COVID wealth redistribution

[fiby41]

To mark the 60th anniversary of formation of the modern day state of Maharashtra the health minister paid the premium to extend insurance coverage to all 112 million citizens yesterday.

[Saltation]

COVID wealth distribution is happening. Both workers in this house are deemed essential employees and schools are closed so no daycare bill. What did that mean last month? Well my cash flow went up ~$4330 in the month of April---------$3400 from Donny T check, $930 from not paying daycare. I don't have to pay childcare in May or half of June. If I get furloughed I can collect more per week in benefits than what I make actually working. Currently COVID is making me much better off.....aside from the number in my 401k.....and DW's photography business.....What about the tree I needed cut down at my house? Well, that was going to be $2600. Guess what, people have more time so some buddies came over and several of us knocked it out with an aerial lift and some booze. Total cost $350. I'm saving on wear and tear on vehicles, gas, etc. Last month we had our single best month in terms of cash flow that I have recorded in almost three years.

What about the wealth that is not financial? The cleaner environment, quieter neighborhoods, more free time, great home cooked breads etc. My 401k is down, but aside from that everything was in cash anyway. I've been trying to build a buffer for awhile.

I look around and the management class and select manufacturing are doing better than ever. My father is in skilled manufacturing and he is working overtime making more money and getting bonuses right now. My mom is in manufacturing that produces ice cream cartons (which are in high demand right now) and she has voluntary OVERTIME and has worked 23 days straight of 10+ hours which is helping her save thousands of dollars. Around here we make lots of toilet paper. There is quite the demand for that recently.Our family is not an exception either. I know several families that are in the same boat: not paying daycare, better unemployment benefits when they need them and more free time. All of this is wealth and some of it is being redistributed.

[akratic]

I know people are enjoying the "is this likely" topic, but I want to go back to the thought experiment: "Monday I have enough cash for 10 beers. Friday it'll buy only 1 beer. It's Monday. What do?"

On Monday we should convert all cash into the reduction or elimination of expenses. High rent expense? Buy a house. High property tax? Can we pay to relocate somewhere with lower property tax? High future medical expenses? Is there something we can buy now that will help us exercise more often?

How many beers do we drink per year? 1000? 50 yr life expectancy: 50*1000 beers. Do we have enough storage for 50k beers? Given they're 10 times cheaper now we could buy a lifetime's worth. Maybe buy more storage. 50k is a lot though, hmmm. Maybe we only need enough for the downturn, say 5 years? Buy 5k beers monday. Still a lot. How much does it cost for the materials to grow your own beer? Is it fun or labor intensive?

What if we had more hobbies other than just beer drinking. Maybe if we take up gardening and kitesurfing and mushroom foraging they we'll only drink 50 beers/yr instead of 1000 beers/yr. Then 5 yr supply is only 250 beers. Is cash the only thing stopping us from getting into these hobbies (*) and reducing the need for beer? On Monday we're rich, spend the cash. Buy 250 beers too.

(*) probably we're limited by skills or habits or something other than cash, but whenever if it's cash in this thought experiment we should just spend it. I haven't pulled out a spreadsheet but I think the ROI on spending cash on needs/wants on Monday is like 100%/yr, making 3% SWR or 8% stock market return look like a joke.

[Lucky C]

I want to ride the wave and not wipe out. The best way to do that is to watch the wave patterns and not take your eyes off the water.

Buy stuff that's going up in price (relative to T-bills or beer). Sell when it stops going up in price.

[Saltation]

@akratic

This should be the point of this pandemic discussion. Whatever your personal beliefs are regarding if the shutdown should have happened, if the old should just die already, if the young should suck it up or your job is essential/inessential etc. is PROVIDE FOR YOURSELF. Don't make excuses or complain about it because your not the leader(s) making the decisions and society has already determined that your right to make a living doesn't exist the way it used to.

We are empowered to redistribute the wealth just not the way we used to do it. Our garden is slowing going in (great ROI), planted 25 heritage ever bearing raspberry plants from the neighbor that we got for free (another ROI), using the wood from the cut tree for exercise (split wood for 25 hours by hand with an ax and maul) and will use to heat our house.

I'm nowhere near ERE in terms of spending level but having the ability to switch gears quickly, make do with little and expand your social circle quickly has benefits. While everyone is in panic mode I'm trying to gobble up everything I can to switch into 4WD and power through this potential mud hole we're collectively driving ourselves straight into.

[bostonimproper]

If you're really worried about hyperinflation in the short term (which I am not), the correct answer (from a forever-capitalist perspective) is to use your current cash to get as much debt leverage as you can and buy hard assets with high LTV ratio. Inflation will reduce your debt burden, decreasing LTV, and leave you with real wealth.

[Mister Imperceptible]

Highest return on individual instrument so far has been from put options on stocks on 35% waterfall decline, and using proceeds to buy mining stocks after they had dropped 50% before a 60-75% recovery. Had I only been long the miners I would still be waiting for the payoff.

I took out $300,000 in debt between December and February. Hyperinflation not needed, just something akin to the 1970s. This chart still looks favorable.

https://www.macrotrends.net/2485/gold-t ... base-ratio

The financial world and the economic world are now disconnected. What I described above amounts to financial engineering which was spawned as a self-defense function against financial engineering/institutionalized fraud. The investments will not matter in the event of financial collapse. But then the debt will not matter either.

The usual “have alternative capital” applies for if/when financial capital fails but that is not what the OP was asking.

Comparison was made to the Great Depression.



Source: https://www.crescat.net/this-is-it/

[Laura Ingalls]

@augustus

Buy productive land. Farm land, timberland, range land. You can lease out the range and farm land, and those are interests who won't be bailed out by the politicians you are concerned about.

I am going to disagree with this assertion.
Commodity row croppers are the biggest welfare queens around with subsidies and cheap crop insurance.

[Riggerjack]

Lovely. Buy the land, farm it the way you want.

If you know how you want a farm business to go, there is nothing like aligning actions with intent. If you can make a profit, others may follow your example.

[IlliniDave]

I just got a monetary award from my employer for "accountability" even though I haven't been the fall guy for anything at work for at least a decade. Not a huge wealth transfer by any stretch, but like the saying goes, half the battle is showing up.

I've had what success I've had with net inbound wealth transfer by curbing how fast I transfer it out to the next person. I get a little resentful when people look at me as a thief for mastering arithmetic (being otherwise generally among the "innumerate" we're currently looking down our noses at). I'll feel foolish when the righteous rise to strip me of my spoils so my results are equal to that of people like my idiot younger brother, but old dog new tricks and all.

[7Wannabe5]

@IlliniDave:

How resentful would you feel if your idiot brother raised his wealth to your level by marrying a wealthy widow?

BTW, I am in more cheerful mood today, but I am still setting “my” standard for being numerate as the qualifying exam for teaching high school mathematics in Michigan = approximately ability to not get blown out of the water under stress of questions from gifted 8th graders. Not a complete cakewalk, but no Dif EQ -much easier than actuarial exams or math GRE etc. I am sure you and most other members of this forum could pass it if you gave yourself a few weeks to review.

[IlliniDave]

@IlliniDave:
How resentful would you feel if your idiot brother raised his wealth to your level by marrying a wealthy widow?

Probably not at all.

[7Wannabe5]

@IllinDave:

That’s good, because there are probably going to be a lot of Covid widows.

[IlliniDave]

@IllinDave:

That’s good, because there are probably going to be a lot of Covid widows.

Hmm. I should add that to my list of backup plans then.

[fiby41]

Minimum wage is currently applicable to about a third of all workers. FinMin wants to make it universal through a floor wage concept. Details awaited.

[daylen]

Can anyone explain to me what would happen if the world lost faith in the US dollar?

The american empire and its world-wide tribute system would collapse. Likely coinciding with dozens of other events/factors. EOTWAWKI

[daylen]

Even with 800+ military bases spread across the world in strategic locations.. if there really was a world-wide rebellion against the dollar then there is nothing the U.S. or any other political power could do.

https://www.youtube.com/watch?v=mweTc7tDO3I

[tonyedgecombe]

The British Pound used to be the global reserve currency, at one point 60% of world trade was settled in Pound sterling. There has been a steady decline since the first world war yet we are still here, better off than we have ever been (putting aside Covid and Brexit).

[ertyu]

My rudimentary understanding is that we would see massive inflation in the US if the world lost faith in the dollar and/or china sold off it's dollars.

I have the sense that something entirely different And unexpected would happen. Everyone harps on about the dollar losing status and about inflation in the dollar. But this is precisely what makes it a known-known, and thus a known that policy makers can react to. Ditto with the massive deflation and the milkshake. It’s really frustrating, I’m smart enough to get I’m missing something fundamental but not smart enough to get what it would be. If there is an opportunity to take advantage of, I can guarantee you it’ll be on fintwit only -after- the smart money are done taking advantage of it lol