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How Viewing a "Virtual You" Can Help You Save

samzenpus posted about 3 years ago | from the look-what-you've-become dept.

The Almighty Buck 182

Hugh Pickens writes "The WSJ reports that computer scientists, economists, neuroscientists and psychologists are teaming up to find innovative ways of turning impulsive spenders into patient savers. One way to shock Americans into saving more for their retirement is software that lets users stare into a camera in a virtual-reality laboratory and see an image staring back of how they will look in the year 2057. By enabling the young to see themselves as they will be when they are old, virtual-reality technology can transform their urge to spend for today into a willingness to save for tomorrow because to the extent that people can more vividly imagine how badly they will feel in the future with little to no retirement savings, they can be motivated to save more money now. In one test experimental subjects who saw a persuasive visual analog of a 70-year old version of themselves by morphing the shape and texture of his avatar to simulate the aging process reported they would save twice as much as those who didn't (PDF). 'An employee's ID photo could be age-morphed and placed on the benefits section of the company's website,' says Dan Goldstein of London Business School. 'From there, we're just a few clicks and a few minutes away from someone making a lasting decision that can be worth thousands [of dollars].'"

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182 comments

Good life (1, Funny)

neverforget (2027512) | about 3 years ago | (#35632052)

What about the people who die before retirement? When you're putting money to retirement savings you're gambling it. It's also money off from investments that could make you a lot more. And of course, it's money off right away.

Why not stop caring about future and live now like it would be your last day on earth? That's what I've done for the last 2-3 years and it's been great. I've also done so many things during that time. And I will continue doing so and let the future me take care of himself. If he is even half as awesome as I am, he will survive and he will survive even better than if I took care of him.

Re:Good life (1)

Mad Merlin (837387) | about 3 years ago | (#35632146)

When you're putting money to retirement savings you're gambling it.

...and when you don't save for retirement, you're gambling with your life. Pick your poison.

Re:Good life (1)

DamonHD (794830) | about 3 years ago | (#35632206)

Indeed, except that all the rest of us have to pick up the tab if you make *no* effort to plan ahead. I know which route I favour you taking...

I'm not big on slaving now in the hopes of being happy when I'm 80, but I'm not so selfish or silly as to assume that someone else will have me live like a king if I recklessly failed to put anything away.

Besides, as I understand UK law where I am, if I drop dead before taking my pension then my family get the contents tax free. In which case an early death can be a huge gift to any offspring. A gamble with little downside overall.

Rgds

Damon

Re:Good life (5, Insightful)

MoonBuggy (611105) | about 3 years ago | (#35632352)

Indeed, except that all the rest of us have to pick up the tab if you make *no* effort to plan ahead. I know which route I favour you taking...

So if someone is responsible, makes sacrifices, and saves, they are rewarded by having to subsidise those who didn't bother to plan ahead. If, on the other hand, they blow all their money on blackjack and hookers, their retirement is then subsidised by those who still have some money.

Sounds like a system that encourages you to take the trip to Vegas while you're young enough to appreciate it, as far as I can see...

Re:Good life (1)

similar_name (1164087) | about 3 years ago | (#35633232)

So if someone is responsible, makes sacrifices, and saves, they are rewarded by having to subsidise those who didn't bother to plan ahead. If, on the other hand, they blow all their money on blackjack and hookers, their retirement is then subsidised by those who still have some money.

Sounds like a system that encourages you to take the trip to Vegas while you're young enough to appreciate it, as far as I can see...

A system that lets the elderly who have no money rot would certainly encourage people to save.

Re:Good life (1)

WrongSizeGlass (838941) | about 3 years ago | (#35632208)

...and when you don't save for retirement, you're gambling with your life. Pick your poison.

Ooh, ohh ... I'll take iocane powder ;-)

Re:Good life (2, Insightful)

bigstrat2003 (1058574) | about 3 years ago | (#35632328)

There are two extremes, and both are bad. While one shouldn't deny themselves everything in the short term simply to prepare for the future, neither should one sacrifice their future for today. Living every day like it's your last is a stupid way to live, financially speaking.

Re:Good life (0)

Anonymous Coward | about 3 years ago | (#35632400)

Agreed. Fuck everything that moves until age 60. At 60, jump off a cliff - optionally with a wingsuit, your choice.

Re:Good life (0)

Anonymous Coward | about 3 years ago | (#35633214)

While one shouldn't deny themselves everything in the short term simply to prepare for the future, neither should one sacrifice their future for today.

With the ever dwindling buying power of the average citizen thanks to inflation outpacing the average salary increases of most, you'll be surprised to learn that you really do have to make a choice between the extremes in more cases than you'd think.

Re:Good life (0)

Anonymous Coward | about 3 years ago | (#35632452)

Why not stop caring about future and live now like it would be your last day on earth? That's what I've done for the last 2-3 years

So if you knew you were going to die tomorrow you would get up, grab a cup of coffee and go to your day job? That's pretty depressing.

Re:Good life (1)

netsharc (195805) | about 3 years ago | (#35632770)

Maybe he doesn't have to be a wage-slaver, or his job is fulfilling (saving children or what not), that would be my ideal life.

Anyway, at the rate humans, represented by democratically elected leaders, are fucking up the world, I doubt that it will survive another 50 years. From climate-change-deniers-and-proud-of-it-in the USA to "oh we pledge to reduce car emissions by 50%... by 2020." too-cozy-with-car-companies Europe, all are blind to the fact that the summers are getting hotter, and the winters are getting extremer... and since budgets are getting slashed left and right, having several thousand die from freezing to death because the power company couldn't get the power fixed in winter and rescue workers are no longer existent will probably be a regular occurrence in 5 to 10 years...

Floods, forest fires (look at Russia last summer), snow and ice...

Re:Good life (3, Insightful)

FooAtWFU (699187) | about 3 years ago | (#35632908)

It's reasonable to worry about global warming and similar effects, and it's all well and good to complain about "climate change deniers and proud of it", but to visit the other extreme is also an affront to reason. To wit: changing weather patterns may affect the world economy to the tune of trillions of dollars, but your "uber-winter" scenario sounds like something out of The Day After Tomorrow. As such, I believe that your worries have transcended reason and are now firmly in the realm of paranoid delusion.

Please come back. I assure you there's still plenty of room to be rationally concerned about the world, and (outside of a circle that already embraces the notion) you're really undermining the global warming cause.

Re:Good life (1)

russotto (537200) | about 3 years ago | (#35632570)

What about the people who die before retirement?

For them, the picture will be of a coffin or an urn.

Re:Good life (2)

camcorder (759720) | about 3 years ago | (#35632632)

Whatever you do to take care of your body, it will be weaker by time. You can only make the pace of it slow, though eventually it will. If you think you'll be as healthy, as energetic you are today, you're only fooling yourself and you might be surprised enough to see year by year you'll lose your skills and turn back to what you had when you're a new born.

Life has a cycle, you start with nothing, and die with nothing. But it gives you a chance when you're younger to have something before you die. If you don't use your chance, you postpone worst days of your life to its end. When you're a young or baby, people would give you a hand, but when you're old, nobody would care about you if you hadn't used your chance.

Re:Good life (2)

LordLucless (582312) | about 3 years ago | (#35632868)

I was going to mod you down, but I couldn't find a "-1, Damn Stupid" mod. Have fun when you're 65, unemployable, deteriorating physically, and have no saved resources. I hope future you feels like suiciding in an half-as-awesome-as-you manner so that "death before retirement" gamble comes off.

Re:Good life (1)

dilinger (6464) | about 3 years ago | (#35633196)

Presumably by that point, he has a family and friends who are willing to take care of him. *That*s how you properly save for retirement. Putting money into the slot machine that we call the stock market is no guarantee, it's simply one possibility. Building a local community, however, is a much better bet.

I have one of those (2)

jawtheshark (198669) | about 3 years ago | (#35632066)

He's called "my dad"... and he worked hard his whole life, and I see that now at 64 has failing health, is tired all the time and doesn't do much apart from watching TV and surfing a bit. I know how my future looks, I can see him every day if I want.

Re:I have one of those (0)

Anonymous Coward | about 3 years ago | (#35632394)

I had of of those... he would have been 71. But he isn't. He stopped "being" just a year older than yours. Death happens. My own particular "mirror" looked great (you'd have thought "maybe he's 50?") he was active as all get out, and never complained of age related problems.

That aggressive prostrate cancer sure turned out to be a problem.

I am in my late 40's (look like I'm in my mid-30's) and have a retirement savings that will just about cover the cost of a prostrate exam. I already know I'm gonna leave a good-looking corpse... genetics-wise this image software would get it dead wrong. Would I rather be decrepit and rich? Maybe. But I sure don't want to be tired all the time and not do much apart from watch TV and surf a bit.

Unless by "surf" you mean wetsuits and resin-coated-fiberglass.

Don't wait on the PSA-DO IT NOW! (0)

Anonymous Coward | about 3 years ago | (#35633106)

If you are in your late 40s and your father had it, DO NOT WAIT ON THE PSA. Get it tomorrow!

In all seriousness, do it. It could save your life if caught early enough.

Spoken from early 40s with an elevated PSA and recent Da Vinci prostatectomy.

Taking care of self (1)

basotl (808388) | about 3 years ago | (#35632080)

If the individual inputted as having an unhealthy lifestyle such as heavy smoker with lack of exercise did the study show them as dead or suffering at these older ages? I've seen many 50 year olds that looked worse than my 70 year old father-in-law due to how they took care of themselves.

Just other food for thought.

Weak. (1)

Frosty Piss (770223) | about 3 years ago | (#35632094)

The image samples in the article are pretty weak, they look like someone spent a few minutes in Photoshop changing the hair color to gray and altering the skin tones a bit and running the image through a brush filter, and the overall effect is as if they created a "Second Life" clone from a photograph. Not very good age-progression at all.

2057? (0)

Anonymous Coward | about 3 years ago | (#35632162)

> how they will look in the year 2057

I'm quite sure what I'll look like in 2057. It might be amusing to have a coffin-cam though with a URL that people could go to.

Although more likely I'll be cremated, and a pile of ashes isn't as interesting to look at.

Another way to save (2)

martin-boundary (547041) | about 3 years ago | (#35632168)

Another way to help Americans save for retirement is to not crash the market...

You couldn't be more wrong (1)

Colin Smith (2679) | about 3 years ago | (#35632364)

Deflation helps savers. Inflation helps borrowers.

You noticed all the "SALE 50%" signs go up in 2008/9? Deflation. Money increases in value.
 

Re:You couldn't be more wrong (1)

artor3 (1344997) | about 3 years ago | (#35632470)

A 50% off sale doesn't help the guy who just lost 75% of his wealth.

Re:You couldn't be more wrong (1)

mini me (132455) | about 3 years ago | (#35632702)

But it would be pretty foolish to put all of your money in the stock market. Something about putting all of your eggs in one basket or something like that. Other markets went up at the same time, so worst case should be that you are no further ahead.

Re:You couldn't be more wrong (0)

Anonymous Coward | about 3 years ago | (#35632734)

The only ones whining about losing 75% of their wealth already have more than you or I will earn in a lifetime.

Re:You couldn't be more wrong (1)

Yvanhoe (564877) | about 3 years ago | (#35632540)

But deflation makes banks who offer saving accounts useless to regular people. So it won't happen and be branded as an univocally wrong thing for the economy when such an hypothesis will be brought up.

Re:Another way to save (1)

couchslug (175151) | about 3 years ago | (#35632764)

"Another way to help Americans save for retirement is to not crash the market..."

Tee hee! You kill me! (runs)

Ah, yes, the US retirement scams (3, Interesting)

guruevi (827432) | about 3 years ago | (#35632180)

Get $100 taken out of your paycheck every month for 40 or 50 years (480 months * 100 = $48,000) and then get a meager 600/month back for maybe 10 (120 months = however much $72,000 will be worth within 40 years) and if you're healthy enough 15 years.

My employer pays for my pension plan and they put in $100 and the $600 is what the fund says I will get even though my investments are very aggressive at this point (50% goes in the tech and asian markets with very good dividends that double the investment every quarter, 50% in the safe 'recommended' aggregated funds which doesn't ever seem to make a profit but is promised to be always there even if the markets crash). If I make another $250 contribution every month they say I should be able to have the same income as I do now but measured against the historic devaluation of money that is not what I want to be making within 40 years and I really could use the 250 right now.

The only way the pension funds work is if you're in the middle-to-upper class (>$250,000/year income) and can contribute easily a good $1000/month into your own managed investment funds. Then you should be able to cash in when you're 60 and live comfortably if off course you're investments paid off over time and you're not committing large funds in bubble's and crashes.

Re:Ah, yes, the US retirement scams (1)

Ichijo (607641) | about 3 years ago | (#35632238)

Get $100 taken out of your paycheck every month for 40 or 50 years (480 months * 100 = $48,000)

If you add in the 8% annual long-term average stock market return, 480 months of investing 100 currency units per month comes to nearly 350k in today's currency units.

Re:Ah, yes, the US retirement scams (1)

demonlapin (527802) | about 3 years ago | (#35632484)

Yes, well, what do you do when you hit your planned retirement age in 2009? Or 2001, for that matter? At some point, you're going to have to step out of the risk that equities have in order to consolidate your gains.

Re:Ah, yes, the US retirement scams (1)

Ichijo (607641) | about 3 years ago | (#35632544)

Yes, well, what do you do when you hit your planned retirement age in 2009?

You put off retirement for a year to wait for the market to bounce back. Better yet, you sold in 2008 because you saw the bubble and were fearful when others were greedy [wikiquote.org].

Re:Ah, yes, the US retirement scams (1)

gknoy (899301) | about 3 years ago | (#35633138)

Let's say you retire at 65. How long do you hope to live? Till 75? 85?

350k / 10 years = 35 k/year
350k / 15 years = 23.3 k/year
350k / 20 years = 17.5 k/year

When we assume that social security is likely to be completely broken by the time we retire, our nest egg has to last us. 350k is still frighteningly small! Especially if you need to pay for medical treatment, or want to do more than sit in a small apartment and eat ramen.

Re:Ah, yes, the US retirement scams (1)

JonySuede (1908576) | about 3 years ago | (#35632244)

my pension plan is the following, I have a unionized job in a medium ivy university, I get 3.35% of the average of my best five years by years worked there. I got job security and that I plan to retire atfer 35yr of service. I will therefore get what I got when I retire without doing anything else to save money!

Unions rocks !

Re:Ah, yes, the US retirement scams (2)

demonlapin (527802) | about 3 years ago | (#35632492)

Unions rocks !

So long as they're properly funding that pension plan. It might be more expensive than you think - just ask UAW retirees.

Re:Ah, yes, the US retirement scams (2)

vlm (69642) | about 3 years ago | (#35632268)

One minor flaw in the ointment is the baby boomers have just spent 40 years throwing money into the market for retirement. Now they'll be pulling it out.
Consider the very basic supply -n- demand implications. Huge demand to buy results in high prices results in people believing the market will always miraculously give great returns. Then huge lack of demand aka selling means prices drop.

Another problem is pre-tax is the govts money to be used at the govts beck and call, possibly even for your benefit, if the govt sees fit to give you permission. Or perhaps instead to be nationalized to pay for the boomers retirement when SS implodes.

Seems a good bet in the past, suckers bet going forward.

Re:Ah, yes, the US retirement scams (1)

Entrope (68843) | about 3 years ago | (#35632272)

Do you have any suggested alternatives that don't involve the multi-generational Ponzi scheme known as Social Security, or did you just want to whine?

It should not be surprising that if you save $100 a month for 40 years, it will give you very much for very long after retirement. On the other hand, the median household income in the US is $50,000. If you rely on your employer to put aside the equivalent of 2.5% of your income, without putting in anything on your own, that is your own fault. Most Americans could downsize their cable, mobile phone, and/or Internet service to double the $100/month figure. Most retirement advisors recommend more like 10% of your income should go towards retirement and rainy-day savings. (And yes, I know that median household income distorts things a bit because income grows as one gets closer to retirement -- but on the other hand, I suspect Slashdot's reader base has higher median income than the general public.)

Re:Ah, yes, the US retirement scams (1)

Entrope (68843) | about 3 years ago | (#35632296)

Typo: "it will give you very much" should, hopefully obviously, read "it will NOT give you very much".

Re:Ah, yes, the US retirement scams (1)

Mad Merlin (837387) | about 3 years ago | (#35632332)

Get $100 taken out of your paycheck every month for 40 or 50 years (480 months * 100 = $48,000) and then get a meager 600/month back for maybe 10 (120 months = however much $72,000 will be worth within 40 years) and if you're healthy enough 15 years.

My employer pays for my pension plan and they put in $100 and the $600 is what the fund says I will get even though my investments are very aggressive at this point (50% goes in the tech and asian markets with very good dividends that double the investment every quarter, 50% in the safe 'recommended' aggregated funds which doesn't ever seem to make a profit but is promised to be always there even if the markets crash). If I make another $250 contribution every month they say I should be able to have the same income as I do now but measured against the historic devaluation of money that is not what I want to be making within 40 years and I really could use the 250 right now.

The only way the pension funds work is if you're in the middle-to-upper class (>$250,000/year income) and can contribute easily a good $1000/month into your own managed investment funds. Then you should be able to cash in when you're 60 and live comfortably if off course you're investments paid off over time and you're not committing large funds in bubble's and crashes.

How on EARTH do you need to earn >$250k/year to contribute $1k/month to your retirement savings? I own a condo, have a paid off car (bought new) and contribute over $1k/month to my retirement... and I make less than 6 figures.

Re:Ah, yes, the US retirement scams (0)

Anonymous Coward | about 3 years ago | (#35632390)

seriously, if i made 250k a year i would have my entire retirement funded in a handful of years

Re:Ah, yes, the US retirement scams (4, Insightful)

demonlapin (527802) | about 3 years ago | (#35632506)

You might be surprised. Taxes start to be a real bear over $100k as all the exemptions disappear, and tax-advantaged savings plans like IRAs and 401(k)'s have limits to contributions.

Re:Ah, yes, the US retirement scams (1)

VirginMary (123020) | about 3 years ago | (#35633244)

What a bunch of bull! A few years ago I made $112k/year and put away $2500/month pre-tax consistently for 3 years in a row! If I couldn't have done that, I would have put away $1600/month after tax! I don't feel any sympathy for people that make as much as I did or even more. They can easily put away significant amounts of money and live extremely well when they retire. Since I turned 40 I have been saving money even when I was making significantly less than $100k/year, which was most of my live and is true currently. If you don't save at least 10% of your monthly income you're a fool! Who wants to never be able to retire and/or have to worry about money when you're old? My attitude is that if you can't save 10% you're clearly living beyond your means! And that's true just as much on $40k/year as on $1mil/year. That's why I will continue to enjoy the life style I am used to when I retire at age 62 and I will move to Hawaii to boot. Even if there is a huge unexpected disaster that throws a wrench into my plans I will still be way better off than most others with the same income because most of them are idiots that spend nearly every penny that they make! And yes, I am having plenty of fun right now!

Re:Ah, yes, the US retirement scams (1)

MarcQuadra (129430) | about 3 years ago | (#35632454)

The magic number from all my calculations is around 12%. That pretty much assumes that the market will not be good at all, and inflation will be somewhat high. If you bank 12% of income your working career (including employer matches), and you purchase a home on a 30-year mortgage before you're 35 (so your housing costs essentially disappear at retirement), you should be GOLDEN, living better than you did when you were working.

$100 or $200 a month isn't going to cut it. A person working in technology making $50K should be putting away about $500/month to hit the magic number (again, if your employer offers a 1:1 match, use it so you only need to put away $250 of your own).

If you're in the middle class and you 'could use the $250', you either need to get a side job or cut your expenses. Drop the cable TV, sell the $20K car and drive a used subcompact, or get a roommate, because you're only half a missed paycheck away from being chewed-up by this modern world.

I live in a state with high cost of living, high taxes, and I only make middle class money, but I plan on looking like this when I retire: http://blogs.seattleweekly.com/dailyweekly/monopoly%20man.jpg [seattleweekly.com] because I should have anywhere between $800k and $1.4M in the bank when I turn 65. It's possible to do, you just have to exhibit some very un-American fiscal discipline.

Re:Ah, yes, the US retirement scams (1)

martin-boundary (547041) | about 3 years ago | (#35633068)

If you bank 12% of income your working career (including employer matches), and you purchase a home on a 30-year mortgage before you're 35 (so your housing costs essentially disappear at retirement), you should be GOLDEN, living better than you did when you were working.

Sorry, but you're unlikely to be living better after retirement. You'll have little aches and pains all day, arthritis, hair loss, bad teeth, you'll need glasses to see, and have trouble getting it up, let alone having sex for half the night.

Don't trust anyone over thirty. (0)

Anonymous Coward | about 3 years ago | (#35632194)

Barring miraculous medical advancements I'll be long dead by 2057.

another use for this (1)

nerdonamotorcycle (710980) | about 3 years ago | (#35632218)

I do know that if 20 year old "me" could have seen the current, 45 year old "me", I would have taken much better care of my body, and spent more money and effort on upgrading and maintaining my appearance, rather than looking at the people who did do that as vain and shallow. Hindsight is always 20/20.

B.F. Skinner would be proud (5, Insightful)

iluvcapra (782887) | about 3 years ago | (#35632220)

Just short of mind control, really. We're holding your future self for ransom and if you don't put your money in the the 401(k) he's gonna get it! It's also weirdly like the Wolfenstein HUD in that your character's face is used to communicate status.

Such a technology as this is really an abandonment of rationalism -- we concede we can't use empirical arguments and evidence about saving and retirement to convince people to save, so now we'll just scare them. Notice that people are only manipulated into saving, and not into thinking about what to put their money into, which is the actual decision people are making. How will your face look if you discover in 20 years the stocks you were buying were a house of cards, and that the only reason you were putting your money into them is because your corporate HR department was guilting you. You should decide how to save their money with a sound mind, free of the sort of manufactured anxieties bank and stock broker marketers use to induce new customers, which is all this is.

Why on earth would I save? (4, Funny)

Colin Smith (2679) | about 3 years ago | (#35632234)

Saving? Are you insane?

Real inflation is hitting what? 8% per year. Anything I save is made worthless very quickly. It is handed over to the bankers. On the other hand, if I take out as much debt as is possible and then I get to pay it back in devalued currency.
 

Re:Why on earth would I save? (1)

vlm (69642) | about 3 years ago | (#35632308)

Saving? Are you insane?

Real inflation is hitting what? 8% per year. Anything I save is made worthless very quickly. It is handed over to the bankers. On the other hand, if I take out as much debt as is possible and then I get to pay it back in devalued currency.

Frosting on the cake, is using the cash to either generate income or reduce expenses.

On the other hand that assumes wages will someday increase in step with inflation instead of just 3rd worlding the countries standard of living...

Re:Why on earth would I save? (1)

Colin Smith (2679) | about 3 years ago | (#35632338)

Not wages. Commodities, stocks and shares.

With the Fed pumping out trillions, it's a one way bet at the moment.
 

Re:Why on earth would I save? (1)

migla (1099771) | about 3 years ago | (#35632358)

>On the other hand, if I take out as much debt as is possible and then I get to pay it back in devalued currency.

Or, even better, die indebted and you will have gotten more than you should have, in the end.

Re:Why on earth would I save? (1)

Anonymous Coward | about 3 years ago | (#35632382)

It's nowhere near 8%, except in the eyes of some paranoid bloggers.

The forecast for 2011 is between 0.5% and 1.5%, and it's been lower recently. Many common expenses are actually in a slight deflationary period at the moment.

http://forecast-chart.com/forecast-inflation-rate.html [forecast-chart.com]
http://tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=USD [tradingeconomics.com]

Re:Why on earth would I save? (1)

larry bagina (561269) | about 3 years ago | (#35632584)

Not 8%, perhaps, but the official inflation numbers are garbage. Oil? Not included -- too volatile. Food prices? Not included -- too volatile. The iPad (which less that 5% of Americans own)? They just dropped the price on last year's model by $100, so that's factored in as deflation.

Apple is a poor example, Housing is better (1)

alexander_686 (957440) | about 3 years ago | (#35633428)

You may want to check out how the Bureau of Labor Statistics calculates CPI. www.bls.gov/cpi/
      It does count oil. It does count food.
      Yes, it does count the cut in Apple, but the weight given to such items is low. Look at housing instead. That has been keeping overall inflation low for the past few years.

I think you are talking about "headline" inflation, which is something different. That excludes oil and food. The fed can cut / raise short term interest rates. That can affect manufacturing and housing. It will not affect food [wait until next year when we can plant some more] or oil [since we import a lot.]

 

Speculation runs from measurement. (1)

istartedi (132515) | about 3 years ago | (#35632914)

The Fed took food and fuel out of their inflation measures on the pretext that they are too volatile.

To be fair, they should measure the volatility of all goods, and take them out on the basis of volatility alone.

If they did that, I think they'd find that food and fuel have, on average been high for quite some time, and are thus not as volatile as they think. Also, the iPads and other gizmos that they are currently including in the index are even more volatile than food and fuel. When Apple decides to cut a price 50% all at once, how volatile is that?

In short, the Fed's inflation measures are widely known to be b0rked. While the paranoid bloggers may indeed be paranoid, they have a point.

Another problem with the Fed's inflation measures is that they are generally known. Speculators who depend on cheap money will "run from measurement". What do I mean? I mean that if you're a hedge fund and you have any idea how the Fed measures inflation and uses it to determine rates, then you'll make sure to invest your cheap dollars in things that the Fed doesn't measure. Hence, you go to commodities, farmland in Iowa, etc. Anything that the Fed can't measure is good for you. If you buy too many things that the Fed can measure, they'll take the punchbowl away which is exactly what you don't want.

Get it? Speculation runs from measurement. It's obvious to me. It should be obvious to those in charge yet apparently it itsn't.

Re:Why on earth would I save? (1)

oliphaunt (124016) | about 3 years ago | (#35632392)

We'd be damn lucky to see only 8%. Food costs went up 4% month over month in February alone, the greatest monthly increase since 1974. [ocregister.com] Assume the February increase is double the "actual" rate and we'd still be looking at 25% year-over-year inflation.

Core inflation in 1974 was about 12% over the entire year. It was
over 30% for the period from 1973-1975. This is significant because
there is general agreement about the causes of the violent inflation
of the early 70s: The global financial order fundamentally changed in
1971 and 1972, when Nixon ended the Bretton Woods agreement and took
the US entirely off the gold standard. We had to go off gold because
we were printing too much money to pay for the war in Vietnam, which
devalued the dollar.

Sound familiar?

Spending on Vietnam created an arbitrage opportunity for [french]
people to buy dollars, exchange them for gold at the US-pegged price
of $35 per oz of gold, and then sell the gold on the market for
$40ish. When the US went off gold and floated our currency, there was
a long (5-10 year) period of economic shock while everyone had to work
out what happened. Part of the consequence was widespread price
inflation in the US. This turned out to be a good thing for
people who had 30-yr fixed mortgage payments, but not such a great thing for profits at banks.

The spot price for an ounce of gold today is hovering around $1400 /oz.

Last month's food and energy price increases will not show up in
CPI-based adjustments to wages and durable-goods prices because the US
bureau of labor statistics excludes those costs from its calculations.

Good thing people don't include the cost of food or gas in their
estimated cost of living.

Re:Why on earth would I save? (2)

maxume (22995) | about 3 years ago | (#35632536)

They aren't excluded to hide cost of living increases, they are excluded because they are relatively volatile.

Gas is pretty expensive these days, but it was only about 15 years ago that it was about as cheap as it had ever been.

That you can research such information on their website sort of deflates the conspiratorial hand-wringing:

http://data.bls.gov/pdq/SurveyOutputServlet?data_tool=latest_numbers&series_id=WPS0571&output_view=pct_1mth [bls.gov]

Re:Why on earth would I save? (1)

vlm (69642) | about 3 years ago | (#35632608)

When the US went off gold and floated our currency, there was
a long (5-10 year) period of economic shock while everyone had to work
out what happened.

I thought it was Hubberts peak of USA oil production happening just as predicted 40 or so years earlier... So in the '67 arab israeli war the arabs could shut off the spigot and ... who cares since pre-peak you can always increase domestic production. But in the '73 arab israeli war we were at or post peak so the arabs figured out they can now shut off the spigot and we get gas lines and economic collapse... And everybody had to work out what happened w/ regards to that.

Also, its not so much "spot price for an ounce of gold today is hovering around $1400 /oz." as it is "spot price for a dollar is a 1/1400th oz of gold" as its the value of the dollar thats collapsing over the past couple years not the value of gold soaring. In the same time frame, gold isn't a whole heck of a lot more valuable compared to ... pretty much anything but other currencies that are collapsing...

There's a couple interpretations of the 70s, probably all partially correct.

Re:Why on earth would I save? (4, Interesting)

MarcQuadra (129430) | about 3 years ago | (#35632504)

The idea that you and I will have equal votes in forty years, when my life of scrimping and saving means I have $1M in the bank, and you're penniless and living on debt scares the bejeezus out of me.

Re:Why on earth would I save? (1)

Anonymous Coward | about 3 years ago | (#35632602)

On the other hand, you are counting on a bank to hold on to your 1M dollars? FDIC only covers what $250K. Maybe you should put your money elsewhere.

Re:Why on earth would I save? (4, Insightful)

vlm (69642) | about 3 years ago | (#35632644)

The idea that you and I will have equal votes in forty years, when my life of scrimping and saving means I have $1M in the bank, and you're penniless and living on debt scares the bejeezus out of me.

The really scary part is that 40 years of 70s style stagflation in a post peak oil environment means $1M will roughly buy a cup of coffee at starbucks...

Re:Why on earth would I save? (1)

IICV (652597) | about 3 years ago | (#35633028)

It's okay, each dollar of your $1M in the bank is an extra vote he won't have.

Re:Why on earth would I save? (1)

izomiac (815208) | about 3 years ago | (#35632680)

Real interest right now is positive, but meager. It's oscillated between that and negative my whole life. Personally, I'm terrified to think of what that has taught my generation, since you either lose wealth by saving it or borrow at "low" interest rates. If you're saving up to buy a car, the prices are outpacing any interest you earn. OTOH, if you buy it on credit, the wealth you lose to interest is approaching the same as if you'd kept the money in a bank, plus you get to use the car. This teaches that borrowing is superior to saving, which might be true until it comes time for retirement... I doubt the next generation will be able to survive by government support in retirement, as that system will likely crumble under the baby-boomers.

rass (0)

Anonymous Coward | about 3 years ago | (#35632248)

On the one hand - it was good. All information can be obtained on the spot. On the other hand - less they know, better sleep.

An even better way to 'save'... (1)

knarf (34928) | about 3 years ago | (#35632254)

...would be to find a way to drain those parasites at the top of more or less the entire finance system and many other sectors of the excessive riches they have misappropriated. The scum which acts as top suit of company A and sits in the board of directors of company B,C and D which colludes with the other scum which heads B and sits in A, C and D's board, approving each others thievery.

As long as those parasites hold sway over the banks it does not seem to make that much sense to go on a saving spree. Compare it to storing all your grain in a rat-infested silo in the hope to save it for when it is needed. By the time you need your grain the rats will have gone off with most, and spoiled the rest.

Just like the besuited-and-tied rats in those board rooms, really...

The top 400 own more than the bottom 150,000,000 (1)

Colin Smith (2679) | about 3 years ago | (#35632398)

I'm surprised that guillotines aren't being built in America yet. Maybe in a decade, when the top 400 own more than the bottom 290,000,000 and people start to wake up to the Ponzi scheme.
 

Re:The top 400 own more than the bottom 150,000,00 (4, Insightful)

FooAtWFU (699187) | about 3 years ago | (#35632526)

Right, because breaking out the guillotines and slicing the heads off of a bunch of rich jerks will is totally an effective strategy for improving the day to day lives of these people. Hope they enjoy themselves. Myself, though, I think I'll wander off somewhere else before anyone decides it's time to start purging the intellectuals, and would advise most of Slashdot to do the same.

Of course it'll work! (1)

Anonymous Coward | about 3 years ago | (#35632742)

Right, because breaking out the guillotines and slicing the heads off of a bunch of rich jerks will is totally an effective strategy for improving the day to day lives of these people.

It's called the trickle down theory. Except instead of tax cuts, it's head chops.

Hope they enjoy themselves. Myself, though, I think I'll wander off somewhere else before anyone decides it's time to start purging the intellectuals, and would advise most of Slashdot to do the same.

You know who is the most dangerous person in the world? Somebody who thinks they are smart when they're not.

Nobody who thinks themselves a fool has ever caused a tenth the harm of somebody who thinks they are wise.

Re:The top 400 own more than the bottom 150,000,00 (0)

Anonymous Coward | about 3 years ago | (#35633088)

I would imagine that most here can "wander off somewhere" because mommy and/or daddy was born elsewhere. This makes it a lot easier to obtain citizenship in the land of their origins. American liberty has had its day, especially for those who have alcohol metabolism issues.

Re:The top 400 own more than the bottom 150,000,00 (0)

Anonymous Coward | about 3 years ago | (#35633336)

Blasphemy! Off with his head!!!

Re:The top 400 own more than the bottom 150,000,00 (1)

larry bagina (561269) | about 3 years ago | (#35632600)

It's too expensive to build them ourselves. Much cheaper to have them built in China.

Advertising (1)

Chemisor (97276) | about 3 years ago | (#35632310)

This can not possibly reverse decades of conditioning that watching advertising has wrought on a typical mind. Advertising is what makes you want things you do not need. Advertising is what gets you to spend on things that you would not have heard of otherwise. Advertising is what gets you to buy things impulsively without researching alternatives, checking prices in multiple places to get a better deal, or thinking about whether you can do just fine without the damn thing. If you could train people to have an attitude of default hostility toward advertising of any kind, then you will have a nation of savers. Otherwise people will keep spending and spending and spending, because that is what they have been trained to do.

This is good news! (2)

cvtan (752695) | about 3 years ago | (#35632334)

I'm 62 now. This means a computer has predicted I'll be alive in 2057! Woo Hoo!!!

I'm spending (0)

Anonymous Coward | about 3 years ago | (#35632380)

Not many in my family live to retirement age - I'm 37, have type 1 diabetes, smoke, work in the construction (oil, gas, chemical) industry ride a motorbike 300 miles a week, get very drunk every Saturday night, shoot guns most weekends and have an appalling sexual history... and I'm meant to save money for when I retire at 65?

Jog on.

Re:I'm spending (1)

couchslug (175151) | about 3 years ago | (#35632788)

"have an appalling sexual history"

Appalling "good", appalling "bad", or even more appalling "none"?

Only fools put their faith behind software... (0)

Anonymous Coward | about 3 years ago | (#35632428)

I can't use anything that isn't even 64-bit...and that ain't a lot. Live fast and die young, while you can enjoy it! Everything else is a folly, that helps pay taxes for fat bureaucrats. Seriously, coke and booze it up hard. Only a few more years to go, for the whole lot of you! ~ It's a fact.

Reminds me of Oblivion NPCs (0)

Anonymous Coward | about 3 years ago | (#35632444)

If nothing, this research confirms that there will be a lot of uglies walking around in 2057...

Try watching your parents die (0)

Anonymous Coward | about 3 years ago | (#35632496)

I thought savings was really important before I watched my parents die. My Mom, slowly. My Dad next quickly; but taking care of her took a lot out of him.

My Dad, on more than one occasion sighed and said "ahhh the golden years" with obvious sarcasm. That was uncharacteristic of my Dad. Those "golden years" drove him to it.

Now I'm much more inclined to say, "fuck it". Take that road trip. Live in California and don't worry about earthquakes. You can watch yourself die in a SRO or and old folks home just as easily as you can in a castle. What's the point of being in some really nice place if you can't enjoy it.

Re:Try watching your parents die (2)

couchslug (175151) | about 3 years ago | (#35632820)

Did that. However, because THEY saved and because I saved, we were in a much better position to care for them during their dying process.

We all croak. Live a balanced life and you can be reasonably comfortable until you start "dying in earnest".

When THAT comes I'll either OD or pull a Hemingway. Nothing, at ALL, wrong with suicide when the alternative is slow gnarly incontinent insanity.

Singularity (0)

Anonymous Coward | about 3 years ago | (#35632510)

In 2057 we had already reached the singularity, so everybody would be young. There would be no old people.

You know what else would help me save? (4, Insightful)

rsilvergun (571051) | about 3 years ago | (#35632706)

A wage that hasn't been declining since 1970.

Re:You know what else would help me save? (1)

couchslug (175151) | about 3 years ago | (#35632836)

Try unconventional lifestyles and learning things to stretch your check over a lifetime. Learn to fix nearly everything you own. Have useful hobbies. Make friends with all the technology around you.

And this (1)

Dunbal (464142) | about 3 years ago | (#35632774)

"Shock therapy" is available for only 5 easy payments of $99.99 on your credit card... Frankly I will wait until I see the numbers. Writing N=50, saying there was a "significant savings" and including a bad graph does not a scientific study make. Although it makes for what the marketing people see as a hell of a presentation. There's proof! See the graph?

beh (1)

Hognoxious (631665) | about 3 years ago | (#35632846)

reported they would save twice as much as those who didn't

What people say and what they do are like white knight to black bishop.

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