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I was clearly misunderstanding how TIP yields worked, I'll read more about it. Thanks!

imtringued 5y ago
The money illusion got you. With demurrage currencies, everything works like TIPS. Yields may be negative but they are free from inflation and deflation. It's kind of weird that people are choosing the money illusion over a negative yield/interest rate. I would rather have no inflation and see that the yield is negative than unpredictable inflation where the yield could be absolutely anything and I simply won't know.
- JumpCrisscross 5y ago
  > they are free from inflation and deflation No systemic measure is free from inflation or deflation in a dynamic market. Prices move, sometimes in a correlated fashion, and credit waxes and wanes organically. Long-run inflation may be theoretically zero in some systems (constant money supply and magically constant velocity), but in reality, we have never observed this. (Even under commodity money systems with relatively constant money supply.)
- dragonwriter 5y ago
  > With demurrage currencies, everything works like TIPS. Yields may be negative but they are free from inflation and deflation. Not at all true of historical demurrage currencies, with are subject to inflation/deflation as normal but also have reduced nominal value over holding time. ISTR the term has been resurrected for crypto products, but I can't find any details of how any crypto demurrage currencies work that would confirm or deny that they are somehow insulated from inflation/deflation and only change buying power by the demurrage charge, though I can't see it being likely to work in practice. In theory, you could have what is basically a “stablecoin” managed against a price index like the CPI-U instead of an actual fiat currency and then add a demurrage charge on top of that (which could provide stabilization resources, so it's not completely irrelevant to function).

The money illusion got you. With demurrage currencies, everything works like TIPS. Yields may be negative but they are free from inflation and deflation. It's kind of weird that people are choosing the money illusion over a negative yield/interest rate. I would rather have no inflation and see that the yield is negative than unpredictable inflation where the yield could be absolutely anything and I simply won't know.

JumpCrisscross 5y ago
> they are free from inflation and deflation No systemic measure is free from inflation or deflation in a dynamic market. Prices move, sometimes in a correlated fashion, and credit waxes and wanes organically. Long-run inflation may be theoretically zero in some systems (constant money supply and magically constant velocity), but in reality, we have never observed this. (Even under commodity money systems with relatively constant money supply.)
dragonwriter 5y ago
> With demurrage currencies, everything works like TIPS. Yields may be negative but they are free from inflation and deflation. Not at all true of historical demurrage currencies, with are subject to inflation/deflation as normal but also have reduced nominal value over holding time. ISTR the term has been resurrected for crypto products, but I can't find any details of how any crypto demurrage currencies work that would confirm or deny that they are somehow insulated from inflation/deflation and only change buying power by the demurrage charge, though I can't see it being likely to work in practice. In theory, you could have what is basically a “stablecoin” managed against a price index like the CPI-U instead of an actual fiat currency and then add a demurrage charge on top of that (which could provide stabilization resources, so it's not completely irrelevant to function).