Gyroscopic Investing

Simonjester wrote: an interesting article about a report from the st Luis federal reserve, that says hording money is the cause of poor economy http://freedomoutpost.com/2014/09/report-fault-fed-says-americans-hoard-money-blame-poor-economy/ it also has some interesting doomer porn about the government definition of hoarding and what that could mean under a worst case scenario

This article strikes me as another card in the deck of getting people to avoid saving for the future, and thus make them even more dependent on big government to save them when they reach their golden years.

... Mountaineer

And at the meat of the article is this:

"The answer is simple, really, and you don't need to look at detailed government charts and statistics to figure it out.

American consumers have been absolutely pummeled over the last decade.

We are losing so many jobs that newly created minimum wage jobs touted by the Obama administration aren't even making a dent.

Moreover, the price of food, electricity, gas and other essentials have risen so sharply that we're paying nearly double for those items today than we did a decade ago.

And, as recently noted by The Economic Collapse Blog, over 77 million Americans currently have debt collection accounts and 25% of Americans have absolutely no emergency cash whatsoever.

It's not so much that Americans are "hoarding" money, a phrase that suggests greedy people all over the country are stacking piles of cash under their mattresses. It's that most Americans don't have any money left to spend."

I'd love to write more but I have to go hoard some more.

Seems pretty common sensical to me. If everyone in my city spent money like me, the only businesses that would survive would be the supermarket and the goodwill store.

doodle wrote: Seems pretty common sensical to me. If everyone in my city spent money like me, the only businesses that would survive would be the supermarket and the goodwill store.

Same here, for the most part.

But let's turn this on its head: to a certain extent, doesn't this just demonstrate a lack of products that appeal to us? People like you or I may not be tempted by boats, rock concerts, 80 inch TVs, or vacations to Disneyland, but there are surely things we will purchase. Aren't you getting ready to build a house? That's gonna be a chunk of change. And I'm willing to bet that you select high quality materials and respected builders. In fact, I just dropped $5k on new windows and doors for my house. Really good windows and doors, too. The kind that will last decades and eventually pay for themselves in energy savings. And I also bought a bunch of tools that I'm going to use to install them myself. That gives me ten times the pleasure of sitting on my butt and watching even TV shows that I enjoy.

It's just a matter of offering us the kinds of things we are interested in, not the plastic crap and faux experiences they sell to most people. So maybe frugality and asceticism are just symptomatic of bad marketing and product design! Maybe if more people were like you or me, instead of commerce grinding to a screeching halt and society reverting to a warre of all againste all, we would instead have more builders of fine structures and sellers of high-quality tools and fewer vacations charged to the credit card and boats in the desert (seriously, WTF?).

[quote=doodle]Seems pretty common sensical to me. If everyone in my city spent money like me, the only businesses that would survive would be the supermarket and the goodwill store.[/quote]

But the Goodwill store is dependent on a consumer-based, buy-it-all-now-and-then-discard economy.  Speaking of Goodwill, I read somewhere about an 80% rule.  80% of the stuff there is crap, 15% is OK, and 5% is golden.  Or something like that.

We have a general economic malaise caused by numerous factors.  It is not unexpected that the reflection of an unreasonable boom is an unreasonable bust.  There has to be some sort of reciprocity in economic cycles.

Or as Yogi might say, if people don't want to spend money you can't stop them.

MangoMan wrote: It has long been my opinion that the terrible shape of the US economy is the fault of the people over at the MMM and ERE forums. Now evidence to support it! Probably the BH people are also to blame. 

Ha!  At least many of those guys invest their money back into consumerism via corporate stocks and bonds rather than hoarding gold, cash, and treasuries.    As a crossover ERE/PP guy, I'm feeling especially counter-culture today. 

WildAboutHarry wrote: Speaking of Goodwill, I read somewhere about an 80% rule.  80% of the stuff there is crap, 15% is OK, and 5% is golden.  Or something like that.

To Pointedstick's point about product quality, the same can be said about pretty much every retail store.  Even grocery stores.

POintedstick,

Yes, I'm going to drop a chunk of change on a house pretty soon, but after that I will immediately revert back to my frugal ways. If everyone consumed as we did I think we would have extreme deflation and less work....both of which I see as positives. I can't understand our economy where we are always trying to create more jobs and have positive inflation......that just makes no sense to me. Why do we want to work more and have higher prices in the future despite increases in productivity and efficiency? 

Anyways, it seems as if Americans have returned to their profligate ways again....interesting connection between lower public debt and higher private debt....I guess the money has to get created somehow.

http://www.cnbc.com/id/102000780

I agree with everything you said, Doodle. That's why I'm not worried about us crashing the economy. Most people just don't seem to be wired the way we are.

I'm probably not quite as frugal as you guys, but I have a lot of internal debate about how I view the economy.

The anti-consumerist & environmentalist in me thinks how we consume in this country is asinine in many ways.

The MR economist in me sees our current situation worsened considerably by inadequate demand for our current productive capacity, and I fully believe if everyone "spent like doodle" it would be awful for people who have made leveraged stakes on their own future productivity in a specific industry. The most entrepreneurial guy I know would be screwed if we all "tightened our belts."  He'd find ways of getting good at surviving rather than thriving, or marketing a VERY different set of skills than he currently has, but in the meantime, him and his wife and 4 kids would have one hell of of a miserable adjustment period, including a foreclosure on both his business assets and home, most likely.

WildAboutHarry wrote: It is not unexpected that the reflection of an unreasonable boom is an unreasonable bust.

WAH, is this your own invention or are you quoting someone?

I find that brilliant.

[quote=barrett]WAH, is this your own invention or are you quoting someone?

I find that brilliant.[/quote]

Well, thanks.

I think it is original with me.  At least it seemed so this morning.

moda0306 wrote: I'm probably not quite as frugal as you guys, but I have a lot of internal debate about how I view the economy.

The anti-consumerist & environmentalist in me thinks how we consume in this country is asinine in many ways.

The MR economist in me sees our current situation worsened considerably by inadequate demand for our current productive capacity, and I fully believe if everyone "spent like doodle" it would be awful for people who have made leveraged stakes on their own future productivity in a specific industry. The most entrepreneurial guy I know would be screwed if we all "tightened our belts."  He'd find ways of getting good at surviving rather than thriving, or marketing a VERY different set of skills than he currently has, but in the meantime, him and his wife and 4 kids would have one hell of of a miserable adjustment period, including a foreclosure on both his business assets and home, most likely.

In some ways I think the ERE lifestyle is really parasitic. My hoarding and frugality is rewarded by those who choose to enslave themselves to a debt fueled lifestyle. I not only enjoy the benefits of growing investments however, but I also live in a thriving, vibrant, and interesting city full of activity which I can leech the benefits from without paying the cost. For example, I love going into artists galleries and watching them work, and their art brightens up my neighborhood, but I would never buy anything that they create. So in essence I am reaping the benefits of those that do spend on these things without incurring any of the cost.

Life is mostly parasitism, if you really want to think about it that way. There is no end to benefits we receive without compensating someone for them. It's just the nature of the beast.

The upside to a nonconsumerist doodletopian world would be that people would work to do those things that either A. Fulfilled some basic need or B. Were enjoyable and fulfilling to them. A nonconsumerist doodletopian world wouldn't worry about full employment or economic growth. It would be more concerned with quality of life.

Things like sewage, trash collection, housing, clothing, food etc etc. wouldn't cease to exist because I can't think of anyone that would want to live in a world without these. People would still be compensated for their work but they would have to work way less because so many more people would be dividing the labor going towards fulfilling these essential services instead of having a labor pool invested in creating junky plastic knick knacks. Innovation would also still happen I think because innovation improves services and makes lives increasingly easier and opens up more time for other pursuits. Man has a natural propensity to tinker and I don't think he needs to be financially rewarded in order to get him to try to improve things. If someone were able to to create a machine that could sew clothing for example without requiring labor it would be great because it would reduce the total amount of labor necessary to fulfill basic needs. Maybe innovation would happen a little more slowly but it would be driven by true demand instead of artificial manufactured advertising created demand. A lot of "innovation" in my opinion is really just a way to increase sales by offering the public the appearance of having created something that is really a big improvement over previous models, when in fact it is not. As I mentioned before, billions of man hours and dollars have been invested into shaving technology, yet I still very effectively use the shaving technology of my grandpas generation. In a doodletopian world people would be free to tinker with the razor but in the absence of dollar driven advertising such products wouldn't be adopted unless they either provided a noticeable increase in quality, or came at a greatly reduced price.

In a doodletopian world fine craftsmanship and art and science would still flourish because these are pursuits that are intrinsically rewarding to many people.

Gotta go cook dinner in my 60 years cast iron skillet.....these were just a few ideas off the cuff......probably lots of holes in my logic.

Sign me up for Doodletopia!

There are infinitely more ways to contribute to a vibrant society than to earn a salary and spend money.  ERE is simply a means to enable one to explore their options to live and give back more fully. 

Unfortunately doodletopia is the result of a cultural shift.....it can only emerge from the bottom up once people's values regarding consumption begin to shift. I just wonder what a world where everyone subscribed to the tenets of ERE would look like.....I imagine people being engaged in a lot more fulfilling and interesting pursuits. I really think that money is way overrated as a motivating factor in innovation, hardwork, and progress. In fact, I think in many ways money stifles true innovation.

Doodletopia sounds a lot like Mr. Money Mustache's idea, too. Sounds like a wonderful place to live. In a way, all of us ERE folks are working to make this bright future a possibility, even though we may be parasites in the consumerist world.

I stupidly went into the hardware store the other day to look for products to remove rust from all the chrome and other misc parts on an old bicycle that I'm restoring. Anyways, the clerk steered me towards an aisle full of rust removal products galore some of which cost quite a bit and looked pretty toxic. So I decided to stop being lazy and look up alternatives on the internet. I settled on aluminum foil and lemon juice for the chrome and I soaked the bolts and other misc parts in a bit of white vinegar overnight. The chrome cleaned up like new for a total cost of about .25 cents and the next day all the parts came out of about a dollar of vinegar totally shiny new. In a doodletopian world no one would invest any time manufacturing, advertising, stocking, and selling products that did something which a few simple nontoxic household ingredients could accomplish. I wonder how many other products that we buy are actually less effective and more toxic than simpler solutions that our grandparents would have used. How many products are created by someone motivated to make money by solving a problem that already has a very effective solution?

doodle wrote: I wonder how many other products that we buy are actually less effective and more toxic than simpler solutions that our grandparents would have used. How many products are created by someone motivated to make money by solving a problem that already has a very effective solution?

Probably very nearly all of them, I would imagine.

[quote=doodle]Things like sewage, trash collection, housing, clothing, food etc etc. wouldn't cease to exist because I can't think of anyone that would want to live in a world without these.[/quote]

I, for one, would not want to live in a world without sewage

[quote=doodle]I stupidly went into the hardware store the other day to look for products to remove rust from all the chrome and other misc parts on an old bicycle that I'm restoring. Anyways, the clerk steered me towards an aisle full of rust removal products galore some of which cost quite a bit and looked pretty toxic. So I decided to stop being lazy and look up alternatives on the internet. I settled on aluminum foil and lemon juice for the chrome and I soaked the bolts and other misc parts in a bit of white vinegar overnight. The chrome cleaned up like new for a total cost of about .25 cents and the next day all the parts came out of about a dollar of vinegar totally shiny new. In a doodletopian world no one would invest any time manufacturing, advertising, stocking, and selling products that did something which a few simple nontoxic household ingredients could accomplish. I wonder how many other products that we buy are actually less effective and more toxic than simpler solutions that our grandparents would have used. How many products are created by someone motivated to make money by solving a problem that already has a very effective solution?[/quote]

But of course there are things that need cleaning, lubricating, polishing, etc. for which old grand-dad's methods are not effective, or as effective, as more "modern" products.  I cannot imagine lubricating a jet engine with beeswax, although I am sure beeswax would provide some sort of lubrication.  Maybe good on lips and on stuck hinges. 

Aspirin tablets are better than willow bark.  Better quality control, dosage, etc.  But why did those pesky old chemists fool around with acetylsalicyclic acid when willow bark is so plentiful?  Motivated to make money?  Sure.

It is the attempt to arrive at newer, better, etc. that results in truly new and innovative things.  But you need to go through all the crap to get the jewel.

I view commerce like a female cod fish.  The cod lays 50 bazillion eggs hoping to make one new cod.  Commerce produces a bazillion new products and some small percentage actually turn out to be useful, and a small fraction of those turn out to be wonderful.

WildAboutHarry wrote: I view commerce like a female cod fish.  The cod lays 50 bazillion eggs hoping to make one new cod.  Commerce produces a bazillion new products and some small percentage actually turn out to be useful, and a small fraction of those turn out to be wonderful.

That's a really cool way of putting that!

Pointedstick wrote:

WildAboutHarry wrote: I view commerce like a female cod fish.  The cod lays 50 bazillion eggs hoping to make one new cod.  Commerce produces a bazillion new products and some small percentage actually turn out to be useful, and a small fraction of those turn out to be wonderful.

That's a really cool way of putting that!

But the products are being made oftentimes as a way to generate sales and produce money, not because they really are any better. This is why companies release new styles every year to replace the previous years styles. Doodletopians wouldn't fall prey to such nonsense....they would realize that all these shifting styles and "upgrades" result in longer work hours, stress, time away from more rewarding pursuits, etc etc

Also, Doodletopians tend to value function over form and look for objective ways to measure a products effectiveness short of trying to sway an unknowledgable public through advertising. Is the product of better quality and cheaper to produce than the current product.....no? Then immediately to the scrap heap with it....let's not waste time on trying to create a false hype around some piece of shit product. Doodletopians are also a frugal and forward thinking bunch....there is little demand for Walmart garbage that wears out in a year and must constantly be replaced. Instead there is a thriving goodwill and secondhand market where quality products are traded back and forth as one no longer needs them. This means that people aren't constantly engaged in the effort of manufacturing junk that will be disgraced into landfills immediately.

WildAboutHarry wrote:
I, for one, would not want to live in a world without sewage

But you need to go through all the crap to get the jewel.

I certainly hope you meant "a world without sewage sanitary collection, treatment, and appropriate jewel finding equipment! 

... Mountaineer

doodle wrote: Also, Doodletopians tend to value function over form and look for objective ways to measure a products effectiveness short of trying to sway an unknowledgable public through advertising. Is the product of better quality and cheaper to produce than the current product.....no? Then immediately to the scrap heap with it....let's not waste time on trying to create a false hype around some piece of shit product. Doodletopians are also a frugal and forward thinking bunch....there is little demand for Walmart garbage that wears out in a year and must constantly be replaced. Instead there is a thriving goodwill and secondhand market where quality products are traded back and forth as one no longer needs them. This means that people aren't constantly engaged in the effort of manufacturing junk that will be disgraced into landfills immediately.

I'm thinking I'm a Doodletopian and did not even know it.  Before you know it, Doodle might even recognize a Mountaineerian as a tolerable species. 

... Mountaineer