6/16/2014 9:09 AM

What if, in Magical 100m Retirement Fund Land, inflation goes apeshit.   Cheeseburgers cost 1m each.   I wonder if moy's 100m is enough or if he will continue to fund his retirement account?    Perhaps BL can tell us.

6/16/2014 9:26 AM
I checked my 401k account first thing this morning.  All my money is gone and has been replaced by cheeseburgers.

Now, I just got an email from my 401k administrator who told me that I had too many cheeseburgers and they've taking some away because they didn't think I could eat them all.

WTF?
6/16/2014 9:32 AM
Posted by bad_luck on 6/16/2014 8:47:00 AM (view original):
Posted by moy23 on 6/16/2014 7:09:00 AM (view original):
Posted by bad_luck on 6/16/2014 12:52:00 AM (view original):
Posted by bad_luck on 6/15/2014 7:55:00 PM (view original):
Posted by tecwrg on 6/15/2014 6:50:00 PM (view original):
No, I don't think so.

You're special.
Nope. It's everyone.

If you were hungry and had one cheeseburger, that would be great. It would fill a need. If you had a second, it would probably also be great. But you probably aren't hungry after two, so a third doesn't do you as much good. A forth does even less. A fifth less than that and by the time you got to burger 6, you're probably in negative utility range.

Agree, yes or no?
Moy?
Again... This is a law regarding consumption of goods and services.... You are going to the wrong investment advisor if they are talking to you about eating 6 cheeseburgers. Mine discusses risk tolerance, principle guarantees, and ROI.

Unlike my stomach my bank account doesn't get 'full'.... Nor do I suffer side effects like obesity and high cholesterol from making what you would call 'too much' money. The more money I have gives me more options.... Hey someday I might want to buy my favorite sports team in which I'd need way more than $100 million dollars. If the money is not there I can't buy it so its not just about consuming cheeseburgers today..... But more about having enough access to cheeseburgers for the rest of my life.... And then my kids lives... And my grandchildrens lives. You keep looking at this issue in a vacuum TODAY.... Savers save for the unknown. 'You can never save enough money cause you never know what will go wrong'.... I'm saving for an uncertain future which means I have a minimum threshold that I feel comfortable with (so I can sleep at night) and I don't have a maximum threshold because I don't know what the future holds. Make sense?
Just for the sake of the argument, do you agree with the point regarding the burgers?
of course. its a legit theory. problem with it is its mostly utilized for 1 point in time... not over time.

your burger example is perfect. you are referring to one sitting - not a lifetime of eating. a lifetime could end tomorrow or in 50 years so your point of diminishing marginal utility would always be a moving target, or better yet, uncertain and unreliable.
6/16/2014 9:33 AM
Posted by tecwrg on 6/16/2014 9:26:00 AM (view original):
I checked my 401k account first thing this morning.  All my money is gone and has been replaced by cheeseburgers.

Now, I just got an email from my 401k administrator who told me that I had too many cheeseburgers and they've taking some away because they didn't think I could eat them all.

WTF?
lol
6/16/2014 10:13 AM
Posted by moy23 on 6/16/2014 9:34:00 AM (view original):
Posted by bad_luck on 6/16/2014 8:47:00 AM (view original):
Posted by moy23 on 6/16/2014 7:09:00 AM (view original):
Posted by bad_luck on 6/16/2014 12:52:00 AM (view original):
Posted by bad_luck on 6/15/2014 7:55:00 PM (view original):
Posted by tecwrg on 6/15/2014 6:50:00 PM (view original):
No, I don't think so.

You're special.
Nope. It's everyone.

If you were hungry and had one cheeseburger, that would be great. It would fill a need. If you had a second, it would probably also be great. But you probably aren't hungry after two, so a third doesn't do you as much good. A forth does even less. A fifth less than that and by the time you got to burger 6, you're probably in negative utility range.

Agree, yes or no?
Moy?
Again... This is a law regarding consumption of goods and services.... You are going to the wrong investment advisor if they are talking to you about eating 6 cheeseburgers. Mine discusses risk tolerance, principle guarantees, and ROI.

Unlike my stomach my bank account doesn't get 'full'.... Nor do I suffer side effects like obesity and high cholesterol from making what you would call 'too much' money. The more money I have gives me more options.... Hey someday I might want to buy my favorite sports team in which I'd need way more than $100 million dollars. If the money is not there I can't buy it so its not just about consuming cheeseburgers today..... But more about having enough access to cheeseburgers for the rest of my life.... And then my kids lives... And my grandchildrens lives. You keep looking at this issue in a vacuum TODAY.... Savers save for the unknown. 'You can never save enough money cause you never know what will go wrong'.... I'm saving for an uncertain future which means I have a minimum threshold that I feel comfortable with (so I can sleep at night) and I don't have a maximum threshold because I don't know what the future holds. Make sense?
Just for the sake of the argument, do you agree with the point regarding the burgers?
of course. its a legit theory. problem with it is its mostly utilized for 1 point in time... not over time.

your burger example is perfect. you are referring to one sitting - not a lifetime of eating. a lifetime could end tomorrow or in 50 years so your point of diminishing marginal utility would always be a moving target, or better yet, uncertain and unreliable.
If you were starving and only had one, you'd eat it. You wouldn't save it.

Saving for retirement comes after basic needs are met. The money saved for retirement is less important than the money used for food now. If you starve to death there's no retirement to save for.
6/16/2014 10:21 AM
6/16/2014 10:35 AM
If I'm understanding BL correctly, he thinks society is better off if they starve to death today rather than save money for retirement tomorrow.

#AnotherBrillianIdea
6/16/2014 10:49 AM (edited)
Posted by bad_luck on 6/16/2014 10:13:00 AM (view original):
Posted by moy23 on 6/16/2014 9:34:00 AM (view original):
Posted by bad_luck on 6/16/2014 8:47:00 AM (view original):
Posted by moy23 on 6/16/2014 7:09:00 AM (view original):
Posted by bad_luck on 6/16/2014 12:52:00 AM (view original):
Posted by bad_luck on 6/15/2014 7:55:00 PM (view original):
Posted by tecwrg on 6/15/2014 6:50:00 PM (view original):
No, I don't think so.

You're special.
Nope. It's everyone.

If you were hungry and had one cheeseburger, that would be great. It would fill a need. If you had a second, it would probably also be great. But you probably aren't hungry after two, so a third doesn't do you as much good. A forth does even less. A fifth less than that and by the time you got to burger 6, you're probably in negative utility range.

Agree, yes or no?
Moy?
Again... This is a law regarding consumption of goods and services.... You are going to the wrong investment advisor if they are talking to you about eating 6 cheeseburgers. Mine discusses risk tolerance, principle guarantees, and ROI.

Unlike my stomach my bank account doesn't get 'full'.... Nor do I suffer side effects like obesity and high cholesterol from making what you would call 'too much' money. The more money I have gives me more options.... Hey someday I might want to buy my favorite sports team in which I'd need way more than $100 million dollars. If the money is not there I can't buy it so its not just about consuming cheeseburgers today..... But more about having enough access to cheeseburgers for the rest of my life.... And then my kids lives... And my grandchildrens lives. You keep looking at this issue in a vacuum TODAY.... Savers save for the unknown. 'You can never save enough money cause you never know what will go wrong'.... I'm saving for an uncertain future which means I have a minimum threshold that I feel comfortable with (so I can sleep at night) and I don't have a maximum threshold because I don't know what the future holds. Make sense?
Just for the sake of the argument, do you agree with the point regarding the burgers?
of course. its a legit theory. problem with it is its mostly utilized for 1 point in time... not over time.

your burger example is perfect. you are referring to one sitting - not a lifetime of eating. a lifetime could end tomorrow or in 50 years so your point of diminishing marginal utility would always be a moving target, or better yet, uncertain and unreliable.
If you were starving and only had one, you'd eat it. You wouldn't save it.

Saving for retirement comes after basic needs are met. The money saved for retirement is less important than the money used for food now. If you starve to death there's no retirement to save for.
No I would ration it. Take a small bite now and SAVE the rest for later.

In theory you are correct... In reality people are too stupid to decipher between basic needs and wants. The fact that 28% of those in poverty smoke is a great example. The fact that we spend $20000 a year per each impoverished individual and $60000 a year on an impoverished family of 3... Yet there are more poor people today than ever before suggests that these people need financial education more than they need money. They, in general, are eating the entire burger because they don't have the discipline to save some for later. Without the education piece they are destined to always be poor (even if you gave them $100 million dollars). How many lottery winners go bankrupt? Do you know why?
6/16/2014 10:49 AM
Posted by tecwrg on 6/16/2014 10:35:00 AM (view original):
If I'm understanding BL correctly, he thinks society is better off if they starve to death today rather than save money for retirement tomorrow.

#AnotherBrillianIdea
As usual, you are not understanding correctly.

You guys can whine about it all you want, but this is the reason that higher incomes are taxed at higher percentages and lower incomes are taxed at lower percentages. If we need to collect X amount of dollars, it's better to take the dollars that are less necessary.
6/16/2014 10:52 AM
Posted by bad_luck on 6/16/2014 10:49:00 AM (view original):
Posted by tecwrg on 6/16/2014 10:35:00 AM (view original):
If I'm understanding BL correctly, he thinks society is better off if they starve to death today rather than save money for retirement tomorrow.

#AnotherBrillianIdea
As usual, you are not understanding correctly.

You guys can whine about it all you want, but this is the reason that higher incomes are taxed at higher percentages and lower incomes are taxed at lower percentages. If we need to collect X amount of dollars, it's better to take the dollars that are less necessary.
Couldn't the reason be because its better to take from 20% of the voters than 80% if you are looking to win an election ?
6/16/2014 10:53 AM
And YOU are the aribiter of "less necessary".

That clears things up tremendously.

#Dumbass

6/16/2014 11:49 AM
Posted by tecwrg on 6/16/2014 10:53:00 AM (view original):
And YOU are the aribiter of "less necessary".

That clears things up tremendously.

#Dumbass

I'm not. But you don't agree that, at some point, dollars are less necessary than the ones that came before, without agreeing on where the point is?
6/16/2014 11:55 AM
I've never been in a position where the money I earn today has less value than the money I earned last week, last month, or last year.

And I'm not going to be so presumptuous as to assume that others are indeed in that position, or to determine "Yeah, you have enough money.  Let's take some of it away".

So no, I don't agree.

6/16/2014 11:58 AM
Posted by moy23 on 6/16/2014 10:52:00 AM (view original):
Posted by bad_luck on 6/16/2014 10:49:00 AM (view original):
Posted by tecwrg on 6/16/2014 10:35:00 AM (view original):
If I'm understanding BL correctly, he thinks society is better off if they starve to death today rather than save money for retirement tomorrow.

#AnotherBrillianIdea
As usual, you are not understanding correctly.

You guys can whine about it all you want, but this is the reason that higher incomes are taxed at higher percentages and lower incomes are taxed at lower percentages. If we need to collect X amount of dollars, it's better to take the dollars that are less necessary.
Couldn't the reason be because its better to take from 20% of the voters than 80% if you are looking to win an election ?
If you choose to take a cynical view of it, maybe. But the first marginal income tax bracket was put into place in 1862 and a system similar to what we have now has been in place since 1913.
6/16/2014 12:13 PM
Posted by tecwrg on 6/16/2014 11:56:00 AM (view original):
I've never been in a position where the money I earn today has less value than the money I earned last week, last month, or last year.

And I'm not going to be so presumptuous as to assume that others are indeed in that position, or to determine "Yeah, you have enough money.  Let's take some of it away".

So no, I don't agree.

Maybe it's on me for not explaining it well enough, but you not understanding doesn't make it less real.

The shift is easiest to see at astronomical incomes. If you made $100 million a year, making another $5,000 probably doesn't do anything for you. It doesn't change your standard of living at all. That $5,000 has an extremely low marginal utility for you.

Obviously, at incomes most of us make, the shift is much more subtle. Instead of thinking of "first dollar" as money earned in January and "last dollar" as money earned in December, think of it as how you prioritize your budget. "First dollar" is what you use to buy what you absolutely have to have. "Last dollar" is what you use to buy* your least important thing.

*For the sake of this discussion, consider savings as "buying" something that falls somewhere on the list of priorities depending on the person.

 

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