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The point of a currency is not to experience zero inflation, it is to facilitate commerce as a medium of exchange. If you want to save, buy appreciating assets.

The point of a currency is not to experience zero inflation, it is to facilitate commerce as a medium of exchange. If you want to save, buy appreciating assets. > I'm still not sure why people are so unhappy at the idea of using money to track some constant amount of value. What's the grand cosmic purpose of having something that holds a "constant amount of value" (whatever that means)?

roenxi 3y ago
> What's the grand cosmic purpose of having something that holds a "constant amount of value" (whatever that means)? Well, if a sandwich shop was selling sandwiches for $10 last year and $11 this year, it'd be convenient for me to have a way of telling if the real price of a sandwich has gone up without needing to do any calculations and look up statistical data. I think most people would benefit from that sort of comparative power to be honest; it is difficult to keep track of whether the offers being made are better or worse value as time passes. If the value of money were constant, then a $11 sandwich in 2024 would be guaranteed more expensive than a $10 sandwich in 2023. I've talked to several people who are convinced the economy would collapse if that sort of constant pricing was normal practice. I have reservations about their claims.
- SiempreViernes 3y ago
  But what purpose does the "constant value object" serve here? To evaluate if the real sandwich price has changed you need information about the sandwich (and the rest of the economy)...
  - roenxi 3y ago
    Seems like the easy way to get close to a 0-inflation policy. How would you get close to a situation where the price going from $10 to $11 indicated that the real price of a sandwich had risen?
    - JumpCrisscross 3y ago
      > How would you get close to a situation where the price going from $10 to $11 indicated that the real price of a sandwich had risen You can’t. You need more data. Otherwise, you wind up trying to mandate what a wheat plant does by law. The simple answer is a siren’s call.
      - roenxi 3y ago
        If it is possible to target 2% inflation and 3% inflation, then it is possible to target 0%. We're not dealing with particularly complex ideas here. And if we anchored the unit of measurement to some commodity - which appears to have been standard practice for most of human history, I might add - then we'd be able to get a pretty good estimate of relative real changes in prices. It'd be more accurate than the current system of targeting constant price changes. It wouldn't be perfect, but the current policy is basically printing money and handing it out to asset owners - which is not only imperfect but wildly unfair, distorts markets in unhelpful ways and looks a lot like it is heading for a large financial collapse.
        JumpCrisscross 3y ago
        > If it is possible to target 2% inflation and 3% inflation, then it is possible to target 0% Look at the variance about 2%. Except now you risk depression. Which means when you get it a little wrong, you get people and companies defaulting on loans and mass lay-offs. > if we anchored the unit of measurement to some commodity - which appears to have been standard practice for most of human history The theory for why this is a bad idea was written in the 19th century and practice the 20th. Also, if you’re concerned about the rich getting richer, deflationary and anti-growth commodity money is the opposite of what you want.
        roenxi 3y ago
        Does any of this this theory come with a reference? Because as arguments go that is so information-lite I'm not even what theory you are invoking. I'm not worried about the rich getting richer. I'm worried about market distortions and unfairness. I think everyone should be getting richer; the rich included. > Which means when you get it a little wrong, you get people and companies defaulting on loans and mass lay-offs. So, not much change from the current state? We have a big financial crisis about once a decade, usually accompanied by mass layoffs and bankruptcies. Besides, defaulting on loans and layoffs isn't when the damage is done. The damage is done when bad loans are made and people are hired for jobs that aren't actually value-creating. You're complaint here is that we would be detecting and recognising real economic damage - that is something we should be doing. If people make bad loans they shouldn't get to pretend they made good ones, and people should be redeployed from low-value jobs to high-value jobs. There is no point making people do bullshit work.
- JumpCrisscross 3y ago
  > it'd be convenient for me to have a way of telling if the real price of a sandwich has gone up without needing to do any calculations and look up statistical data This is the core problem of economics. If we solve it, we solve, well, the economy. Nobody would need to buy anything; we could just produce and send everyone what we know they want. No need to consider unpredictable variations in individual choice and discretion. Of course when you include that pesky individualism, this model breaks down. Because it becomes impossible to structure production today to perfectly meet demand tomorrow. Making currency transformations across eons breaks down because it doesn’t make sense to ask how many talents of silver Caesar would have paid for an iPhone. > talked to several people who are convinced the economy would collapse if that sort of constant pricing was normal practice No? Are you confusing what you described—which is the aim of price-level targeting—with fixed-price policy?
  - roenxi 3y ago
    > No? Are you confusing what you described—which is the aim of price-level targeting—with fixed-price policy? There are people who seem to literally believe that without inflation people will refuse to invest in anything and choose to return to a cave-dwelling existence. I don't know how prevalent they are, but they turn up in these sort of threads.
    - JumpCrisscross 3y ago
      > people who seem to literally believe that without inflation people will refuse to invest in anything and choose to return to a cave-dwelling existence Yeah, I’ve seen them. They’re wrong. The point is price levelling is computationally expensive. It can never come for free. If your economy is dynamic—let alone growing—prices will slip. From time to time, they will do so in a generalised form. I actually think policymakers’ aversion to deflation comes from its intractability. Lots of societies have collapsed before they could solve deflation. Our examples of inflationary shitshows is partly due to their resilience—a deflating society starves fast.
      - roenxi 3y ago

roenxi 3y ago

> What's the grand cosmic purpose of having something that holds a "constant amount of value" (whatever that means)? Well, if a sandwich shop was selling sandwiches for $10 last year and $11 this year, it'd be convenient for me to have a way of telling if the real price of a sandwich has gone up without needing to do any calculations and look up statistical data. I think most people would benefit from that sort of comparative power to be honest; it is difficult to keep track of whether the offers being made are better or worse value as time passes. If the value of money were constant, then a $11 sandwich in 2024 would be guaranteed more expensive than a $10 sandwich in 2023. I've talked to several people who are convinced the economy would collapse if that sort of constant pricing was normal practice. I have reservations about their claims.

SiempreViernes 3y ago
But what purpose does the "constant value object" serve here? To evaluate if the real sandwich price has changed you need information about the sandwich (and the rest of the economy)...
- roenxi 3y ago
  Seems like the easy way to get close to a 0-inflation policy. How would you get close to a situation where the price going from $10 to $11 indicated that the real price of a sandwich had risen?
  - JumpCrisscross 3y ago
    > How would you get close to a situation where the price going from $10 to $11 indicated that the real price of a sandwich had risen You can’t. You need more data. Otherwise, you wind up trying to mandate what a wheat plant does by law. The simple answer is a siren’s call.
    - roenxi 3y ago
      If it is possible to target 2% inflation and 3% inflation, then it is possible to target 0%. We're not dealing with particularly complex ideas here. And if we anchored the unit of measurement to some commodity - which appears to have been standard practice for most of human history, I might add - then we'd be able to get a pretty good estimate of relative real changes in prices. It'd be more accurate than the current system of targeting constant price changes. It wouldn't be perfect, but the current policy is basically printing money and handing it out to asset owners - which is not only imperfect but wildly unfair, distorts markets in unhelpful ways and looks a lot like it is heading for a large financial collapse.
      - JumpCrisscross 3y ago
        > If it is possible to target 2% inflation and 3% inflation, then it is possible to target 0% Look at the variance about 2%. Except now you risk depression. Which means when you get it a little wrong, you get people and companies defaulting on loans and mass lay-offs. > if we anchored the unit of measurement to some commodity - which appears to have been standard practice for most of human history The theory for why this is a bad idea was written in the 19th century and practice the 20th. Also, if you’re concerned about the rich getting richer, deflationary and anti-growth commodity money is the opposite of what you want.
        roenxi 3y ago
        Does any of this this theory come with a reference? Because as arguments go that is so information-lite I'm not even what theory you are invoking. I'm not worried about the rich getting richer. I'm worried about market distortions and unfairness. I think everyone should be getting richer; the rich included. > Which means when you get it a little wrong, you get people and companies defaulting on loans and mass lay-offs. So, not much change from the current state? We have a big financial crisis about once a decade, usually accompanied by mass layoffs and bankruptcies. Besides, defaulting on loans and layoffs isn't when the damage is done. The damage is done when bad loans are made and people are hired for jobs that aren't actually value-creating. You're complaint here is that we would be detecting and recognising real economic damage - that is something we should be doing. If people make bad loans they shouldn't get to pretend they made good ones, and people should be redeployed from low-value jobs to high-value jobs. There is no point making people do bullshit work.
JumpCrisscross 3y ago
> it'd be convenient for me to have a way of telling if the real price of a sandwich has gone up without needing to do any calculations and look up statistical data This is the core problem of economics. If we solve it, we solve, well, the economy. Nobody would need to buy anything; we could just produce and send everyone what we know they want. No need to consider unpredictable variations in individual choice and discretion. Of course when you include that pesky individualism, this model breaks down. Because it becomes impossible to structure production today to perfectly meet demand tomorrow. Making currency transformations across eons breaks down because it doesn’t make sense to ask how many talents of silver Caesar would have paid for an iPhone. > talked to several people who are convinced the economy would collapse if that sort of constant pricing was normal practice No? Are you confusing what you described—which is the aim of price-level targeting—with fixed-price policy?
- roenxi 3y ago
  > No? Are you confusing what you described—which is the aim of price-level targeting—with fixed-price policy? There are people who seem to literally believe that without inflation people will refuse to invest in anything and choose to return to a cave-dwelling existence. I don't know how prevalent they are, but they turn up in these sort of threads.
  - JumpCrisscross 3y ago
    > people who seem to literally believe that without inflation people will refuse to invest in anything and choose to return to a cave-dwelling existence Yeah, I’ve seen them. They’re wrong. The point is price levelling is computationally expensive. It can never come for free. If your economy is dynamic—let alone growing—prices will slip. From time to time, they will do so in a generalised form. I actually think policymakers’ aversion to deflation comes from its intractability. Lots of societies have collapsed before they could solve deflation. Our examples of inflationary shitshows is partly due to their resilience—a deflating society starves fast.
    - roenxi 3y ago