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The Most Rapidly Depreciating Currency In The World
Submitted by Simon Black of Sovereign Man blog,
Do you remember the days when travel used to be glamorous and sexy? The mere prospect of getting on an airplane was tremendously exciting. Friends and family would come with you to the gate to see you off and pick you up.
Today, millions of passengers in the Land of the Free will take off their shoes and assume the “I surrender” pose inside a radiation machine that provides negligible benefit and maximal cost to taxpayers.
Our modern security theater is a stark contrast to the past. But there’s been something else happening over the last several decades that is even more insidious… and far less obvious.
In 1979, Texas International Airlines (the precursor to Continental) introduced the first modern frequent flier program. American Airlines soon followed, launching their AAdvantage frequent flier program in 1981.
When the program launched, you could upgrade to a first class seat on the Concorde for 20,000 miles (something that you couldn’t even do today). Today, an upgrade to first class between the US and Europe would set you back 50,000 miles, plus $900 in fees.
In fact, just about every mileage award category has been getting more ‘expensive’, particularly among the major US carriers. The majority of the increases have taken place in the last several years.
United Airlines, for example, is raising the number of miles required for most of its awards starting February 1st. The steepest is an 87% increase for first class award seats on United’s partner airlines flights to the Middle East.
A United economy class ticket to Hawaii will increase by ‘only’ 12%. And business class to Europe and Japan will increase 20%.
Just like central bankers with paper currencies, airlines are devaluing their miles.
They have created trillions of miles in the system, many of these through special gimmick promotional giveaways. We’ve probably all seen the ‘sign up for the new credit card and receive 25,000 bonus miles’.
But just like the real economy, rapidly increasing the money supply (airline miles) devalues the currency and creates inflation.
That’s exactly what’s happening here. Airline miles are worth less and less.
Moreover, the airlines have begun to restrict award seat capacity. If you have ever tried to actually USE your miles, you’ve probably become very frustrated. Sometimes you have to book those flights a year in advance just to get one crummy seat.
They’ve also begun increasing fees on top of the mileage awards– so now if you want to use miles to upgrade, you have to pay a steep fee on top of the miles.
Airline miles are a great analogy of how inflation works in the real economy. It’s clear that the supply of miles is increasing rapidly. But the effects go unnoticed for a long time.
Then suddenly, one day, prices go up dramatically (as in the case of United).
And most people who have been responsibly saving for a rainy day (or that dream trip to Paris) suddenly find that years of their savings are worth less.
Airline miles are the most rapidly depreciating currency in the world. And they’re an interesting sign of things to come with fiat currencies.
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Fuel and debt based credit money the worst of the worst!
Ya know, this is really a who fucking cares.
For many years I put 100K+ on and got oodles and oodles of free miles.
Then Mrs K would say how nice it would be to fly off to Pago Pago or somewhere when all I wanted to do was stay as far away from airports, airplanes, customs, taxis, hotel rooms and restaurants as anybody could imagine.
So I never used all the crap.
Then, along comes the "new protect yourself from the ragheads in Bora Bora" and I all but refuse to get on a plane anymore.
Fuck it, it's a pain in the arse.
I'll just stay home.
You fuckers out there, tptb, want to get the economy going, get out of everybody's faces 24/7/365
that will never happen...they live to be IN your face. because they are better, smarter and more virtuous than you....you dont know what's good for you....they will show you the way....just submit.
When the program launched, you could upgrade to a first class seat on the Concorde for 20,000 miles (something that you couldn’t even do today). Today, an upgrade to first class between the US and Europe would set you back 50,000 miles, plus $900 in fees."
Gone the way of the Saturn-V, trips to the moon, mach 3+ manned aircraft, and 16" naval cannon.
But on a positive note, we got's the EBT, yo.
If someone really wanted to kickstart an airline revolution there should be a CorpToCorp co-op program for frequent flyers. Not NetJets where you have to hire the pilot & need to chart your own destinations (which is a PITA), but an air service with super-sonic jets along the major buiz. corridors. The kicker ? Because you are pre-screened and verified by the airline you can skip the whole fucking TFSA bullshit.
You walk in, flash your passport and gauranteed your entire check-in is 5 min. plus your walk to your seat on the tarmack. The air crew is personable and normal non-union pricks. Everyone on the jet gets a free beer or martini. Free internet on the plane. Air service has concierge service waiting at debankment with your luggage already loaded into your cars. The airline points can be converted into bitcoins or gift certs at tier-1 luxury places or put forward towards your Hilton/Starwood or W hotel account.
Your ad campgain is simple: 3 executives walking with big ass smiles on their face past a lineup of guys bending over being butt searched. 3 words in black & white: Never Fucking Again. Then the logo. Boom.
I promise you this idea would be the biggest thing since sliced bread. Get every oil company in the world to give you cut rate discounts on airline fuel (due to the passthrough of divdends for seat holders) and offer to manage their full main-line skyfleet for them.
Shit, sign the 4 sisters up for a 10 year contract on day one.
After you get critical mass by having EVERY corporate executive, banker and travelling buiz.-guy signed up. IPO this. Make it the original facebook of airlines. ie. You need to be working for a corp. to get in, a paywalled social network for jet-set. Then launch a similar carrier for families to fly on.
Boom.
Tag me in for the IPO advisory and I'll buy 400 seats for the practice.
The IRS should start taxing airline frequent flier points.
Sorry, I couldn't even keep a straight face on that one. They were looking into it a few years ago but backed off. You know they'll be back someday. Sure as the sun will rise.
Your airline sounds brilliant. If you make it adults only -- no screaming kids in Business Class, FFS, no matter how rich their parents! -- then sign me up right now.
Can I have your points?
Gold bitchez
Easy fix, boycott airplanes!
10 for 1 reverse split.
sheep will love it.
Airline mergers and consolidations cartel ... ain't it a bitch ? .. . who approves this shit ?
If there are more than one or two companies the regulators can't tell if they are competing or not, so we allow all the companies to merge into one or two companies so then we can determine if they are properly competing.
The nature of fascism.
Zimbabwe Airlines is now departing from gate 666 to anywhere but here.
<All aboard while the getting is good and the currency is miles are worth something.>
I don't fly any more. The BS at the airport is too much.
Time for us to rediscover the journey rather than the destination.
Amen
My favorite trip ever was in a sweat lodge in manitoba at the legendary Sacred Bear Totem Temple. It was soon before the cancellation of the brady bunch, and the groove there was very celebratory.
we learned that a lot of things turn out to be true, in the sense of what things mean.
which reminds me -- if "goddess of mystery and divine innerness" reads zh, I would appreciate if you would return my blanket
no replies please, to preserve continuity with next/previous post
My favorite trip ever was London to New Dehli overland on the legendary Magic Bus. It was soon before the overthrow of the Shah of Iran, and the tension there was palpable. Afghanistan, while poor, was spectacular, and yet to have been destroyed by Russia and the U.S., etc.
Was this in the late 60s?
1977, actually. It would have been my third year of college, but I opted for a far more valuable education. I was gone for a year, seven months of which was spent in and around India. Fantastic experience.
I would have loved to have done that.
just finished a trip new england to florida on amtrak. 36 hours. five times longer in duration and 20% more expensive. third world experience. but no xrays or sodomy...
I'm prefectly happy staying on the farm.
jim249 - agreed. i don't leave home. i don't need my amex card (which isn't used in europe at all actually). i love simon black. it took me time, i couldn't understand why anbody would want to read his carp. but for the goldman sachs interns, he must be their james bond. whining about concord flights and how difficult it is to get through customs with 40 ounces of gold and such. the british would say 'he's a right cunt he is'.
simon - keep on telling us the tales of the rich and famous. you REALLY are a right cunt. but - i'm a yank, and i'm starting to love it. let me sit home and be an arm chair quarterback reading about how the .01% live! it's sounds pretty cool!
mr. simon black. you want to make some real bling? (not that you need more, but enough is never enough). tell us about some of your real 'adventures'. ;)
you know what i mean? (wink, wink, nod, nod) singapore. thailand. you love those places right? come on big guy - open up. you want to educate us about how to protect our wealth, we should also learn a bit about how to enjoy it!!!
Exactly what I thought when I'd read this.
My wife was just lamenting about how an X-mas charity was giving THREE toys to each "poor" kid. My wife had NO toys, zilch, nada, when she was a child. Oh, yes, and she was POOR (Philippines): fucking toilet paper was a luxury. She has no problem with giving clothing etc..
So, yeah, Mr. Black do tell us how difficult life is (and how we should help bail you out by buying airline tickets so that economies of scale in reverse don't pull the rug out from your high-flying ways).
Airline miles = BitchCoin.
the diference is that the most of the flights are done these days by goverment staff paid with your tax money
Funny you should mention this. Im a 1K on United's Mileage Plus. I always get a free upgrade. Always. A few weeks ago, I flew from Vegas to Wash Dulles enroute to Harrisburg, PA. I bought my tickets over a week in advance. I didnt get upgraded. While waiting at the airport United Club lounge, I started a conversation with 2 useless prick Directors from the US DoE. A guy and a girl. Both SES level political appointees. They shared that they were out there for some conference.
Clueless? Sweet Jesus!
When I got to the gate I saw them again. Guess who was flying on a bought and paid for 1st class ticket? Why in the FUCK are we flying these useless F-Heads around on our nickel?
Im still enraged over it.
My anger grows. As an aside, I got to send another "Fuck, No. We dont want you." letter to yet another Harvard MBA/JD this week. I'm seeing more of these weekly.
Airline miles are just a promotional gimmik like cents off coupons. Flights are full right now, and the price of fuel is high. Airlines just don't need to give frequent flyers a break right now, so they don't. If there is a cyclical downturn in the airline industry that makes them hurt to fill the planes, they might actually put some deflation into the miles.
Does Disney bucks hold value?
Almost as good as the ultimate inflation hedge: forever stamps.
Beware there is some counterparty risk.
Here you have the best example of independent business cost against "government-taxed-legal-driven-corporation-model" which is going to kill all of us, including posibility to fly:
"The 19-year-old’s design for a low cost, self-driving car won first place and USD 75,000 at the Intel International Science and Engineering Fair for high school students.....he used artificial intelligence technology and a mounted camera on the car to identify traffic lanes, curbs, cars and even people. He managed to keep the costs low – at only USD 4,000 as opposed to Google’s USD 75,000 self-driving car. "
http://www.romania-insider.com/romanian-student-ionut-budisteanu-listed-among-time-magazines-16-most-influential-teenagers-of-2013/109420/
@4195205 He will be poached by an American company (by Google itself?) from Romania in no time.
Bitcoin is a fiat currency, as the others are. They all increased in value 25% or more in the last week. Go figure
Bitcoin is a fiat currency = Rubbish. I come here to learn ... not teach what little I do know ?
The predominate feature of FIAT money is that it is made legal tender by fiat (order / force) of the government. While having no intrinsic value is a feature shared by USD and BTC (All currencies have no intrinsic value - money has intrinsic value i.e Gold, Silver etc.. ) BTC is CHOSEN voluntarily in the spirit of free market and it's quantity (volume) is both fixed and transparent ... significant difference.
Can't understand the disdain for it around here ? My capital is fully invested in physical bullion like many and to me BTC is the perfect intermediatary currency companion ?
Seems to me a normalcy bias has developed around the fully rigged and manipulated markets we have which leads most to ridicule BTC early rapid rise in value while it is fundamentally easy to understand how an item with an honestly fixed quantity rapidly rises in price as its adoption (demand) expands exponetially. Add to this the KNOWN and oft lamented huge increase in the quantity of USD and other centralised fiat currencies it would be cause for alarm if BTC did NOT rise in value accordingly ?
"to me BTC is the perfect intermediatary currency companion"
Perfect?
I live out in the rural countryside. Folks out here don't take much to messing with computers, let alone "electronic money."
Most of the folks with any wealth left (besides TPTB) are older. It's hard to teach old dogs new tricks. And older folks tend to not look to get bound up in a bunch of new risk: yeah, the USD is likely to collapse, but not in the eyes of most the older folks.
Bitcoin is a great IDEA. But as tends to be the case, lots of great ideas suffer when introduced into the real world (lots of interests out there).
That it relies on TPTB's internet makes it vulnerable.
Sometimes people tend to ignore very valid risks and attempt to distract from them by accusing others of "normalcy bias."
"Normalcy bias" = smashed it out of the park. That is exactly the problem, we expect ZH to be filled with critical thinkers - but most are stuck in a belief system regarding physical bullion.
I love my silver and gold, but I love them because of their properties - not because of some religious fervor. I hold quite a lot of BTC, and now also LTC - but I know the risks.
The risks of BTC are legal, technical, competitive and possibly that the bulk of coins may reside in unfriendly hands, or that the coins are highly traceable.
I dont think BTC is designed by the security forces of the enemy, so I think the latter risks are low. The main risk to BTC is purely a better BTC.
After saving up my frequent flyer miles with Continental/now United for 15 years, and trying five times unsuccessfully to use them for a free flight from Florida to the Bahamas which didn’t include a stop in Newark or Houston or both and at least 8 hrs transit time, I finally cashed them all in on a vacuum cleaner.
Reality bites.
Yeah, we did the same thing, basically. Rather than use about 100k miles for trips, we converted them into gift cards at Home Depot and Lowes. We bought a fixer-upper in the country and got a big stack of building materials for free. Now we have a nice cozy little house off the beaten track...
We recently flew to the big island of Hawaii. What a pain the fricking ass! They treat you like a terrorist through check in, in which after being subjected to a full body scan they pat you down. They even took a tab of paper and dragged across my shirt and pants I guess to see if there were traces of plastique. Never a nice word, just; "Now you can put your shoes back on."
Then we get on and at least 6 people right around us are sick; coughing, sneezing, blowing their noses, sniffling, wheezing. Then on our 4 thousand dollar trip over ten days, which works out to 400 a day, we both come down with the same colds those people had. I would have put up another thousand to avoid the illness.
Then we stay at a VRBO with a dog above that barks and wakes us up in the morning with no AC. I called it the Hot Box. So we couldn't be in the room from about 10:30 AM until Sunset because it was too hot, so we made sure to always be going somewhere, doing something. At the end of the journey we were more worn out than if we had never taken a vacation.
Perfect example for why I stay home and apply any "discretionary" monies toward producing assets...
Oh and get this pathetic routine!!! All the airlines do this; they have a menu with crappy junk they stuff into boxes and pretty darn good sounding stuff like a BLT on a sourdough roll. You of course have to pay for this stuff right, but here's the kicker: The don't actually have the good sounding stuff on the effin plane! I said to the stewardess: "Why do you offer it if it doesn't actually exist?" She said nothing!! And of course you can't be an ass on planes these days, so I hushed up, but it's a con. Maybe they are required to offer food, so they put this carrot on a stick, but only the easy to hand out cold inedible junk in a box is actually on the plane.
Now, where's my buggy whip? Whoa, boy....!
Next time you go to the Big Island, stay in Waikaloa Village. You won't need a/c.
I'm 6'3" and I don't even fit into airplanes any more. Fuck them all.
Amen brother - I fly around Asia quite a bit, and if I cant get an emergency exit window seat Im basically chaffing my ears with my knee's - window seat so I can lean into the window and not have my shoulders overlapping the next seat.
If I get a middle seat my shoulders overlap both sides, and I have to lean forward and tuck my elbows in tightly so Im not crushing the person next to me - fkn ridiculous.
I hear you, dude. At least you're flying around Asia, which is a whole lot more winning than flying around the USuckAss.
Amagnonx
you are lucky to get bulkhead or emergency row seats anymore. All US airlines now CHARGE EXTRA for these seats, bastards. The only option left for tall folks is an ailse seat or seat way back in steerage: this way, if there any empty seats, you get first pick.
Forget inflation, it is difficult to redeem any reward points for anything.
I have for years called any and all reward points "however points." As in, "Sure you can redeem those, however..."
Glad everyone is realizing what a scam air miles are. I never bought into it from Day 1. Never got any cards offering air miles. I just shopped around for the cheapest flight. Now I only travel by air when I absolutely have to. Air travel has become a total pain in the ass that can only be dreaded. Airports try to rip you off, security treats you like a terrorist and the airlines treat you like cattle. Fuck them all. I am staying home.
That mileage plus stink thing been blowin for 5 years now, my tardy scout.
A very timely article. I recently realised this racket and concluded that my own air miles are virtually impossible to use.
Last week I purchased a ticket on TAM Brazilian Airlines and wanted to use my 'fidelity miles' to upgrade to Business Class on the GRU-to-LHR return leg. When I called TAM they told me I had "the wrong sort of ticket" and I'd need to pay another GBP 445 before I could upgrade.
ROTFL.
Further, their website and telephone booking services do not allow a customer to pay for part of their journey with air miles: it's all or nothing. To do that, you have to book multi-leg journies as seperate tickets which makes it more expensive, much more complicated and of course you then lose the regulatory cover if any leg of your flight is delayed/cancelled and you miss a connection flight.
Air miles schemese are now a racket.
Like all loyalty schemes whether they be airlines, supermarkets or whoever, it's best to judge them by their product prices, not by how many miles or other features they offer.
I had some supermarket vouchers that could be used on a ferry, worth two or three times their value it appeared at first. However I found out that the price of the ticket was more expensive if I used the vouchers to part pay for it than compared to just buying the ticket!
Too much negativity in this time of giving thanks methinks. In defense of United at least they deliver a fairly consistent product and for gthose who fly frequently free economy plus for long haul intl and free upgrades to first class in the US. And a nice selection of merchandise to buy with miles if addl travel isnt feasible or desireable.
These programs are just like the insurance industry... when you need it you can't have it or you have to fight with the denial of claims dept. Air canada's program, now a private competitor to air miles, actually cancelled miles if held too long ....kind of like the banks are plannning to do with your savings. Talk about depreciation in purchasing power. A class action lawsuit is ongoing https://en.wikipedia.org/wiki/Aeroplan
I used my miles, 1 month out to book the flight, cost $5 (domestic flight cross country).