How People Get Rich Now

Re:How People Get Rich Now by bondarchuk on Monday April 12, 2021 @12:50PM (#26781727)

But that is the government inflation, which is considered by some to be fake. Shadowstats [1] says inflation would be about 5%/year if we use the same methodology as in 1990, which gives about 60% over 10 years, i.e. you'd have to make 320k now. I'm just eyeballing the chart but if we use the 1980 method (~7% a year) it's almost 100% (i.e. you'd have to make 400k now).

For another example, Dow Jones with dividends reinvested gives a 180% increase, i.e. you'd have to make 560k. Of course this is not really inflation, but it gives a sense of how much you're missing out on vs. asset owners (please correct me if this is massively wrong).

[1] http://www.shadowstats.com/alternate_data/inflation-charts

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Re:How People Get Rich Now by TheTrotters on Monday April 12, 2021 @01:11PM (#26782059)

Well, yes, if you accept some official-inflation-is-fake conspiracy theory as a premise you can reach many interesting conclusions.

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Re:How People Get Rich Now by frongpik on Monday April 12, 2021 @01:23PM (#26782250)

It's not conspiracy, but an observation that hamburgers, cars, houses and yachts inflate at different rates. The gov inflation concerns hamburgers, but someone's making 200k really needs housing and that inflates much faster.

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Re:How People Get Rich Now by medvezhenok on Monday April 12, 2021 @02:12PM (#26782958)

Here is housing: https://fred.stlouisfed.org/series/CPIHOSNS

House prices are simply bonds tied to rent value and interest rate and affected by certain demographic trends. The all-told carrying costs of a mortgage right now are actually lower than they were 30 years ago, considering inflation (the principal might be higher and you don't get the tailwind of dropping rates to rebalance and whatnot, but it doesn't change the fact that houses are technically more affordable, not less).

Edit: Here's a graph of housing prices when adjusted for inflation & mortgage rates: https://realestatedecoded.com/the-shocking-truth-about-house... (although the down-payment is more unaffordable, yes, but you can generally buy things with as low as 3.5% down)

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Re:How People Get Rich Now by dominotw on Monday April 12, 2021 @04:23PM (#26784666)

> but you can generally buy things with as low as 3.5% down

no way. It is so competitive here that buyers are inundated with all cash offers.

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Re:How People Get Rich Now by medvezhenok on Monday April 12, 2021 @04:44PM (#26784928)

https://accept.inc/ converts your mortgage approval into an all-cash offer. (Edit: looks like that's only for Colorado)

The craziness going on right now is due to several factors: (1) all time low supply due to pandemic restrictions/fears; (2) Work from home transforming housing values (single family homes a lot more appealing if you only work from the office occasionally); (3) Millennials aging into the housing market and boomers holding on to their properties (see 1) - also a lot of stock is now owned by investment companies / pension funds past 2008; (4) Housing is the safest way to take a leveraged short on the US dollar (which a lot of people fearing inflation want to do); (5) Capital flight from other countries like China (though that was more of a factor pre-pandemic) - real-estate is the only industry where anti money laundering provisions are severely watered down / non-existent.

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Re:How People Get Rich Now by dominotw on Monday April 12, 2021 @08:50PM (#26786987)

uh ok. I guess i'll be renting forever :D. But hey govt says inflation is low, so all good.

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Re:How People Get Rich Now by TheTrotters on Monday April 12, 2021 @02:00PM (#26782765)

1. Rents are included in the CPI. 2. This confuses relative price changes with inflation.

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Re:How People Get Rich Now by dominotw on Monday April 12, 2021 @02:08PM (#26782879)

> 1. Rents are included in the CPI.

Rents have remained low in my city but housing prices( which GP is talking about) have gone up over 30% last 2 years.

Its pretty easy to find a rental but almost impossible to buy a house here.

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Re:How People Get Rich Now by ClumsyPilot on Monday April 12, 2021 @01:20PM (#26782202)

Its not fit for purpose, just like the fact that we celebrate increasing GDP while life expectancy has been stagnant or declining

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Re:How People Get Rich Now by whimsicalism on Monday April 12, 2021 @01:45PM (#26782555)

Yes, and those trails from airplanes are considered by some to be mind control chemicals.

I wonder why the whole "secret inflation" theory seems so popular among techies, I see it multiple times a week on HN.

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Re:How People Get Rich Now by zo1 on Monday April 12, 2021 @02:52PM (#26783496)

The same "techies" that are proponents of using Goodhart's law to describe measures of development effort?

https://en.wikipedia.org/wiki/Goodhart%27s_law

Or how about https://en.wikipedia.org/wiki/Campbell%27s_law ?

Both of those are good and reasonable rules to describe the world, and something that is very intuitive. That is why a lot of people find government inflation stats suspect - even if they are measured correctly!

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