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This story is not incompatible with a more-basic one where inflation debases the currency, so when a company starts exploring price hikes for whatever reason th

This story is not incompatible with a more-basic one where inflation debases the currency, so when a company starts exploring price hikes for whatever reason they unsurprisingly realize greater profits (since they were implicitly lowering the price by selling for the same quantity of a less-valuable currency). Imagine that Pepsi was selling for ETH in 2021, then "discovers" after the price of ETH halves in 2022 that they can get away with hiking the price - in this case the price hikes are the consequence of the currency devaluation, not the cause.

arcticbull 3y ago
Inflation is measured from a change in purchasing power, it's not a function of supply - because what you do with the supply is what matters, not that it exists. These companies raising prices would be inflationary in and of itself. Supply may or may not yield inflationary pressure, but a change in supply is just that - a change in supply. Inflation is measured from a change in prices. For instance, a 100% sales tax would be massively inflationary (at least initially) and wouldn't be reflected in supply of currency units. ETH like BTC prices are just high-beta derivatives of US dollar liquidity in the global financial system. And that's pretty generous, assuming it's not just a rigged mob casino run by a small handful of insiders. It's not really comparable because it's not really a currency. In the sense that nothing is actually priced in ETH or BTC - it's an open loop system. Everything's priced in dollars and converted at the last second to a BTC/ETH price, and then those are usually immediately sold for dollars to pay suppliers, etc. There's at best a negligible closed loop BTC/ETH economy.
- yanderekko 3y ago
  >These companies raising prices would be inflationary in and of itself. Sure, but there are scenarios where this would be profitable and scenarios where it wouldn't be, and we expect the former to occur when there's been an exogenous debasement to the currency. Inflation is measured from a change in prices, but that does not mean that the exogenous factors which rationalize price hikes are not fairly characterized as the cause of inflation - "greed" or "profit seeking" do not have any narrative value here since there's no covariance between these phenomena and actual observed inflation. And no one seriously expects a company to not raise prices when a currency is debased anyways.
sobkas 3y ago
> This story is not incompatible with a more-basic one where inflation debases the currency, so when a company starts exploring price hikes for whatever reason they unsurprisingly realize greater profits (since they were implicitly lowering the price by selling for the same quantity of a less-valuable currency). Imagine that Pepsi was selling for ETH in 2021, then "discovers" after the price of ETH halves in 2022 that they can get away with hiking the price - in this case the price hikes are the consequence of the currency devaluation, not the cause. Then they can increase prices two, three or four times and because they have inflation as excuse no one will say a bad word against them. On top of that they hold their suppliers by the throat so they will be able to keep surplus of money in their pocket. Hence astronomical revenue they have during "inflation".

arcticbull 3y ago

Inflation is measured from a change in purchasing power, it's not a function of supply - because what you do with the supply is what matters, not that it exists. These companies raising prices would be inflationary in and of itself. Supply may or may not yield inflationary pressure, but a change in supply is just that - a change in supply. Inflation is measured from a change in prices. For instance, a 100% sales tax would be massively inflationary (at least initially) and wouldn't be reflected in supply of currency units. ETH like BTC prices are just high-beta derivatives of US dollar liquidity in the global financial system. And that's pretty generous, assuming it's not just a rigged mob casino run by a small handful of insiders. It's not really comparable because it's not really a currency. In the sense that nothing is actually priced in ETH or BTC - it's an open loop system. Everything's priced in dollars and converted at the last second to a BTC/ETH price, and then those are usually immediately sold for dollars to pay suppliers, etc. There's at best a negligible closed loop BTC/ETH economy.

yanderekko 3y ago
>These companies raising prices would be inflationary in and of itself. Sure, but there are scenarios where this would be profitable and scenarios where it wouldn't be, and we expect the former to occur when there's been an exogenous debasement to the currency. Inflation is measured from a change in prices, but that does not mean that the exogenous factors which rationalize price hikes are not fairly characterized as the cause of inflation - "greed" or "profit seeking" do not have any narrative value here since there's no covariance between these phenomena and actual observed inflation. And no one seriously expects a company to not raise prices when a currency is debased anyways.

sobkas 3y ago

> This story is not incompatible with a more-basic one where inflation debases the currency, so when a company starts exploring price hikes for whatever reason they unsurprisingly realize greater profits (since they were implicitly lowering the price by selling for the same quantity of a less-valuable currency). Imagine that Pepsi was selling for ETH in 2021, then "discovers" after the price of ETH halves in 2022 that they can get away with hiking the price - in this case the price hikes are the consequence of the currency devaluation, not the cause. Then they can increase prices two, three or four times and because they have inflation as excuse no one will say a bad word against them. On top of that they hold their suppliers by the throat so they will be able to keep surplus of money in their pocket. Hence astronomical revenue they have during "inflation".