Perspectives on money

[Sclass]

I had to repost this because it really jumped out at me.

Riggerjack said this (along with other insights about $$) in Frita’s journal,

Sacrificing time for money is rewarding, until one has both time and money. Then one has the capacity to sacrifice, but no rewards are available.

This hit home. I’ve gotten so good at telling myself I don’t need things I’m starting to believe it. My idea of consuming money was buying an $8x2 bottles of water at an outdoor festival yesterday instead of trying to find a water fountain. The same water bottles that cost $0.50 at the grocery. My wife said “let’s try to make it another two hours.” I thought no way I’m getting dehydrated.

As of last month my father’s inheritance has been paid out to all the heirs. They’re gone. They are on social media posting from all kinds of places this week - Europe, Nepal, Africa. It’s just dumb. Like proverbial lottery winners. My step mom literally asked me how my dad saved so much money a month ago. “Sclass how could that account grow so big? Your mother tricked me all this time!” It’s so twisted. Somehow my mom debilitated with Alzheimer’s managed to steal all dad’s money. My step mom was married to him twenty years and she still cannot understand money begets money. She’s partying hard today someplace in the Himalayas. I hope she runs out of oxygen in Annapurna or gets kicked off the mountain by a yak.

I warned everyone that they needed to sign up for wealth management immediately. They literally bought plane tix and flew away. My step mom growled at me to stop telling her kids what to do with their money. Ok. We will see. It literally takes one generation of idiots to destroy wealth.

[suomalainen]

For me, money is a medium of exchange of life energy, which is why I'm so offended when others (my kids) think nothing of spending it. This is also why I'm so quick to spend my own accumulated life energy to solve a present problem when my current stores of life energy are near-zero nearly constantly.

Re: inflation, which is obviously relative, I think of it as (accumulated) money is a long-term store of value until it isn't; then, in such a situation, (accumulating) money is briefly a store of value, until it quickly becomes accumulated money, in which case it is most rational to eat the marshmallow now knowing there is no additional marshmallow to come later.

[Scott 2]

I think the ability to see money as capital is a demarcation point in one's own perspective

I still struggle with seeing the US dollar as relatively valued asset. Not just because of inflation, but because the value of all assets fluctuates. Maybe $10 buys 2 dozen eggs this week, but 3 dozen next week. My brain wants to denominate all wealth in US dollars, which ought to have a stable and universal value.

It's simply not true. The idea of a strong or weak dollar, is very hard to wrap my head around. US monetary policy can in a matter of months, make $1 behave as 80 cents or $1.25. Or China can artificially depress prices, causing $1 to buy $2 of consumer goods, making the US dependent on imports.

Some people will point to another asset as the superior and stable global currency. Gold. Bitcoin. Beanie babies. But all valuation is relative. I think recognizing this makes the wisdom of diversifying one assets much clearer. Including non-financial forms of capital.

[mountainFrugal]

Some ideas I have heard that are not represented yet:
-Money is a renewable resource, time is not.
-Money is evil. Money is the root of all evil. The love of money is the root of all evil. Money goads men to do evil.
-Home equity line of credit is basically free money! (similar reasoning to Walwen's example)
-"You have a part-time college job, you can afford to buy a house while you are a full-time student they are practically giving them away..."(subprime mortgage bubble).
-If you get X people to work under you, you will make at least X/year (pyramid schemes, see current examples in "Life Coaching"). "Well with the savings and discounts alone from our catalog..."" "Everyone needs a coach, even coaches!"

[ertyu]

[typically on western luxury import goods]

Not necessarily. Growing up, my grandmother converted the household finances into non-perishables: i remember a shelf with bottles and bottles of cooking oil, another shelf with all soap, etc. You do tend to want to get out of cash when it's losing value but what you choose to store value in instead depends on personal values. The younger generation whose wants were stroked with pink plastic junk for the first time in their lives went for status consumption - brand trainers or t-shirts and so forth - also common in the murikan hood, if you think about it. Or to any "chav" layer of society.

[ertyu]

-Money is evil. Money is the root of all evil. The love of money is the root of all evil. Money goads men to do evil.

I've got one along these lines that recently came up for me: "if you have money and you don't give it away to those more in need, God/Karma will smite you."

I have no idea where I "caught" this one, my family of origin is not religious, but it came up as I investigated my fear of investing. I don't want to have more than the bare minimum because I don't want to give it away and I don't want God/Karma to hurt me for not giving it away.

[jesmine]

Money Is a way to keep tabs with society. If I have savings, I contributed enough, I a have debt, I didn't.

Curiously, debt and/or obligation was the thing that preceded and eventually begat money. See Michael Hudson for this. If money IS debt, saving money can be defined as the accumulation of tokens representing other people's obligations. Nothing backs money but confidence that people will work to provide a good or service to alleviate their obligations.

[GreenMonsta]

Consumer mindset: You can’t take it with you.

Producer/capitalist mindset: money flows where it is treated best.

Religious teachings: “Do not store up for yourself treasures on earth”. Can be conducive to earn/spend mentality. But there is the Parable of the 3 Servants/Bags of Gold emphasizing the need to multiply what has been given to one’s self. The latter sits better with the producer/capitalist worldview.

[Western Red Cedar]

"Money is power"

[xmj]

Venkatesh Rao had a few posts that detail these perspectives in the Mysteries of Money series

Central among them of course is Fools and their Money Metaphors where he details many of the perspectives mentioned in this thread.

What I've come to appreciate is the distinction between the "paycheck" and "entrepreneur" metaphors as it is a reoccuring theme of my life, and a cause for many misunderstandings when talking with non-entrepreneur friends (shoutout to all my entrepreneur friends, birds of a feather and all that).

[loutfard]

David Graeber's "Debt, the first 5000 years" has been mentioned a few times on this forum already. It's probably very relevant to this topic too.

[zbigi]

I still struggle with seeing the US dollar as relatively valued asset. Not just because of inflation, but because the value of all assets fluctuates.

(...)

I think recognizing this makes the wisdom of diversifying one assets much clearer. Including non-financial forms of capital.

The alternative is to store wealth in inflation-protected securities, such as TIPS.

[Scott 2]

The value of TIPS is also subject to monetary policy risk. There is not a universally stable store of value. All asset prices are relative. The default to denominating in one particularly liquid asset (us dollars) makes it confusing.


https://www.investopedia.com/terms/t/tips.asp

How Did TIPS Perform in 2022?

In 2022, inflation in the United States hit highs not seen in four decades, leading many investors to flock to TIPS for protection. However, that insurance policy didn’t really go according to plan. These inflation-protecting securities fell an average of 14.2% during the course of the year, performing not much better than regular Treasuries and major equity markets.
6

This serves as a reminder of how TIPS work and how they are often misunderstood. When inflation soared in 2022, the Federal Reserve—as it normally does when the cost of living rockets—hiked interest rates. And steep increases in the cost of borrowing caused TIPS, like the rest of the bond market, to plummet in value, despite the extra payouts tied to inflation.

What 2022 taught many investors is that TIPS carry the same underlying interest rate risk exposure as other bonds and, therefore, are not the pure-play inflation hedge that some people may have thought they were. Many were fooled into thinking that TIPS returns are perfectly correlated to changes in inflation. Hopefully, they have learned their lesson.
TIPS are designed to protect investors against inflation over the long term rather than act as a short-term hedge against soaring prices.

[7Wannabe5]

David Graeber's "Debt, the first 5000 years" has been mentioned a few times on this forum already. It's probably very relevant to this topic too.

Yes, and Graeber makes the point that Human Capital was the first store of value and exchange. One of the earliest words that approximates "freedom" literally translating as "Return to mother." IOW, no longer being held as a debt slave to another tribe or clan. It has also been suggested that bride price was central to the invention of the concept of money. The overlap of these can be seen in common practices such as having to labor for your future FIL for 3 years to procure his daughter as bride. Modern Western marriage practice obscures the origin of Money as Erotic Capital due to the influence of strong male primogeniture practice resulting in the frequent practice of providing financial dowry along with erotic capital when arranging for marriage to a first son, thus consolidating wealth and power.

As Picketty notes in his "Capital in the 21st Century", one of the strongest underlying forces driving wealth inequality in the 21st century is assortative mating, particularly the tendency for women to prefer men who earn more than they do. Over 60% of the wealth inequality in the U.S. is due to direct inheritance. Therefore, those who feel righteous about not holding debt, even if this was not due to direct inheritance, may want to consider the extent to which inheritance-in-kind may have contributed to their outcome. For example, maybe your parents didn't give/leave you any money, but maybe they at least didn't leave you marooned in the kind of inner city decay/rural blight school districts where I teach.

OTOH...

What I've come to appreciate is the distinction between the "paycheck" and "entrepreneur" metaphors as it is a reoccuring theme of my life, and a cause for many misunderstandings when talking with non-entrepreneur friends (shoutout to all my entrepreneur friends, birds of a feather and all that).

This. One great book (can't summon up the title) I read by a Buddhist Financial Planner suggested that money naturally flows into your life when you do the work that other people want you to do. In alignment with Graeber, I would modify this as more correct if expressed as money naturally flows into your life when you do the work that other people who have money want you to do. However, I think the entrepreneurial perspective would place the emphasis more like "money naturally flows into your life when you do the work that other people want you to do. Profitable trade is like sex, it's all about the desire, which is often spun into being out of seemingly nothing. This is even true with the most boring Econ 101 examples involving trading Melons for Fish.

• Money is Freedom. It's application can literally result in not being enslaved.

• Money simply facilitates the more important function of Trade. Trade follows contour lines of Desire. Innovation creates new contour lines of Desire.

ergo

• Money can be the means through which fulfilling the Desire of others sets you Free to pursue your own Desires.

[zbigi]

The value of TIPS is also subject to monetary policy risk. There is not a universally stable store of value. All asset prices are relative. The default to denominating in one particularly liquid asset (us dollars) makes it confusing.


https://www.investopedia.com/terms/t/tips.asp

I'm not 100% clear on how TIPS in particular work, but - if you don't intend to sell the TIPS on secondary market, but are just waiting for maturation to collect back the invested value corrected for inflation - then the secondary market valuation of TIPS at any particular time is of no importance to you? That's my approach to value preservation, using Polish government anti-inflation bonds (which even can't be traded on the market, so they have no valuation to go up or down).

[Scott 2]

The change in secondary market price, reflects a change in value of the underlying payment stream, including the large final payment.

I'm not familiar with Polish bonds, but I don't see why they'd be any different. The value of the series of payments has changed.

I'm not saying inflation protected bonds are good or bad BTW. Only that all valuations are relative.

[jacob]

The change in secondary market price, reflects a change in value of the underlying payment stream, including the large final payment.

This is only relevant if the bond is bought as part of a fund. It does not affect bonds in the primary market and held to maturity. The effect is also small on bond funds with a low duration.

[zbigi]

It does not affect bonds in the primary market and held to maturity.

Yep, this is what I do exactly.

@Scott2
There's literally zero upside to this, so if you want your money to "work for you" (or, try for some wins via buying low and selling high), this is not a good strategy. But, there's also literally zero downside - as long as your purchases are similar to the average consumer's (as polled by the government), purchasing power of your money is guaranteed.

I like this approach because there's literally no volatility in it, which allows me to plan with much smaller margins (padding) for bad scenarios (which translates to needing much smaller stash).

[OutOfTheBlue]

"Far out in the uncharted backwaters of the unfashionable end of the western spiral arm of the Galaxy lies a small unregarded yellow sun. Orbiting this at a distance of roughly ninety-two million miles is an utterly insignificant little blue green planet whose ape-descended life forms are so amazingly primitive that they still think digital watches are a pretty neat idea.

This planet has – or rather had – a problem, which was this: most of the people on it were unhappy for pretty much of the time. Many solutions were
suggested for this problem, but most of these were largely concerned with the movements of small green pieces of paper, which is odd because on the whole it wasn’t the small green pieces of paper that were unhappy."

Douglas Adams - The Hitchhiker's Guide to the Galaxy

[okumurahata]

1. Money is a number in an SQL database.
2. Money has multiple currencies, but in the end, it can be translated to an amount of time.
3. Time isn’t equal in every country. In some countries, you'll spend your time more slowly, while in others, time will fly.
4. The government steals your time in the form of taxes.
5. Banks steal time with every transaction you make using a card.
6. Tech companies steal your time in the form of attention.
7. Inflation silently steals your time.
8. A job gives you time, but it takes your time as well. If your job gives you more time than it takes from you, you'll become free.
9. One second of my time isn’t as valuable as a second of the king’s time.
10. If you accumulate more time than your life expectancy, you are free.
11. Machines create free time.
12. Capitalists collect and distribute the time created.