Amazon created a concrete shortage

[Steppenwolfe]

Cash is the worst thing to have in an inflationary cycle. This is not going to be short-lived. It will be 3-5 years before it gets resolved.

And why is that?

 

[Larry Caldwell]

Cash is part of a prudently diverse portfolio, especially for those retired or about to retire.

Cash is your second best defensive position during a panic.

 

[Deere Dude]

If for some reason there is an issue with the checking account, we can get back home.

A little different from your experiance. I Had something happen before my Credit Card days. In Utah on 4 week vacation with family in my motorhome and a week to go seeing the sights. I checked my vacation cash and only had $86 left. I stopped at several banks to cash a personal check but none would even listen to my pleading to cash one. We were as stranded as much as I ever would want to be.

Finally, we forgot the last side trip and headed home to Wisconsin. We nursed the motor home to squeeze all the mileage we coulld get out of it. We pulled into the driveway with about $15 left.

The next couple days we started shooting out credit card applications and vowed to never be cardless again.

 

[Pixguy]

And why is that?

Let it go Step.

 

[Oaktree]

Cash is your only fungible asset.

Or barter.

 

[Steppenwolfe]

Let it go Step.

By all means... To what do you refer?

 

[Torvy]

And why is that?

When prices are rising cash is literally being devalued. Think of it this way...you have a $10 in your pocket and today you can (hypothetically) buy 10 ceramic apples with that money. You choose to hold your cash because you heard inflation is coming. With a 10% inflation rate, those same apples cost $11 next year. You held your cash and can only buy 9 apples now. If your friend bought the apples rather than hold the cash, his apples gained value and are worth $11. This is why professional advisors will tell you to buy gold or silver. Any asset that does not depreciate would work. Land is my personal favorite.

Hyperinflation is just a really bad version of what we are entering. As an example, the German Mark was so beset by hyperinflation after WWI, that it was literally cheaper for people to burn bundles of paper Marks in their fireplaces than to buy firewood.

On the other hand, if you have a fixed rate loan that you took out before inflation took hold, your payment doesn't change for the life of the loan. Your income would typically rise with inflation... Cost of Living adjustments, etc. So the loan, as a percentage of your income would get cheaper.

 

[JDZ735M]

When prices are rising cash is literally being devalued. Think of it this way...you have a $10 in your pocket and today you can (hypothetically) buy 10 ceramic apples with that money. You choose to hold your cash because you heard inflation is coming. With a 10% inflation rate, those same apples cost $11 next year. You held your cash and can only buy 9 apples now. If your friend bought the apples rather than hold the cash, his apples gained value and are worth $11. This is why professional advisors will tell you to buy gold or silver. Any asset that does not depreciate would work. Land is my personal favorite.

Hyperinflation is just a really bad version of what we are entering. As an example, the German Mark was so beset by hyperinflation after WWI, that it was literally cheaper for people to burn bundles of paper Marks in their fireplaces than to buy firewood.

On the other hand, if you have a fixed rate loan that you took out before inflation took hold, your payment doesn't change for the life of the loan. Your income would typically rise with inflation... Cost of Living adjustments, etc. So the loan, as a percentage of your income would get cheaper.

Ummmhummm. Land is a good hedge against inflation. Except for taxes and expenses buying most of it and also selling it. Have you ever though about what most people would do if their real estate taxes suddenly doubled? Or tripled? Every year for 5 years in a row? Think it couldn't happen?

 

[Torvy]

Ummmhummm. Land is a good hedge against inflation. Except for taxes and expenses buying most of it and also selling it. Have you ever though about what most people would do if their real estate taxes suddenly doubled? Or tripled? Every year for 5 years in a row? Think it couldn't happen?

Real problem, but not really due to inflation. Tax rates are fixed unless your elected officials raise them. The en vogue thing for them to do is artificially inflate land values through 'valuation' which leaves rates the same and increases your taxable value due to a 'paper' increase. You can fix these things by voting, or by challenging the values. This happens in or out of inflationary periods. This is also another area where differences are not just state by state, but county by county as well. Where my land is the AG valuation is pretty low. Land values in the metroplex have outpaced inflation for years. Some people get happy excited when values go up because their property is 'worth more'. They may not understand the costs involved. I would favor systems in which you pay taxes on a rolling average of the value of your property starting the year you took ownership. For example, if you paid 100k for a piece of land, that is the base value of that land. The next year, the assessment comes back at $110k, in my hypothetical system, your base for taxes would be $105k. This would be a hybrid of systems where you only pay on the purchase value and the more common system where you pay based on the mythical assessed value. I think assessments should also have to be no more frequent than 3 years and include an actual site visit or inspection. Most assessment nowadays is just an imaginary number applied based on the sale of new properties in the area with no regard for the actual property itself (or even comparable ones). We have successfully had our property valuation challenged every time. It is just a hassle. They make not hard so you will not challenge it...don't look behind the curtain.

Inflation CAN cause these increases over the long term, but even bad inflation of 10 or 20% would only increase your taxes by 10 or 20%. All of the other increases are thanks to your local officials.

 

[JDZ735M]

Real problem, but not really due to inflation. Tax rates are fixed unless your elected officials raise them. The en vogue thing for them to do is artificially inflate land values through 'valuation' which leaves rates the same and increases your taxable value due to a 'paper' increase. You can fix these things by voting, or by challenging the values. This happens in or out of inflationary periods. This is also another area where differences are not just state by state, but county by county as well. Where my land is the AG valuation is pretty low. Land values in the metroplex have outpaced inflation for years. Some people get happy excited when values go up because their property is 'worth more'. They may not understand the costs involved. I would favor systems in which you pay taxes on a rolling average of the value of your property starting the year you took ownership. For example, if you paid 100k for a piece of land, that is the base value of that land. The next year, the assessment comes back at $110k, in my hypothetical system, your base for taxes would be $105k. This would be a hybrid of systems where you only pay on the purchase value and the more common system where you pay based on the mythical assessed value. I think assessments should also have to be no more frequent than 3 years and include an actual site visit or inspection. Most assessment nowadays is just an imaginary number applied based on the sale of new properties in the area with no regard for the actual property itself (or even comparable ones). We have successfully had our property valuation challenged every time. It is just a hassle. They make not hard so you will not challenge it...don't look behind the curtain.

Inflation CAN cause these increases over the long term, but even bad inflation of 10 or 20% would only increase your taxes by 10 or 20%. All of the other increases are thanks to your local officials.

The same people who gave you that AG valuation can, and will, if it suits them, take it away. The Feds could even come up with a scheme to tax your property. Increased capital gains taxes? A 'wealth tax' on increased value of real estate?

And, BTW, since we know how much land is a 'hedge against inflation' we both also know the fallacy of the 'paper increase" is not a real increase. It's real. You pay it in real money. Property values are increasing for a fact. And your taxes will increase.

 

[groundcover]

Few years ago wife took me away for a birthday. I'm a stick in the mud, as dad said "I'm like a fine wine,I don't travel well"
We were at a bed and breakfast and we go to a very nice restaurant that had a paid parking lot . The parking attendant in the little booth said we don't take cash only credit cards ! They don't trust him with cash but I'm supposed to trust him with my credit card ?? I tell him look it's printed right on the dollar "for legal tender" ! I'm a bit grumpy when hungry and was ready to turn around and go home when wife pulled out her credit card and said here, give him this . Next morning taking to a couple at the B&B found out they used an Uber to go to the same place for what we paid for parking !

 

[lman]

Ummmhummm. Land is a good hedge against inflation. Except for taxes and expenses buying most of it and also selling it. Have you ever though about what most people would do if their real estate taxes suddenly doubled? Or tripled? Every year for 5 years in a row? Think it couldn't happen?

Around here farmland has always been considered a good investment. When you lease the land to a farmer, you will get more than the cost of the property taxes. Land in your area may not be suited to grow corn or soybeans and would not be a good investment.

 

[RickB]

Giving blanket financial advise without regard for geography, age or circumstances is a fool's errand. There are locales where real estate is a chronically poor investment for a variety of reasons. There are times when holding cash is either prudent or counterproductive depending on other factors.

 

[Oaktree]

We were at a bed and breakfast and we go to a very nice restaurant that had a paid parking lot . The parking attendant in the little booth said we don't take cash only credit cards ! They don't trust him with cash but I'm supposed to trust him with my credit card ?? I tell him look it's printed right on the dollar "for legal tender" ! I'm a bit grumpy when hungry and was ready to turn around and go home when wife pulled out her credit card and said here, give him this . Next morning taking to a couple at the B&B found out they used an Uber to go to the same place for what we paid for parking !

First of all, I would never patronize a business that required me to pay for parking. I'm more or less OK with paid parking at, say a municipal lot but a business that charges it's customers to park is a deal killer. Granted, I'm not much of one for fancy restaurants to begin with.
I've never used an uber, wouldn't even know how to hail one.

While I use credit cards more these days than in the past (with cash back, you're essentially getting a 1-5% discount), but I've always wondered how a business can legally refuse cash...as you said it's printed right on the notes that it's legal tender.

My wife is much more accommodating to these types of things, but sometimes you gotta take a stand.

 

[Jstpssng]

I've always wondered how a business can legally refuse cash...as you said it's printed right on the notes that it's legal tender.

I've often wondered the same thing.

 

[Larry Caldwell]

Real problem, but not really due to inflation. Tax rates are fixed unless your elected officials raise them. The en vogue thing for them to do is artificially inflate land values through 'valuation' which leaves rates the same and increases your taxable value due to a 'paper' increase. You can fix these things by voting, or by challenging the values. This happens in or out of inflationary periods. This is also another area where differences are not just state by state, but county by county as well. Where my land is the AG valuation is pretty low. Land values in the metroplex have outpaced inflation for years. Some people get happy excited when values go up because their property is 'worth more'. They may not understand the costs involved. I would favor systems in which you pay taxes on a rolling average of the value of your property starting the year you took ownership. For example, if you paid 100k for a piece of land, that is the base value of that land. The next year, the assessment comes back at $110k, in my hypothetical system, your base for taxes would be $105k. This would be a hybrid of systems where you only pay on the purchase value and the more common system where you pay based on the mythical assessed value. I think assessments should also have to be no more frequent than 3 years and include an actual site visit or inspection. Most assessment nowadays is just an imaginary number applied based on the sale of new properties in the area with no regard for the actual property itself (or even comparable ones). We have successfully had our property valuation challenged every time. It is just a hassle. They make not hard so you will not challenge it...don't look behind the curtain.

Inflation CAN cause these increases over the long term, but even bad inflation of 10 or 20% would only increase your taxes by 10 or 20%. All of the other increases are thanks to your local officials.

So Texas levies a state property tax? In Oregon there is no state property tax. All property taxes are local, and cannot increase more than 3%/year.

 

[Larry Caldwell]

I've often wondered the same thing.

Nobody forces you to do business with you, but if you owe them money, tender cash, and the tender is refused, the debt is cancelled. You better get that refusal in writing.

 

[Oaktree]

Real problem, but not really due to inflation. Tax rates are fixed unless your elected officials raise them. The en vogue thing for them to do is artificially inflate land values through 'valuation' which leaves rates the same and increases your taxable value due to a 'paper' increase. You can fix these things by voting, or by challenging the values. This happens in or out of inflationary periods.

I don't know how it works in other states, but here in N.H. cities & towns are required to re-assess property every 10 years or less. Some may grumble, but to me it's fair...this way someone who bought years ago isn't skating by while his neighbor is paying more than his share. Usually after a re-assessment the tax rate is adjusted accordingly to keep revenue (relatively) unchanged.
I don't know what formula they use to determine valuation for tax purposes. We do have a land use category here called "current use", in which lots over a certain size, not in commercial use have a fixed value per acre determined by the state. The intent was to encourage open space and make agricultural land affordable tax-wise.

 

[Jstpssng]

I don't know how it works in other states, but here in N.H. cities & towns are required to re-assess property every 10 years or less. Some may grumble, but to me it's fair...this way someone who bought years ago isn't skating by while his neighbor is paying more than his share. Usually after a re-assessment the tax rate is adjusted accordingly to keep revenue (relatively) unchanged.
I don't know what formula they use to determine valuation for tax purposes. We do have a land use category here called "current use", in which lots over a certain size, not in commercial use have a fixed value per acre determined by the state. The intent was to encourage open space and make agricultural land affordable tax-wise.

We have what's called "Tree Growth" to make it easier for land to remain undeveloped. To qualify the landowner must have more than 10 acres, have a management plan every 10 years, and the principle use has to be for timber production. The valuation is based on timber type.

To take it out of tree growth can be pricey; you need to pay the difference between that value and fair market value, plus 30%.

 

[Steppenwolfe]

This will ruin your Christmas; read at your own risk...

https://www.washingtonpost.com/business/interactive/2021/wyoming-trusts-finance-pandora-papers/