5 ms·

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightl

by bko 4mo ago

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure. Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technological progress. The argument that prices can't get cheaper or [bad thing will happen] was never very convincing to me. Prices already do get cheaper for large swaths of the economy that have technological progress grow faster than money supply. Cell phones are rapidly depreciating. You can wait 6m to a year and get a significant discount on the latest iPhone version. People don't stop buying iPhones, and Apple doesn't stop investing in iPhones. This is even more true w/ AI models. Investors/companies are burning billions to build tech that will only get cheaper and obsolete in years if not months. So if you were to try to convince me that deflation would reduce investment or spending, tell me why this doesn't apply to tech products that get cheaper every year.

ramesh31 4mo ago
>"We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down." Because a lot of people earn their living by producing or selling food. Your other necessities don't become more affordable just because food prices go down, but if that's your livelihood it becomes at risk. Food was incredibly cheap during the great depression. There's an amazing quote from the PBS documentary series on it; "A sack of flour cost a nickel, but where were you gonna get a nickel?". Steady, controlled inflation via fiat is the only way to keep a capitalistic economy functioning, because you can't micromanage or control the price of everything, and people need money to live. The real issue is stagnation of wage growth while assets explode. It's the transfer of real wealth from earners to owners that has put us in the current position, not absolute prices.
throw0101d 4mo ago
> Prices should get cheaper. Does that include the price of labour? Are you okay with your salary going down? Because the historical record shows that's what happens during deflationary periods: producers of good/services see the price that they can sell things for goes down, and so they insist on their suppliers and inputs—including labour input—reduce their prices as well.
- bko 4mo ago
  Why would it go down? The person is becoming more productive? Do employees at Apple salaries go down because the iPhone they're working on is worth less every year? Again, tie it to things that decrease in price over time.
  - throw0101d 4mo ago
    Let us say a farmer had taken out a mortgage in 1928, and let us say his mortgage payment was US$20 (equivalent of 1 oz. of gold). In May 1929 he would have had to have sold 114 pounds of cotton to earn $20 (or 18 bushels of wheat, 23 of corn, 44 of oats). By May 1932 he would have had to sold 369 pounds of cotton (or 38 bushels of wheat, …): * https://www.sciencedirect.com/science/article/abs/pii/0304393287900456 https://www.sciencedirect.com/science/article/abs/pii/030439... * https://econbrowser.com/archives/2012/02/why_not_abolish https://econbrowser.com/archives/2012/02/why_not_abolish If he had 4 farm hands and paid each $5 (total $20), that's a lot more crops that need to be sold to cover payroll; or he could cut staff. And it would have been the same for selling any good or service: to pay whatever debts you had (mortgage, car/business/student loans) you would have to work more to earn the same amount of money. Or a company that makes widgets needing to pay the same wages: sell more widgets to cover payroll, or reduce payroll (per head, or total heads).
margalabargala 4mo ago
> Imagine a world in which prices regularly go down That world results in a lot of people individually deciding "why buy now, when I can buy for less later" and sitting on their money. That in aggregate makes the economy much worse. You're up against human nature here. Money may be an arbitrary numerical denomination of value, but people's behavior around it and how that affects the economy at large need to be accounted for. Having prices slowly creep upwards over time (low inflation) tends to result in more, better things sooner.
- bko 4mo ago
  Keep reading the comment. Why do people buy iPhones today knowing that they can get a significant discount in 6-12m for that same iPhone
  - bigfishrunning 4mo ago
    Because an iphone is a status symbol, and in 6-12m that same iphone won't grant the same status, a newer more expensive one will.
    - bko 4mo ago
      Same applies for Android phones and TVs and most electronics.
  - margalabargala 4mo ago
    The state of tech goods is such that they become obsolete and have a finite lifespan, due to battery and compute needs, as well as the "fashion" element of having the newest thing. The price is dropping over time because you're getting something literally less valuable. The analogy would be, would you pay the same for a bag of rice expiring in 2 years, as one expiring in 2 months? The argument you're trying to make, would be valid and convincing if Apple lowered the price of a new iPhone with each subsequent release.
    - bko 4mo ago
triceratops 4mo ago
> We get better at growing food every year, why shouldn't food get cheaper? It has gotten cheaper, as a percentage of people's income and spending.
chadgpt3 4mo ago
I suggest a bread standard. It's more useful than gold, and it worked in Brazil.
wwweston 4mo ago
Tech product price dynamics benefit from a bunch of things that food doesn’t: they’re optional purchases, they’re early stage developments which have more low hanging fruit, and purchase price can be subsidized with later plays (subscriptions, data sales, network effects, freemium to enterprise pipeline). Also - I think if you look at the data you’ll find periods off the gold standard where food prices grew more slowly than inflation and even wages, ie food becomes cheaper. 80s and 90s for example.
skywhopper 4mo ago
If prices get cheaper all the time, there would be no way for anyone to ever borrow money. Tech products like phones used to get cheaper because 1) they start out at a wild markup; 2) they have intense competition by rivals to build the latest and greatest; 3) the ability to make things faster/smaller continued to increase. Those factors are non-existent for most industries, and they are reducing in effect for tech products over time.
OnlyANeurosci 4mo ago
> I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Gimme all the gold contacts in all of your electronics please, we shouldn't be using gold for those I guess....
wolpoli 4mo ago
Recall that real interest rate = interest rate - expected inflation. The goal of the central banker is to keep real interest rate low. If you have negative expected inflation, that sets a lower bound on the real interest rate since interest rate could only go as low as zero. This gives less flexibility for monetary policy to handle crisis and that scares the central bankers.
dessimus 4mo ago
>Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? This can only really happen if the rate of efficiency gains consistently out pace resource and labor costs, such that the marginal cost of delivering produce to market is flat or decreases for the farmer over time.

by bko 4mo ago

ramesh31 4mo ago

>"We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down." Because a lot of people earn their living by producing or selling food. Your other necessities don't become more affordable just because food prices go down, but if that's your livelihood it becomes at risk. Food was incredibly cheap during the great depression. There's an amazing quote from the PBS documentary series on it; "A sack of flour cost a nickel, but where were you gonna get a nickel?". Steady, controlled inflation via fiat is the only way to keep a capitalistic economy functioning, because you can't micromanage or control the price of everything, and people need money to live. The real issue is stagnation of wage growth while assets explode. It's the transfer of real wealth from earners to owners that has put us in the current position, not absolute prices.

throw0101d 4mo ago

> Prices should get cheaper. Does that include the price of labour? Are you okay with your salary going down? Because the historical record shows that's what happens during deflationary periods: producers of good/services see the price that they can sell things for goes down, and so they insist on their suppliers and inputs—including labour input—reduce their prices as well.

bko 4mo ago
Why would it go down? The person is becoming more productive? Do employees at Apple salaries go down because the iPhone they're working on is worth less every year? Again, tie it to things that decrease in price over time.
- throw0101d 4mo ago
  Let us say a farmer had taken out a mortgage in 1928, and let us say his mortgage payment was US$20 (equivalent of 1 oz. of gold). In May 1929 he would have had to have sold 114 pounds of cotton to earn $20 (or 18 bushels of wheat, 23 of corn, 44 of oats). By May 1932 he would have had to sold 369 pounds of cotton (or 38 bushels of wheat, …): * https://www.sciencedirect.com/science/article/abs/pii/0304393287900456 https://www.sciencedirect.com/science/article/abs/pii/030439... * https://econbrowser.com/archives/2012/02/why_not_abolish https://econbrowser.com/archives/2012/02/why_not_abolish If he had 4 farm hands and paid each $5 (total $20), that's a lot more crops that need to be sold to cover payroll; or he could cut staff. And it would have been the same for selling any good or service: to pay whatever debts you had (mortgage, car/business/student loans) you would have to work more to earn the same amount of money. Or a company that makes widgets needing to pay the same wages: sell more widgets to cover payroll, or reduce payroll (per head, or total heads).

margalabargala 4mo ago

> Imagine a world in which prices regularly go down That world results in a lot of people individually deciding "why buy now, when I can buy for less later" and sitting on their money. That in aggregate makes the economy much worse. You're up against human nature here. Money may be an arbitrary numerical denomination of value, but people's behavior around it and how that affects the economy at large need to be accounted for. Having prices slowly creep upwards over time (low inflation) tends to result in more, better things sooner.

bko 4mo ago
Keep reading the comment. Why do people buy iPhones today knowing that they can get a significant discount in 6-12m for that same iPhone
- bigfishrunning 4mo ago
  Because an iphone is a status symbol, and in 6-12m that same iphone won't grant the same status, a newer more expensive one will.
  - bko 4mo ago
    Same applies for Android phones and TVs and most electronics.
- margalabargala 4mo ago
  The state of tech goods is such that they become obsolete and have a finite lifespan, due to battery and compute needs, as well as the "fashion" element of having the newest thing. The price is dropping over time because you're getting something literally less valuable. The analogy would be, would you pay the same for a bag of rice expiring in 2 years, as one expiring in 2 months? The argument you're trying to make, would be valid and convincing if Apple lowered the price of a new iPhone with each subsequent release.
  - bko 4mo ago

triceratops 4mo ago

> We get better at growing food every year, why shouldn't food get cheaper? It has gotten cheaper, as a percentage of people's income and spending.

chadgpt3 4mo ago

I suggest a bread standard. It's more useful than gold, and it worked in Brazil.

wwweston 4mo ago

Tech product price dynamics benefit from a bunch of things that food doesn’t: they’re optional purchases, they’re early stage developments which have more low hanging fruit, and purchase price can be subsidized with later plays (subscriptions, data sales, network effects, freemium to enterprise pipeline). Also - I think if you look at the data you’ll find periods off the gold standard where food prices grew more slowly than inflation and even wages, ie food becomes cheaper. 80s and 90s for example.

skywhopper 4mo ago

If prices get cheaper all the time, there would be no way for anyone to ever borrow money. Tech products like phones used to get cheaper because 1) they start out at a wild markup; 2) they have intense competition by rivals to build the latest and greatest; 3) the ability to make things faster/smaller continued to increase. Those factors are non-existent for most industries, and they are reducing in effect for tech products over time.

OnlyANeurosci 4mo ago

> I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Gimme all the gold contacts in all of your electronics please, we shouldn't be using gold for those I guess....

wolpoli 4mo ago

Recall that real interest rate = interest rate - expected inflation. The goal of the central banker is to keep real interest rate low. If you have negative expected inflation, that sets a lower bound on the real interest rate since interest rate could only go as low as zero. This gives less flexibility for monetary policy to handle crisis and that scares the central bankers.

dessimus 4mo ago

>Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? This can only really happen if the rate of efficiency gains consistently out pace resource and labor costs, such that the marginal cost of delivering produce to market is flat or decreases for the farmer over time.