The Libra

[Alan Klein]

I read a lot of financial stuff and have not seen anyone state that there is inflation these days.  The Federal Reserve is trying very hard to achieve 2% inflation and it's not happening.  The big problem with low interest rates is they penalize those who are in conservative investments such as CDs and bonds.  Older Americans are forced into more speculative equities so that they can maintain cash for their retirement years.

Inflation means the expansion of the money supply - more printing.  What you're referring to is price inflation that follows expansion of the money supply.  Those people who told you there's little inflation are wrong.  The price inflation rate from 2009-2018 was a total of 18% or 1.8% awfully close to 2%.  If you had $100,000 sitting in a bank acct, it would be worth $18,000 less.  Or you effectively paid additional hidden taxes of $1800 more per year for ten years because of price inflation.  Since these years bank CD's  only payed about .1% interest, older people and other savers took a pretty big hit.  Additionally, people's salaries and other income from pensions took a similar hit as the latter in particular often do not escalate based on inflation rates.  Even people's salaries were often static.  So people's salaries go down too because of inflation.  Inflation is destructive.  Of course, if you're the government and you owe trillions, inflation is good becasue it allows you to pay back loans with cheaper money as the value of the dollar decreases. 

So the idea that regular 2% inflation is nice just isn't so.  Regular people take a big hit. 
Here's the chart.
https://www.usinflationcalculator.com/inflation/current-inflation-rates/

[Alan Klein]

Are you hiding your money in a mattress? A decent money market account beats current inflation.

Until recently, since 2008 you couldn't get more than .1% from a bank CD or money market acct.  That wouldn't cover the inflation rate that averaged 1.8% for the last ten years.  Only recently have the interest rates gone up a little.  However, what good is it?  It's not more than the inflation rate.  So an older person who use to count on interest to help them with their Social Security can no longer count on savings because inflation is eating up the lower interest rates. 

[Alan Klein]

The volatility swings may be a result from a combination of early adoption and speculation. Clearly, if adoption is eventually wider spread, more stable backing results. Most likely the majority of the currency resides with a few relatively extremely big players atm. Clearly, if a facebook adopts bitcoin as a standard it would potentially spread the value of the currency much better.

Question is of course whether they are a better source for controlling or instigating an entirely new crypto currency?

Losing funds to hacking (or usermistakes) is also (going to be) a far bigger problem with crypto than irl pickpocketing etc...

If I was selling you my camera, why would I accept cryptocurrency?  I would insist you pay me in dollars or Euros or some other government issued currency.  If I wanted to gamble, I'd go to the race track. 

[amolitor]

Even the average 6 month CD rate has been more than 0.1%, albeit not by a LOT, over the entire interval from 2008 to now, with 5 year average rates anywhere from 1.1% to 0.7% or so, depending on where you look in that interval. This takes literally a few seconds to look up.

And you can always, by definition, get CD rates above average.

So, no.

[Alan Klein]

Even the average 6 month CD rate has been more than 0.1%, albeit not by a LOT, over the entire interval from 2008 to now, with 5 year average rates anywhere from 1.1% to 0.7% or so, depending on where you look in that interval. This takes literally a few seconds to look up.

And you can always, by definition, get CD rates above average.

So, no.

  You're cherry picking.  Who wants to lock up money for 5 years in a 1.1% CD which is lower than the inflation rate.  Why not recommend putting all your money in a 30 year US Treasury bond at much higher interest than that.  But then you're locked up the money for 30 years.  The .1% interest you mention was the one I was referring too.  A short term rate so your cash is available if you need it.  And that is much lower than the inflation rate, effectively worth nothing.  If you have a better rate elsewhere, where is it?  Some obscure company that is full of risk than retired people can't afford to take with the savings? 

[amolitor]

I'm pointing out a factually false statement that you made. Sure, it's a minor detail, and sure you got the general shape of it right, in that interest rates have been low.

But there's no denying that you posted a factually false statement, and simply could not be bothered to fact check it. Why? I do not presume to guess.

[Alan Klein]

I'm pointing out a factually false statement that you made. Sure, it's a minor detail, and sure you got the general shape of it right, in that interest rates have been low.

But there's no denying that you posted a factually false statement, and simply could not be bothered to fact check it. Why? I do not presume to guess.

You're being pedantic.  You're making a distinction without a difference. All of the rates you mentioned were below the average inflation rate.   Therefore you'd lose money with your savings which was my point. 

[amolitor]

I'm not commenting on CDs, the economy, or anything related to finance whatsoever, Alan. I am commenting on you.

[Alan Klein]

I'm not commenting on CDs, the economy, or anything related to finance whatsoever, Alan. I am commenting on you.

Personal attacks are not allowed here.  Have a nice day. 

[amolitor]

If Jeremy chooses to interpret a factual statement about a person as a personal attack, well, that is his prerogative. In the USA the truth is an absolute defense against a libel charge, but I am given to understand that such is not the case in the UK. Jurisdiction in this case is unclear.

[Alan Klein]

"Facebook is backpedaling from its ambitious vision for Libra"
https://arstechnica.com/tech-policy/2019/07/facebook-is-backpedaling-from-its-ambitious-vision-for-libra/

[Martin Kristiansen]

Crypto currency is a wonderful combination of everything I don’t understand about money and everything I don’t understand about the internet. Throw in Facebook, a company I don’t trust,  and we are good to go.

[Jeremy Roussak]

In the USA the truth is an absolute defense against a libel charge, but I am given to understand that such is not the case in the UK. Jurisdiction in this case is unclear.

I suggest you begin to derive your understanding from other sources.

Jeremy

[petermfiore]

Crypto currency is a wonderful combination of everything I don’t understand about money and everything I don’t understand about the internet. Throw in Facebook, a company I don’t trust,  and we are good to go.

Perfect, what could possibly be the problem. ;~)

Peter