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I would argue that a reliable store of value is one that preserves its purchasing power over time.

by lowkey 4y ago

chii 4y ago
> a reliable store of value is one that preserves its purchasing power over time. let's break this down. Over a long time, technological improvements happen, which makes "things" cheaper, all else equal. So presumably, maintaining purchasing power over time means you get to partake in these technological improvements for zero risk - ala, your $1000 dollar can be used to buy an iphone in 10yrs time that is hundreds of times better. But the implicaation that you didn't take any risk - the losses on development & research, investment and the dead ends - are all paid for by somebody else. If the investors demand a high return based on this risk, they will absorb all of the profit from taking the risk. This absorption includes a return on the price of said goods being sold, so it _cannot_ cost the same in 10 yrs time as today and only account for inflation (if this were the case, it means they made no profit). So both scenarios cannot coexist - you either lose purchasing power by not investing, ala you lose to inflation (same thing). Or the technological improvements don't come.
- lowkey 4y ago
  Agree with your assessment of technological innovation lowering cost over time. Disagree that all goods and services behave the same way. As counter-examples look at the HHH of higher than inflation industries: healthcare, higher education and housing all of which experienced growth in cost at double digit rates in recent times. Also, I am not arguing that a widower who buys a certificate of deposit deserves the same rate of return as someone investing in a risky tech stock - they don’t. I do think there should be a safe option for savers to store their savings for a modest return net of inflation - say 2-3% for the time value of the money. Savings != Investment They are separate use cases and there should be room for both.

I would argue that a reliable store of value is one that preserves its purchasing power over time.

by lowkey 4y ago

I would argue that a reliable store of value is one that preserves its purchasing power over time.

chii 4y ago

> a reliable store of value is one that preserves its purchasing power over time. let's break this down. Over a long time, technological improvements happen, which makes "things" cheaper, all else equal. So presumably, maintaining purchasing power over time means you get to partake in these technological improvements for zero risk - ala, your $1000 dollar can be used to buy an iphone in 10yrs time that is hundreds of times better. But the implicaation that you didn't take any risk - the losses on development & research, investment and the dead ends - are all paid for by somebody else. If the investors demand a high return based on this risk, they will absorb all of the profit from taking the risk. This absorption includes a return on the price of said goods being sold, so it _cannot_ cost the same in 10 yrs time as today and only account for inflation (if this were the case, it means they made no profit). So both scenarios cannot coexist - you either lose purchasing power by not investing, ala you lose to inflation (same thing). Or the technological improvements don't come.

lowkey 4y ago
Agree with your assessment of technological innovation lowering cost over time. Disagree that all goods and services behave the same way. As counter-examples look at the HHH of higher than inflation industries: healthcare, higher education and housing all of which experienced growth in cost at double digit rates in recent times. Also, I am not arguing that a widower who buys a certificate of deposit deserves the same rate of return as someone investing in a risky tech stock - they don’t. I do think there should be a safe option for savers to store their savings for a modest return net of inflation - say 2-3% for the time value of the money. Savings != Investment They are separate use cases and there should be room for both.