3 ms·

Price revolution

33 points by zeristor 8y ago

zeristor 8y ago
I posted this with regard to the possibility of harvesting asteroids and the dangers of huge amounts of precious metals being sold into the market. I imagine futures contracts could ameliorate this to some extent.
- 21 8y ago
  Not really. Future contracts will also track the probability of asteroid mining feasibility. The markets are always fully discounting whatever information is available. The price of gold will crash before the first rocket will take off. Many centuries ago, speculators would sit in harbors and when they noticed a ship on the horizon they would immediately start shorting on the market the commodity supposed to be on that ship.
- UncleEntity 8y ago
  The "danger" in this case is a reduction in scarcity which would lead to all sorts of alternative uses for whatever they decide to tow back to Earth. If they perfected a way to cheaply process titanium tomorrow it would suck for people betting on the scarcity of titanium but would be a boon for countless other uses of it that simply aren't economic today like stronger, lighter engine blocks for the family car. Admittedly I didn't read the wikipedia page so... --edit-- Ok, read the page and "nothing to see here, move along..." since no modern currency is backed by precious metals.
araes 8y ago
Could be taken as an interesting argument against ideas like the gold standard, pegged on limited supply. There was a notably huge spike in inflation in the US during the major period of gold rushes in the US. 1850-1870, avg 3%, nearly 15-20% around 1860-65, when Nevada, Idaho, Arizona, Colorado, and California all hit gold. Interestingly, followed by a huge crash. Effectively just created a bubble that burst shortly after. When a theoretically limited asset is found in huge quantities, it possibly creates a vast, unstable surge in the money supply, that then just equalizes back to the real value of underlying assets later.
- SomewhatLikely 8y ago
  Not sure how you could disentangle the effects of the civil war on inflation in that period.

33 points by zeristor 8y ago

I posted this with regard to the possibility of harvesting asteroids and the dangers of huge amounts of precious metals being sold into the market. I imagine futures contracts could ameliorate this to some extent.

21 8y ago
Not really. Future contracts will also track the probability of asteroid mining feasibility. The markets are always fully discounting whatever information is available. The price of gold will crash before the first rocket will take off. Many centuries ago, speculators would sit in harbors and when they noticed a ship on the horizon they would immediately start shorting on the market the commodity supposed to be on that ship.
UncleEntity 8y ago
The "danger" in this case is a reduction in scarcity which would lead to all sorts of alternative uses for whatever they decide to tow back to Earth. If they perfected a way to cheaply process titanium tomorrow it would suck for people betting on the scarcity of titanium but would be a boon for countless other uses of it that simply aren't economic today like stronger, lighter engine blocks for the family car. Admittedly I didn't read the wikipedia page so... --edit-- Ok, read the page and "nothing to see here, move along..." since no modern currency is backed by precious metals.

araes 8y ago

Could be taken as an interesting argument against ideas like the gold standard, pegged on limited supply. There was a notably huge spike in inflation in the US during the major period of gold rushes in the US. 1850-1870, avg 3%, nearly 15-20% around 1860-65, when Nevada, Idaho, Arizona, Colorado, and California all hit gold. Interestingly, followed by a huge crash. Effectively just created a bubble that burst shortly after. When a theoretically limited asset is found in huge quantities, it possibly creates a vast, unstable surge in the money supply, that then just equalizes back to the real value of underlying assets later.

SomewhatLikely 8y ago
Not sure how you could disentangle the effects of the civil war on inflation in that period.