Thursday, October 29, 2015

Every year a local jewelry store has a two-day Special Event featuring a load of Super-Jumbo Diamonds. I wrote up a good analysis of this a few years ago, in the context of my tenth anniversary of frugality and debt-free living ......

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A local jewelry store is advertising some kind of special two-day event featuring a load of Super-Jumbo diamonds. The biggest one weighs 17 carats, normally \$500,000. Now reduced to \$250,000.

I don't get it. Can't begin to understand it. The ad tells you straight out that the diamond has no meaningful price. They were able to cut the "original" price in half without any trouble, and you can be sure they've got plenty of room for deeper cuts. Thus you have no assurance of any particular resale value.

What's the actual value of that material? Quick calculation: 17 carats is the same as 3.4 grams. If you bought the same weight of carbon in the form of coal, you'd nominally spend about 0.00025 dollars. That's 25 thousandths of a cent. \$250000/\$0.00025 = 1,000,000,000.

Would you rather pay the actual value, or ONE BILLION TIMES the actual value? Really? Why?

Coal is crude, so let's try a more appropriate comparison. A pencil lead is mostly graphite, and involves a considerable amount of processing and manufacturing. It's about the same weight as the 17-carat diamond, and costs about 5 cents. In this comparison the diamond costs only FIVE MILLION TIMES as much as the equivalent manufactured piece of carbon. Wow! That's a great bargain comparison, in comparison to the coal comparison! I'm going to rush out and buy one of those diamonds right now, before the price goes down even more!

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This year's Super-Special is being advertised during Dave Ramsey's show. You hear one of Dave's Debt-Free celebrations... a young couple managed to knock down \$250,000 in debt in four years, specifically by eliminating all foolish spending on diamonds and carpets and hot tubs.

Immediately after "We're Debt Freeeeeee!" you hear the ad for \$250,000 worth of idiocy.

Pretty sure those ads during Dave are a waste of money, but don't tell them! I'm glad to see idiots wasting their money.

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Location: Spokane

Polistra was named after the original townsite of Manhattan (the one in Kansas). When I was growing up in Manhattan, I spent a lot of time exploring by foot, bike, and car. I discovered the ruins of an old mill along Wildcat Creek, and decided (inaccurately) that it was the remains of the original site of Polistra. Accurate or not, I've always liked the name, with its echoes of Poland (an under-appreciated friend of freedom) and stars. ==== The title icon is explained here. ==== Switchover: This 2007 entry marks a sharp change in worldview from neocon to pure populist. ===== The long illustrated story of Polistra's Dream is a time-travel fable, attempting to answer the dangerous revision of New Deal history propagated by Amity Shlaes. The Dream has 8 episodes, linked in a chain from the first. This entry explains the Shlaes connection.

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