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From 1945 to 1971 the value of assets was increasing faster than the value of gold mined, and dollars were directly connected to gold, so everyone wanted more d

From 1945 to 1971 the value of assets was increasing faster than the value of gold mined, and dollars were directly connected to gold, so everyone wanted more dollars, so the stock value of companies was low even though they were growing at a much faster rate than companies are today. From 1971 to today, being off the gold-standrd, the count of dollars is increasing at a rate much faster than the value of assets created, so everyone wants more assets. If you don't want to encourage rent-seeking behavior, you need to ensure that the count of dollars increases at a rate equal to the value of the assets being created.

rileymat2 5y ago
Does the count need to increase or simply the velocity of those dollars?
- ItsMonkk 5y ago
  One of the goals of keeping the money supply equal to the value of assets is a stable velocity. The stable velocity might end up the more important aspect, but I don't yet have a perfect intuition on how that works.
  - rileymat2 5y ago
    How is this possible as we have increased access to credit?
    - ItsMonkk 5y ago
      In a fair system with no rent-seeking, you wouldn't. If the money supply is increasing at a rate faster than assets, you would raise the interest rate.
GDC7 5y ago
> If you don't want to encourage rent-seeking behavior, you need to ensure that the count of dollars increases at a rate equal to the value of the assets being created. It's all textbook BS. Everybody is subject to this passion for accumulation vs. spending , hence government actions are baked into it as well.
tm-guimaraes 5y ago
Is it really rent seeking though? Without a peg like gold, the dollar keeps loosing value. Even if a company stays with the same "real value", with dollar actually being less valuable, it's fairly normally for people to park their savings in company ownership rather tan dollars. Are these people rent seeking? They simple want to keep their capital. > you need to ensure that the count of dollars increases at a rate equal to the value of the assets being created. How? You can't predict how business will do. If Apple/Tesla/Amazon/Microsoft will be much more efficient than yesterday or do a bad strategy decision. Money printing shouldn't be related whatsoever to how you think the big companies will fare. Whoever is trading stock simply must understand that Prices are in dollars, and dollars are deflating, so you can't compare the prices with old prices in a simple way.

rileymat2 5y ago

Does the count need to increase or simply the velocity of those dollars?

ItsMonkk 5y ago
One of the goals of keeping the money supply equal to the value of assets is a stable velocity. The stable velocity might end up the more important aspect, but I don't yet have a perfect intuition on how that works.
- rileymat2 5y ago
  How is this possible as we have increased access to credit?
  - ItsMonkk 5y ago
    In a fair system with no rent-seeking, you wouldn't. If the money supply is increasing at a rate faster than assets, you would raise the interest rate.

GDC7 5y ago

> If you don't want to encourage rent-seeking behavior, you need to ensure that the count of dollars increases at a rate equal to the value of the assets being created. It's all textbook BS. Everybody is subject to this passion for accumulation vs. spending , hence government actions are baked into it as well.

tm-guimaraes 5y ago

Is it really rent seeking though? Without a peg like gold, the dollar keeps loosing value. Even if a company stays with the same "real value", with dollar actually being less valuable, it's fairly normally for people to park their savings in company ownership rather tan dollars. Are these people rent seeking? They simple want to keep their capital. > you need to ensure that the count of dollars increases at a rate equal to the value of the assets being created. How? You can't predict how business will do. If Apple/Tesla/Amazon/Microsoft will be much more efficient than yesterday or do a bad strategy decision. Money printing shouldn't be related whatsoever to how you think the big companies will fare. Whoever is trading stock simply must understand that Prices are in dollars, and dollars are deflating, so you can't compare the prices with old prices in a simple way.