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Interesting, thanks I didn't know about this. I'm still struggling with "If we add $1T to the economy and TSLA goes up 500%, how do we calculate the actual chan
by choxi 6y ago
Interesting, thanks I didn't know about this. I'm still struggling with "If we add $1T to the economy and TSLA goes up 500%, how do we calculate the actual change in TSLA's intrinsic value?" I still don't see how the CPI is factoring this in, do you?
- dragonwriter 6y ago“intrinsic value” isn't a thing. The notional grounding of value of a stock is the current value of the future dividends plus the value that will be returned based on assets at dissolution. > I still don't see how the CPI is factoring this in, do you? Because value = acceptable opportunity cost = foregone utility And CPI measures (in closest approximation of any measure) changes in the prices of goods that provide direct rather than instrumental utility. Presuming monetary expansion affects prices but not, in first order effects, production possibilities and relative worth of non-money goods, a consumer price deflator is the most sensible kind of value deflator (one might still contest details of the construction of the CPI, of course.)