" . . . $200,000 in cash - the equivalent of $1,213,226 today."

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taxfoe
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" . . . $200,000 in cash - the equivalent of $1,213,226 today."

Has DB Cooper's fortune been found at last? 'Parachute strap' may reveal where daring criminal buried his ransom cash 46 years after he leaped from a plane and vanished over Pacific Northwest woodland

SOURCE
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This post isn't about D. B. Cooper or his caper. It's about paper, fiat currency.

The article approximately compares $200k cash to a wisely converted value, then vs now. It fails to point out that, if you found Cooper's cash today, you don't get to walk into a bank and demand $1.2+ million.

Why not? The cash never went off ledger. What happened?

Tom C
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Because the government issues

Because the government issues currency with effectively a negative interest rate.

It would like if you borrowed $1,200,000 in 1971, you could repay that loan with $200,000 today.

The government has made a pretty sweet deal for itself!

anonymous_coward
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It would like if you borrowed

It would like if you borrowed $1,200,000 in 1971, you could repay that loan with $200,000 today.

I think I know what you mean, but this sentence makes no sense whatsoever.

In any case you could have parked the money in equities and averaged 10%/year so not sure why everyone freaking out.

pmconusa
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There is no equity gaining 10

There is no equity gaining 10% every year and the reason some rise more than the rate of inflation for a period is because the smart traders are inflating the stock by artificially creating demand. The DOW has risen nearly 50% in just the last few years. Do you really believe the value of those companies that make it up have really grown that much? If you do you have been taken in just like Anonymous.

The way to look at Coopers $200,000 is that in order to have the purchasing power of that $200,000 today you would have to steal over $1 million. There is not a bank in this world that has that much cash on hand in a single place.

anonymous_coward
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The average return for the S

The average return for the S&P500 historically is 10%. You could have just bought S&P 500 stocks and sat on them, only selling when companies are delisted. You would do fine.

I by no means think that the price of a stock reflects the value - in particular, we are in a massive asset bubble (as I've posted about before).

But over the long term, stocks have performed at about 10%, and they are immune to inflation as the value is a function of their sales, which is by nature a function of inflation, so they are essentially inflation proof.

taxfoe
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Everyone sees my point,

Everyone sees my point, obviously. The one refinement I would add is that the present value of the cash is storytelling. Reporting would have informed us that $200k could have purchased PNW waterfront, then, vs the hovel it would get you, today. And the reason for that is . .

anonymous_coward
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Yes, we belabor points as

Yes, we belabor points as well as anyone here on AMG, all apologies...

.... but also consider that inflation is the only way to combat minimum wage increases (which is why tying the minimum wage to inflation is really bad, both for liberals and conservatives. Conservatives because it screws up the labor market and liberals because it gives them an easy political win every few years.)

As long as you keep your money in investments instead of cash, you are generally safe from inflation risk.

pmconusa
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It is obvious that Anonymous

It is obvious that Anonymous has learned his voodoo economics at the Progressive School. Inflation is a factor of the excess currency introduced into the market because each dollar added reduces the value of the previous one. This is because the currency is never consumed but accumulates. When I pay someone $100 for a service, the note does not lose value because the person who gets it, has now the value of $100 and we he spends it the next person also has the same value in hand. We have lost sight of the fact this happens because we no longer use actual paper, but transact business by numerical entries in ledgers. If those entries were immediately converted to paper we would be buried in it.

In 1914 or thereabouts gold was selling for $18.00 per ounce, the same as its cost of production. Since then the cost of producing an ounce of gold has steadily increased in terms of manhours. Those manhours are actually measured in fuel consumed very similar to the gallons of fuel you put in your automobile. The amount of fuel in terms of kcal to produce that manhour are the same today as they were in 1914 and will be in 2014 and this is the measure we should be using for our currency and distributing it evenly to everyone. Nature provides those kcals for free but to obtain them we must pay someone for the time it takes to plant and harvest them, process them and deliver them to us.

As I have said for years, we have ignored the real backing for the so called dollar to the point where we are actually producing less than we consume. It is not that agricultural gains have not kept pace, they had until about the mid 1980s and since then we have been adding more and more consumption (people) and less production (kcals) to the extent we now import enough kcals to maintain the life style of 50 million of our population. Imports are increasing and domestic production is decreasing as we convert more and more arable land to non-agricultural production. A system where this happens is doomed to fail, it is only a question of time. That time can now be measured quite accurately. All you have to do is calculate the kcal production, divide it by the 2500 kcal per day to sustain life and that number will yield the population that can be supported. At current rates, this would be around 2080 unless the rate increases, which it is likely to do because our neighboring countries to the south have already reached or passed this point.

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