Not exactly. I just sent this link to my (Argentine) friends with a different observation. My observation was: The United States is starting to look like Argentina.
You must understand: Most Americans are not accustomed to shoving a third party currency under their mattress, or buying physical gold. The phenomenon of hyperinflation is foreign to them, and there's a steep learning curve.
The actual significance of this is that metal is being offered at a "blue dollar" rate by one of the three largest retailers in America. Prior to there being any concept of blue dollars here. This is going to influence spot prices. The people buying this are too stupid to even go to their local coin dealer. (Which I do, sometimes, go to my local coin dealer - and trust me - the people there to buy are generally pretty stupid).
If I had an hour, I'd like to expound on the significance of Americans buying precious metal at a loss through a giant vertical monopoly. But I'll leave it at the fact that they seem to be starting to alert themselves to the one critical thing that has defined Argentinian inflation for the past 20 years: Bullshit figures from the government saying the currency is stabilized, at the same time as the government takes obvious punitive measures to curb inflation. This leads to distrust which leads to the demolition of the currency.
Argentines can take a 20% drop in the Peso with a morning medialuna. Americans have no fucking idea what's going on. Americans have barely begun to put together the networks to measure it - and is evidenced by Costco taking advantage here, Americans have absolutely no peer-to-peer ways of negotiating the value of a dollar against value anymore. That's quite a dangerous situation, because it means prices are psychologically still thought of as an "act of God" as opposed to any true understanding of who is outpacing whom.
Like I said, inflation and hyperinflation especially are a steep learning curve.
If I were living in BsAs, I'd begin looking for something else to put under the floorboards besides USD. And voting for that clown who wants to tie ARS to USD as if it was 1983 is probably like trying to get tickets to the Titanic right before it sinks. You can do better than resurrecting Menem's economy. (Then again, the Fernandez are even bigger clowns, which is why I refuse to engage in anyone's politics in Argentina).
> If I had an hour, I'd like to expound on the significance of Americans buying precious metal at a loss through a giant vertical monopoly.
Costco occasionally sells gold below spot if Reddit is to be believed. Most of the time it's right around spot. These 1oz bars were going for $1900 give or take, which is spot give or take. It's fairly common to see a small ~$50 ish premium on small quantities like this, around 2-3%.
Costco is also not a monopoly, and it's not really vertically integrated - these bars come from PAMP, a Swiss company.
You can get gold for exactly spot if you have a lot of money - just buy a futures contract and stand for delivery.
Costco's not a monopoly by the current definition, but they do occupy a very cozy spot between wholesale and retail, and they do vertically control everything Kirkland from mayonnaise to roast chicken. We have a strange situation right now, in the US, in which any company with at least one major competitor is considered good for the free market; and it takes a hell of a lot of work to show that those two competitors are working together. But they don't actually need to be price-fixing with each other in a classical way. One has $5 roast chickens and the other has free oil changes. This, then, is the apotheosis of consumer choice? Fuckit, I own stocks of both of them and I just hope the American consumer goes broke before I do.
> But they don't actually need to be price-fixing with each other in a classical way.
Spot on. There doesn't have to be a conspiracy. Like entities with like goals and finite ways to maximize will follow similar or like paths.
The example I like to use are starlings (birds) and murmurations. Obviously, the birds aren't conspiring in any way. And yet they magically move in sync. Business competitors can do the same. So do political parties.
It's not a conspiracy. It's murmuration.
p.s. There's actually a more scientific term. I think it's in the math theory field about the study of such patterns. Starlings are simply the goto example.
Yes; flocking behavior is sufficient to explain how two or three supposed competitors can simulate a free market while profiting from monopolistic behavior. And it's also a fantastically nifty adaptation to allow any one entity to skirt the legislative hammer.
Cronie Capitalism does help as well. When the gov puts it thumb on the scale and clears a clear-enough path, only a fool wouldn't follow the path of least resistance.
Suppose the government did put its thumb on the scale here, how would it impact consumers? Will they now be able to shop for lower prices at a business that earns 1% profit margin or less instead of the 2.6% profit margin that Costco has managed to climb to?
The government is not supposed to be in the favoritism business. When that happens, as we're seeing, there are unexpected and/or unwanted consequences. The government is supposed to level the playing field, not the other way around.
Regulation. Be it local, state and/or federal. The larger the organization, the more resources it has to mitigate / remedy such friction.
The irony? Regulation is also self-serving to gov in the sense it perpetuates ththe gov's need to prove it needs to exit, "create more jobs", etc. But that's another discussion for another day.
Two, lack of national *affordable* universal healthcare. Again, larger companies are better able to fill this gap, offer the benefit, and thus draw better employees, etc.
> We have a strange situation right now, in the US, in which any company with at least one major competitor is considered good for the free market; (...)
Wasn't Amazon just sued by the FTC due to anticompetitive practices?
Argentina has 100% annual inflation and going up while the US has less than 10% and going down. The USD is not going anywhere spectacular, because there is no more stable country to flee to.
The one thing that can reliably trigger inflation in almost any country is oil/gas shortages on the global market, and you can't hedge that with precious metals nor store a 20 year supply in your house.
First of all, there's no evidence it's going down. Secondly, 10% is a wild figure. That's far over the breach for the population to begin to alter their behaviour by either hoarding or spending.
My point was, the mentality of coping with even 10% inflation is very foreign to Americans. But it's a learned skill, and people will learn it. When they do, it will resemble Argentina during the 10% phases (2003-2012 for instance). That's not necessarily terrible if you're coming down from 100%, but it's a brand new experience that Americans haven't come around to.
And it does a lot of very weird things to your politics.
It makes everything more populist far-right or far-left than it would need to be otherwise. It feeds into conspiratorial thinking. It is a regressive tax.
10% is a HUGE regressive tax right now on American citizens, and it's kind of a miracle that they haven't rioted more.
Not to mention that middle America has fixed rate 30 year mortgages, an absolutely extraordinary product that means their payments are fixed in nominal dollars for a huge length of time. So if they get a raise that keeps up with inflation, inflation actually makes them "richer".
The effects are largely dominated by gas and energy prices, which Americans really will get upset over but seem to be recovering. I don't think there's any realistic way you can prevent against 10% gas price jumps and still have a free market.
Yes, it's a wild figure for the US (as a comparison, the US had an year with higher inflation than Brazil). But that lasted for a short period, and it's been measured going down.
Anyway, hoarding gold is not a natural behavior for a population at 10% inflation. It's natural for a population that distrusts the government and the financial markets. Inflation by itself pushes people into banks.
Why would inflation push people into banks? In my (EU) country, banks don’t offer anything that matches current inflation besides speculative investments.
In USA at banks near me, I don't find high liquidity with decent returns. Rates on savings accounts are paltry, and CDs are only liquid if ignoring early withdraw penalties.
I use bank to accept revenue and transfer it to brokerage houses where it sits in highly liquid money market with better returns than bank savings.
> one thing that can reliably trigger inflation in almost any country is oil/gas shortages
I am convinced we are making a huge mistake by conflating shortage of raw material with general inflation.
If there was shortage of food tomorrow, the correct responce is not to raise interest rates - that would cause even greater problems and famine.
The correct responce is immediate intervention to expand supply - build greenhouses, accelerated permits, zero interest finance for agriculture, etc.
This issue will lead to disaster as climate change bites - we are only managing fictisious financial parameters and ignoring what is happening to physical atoms.
if you read the plea from the Argentine above.. they say "peer networks to measure value" .. it implies that the entire inflation is NOT one single number. It is in sector by sector, with local "shadows" .. In the USA, it is housing obviously in large populated areas, but also health care and the cost of a University education. Those measures have climbed triple digits while yes, petrol and candy-bars are the same.
Sectoral inflation is a real issue! But that's the one thing that buying gold can't help you with, because it necessarily means there's something different about that market rather than the money supply as a whole.
> health care and the cost of a University education
See "Baumol cost disease" - things which require highly skilled human inputs tend to get more expensive as automation makes everything else cheaper.
I don't believe you that the inflation rate for housing or education is at 100%. If you mean that there's been 100% inflation since some point in the past then, well, yes that's true but it's also true of every other good. But when we say that Argentina has 100% inflation it means that the nominal price of goods doubles every year.
> inflation rate for housing or education is at 100%.
not per year, but .. there are residential housing listings here in California that have doubled in not very long.. I think the point is, that price increases are not uniform.. and it is related to structural forces of money, as well as markets
It's not uniform. The inflation of housing prices in SF over the last decade has averaged somewhere around 6% leading to a ~100% increase, way higher than the roughly 2% average inflation. But comparing a ~100% increase over a decade to a ~100% increase over a year is very misleading
except that there are houses in other places besides San Francisco.. and that those prices have volatility not seen in San Francisco.. is there is a motivated-reason behind defending the house prices here? projecting stability ?
I was using SF because it's known to have had a much higher house price inflation than other places, in order to try to be charitable to your case. If you look at the overall US housing market then you need to go back a lot further than a decade to see 100% inflation.
actually I tracked housing prices directly here in California on a large scale.. the key to resolving the two positions here is that, volatility is exactly how a one hundred percent increase in price happens.. first drop, the rise, then drop a lot, then rise alot. Meanwhile in the most desirable a.k.a. most expensive zip codes (or similar). the rise has been steady, even at 2008, and as you say, not one hundred percent. Lastly, ordinary people like you and I are not privileged to see the vast amount of cheating that goes on with residential valuation, loans and the like. Loans for more than a realistic value on a property, are as old as Sicily.
Firstly the bars are being sold only a couple of percentage points above spot. This is a perfectly normal price for decent bars or coins in small sizes.
Secondly the 'blue dollar' concept refers to the fact that Argentines are restricted from buying more than a certain amount of US dollars. They pay much higher prices to buy dollars illegally. US citizens can buy as much gold as they like, and Costco is not an underground or illicit market.
Comparing the US with Argentina is wild. Americans are buying gold because there's a lot of propaganda about how the country is going to hell, the economy is fucked and there's plenty of marks out there that fall for this, while unemployment is historically low and the mcdonalds close to me is offering 17 an hour for line workers.
There's been a huge increase in ads about "buying hold to protect yourself" instead of buying US government bonds, that will actually make you money, because these grifters feed off fear and there's plenty of people there that will believe in it. These people will all lose money on this gold when they decide to sell it.
This isn't some fear grift, just so you know. I lived in Argentina for many years, my family is from there, and I've been saying for awhile that America is on the brink of making the same mistakes that Argentina makes that lead to cycles of hyperinflation, default, and instability.
It's clear that it's "wild" in the sense that everyone in the world pegs their economy to USD, and as long as you expect that to continue you have nothing to worry about. Fundamentally, though, in its divided politics and its willingness to oscillate between propping up the economy and going hog-wild with privatization, the US is the same as Argentina and has been for a long time. The only difference is the ability to project military power and enforce the value of its currency through bribery and fear; Argentina doesn't have that ability. (Nor would we think it would be great for the free market if she did).
I’m Brazilian and I lived through our hyperinflation over the 80s and 90s, it’s not the same at all, if it was the economy would already be underground given how much money was printed
Brazilian here, I've also experienced the hyperinflation at the 80's and 90's.
The US has recently been moving on the exact opposite direction from hyperinflation. At least on the short term, they don't have exploding debits, they are removing money from the economy, and have a concerned monetary regulator.
This is a marker of a coming recession. The spikes happen after recessions begin, and it's bizarre that it's been so low for so long: https://fred.stlouisfed.org/series/UNRATE
Not exactly the same thing everyone's talking about here, but "historically low unemployment" isn't exactly a good thing overall - IIRC the theory behind why it signals a coming recession is something like "reduced job mobility because people are afraid of losing their jobs", because it only counts people who are unemployed and looking for a job.
It’s just irrelevant since you don’t need anything even approaching hyperinflation to have real world impact on people, and the real wage loss over the past several years is clearly in that category.
Just as with the people who wake up every morning expecting the Second Coming, or indeed a Nuclear War, these folks fixate on a hyperinflationary US economy so much they begin to hallucinate.
Everything must be a sign. Strong job figures? Those are a precursor to hyperinflation. More mortgages fail than average? Hyperinflation on the horizon. Trump gets elected? He'll certainly cause hyperinflation. Trump loses? Democrat policies lead to hyperinflation.
They're not capable of understanding that they're wrong. JWs for example believe that the end of the world is extremely imminent... and it has been for over a hundred years. I know JWs who were taught as kids that their grandparents would live to see "God's Kingdom" and now, having lost those grandparents, they're still preaching the same nonsense and their own grandkids will be brought up to do the same.
Poster you're responding to, here. I completely agree that the US is not in imminent danger of hyperinflation, so long as it continues to assert itself through foreign policy and maintains the bully pulpit of democracy and the inertia of empire it's developed by putting boots on the ground anywhere its material interests are seriously threatened. Do you see me buying Argentine bonds? No, I have a Roth and a 401k.
Does that mean that I don't believe this country is trending - psychologically in terms of its money supply - toward an Argentine way of thinking and battling?
To become Argentine isn't a total collapse in any sense. It's the disappearance of trust in the currency - on and off, slowly, over years - without actually ceasing to use the currency for day to day transactions. That is what I'm referring to, and that is what is indicated by people buying gold bars at Costco. So yes, I agree that there isn't a better economy or market to put my money in. But that's not a ringing endorsement, either.
[edit] Also, to portray what I made as a fairly nuanced argument about Americans losing faith in the dollar, as if I were a Watchtower devotee or a maniacal doomsday conspiracy theorist, is disingenuous, and a poor-faith argument.
Truly, you don't really get how it works in Argentina or how similar it is to 10% inflation here, unless / until it were to hit 20% inflation here, and smart people would begin to look at what the dynamics were in a similar scenario, in another western country, and how they played out economically and politically. It's something you should look at whether you believe it's possible here or not. There's a vast degree of hubris associated with your declaration that it can't happen in America.
Lots of things could happen. Gamma Ray bombardment sterilisation of the solar system for example. That's the set up for the main plot of Greg Egan's "Diaspora".
But since neither becoming a Gleisner Robot nor Polis Citizenship are possible for me it's futile to spend time worrying about a nearby Gamma Ray burst. If it happens I would likely die instantly, but even if not there's no reason to plan for that.
I care about contingency planning a great deal but it makes no sense to plan for events which are both extremely unlikely and very difficult to successfully ameliorate.
JWs are still on about all that? Figured they would have switched that up over the years. Their "flock" is still vulnerable to various roving con-men then as long as they promote that crap. Anyone could swoop in there, slowly fleece a congregation, and move on to the next. Sad.
Segments of HN have been predicting the imminent collapse of the US dollar for at least the last decade. One thing 10-years-ago HN had but today doesn’t is the constant predictions of the imminent collapse of the VC startup model in general, or maybe I’m just looking in the wrong threads these days.
That said, you may be correct in that the voices have gotten louder. Also, the Covid conspiracy stuff drives me up the wall, and I didn’t remember older HN being like that.
Many of the threads I see recently (like 6-8 months) no longer predict the collapse of the VC startup model. They claim that it's already here. The free money days are over, that sort of thing.
I think you're talking about me, for saying America is starting to remind me of Argentina in certain ways? I assure you I'm not a kook, or a doomsayer. I'm just someone who's lived in both countries through several economic crises, each of which had very different characteristics. Maybe I didn't express myself eloquently enough. You're free to rebut anything I said or to contact me personally. I don't think slandering me by way of slandering the entirety of HN is the exact right way to show you know what you're talking about.
It was PG's pet project. Plenty of YC startups don't use HN anymore aside from their 1 Demo post and on the outside it looks like Bookface and other initiatives are given more headcount than HN within the entire YC organization.
Kooks? The flip side of that coin is the NPC (Non playing characters) that have trouble dealing with any information that could harm their little "comfort cocoon". Nobody has your best interest in mind, not even yourself if you step back far enough.
This piece seems like it was written by someone writing strictly from American perspective without seeing what happens elsewhere.
Inflation in America is not, and was not anywhere in this post-Covid episode, worse than in any other developed nation except Japan, which has so many problems hardly anyone will want to use it as a point of reference.
U.S. economy is in better shape than almost any other advanced nation (and poor countries may be doing better but exactly because they are poor, they are playing technology catch-up, once they are caught up they have no avenues for quick growth and are stuck on Eastern European level). It is both currently richer, and grows faster, and is more stable, and provides more ways for an everyday, layman person to invest. Europeans don't buy stocks of European companies - because they know those companies are ridden with protectionist rules and omnipowerful unions - in all of which they actively, and cynically, participate - and will never give a good return. They buy American stocks.
America is virtually insulated from global warming because it's so big and diverse: some places may be wrecked but others will even win - no other nation is like that. It is virtually insulated from potential wars or invasions due to protection of the oceans. It is safe from any demographic issues because it has a guaranteed stream of immigrants with a lot more brains and money than any other country can hope attracting. It has an attitude to politics where people don't expect politicians to do much, apart from entertaining them, an expectation current generation of politicians fulfils brilliantly. Because there is no way America can be wrecked by politicians NOT doing something (as everything was built from the ground up with exactly that expectation - the government not doing anything), only threat comes from government actuallY DOING very wrong things - but American political system is built to very effectively prevent that.
All in all, comparing America to other rich places, it is evidently the best place to be for the rest of XXI century, at least as long as you have cash.
>Not exactly. I just sent this link to my (Argentine) friends with a different observation. My observation was: The United States is starting to look like Argentina.
As someone who is studying economics in Argentina... You're pretty much the polar opposite of Argentina when it comes to the economy.
No. The easier explanation is that Costco whose customers are regularly middle class and above, love to buy whatever Costco shoves in front of them. There are other observations to be made based on cultural demographics that could also explain why these get sold so quick. I don’t think any of it has to do with your conspiracy theories though.
This is almost exactly it. Costco shoppers will buy whatever they push. And I suspect the cultural factors you’re talking about are the large number of middle class Indian and Chinese Costco shoppers who will buy gold regularly culturally, and if they see gold being sold in Costco I suspect they will buy it instantly.
> large number of middle class Indian and Chinese Costco shoppers who will buy gold regularly culturally
Gold hoarding wasn't much of a Chinese thing, and Indian gold purchases were a mix of regional biases (South Indian families seemed to purchase way more gold than equally well off North Indian families) and tend to skew more towards jewelery (why buy a store of wealth when you can buy a store of wealth and show off to the other aunties as well).
This is just being used to take advantage of deflated consumer expectations, as the article itself said
Well, Argentina had plenty of opportunities to get itself in order (and could still do so), but I'm not sure that the US would let things slide so badly over a long period - they (and the rest of the world) would rather take the short term pain.
Possibly being a reserve currencies adds an additional burden to US policymakers, so they can't always take the easy way out.
> If I had an hour, I'd like to expound on the significance of Americans buying precious metal at a loss through a giant vertical monopoly.
The only thing Costco has a monopoly on is $1.50 hotdogs. Also, inflation in the US has dropped by more than half in the last year. I think this is the opposite of countries like Argentina.
I bet the vast majority of gold being purchased at Costco is by Indian and Chinese immigrants who buy gold culturally and not as a response to global financial events and movements.
You must understand: Most Americans are not accustomed to shoving a third party currency under their mattress, or buying physical gold. The phenomenon of hyperinflation is foreign to them, and there's a steep learning curve.
The actual significance of this is that metal is being offered at a "blue dollar" rate by one of the three largest retailers in America. Prior to there being any concept of blue dollars here. This is going to influence spot prices. The people buying this are too stupid to even go to their local coin dealer. (Which I do, sometimes, go to my local coin dealer - and trust me - the people there to buy are generally pretty stupid).
If I had an hour, I'd like to expound on the significance of Americans buying precious metal at a loss through a giant vertical monopoly. But I'll leave it at the fact that they seem to be starting to alert themselves to the one critical thing that has defined Argentinian inflation for the past 20 years: Bullshit figures from the government saying the currency is stabilized, at the same time as the government takes obvious punitive measures to curb inflation. This leads to distrust which leads to the demolition of the currency.
Argentines can take a 20% drop in the Peso with a morning medialuna. Americans have no fucking idea what's going on. Americans have barely begun to put together the networks to measure it - and is evidenced by Costco taking advantage here, Americans have absolutely no peer-to-peer ways of negotiating the value of a dollar against value anymore. That's quite a dangerous situation, because it means prices are psychologically still thought of as an "act of God" as opposed to any true understanding of who is outpacing whom.
Like I said, inflation and hyperinflation especially are a steep learning curve.
If I were living in BsAs, I'd begin looking for something else to put under the floorboards besides USD. And voting for that clown who wants to tie ARS to USD as if it was 1983 is probably like trying to get tickets to the Titanic right before it sinks. You can do better than resurrecting Menem's economy. (Then again, the Fernandez are even bigger clowns, which is why I refuse to engage in anyone's politics in Argentina).