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It's Not Getting Any Smaller
From Slope of Hope: Given the, errr, disposition of the ZH crowd, this probably isn't the right forum for this, but just for a change, let's have a little uncomfortable truth: I would like to make my own modest effort to put to rest a trite little phrase that gets trotted out every time silver and gold are getting trashed (which has been the case for years now). "I just checked, and my pile hasn't gotten any smaller."
These precious metals kooks - sometimes called "stackers" (since they stack up coins, as well as losses) somehow make the point that since their physical asset hasn't changed shape or amount, it hasn't really dropped in value. Not in a real sense. Honest Injun.
I don't think I've ever used this word before on this blog, but here we go: bullshit.
If I bought a house for $5,000,000 (which poor saps are doing in my fair city right now) and a few years later it is worth $2,500,000, I have lost $2,500,000. Period. End of story.
The analogous retort: "My house isn't any smaller!"
Ummm, yeah, that's right, you pinheaded moron. But you've still had a severe diminishment in asset value by the metrics we here on Earth like to use. Your house still has utility (which is far more than one can say of a bunch of shiny coins and bars), but you've had your ass handed to you anyway.
And I don't say this as a person pointing and laughing at precious metals kooks. I am one of them, as I accumulated a meaningful horde of silver and gold, largely prompted by the lunatic rantings (albeit very convincing rantings) of gold bugs over the past few years.
If the fabled "things will go wrong someday" ever does come, and precious metals soar in value versus meaningless fiat, well, great, then the kooks will have, in the end, be right. But that day may never, ever come, and owners of metals should recognize that their beloved stacks are indeed the same height, width, and depth............but these people (and I) would have been a hell of a lot better off buying Amazon and Starbucks in the first place.
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The house, just like the metal, is not a profit or loss until you sell it. That day may or may not come in your lifetime. So, you go ahead and buy Starbucks or Amazon or whatever you want. I'll do what I do and don't give a shit what you think.
Dink
If you bought a house for $5m and now it's worth $2.5m, don't worry, in present day America you really haven't lost a thing. Because of the homestead act you can't be foreclosed upon and booted from your primary residence. You can, however, get a loan modification and principal reduction courtesy of your friendly neighborhood government. Then if your home's value ever increases again, you can refinance against that appreciated value and buy yourself a couple new cars and some furntiure, or you can sell and keep the profit. What a country we live in.
well, if TPTB enable the price of homes to rise above the level where an average full time wage cant service the mortgage, and therefore the middle class have no clear way of avoiding grinding poverty in their retirement (i.e. they are still renting) then absolutely fuck it. Fuck the system, fuck 'prudence', fuck 'responsibility', fuck 'moral hazard'
we have the spoils of industrialisation and automation to share. Fuck the class system that keeps many trapped in destitution while others consume far more of the earths resources and the produce of fellow men than others ever have tbhe opportunity to.
Anyone who can whether the pressures and threats associated with getting let off their mortage has in every likelihood bloody well earned their house