Fertile material

It took less than 5 minutes after initiating this blog to stumble upon:

At Tiny Rates, Saving Money Costs Investors

"The elderly and others on fixed incomes have been especially hard hit. Many have seen returns on savings, C.D.’s and government bonds drop to niggling amounts recently, often costing them money once inflation, fees and taxes are considered."

Imagine I retire with savings, enough to last me 30 years, at today's cost of living. In a more sensible monetary policy environment - one that did not only exist to benefit credit creation and support a borrowing culture - I would not have to think of whether it would suffice over the period I expect it to.

Confused? Go back to Rome, when Nero was supposedly fiddling around. (According to the General Book of Ignorance, this thing about Nero is a complete myth). You saved 100 gold coins 50 years ago. Successive emperors debased the coins so that there is only a fifth of the gold left in each coin issued today.

Guess what - you can also split each coin by 5, and presto you have 500 coins. Zero inflation.  Of course you could not really have done that, it would probably have gotten you a good flog or even a secular crucifixion.  But assuming people were sensible - which is an assumption all economists make anyway - people would have understood that your coin is worth 5 new ones. The value inherent in your savings is intact.

That still leaves us with other unanswered questions that an economist would ask.

Q. Why can't you invest the money yourself - you don't have to be inflation's slave nor the bankers'.
A. Can the average citizen really invest in things other than property and simple savings product? Ask the sophisticated fund managers who lost (their investors') shirts on the alphabet soup of the first decade of the 21st century.

Q. But keeping it home only costs depreciation equal to inflation, why take risk and lose it all? You still have a low-risk option. Buyer beware.
A. To this, you have to answer: dear economist, have you heard of keeping up with the Johnsons? When the whole world is doing something it is very hard to be contrarian. Economists should know this, if there were a bunch that blathered unthinkingly in unison, it is them.

I too try to invest and make money. I however do not believe the markets are efficient; that humans are rational; or anything else. I do it because I do not want to lose out sitting on cash. But I know I am frankly gambling and hoping to be slightly more intelligent - or luckier - than the next guy.

I wish the financial sector and the freshwater economists who encouraged them would be as humble.  Oh wait, if they were, they'd have no value proposition, no job and no respect.