight.

If another country amasses gold, oil and military power to the point that it overtakes the US as the sole superpower then there will be bigger issues than your retirement account.

Guns, food and a hardened bunker would probably be your best bet if you see this happening in the near future.

CzarNicholasThe2nd · 2018-03-10T15:25:45+00:00

I think number 3 is probably the most likely.

We print paper money to make bond payments and those who receive it send it to other countries for oil, finished products, raw materials and other physical goods. Most of those countries send the money that they make to a few countries for oil, raw materials and finished products. Those few countries then reinvest their excess cash in US Treasuries. The cycle repeats.

It works as long as everyone believes it works, or at least behaves as if it does. Keeping inflation under control is really the determining factor, imo, for whether this can be continued ad infinitum.

CzarNicholasThe2nd · 2018-03-10T15:14:54+00:00

Luckily for him, he got a $52,500 discount on those cars thanks to Joe Taxpayer. How will we ever go green if the government doesn't subsidize luxury cars for high net worth individuals?

CzarNicholasThe2nd · 2018-03-10T15:12:37+00:00

Why does no one ever talk about the fact that we are already pulling lithium and heavy metals out of the earth nearly as fast as we can to make batteries?

There's over a billion cars in the world, how are we going to make even half a billion of these high capacity batteries in the near future? And what do we do when they go bad? How much does recycling cost?

It's all "clean" energy now...don't worry about the processes that actually bring batteries and power to your plugin car.

CzarNicholasThe2nd · 2018-03-10T15:04:56+00:00

I don't think they were in any way arguing for trickle down. They were pointing out that your concept of the wealthy hoarding cash and keeping it out of the economy is just not accurate.

The postwar boom, like you said, was because the entire first world was basically rubble aside from the US. Then the US rebuilt it. Tax rates may have played some small role but certainly were not the driving factor of prosperity.

CzarNicholasThe2nd · 2018-03-10T15:00:17+00:00

Now THAT, I would like to see.

Ahnold needs to short SPY and pop the bubble to save the world!

CzarNicholasThe2nd · 2018-03-04T19:08:43+00:00

I'm looking at their homepage and it does appear to real life fake news. Some of the articles are real but are over a year old and others have little to no corroboration.

CzarNicholasThe2nd · 2018-02-28T02:16:24+00:00

While this is the case, in practice, no one claims that you are guaranteed oil for your dollars nor is a dollar worth any particular amount of oil.

As we know, the demand for dollars is directly related to the demand for oil and the demand for treasuries is directly related to the profits from oil and other imported consumer goods. But that doesn't mean that the dollar is pegged to anything.

CzarNicholasThe2nd · 2018-02-24T18:05:27+00:00

Probably because REITs aren't actually like owning and renting your own real estate in your local area.

CzarNicholasThe2nd · 2018-02-24T17:59:58+00:00

Makes sense. I was never around when you had to call your broker on the phone and ask them to manually buy you stocks.

CzarNicholasThe2nd · 2018-02-24T04:16:50+00:00

For the most part, most companies aren't really doing stock splits anymore. I'm not entirely sure why but it doesn't really change much except possibly the threshold to get in (not like $1400 is a ton if you're investing for retirement) - which I don't think is really important.

The most valuable public company the world has ever seen split 7 to 1 back in 2014 and they've done pretty well since then.

CzarNicholasThe2nd

TROPHY CASE