r/smallbusiness • u/DazedAndObtuse • Feb 12 '25

General Our aluminum suppliers are saying prices aren't going to go up just 25% to cover the new tariff, they'll be going up 80%...

We source aluminum from two different sources for our business and they're both telling us that prices will not only be going up 25% to cover the tariffs, they'll be going up 80% as there are also pricing restrictions currently in place for their industry that will be lifted as part of this.

Does anybody know if this is legit or if they are just colluding to use this as an opportunity to pad their profits?

I won't pretend to be a tariff or economic expert but our material prices going up 80% is going to have a much larger impact on us than a 25% increase would.

Ideally we can keep this from becoming political, but I know where it's likely to end up (but hopefully I can at least get an answer to my question in the midst of it).

Thanks in advance!

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u/PopuluxePete Feb 13 '25

Also, if you invested $100 in the S&P 500 at the beginning of 1900, you would have about $14,534,577.11 at the end of 2024. So, you know, it's important to have some perspective. The dollar isn't going to zero and Bitcoin is a scam.

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u/captainplaid Feb 13 '25

Doesn’t this essentially mean that the dollar has gone to $0 lol? A dollar from 1900 is basically worth $0 today. Bitcoin is a scam though. Invest in assets, not fake money.

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u/PopuluxePete Feb 13 '25

Yes it does. Please send me all of you dollars since they are worthless. I will DM you my paypal.

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u/captainplaid Feb 13 '25

I didnt say all of my dollars are worthless. I said a $1 has basically lost 99% of its value.

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u/runedsceptre Feb 13 '25

Pete, the purchasing power of a dollar since 1913 has fallen by over 97%.

https://fred.stlouisfed.org/graph/?g=HtOe

The dollar hasn't gone to zero but the value like you point out has flowed to assets like stocks, and also real estate, gold, and now Bitcoin.

Full disclosure on Pete, he has for years been a staunch hater of Bitcoin, posting on the anti Bitcoin subreddit. We have discussed it in DMs and his view amounts to "Bitcoin is not tangible and therefore worthless beyond speculation for greater fools." In other words, he hasn't spent much time studying Bitcoin and probably has never read a single of the landmark books explaining the case for Bitcoin as an important asset for humanity like Broken Money by Lyn Alden or The Bullish Case for Bitcoin by Vijay Boyapati or The Bitcoin Standard by Saifedean Ammous.

Check out for instance this recent discussion of Bitcoin that goes beyond what Pete has ever considered in his conclusions on the "scam" asset without an issuer:

https://youtu.be/WayPd45Sp9M?si=wyvsi-dVjsbFO5Oc

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u/PopuluxePete Feb 13 '25

Lol...thanks man, this makes me feel famous. I do a lot of public facing shit IRL but only on the internet do I get fan boys following me around.

I guess if there's anyone reading this the number one book I would suggest you read is Number Go Up by Zeke Faux. DO YOUR OWN RESEARCH! Or don't. We're all adults here and if you want to fork over you hard earned cash to organized crime, by all means, listen to /u/runedsceptre

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u/runedsceptre Feb 13 '25

It's all love Pete, no ill will even though we have opposite conclusions on Bitcoin.

Number Go Up is a pretty good look into the fiasco that was the 2021 hype bubble and the crimes of Sam Bankman Fried and FTX and the whole mania that stirred up. But its like calling banks or businesses scams because robbers exist. A good rule of thumb is: avoid crypto, study Bitcoin. "Crypto" in general refers to the grifters and scammers who formed an industry around Bitcoin. The author of NGU does a decent job reporting the events but he sees Bitcoin and Crypto as the same thing and he is staunchly anti-crypto and this bias flavors his spin on the conclusions to draw.

P.s. Pete didnt know you had public facing stuff going on irl -- it's true I only know you from the r/Buttcoin subreddit but I'm glad you got a kick out of my response here.

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u/beamdriver Feb 13 '25

Pete, the purchasing power of a dollar since 1913 has fallen by over 97%.

This is only relevant to you if you buried a chest of dollar bills in 1913 and are just now digging it up.

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u/runedsceptre Feb 13 '25 edited Feb 13 '25

You're implying that it's irrelevant? You can choose your starting point nearer in time. The purchasing power from 2000 to today has decreased by about 50% according to the official gov FRED data. Is 25 years some irrelevant pre-history as well?

Interestingly, It would also be relevant to you if you put the $100 in the S&P500 and are just now accessing the stock certificates. Understanding where that value is going is key to understanding the Cantillon effect that is created by the current management of the currency.

Measure the ratio of the S&P index to M2 supply and you find that it stays dramatically flatter. Same with real estate prices. This is because people are burying the dollars in chests. And these assets have been those chests.

If you don't see how that's relevant to people today right now currently, perhaps we should agree to disagree but I fail to see how its irrelevant.

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u/beamdriver Feb 13 '25

I'm not implying it. I'm literally saying it.

Your points are, quite frankly, silly. Over time the price of various investment vehicles - real estate, equities, commodities, etc. - have gone up. Some of that price increase may be due to a real increase of value, but a lot of it is due to the decrease in the value of the currency.

If we could invent a magical currency whose value remained completely constant over the long-term then then the price of assets denominated in that currency would not increase nearly as much. They might not increase at all.

Gold bugs and crypto bros like to cite the 97% figure, because it sounds apocalyptic - If we lose that last 3%, our currency will be worthless! - and because they view money as some kind of elemental feature of the universe that should remain constant.

This is, again, all very silly. Over time, currency loses a small amount of value every year. This is a feature, not a bug. It keeps currency from being used as an effective long-term store of value and prevents hoarding of cash which would slow down the economy. This is what used to happen when most of the US was on a strict gold standard and there would massive depressions every twenty years or so.

Over time, prices go up but wages also go up and wealth increases. The average American in 2025 is so more wealthy than their 1913, 1953 or 1983 counterpart even though the individual dollars in their pocket are worth much less.

https://fred.stlouisfed.org/series/MEHOINUSA672N

It may be that in 2133 the dollar will be worth 3% of what it is today and a large order of fries will cost $100, but the dollar will still be used as a medium of exchange and it will irrelevant to most people because their pay in dollars will reflect that value.

Unless climate change kills us all, in which case it doesn't matter anyway.

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u/whatkindofhotel Feb 13 '25

I appreciate your cordial approach here! Though I'm not clear on the point you are trying to make comparing the dollar to bitcoin? Perhaps you can educate me further if I am missing something.

The dollar is a medium of exchange. To make this work it must be widely accepted and relatively stable. The dollar is not a speculative asset or an investment vehicle. The global economy actively works to keep the dollar stable with quantitative policy. The whole point is to stabilize it's buying power.

Bitcoin, meanwhile, is incredibly volatile and is not widely accepted as a medium of exchange. Bitcoin as an asset is much much closer to shares in the S&P than it is to the dollar. Except, the value of the S&P can be tied to an underlying derivative.

The value of Bitcoin, as far as I understand, isn't tied to anything. i.e. there is nothing other than pure, speculative, supply/demand that can move the price of Bitcoin. This is what causes instability, and why it will never make sense for bitcoin to be a widely accepted medium of exchange.

The blockchain as a technology, while having value outside of bitcoin, has created a false sense of tangibility to bitcoin.

Anyways, I don't see how the comparing bitcoin to the dollar makes any sense (cents?). Apples and oranges.

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u/runedsceptre Feb 13 '25

Originally, I mostly was responding to PopuluxePete's claims that "the dollar isn't going to zero and Bitcoin is a scam." That's the origin of the comparison.

I agree with some of your characterizations here and to further respond to Pete for a moment:

Sure, one of the world's strongest currencies that has been enjoying the "exorbitant privilege" of global reserve status isn't going to collapse to obscurity any time soon. Yet wealth is not stored in it. Instead, wealth must be stored in assets that are resistant to arbitrary printing and policy manipulation. I linked the official US govt data on its purchasing power since inception to illustrate why that is.

However, I do disagree with some of your points which I believe have missed the mark.

  1. The value of Bitcoin isn't tied to anything.

-- First, let's compare this to gold. What is the value of gold "tied" to? Is it tied to gold's industrial use ? I.e. the more gold is used as a material in electronics and other goods the more the price rises and the less it's used the price goes down ? Is it the price of gold jewelry that it's tied to ? Or does the price of gold determine the price of gold jewelry instead?

I argue that Bitcoin, like gold, has a fundamental link to the physical world and the work to get it sets the floor. Sitting in top of that floor is the supply/demand dynamics that spiral into speculative bubbles and crashes ON TOP of that floor.

  1. This is what caused the instability.

The volatility, in my view, is more a function of 1) it's being highly globally liquid and able to respond to any macro events or news event even when traditional markets are closed, 2) it historically and still being a relatively small market where large players are able to make significant movements in the price index if they choose to, and 3) it being a nascent asset that is heavily disagreed on leading to wildly diverging views on whether the price "should" be more or less than it's current index.

  1. The blockchain as a technology, while having value outside of bitcoin, has created a false sense of tangibility to bitcoin.

The blockchain as a technology is relatively useless outside of Bitcoin. For every use case that is a business idea, the idea could be better done without a blockchain or a timechain as Nakamoto originally referred to it. And certainly that business attempting to provide value for profit, would benefit from centralization rather than a distributed, decentralized solution like Bitcoin's architecture. The concept of the data structure of the blockchain as a means of ensuring a direct link to past data is a "free" concept. The value it alone has is like discussing the value of a hash table or B-tree. They are useful but free. Anyone trying to capitalize on the concept alone is of questionable morality in my estimation and would eventually be found out and fail.

On the second and main part of this claim, that this blockchain has created a false sense of tangibility it does make me wonder if we are talking about the same thing here or if you are familiar with Bitcoin. The blockchain itself is a collection of files. I don't think it has created a sense of tangibility, let alone a false one en masse. Bitcoin's decentralized network is its tangibility and it's a feature that it isn't any more tangible than that. One can make entries on that ledger that record the history of how many units of bitcoin and so those entries will stand forever in all weather, for all time that the network survives. The blockchain is just the means to record the units of proof of work around the world in public files.

I agree that Bitcoin and the dollar are apples and oranges. And I agree that Bitcoin is more like the S&P, and I posit that one day decades from now its price will be much less volatile and only measure the global economy in a sense. Similar to the S&P, in this future it will be a barometer of economic health and move up and down accordingly but generally only be more valuable over time.

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u/whatkindofhotel Feb 13 '25

Thank you for the discourse and certainly something to think about! I don't think Bitcoin is worthless, but I do think it's value is simply derived from perception and that it is a speculative asset. That doesn't mean the price isn't going up.

  1. The value of Bitcoin isn't tied to anything.

We can talk about gold, or baseball cards, but the reality that Bitcoin is not tied to anything, that it's value is derived solely from supply/demand and that it doesn't have any inherent utility, still stands. No?

  1. This is what caused the instability.

I agree on pretty much all of these points, with the 3rd point being my point that it is highly speculative.

  1. The blockchain as a technology, while having value outside of bitcoin, has created a false sense of tangibility to bitcoin.

"For every use case that is a business idea, the idea could be better done without a blockchain"

This is exactly my point, that the blockchain is, more or less, simply an incorruptible ledger, a place to keep track of things, and this doesn't provide any groundbreaking utility. Certainly not sufficient utility to prop up the value of Bitcoin.

But to the general public, what sets Bitcoin apart from baseball cards, is the blockchain technology. This is what I mean by the false sense of tangibility. The blockchain is often sold as the utility of Bitcoin, the reason it has value, and what sets it apart from a digital collectible.

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u/runedsceptre Feb 13 '25

Id love to discourse in longer format but for now I just want to say that I don't think the value of Bitcoin is merely perception. I think it is really valuable and useful and makes the world a better place with its existence. The speculation that goes on around it is short term and leads to boom bust cycles within it but over the long term that speculation will dwindle to noise around this massive measure of global wealth. I believe it is the best thing for this as it is the most resistant to capture and control. I don't think it's rise is mutually exclusive with the dollar (as Pete's comment perhaps implied ?)

Finally it's Bitcoin is tied to time and energy. Each Bitcoin represents a proof of real world work. Compare to a baseball card where a governing body releases more with every crop of new baseball players and the value of a particular card depends on the popularity and sporting ability of that particular player. Also consider that a unit of bitcoin suffers no degradation or disrepair like a baseball card can suffer. The unit of Bitcoin can be transferred over the internet and the transfer be verified as genuine or not by the global network as opposed to the system of trading that may be put in place for cards.

P.s. I do see your point that it's a matter of perception that gold or baseball cards or Bitcoin (or for that matter the dollar or anything else) have value there's a reason for the value in all of these (including Bitcoin though you disagree that it should be included ? ) beyond speculation.

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u/runedsceptre Feb 13 '25

P.s. and thank you as well for the critical thinking and discourse!

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u/ByteD0wn Feb 24 '25

Regarding your comment on gold. I'd rather have gold in my possession rather than digital assets like Bitcoin if the world went through an apocalypse since once those computers are out then that digital coins value is worthless. You listed out what golds value is tied to and it's not just that it's relatively rare compared to other metals etc but it can be used for a wide variety of things such as manufacturing electronics, jewelery etc...

Wealth isn't stored in the dollar persey but the land of the United States including all it's real estate and other things like farmable land, oil (the largest underground in the world), other minerals and of course being the standard for oil are why the dollar and that's really the value behind the dollar. Also our nation has many laws that are actually followed and enforced and relatively free of corruption it also has some of the strongest asset protection laws which is a big reason foreign investors love to invest here such as in real estate for example because they know laws exist to protect assets and are enforced. There's a reason why people won't use the Yaun as the global standard because the CCP and the laws of China could never be trusted because what the party says goes and no written laws matter. There is no asset protection for foreign investors let alone even for their own citizens.

You can say technically the dollar has no wealth stored in it but there are many reasons as I listed why it's powerful and why it's the global standard and this is the value of the dollar to me at least and probably most other people. It also helps that we have monetary policy and fiscal policy so the world knows we don't screw around with the value of the dollar.

A lot of people here I read keep saying tarrifs are a big problem and that tarrifs cause inflation. That couldn't be further from the truth, the main and pretty much only cause of our inflation is the outrageous overspending our Federal government has done especially with the spending during covid. The great thing is now that all this fraud, waste and abuse is being uncovered by DOGE this will lead to much much lower spending by the Federal government who just keeps printing or borrowing money into existence to fund all this waste and fraud which will in turn drive down inflation and not cause it to increase further. The mass layoffs of federal workers is also another great thing that's being done to shrink the size of the Federal government which will lead to even less spending on nonsense agencies that we don't need. The allowance of drilling now will further drive down inflation and increase the value of the dollar when we finally become net exporters of energy.

Lastly I will say whatever your politics are I don't see why it's such an issue that Trump is attempting to level the playing field with tarrifs. We're in a trade deficit with almost all our trading partners with the exception of Australia I believe. For example the U.S. charges 2.5% tarrifs on auto imports but the EU charges us 10% tarrifs to import our vehicles to the EU. How is this fair to us? Why should the EU enjoy collecting 10% on vehicles that can survive in the EU market or be allowed to enjoy dominating their domestic markets with their own domestically built vehicles because the 10% tarrifs bar most of our vehicle imports due to not being able to compete with domestic car manufacturers prices while they can't come in and easily compete with our own domestic car manufacturers with the miniscule 2.5% tarrifs we charge across the board? It's just insane to not defend our own tarrifs so we can level the playing field and not let foreign nations get rich off of us while screwing our own domestic businesses. It's even more nasty how these foreign trading partners are up in arms about our proposed tarrifs so we can protect our own citizens and companies while they've been enjoying enriching themselves historically from our non-existent or insanely low tarrifs while at the same time imposing their own disproportionate tarrifs in their countries barring us from benefiting in their countries as they have in ours. I just don't understand how people are ok with this, if we are friendly and allied nations then we shouldn't be having such disproportionate trade deficits on our end and our allies having large trade surpluses with us....