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> In investing, you seem to be trying to derive variance from expected value, which is impossible. And risk is not the same thing as variance. It's funny, beca

> In investing, you seem to be trying to derive variance from expected value, which is impossible. And risk is not the same thing as variance. It's funny, because two posts ago you wrote the words "expected value is a term you do not seem familiar with. It is a risk adjusted value of expected return on something". So you're really only arguing against yourself here But variance is, in fact a way for investors to assess risk (again, if you had an adult-level of understanding of the subject matter or even a modicum of self awareness you wouldn't keep contesting definitions for no reason). And since investors care about risk adjusted returns, they do not think an expected 0.1% nominal return on productive activity is attractive, least of all in a deflationary environment. (Sure, you can't directly derive variance from expected return, but you don't need to do that to rule out ludicrous scenarios like a sub 10 basis point risk premium on investing in productive activity whilst prices fall, which means you don't invest at 0.1%) > It's entirely possible for an investment with a 0.1% EV to have a lower variance than one with a 15% EV. Sure. It is however entirely impossible for a productive venture with a 0.1% EV to have an attractive risk adjusted return under deflation. Nobody with an adult level understanding of finance would make this argument, let alone still be trying to defend it by arguing against their own attempted gotcha multiple posts later. Because they understand basics like "deflation causes debt to be more expensive" (remember a week ago when you wrote that, apparently without understanding what it means), and 0.1% is not a high return on risky activity when debt is expensive. And also, they understand that the risk-adjusted return will be negative, particularly as risks to commercial activity increase under deflation caused by monetary policy intentionally starving the economy of capital). > Because the point is that anything with a real expected return of "x" in an inflationary system has a real return of e.g. "x+5" (or whatever the exact delta happens to be) in a non-inflationary system Again, this is just an assertion that only somebody with no understanding of basic stuff like how inflation/deflation affects sales prices and interest rates would make. It is very easy to argue that the price somebody has to pay a wealthier person to borrow money being x+5 rather than x is a bad thing, if you believe that it is better for economies to reward people that make stuff rather than people that have stuff. The actual point was that it's harder to make a positive money return producing stuff to sell when next year's price is y-2 rather than y+2, and in those circumstances also easy to make a small real return doing nothing or a big real return lending to cover short term debts instead. Again, I'm sorry you don't understand this, but it's really, really not possible to contest the fact that deflation does not incentivise investment if you understand supply and demand to high school level (never mind the actual nuances of interest rates and transmission mechanisms). I guess I can look forward to you eventually accepting that it doesn't whilst attempting to attribute your current position to me in five days time. If only you could trade some of your unmatched reserves of persistence for a little actual knowledge... (you could, for example,read a book instead of doubling down on being wrong by Googling more economic terms to insinuate I'm missing whilst not even being able to define them without making mistakes) > But the really interesting thing? Go open their graphs and look where the inflection point is. It's, again, the funny money The really interesting thing is that you've actually managed to find an economic chart without an inflection point to make argument about inflection points, which is quite an achievement! The trend line over the period displayed appears to be a noisy concave function with the noise attributable to economic cycles. Although if you put a gun to my head any asked me to point to what looks most like an inflection point in this graph without an actual inflection point, I'd probably point to the steepening of the downslope of the curve around the millennium which doesn't seem to have much to do with leaving the gold standard or inflation being high.... Watching you pretend to understand the subject matter: https://www.youtube.com/watch?v=2WZLJpMOxS4 https://www.youtube.com/watch?v=2WZLJpMOxS4

somenameforme 3mo ago
I'm not the one arguing about definitions. You chose to take us down that path, adding a bunch of ad hominem while simultaneously misusing the terminology you were trying to be patronizing with. I 100% agree that it's completely inconsequential so long as we both understand what the other is saying, but I'm also trying to, within reason, respond to each thing you're stating. One major thing I'd emphasize here is that you're acting like the consequences of non-inflationary systems are speculative. The entire point of this discussion is we have a wealth of data to draw from, from both systems. With a non-inflationary system we have a system that was, more or less, stable over nearly 200 years through numerous catastrophic events. With the modern inflationary system we have something that already not only seems unsustainable, but is causing major societal issues after just 50 years of relative super-utopia. I say super-utopia because not only have we avoided anything on the scale of e.g. WW2, but it kicked off alongside the once-in-a-civilization super-economic boom of mass digitization that is now plateauing. So on the data issue - the way you determine an inflection point on a noisy graph is just to look at the midpoints of the noise and graph them. On the Fed's graph look at the slope of the midpoints from start to mid 70s, and then from the mid 70s to present. The brief spike at the dotcom bubble is just noise that gets smoothed out. For a comparable graph, with less noise, here [1] is a graph on labor's shares of gross domestic income. Again, you seriously can't miss the inflection point. For specific item prices, this [2] site is extremely interesting. I'm not fond of the author's overt partisanship, but his data is sound and eye opening. He's collected the price of Campbell's tomato soup over more than a century and graphed them. The fun thing about that is that they've been selling the same product in the same quantity, to a generally price sensitive customer, for well over a century. And so it helps give an image of raw price data over time in a way that aggregate measurements like CPI are often unable to do so. And again we see the exact same inflection point. It also gives some context of 40s inflation versus the modern system that we've created. [1] - https://fred.stlouisfed.org/series/W270RE1A156NBEA https://fred.stlouisfed.org/series/W270RE1A156NBEA [2] - https://politicalcalculations.blogspot.com/2026/01/the-price-history-of-campbells-tomato.html https://politicalcalculations.blogspot.com/2026/01/the-price...
- notahacker 3mo ago
  > I'm not the one arguing about definitions. You chose to take us down that path, adding a bunch of ad hominem while simultaneously misusing the terminology you were trying to be patronizing with. I 100% agree that it's completely inconsequential Technically I suppose it is me that keeps insisting you can't just redefine terms to make them mean the opposite of what they mean because that would be convenient to your argument. I didn't realise you considered making up new definitions of words "completely inconsequential", but it explains a lot. But one of the things about posting complete nonsense like "expected value [2] is a term you do not seem familiar with. It is a risk adjusted value of expected return on something" is that I'm going to patronise you for responding by posting incorrect definitions in a ill-advised attempt to patronise the person who knows what the words actually mean. > I'm also trying to, within reason, respond to each thing you're stating And yet your latest response to me continues to ignores all my points about risk, base interest rates, opportunity costs and the relative unprofitability of investing in productive ventures when average prices are falling and instead links to a trend line for Campbell's soup prices. I realise it's easier for you to triumphantly assert that inflation is correlated with the price of Campbell's soup to rise (well done, you managed to not get a basic economic relation the wrong way round for once!) than to learn why interest rates have an inverse relationship with money supply and why that might be relevant to the return on productive ventures, but it's a whole lot less relevant to anything I've said. Because, funnily enough, I never expected anything other than Campbell's soup increasing their prices in the last 50 years. Still, the proportion of budget spent on food, which matters a lot more, has gone down a lot since the gold standard era[1][2] and it's not like that's because Americans are getting skinnier! > One major thing I'd emphasize here is that you're acting like the consequences of non-inflationary systems are speculative. The entire point of this discussion is we have a wealth of data to draw from, from both systems. With a non-inflationary system we have a system that was, more or less, stable over nearly 200 years through numerous catastrophic events. With the modern inflationary system we have something that already not only seems unsustainable, but is causing major societal issues after just 50 years of relative super-utopia. I say super-utopia because not only have we avoided anything on the scale of e.g. WW2, but it kicked off alongside the once-in-a-civilization super-economic boom of mass digitization that is now plateauing. If we want to talk about stability verus "catastrophic events", the most notable periods of of sustained deflation (the thing you kicked off this exchange by praising) were called the Great Depression, Panic of 1893, Panic of 1873, the Panic of 1837 and the 1818-21 depression. So yeah, economists' alarm about deflationary spirals are not speculation but backed by a lot of data. If we're doing a natural experiment between deflation and steady 2% inflation even the names are a hint that the former state of affairs might be more problematic. It's funny that you think there was a single monetary system over that 200 year period (again, you're disputing a universally agreed historical fact rather than making a defensible theoretical argument about causation here) and perhaps funnier still that you believe there were no societal issues over that period and that "mass digitization" has been more transformational than the Industrial Revolution was. Disruptions like the Civil War and WWII were dealt with by completely disregarding convertibility to gold and the growth of 1950-1970 was sustained by the US giving away quarter of the entire world's gold supply, a luxury it can no longer afford. The Bretton Woods trade arrangement that made everyone need dollars largely worked for the US; the attempt to link it to gold was what killed it. And it would have died much earlier if FDR hadn't already suspended the ability of anybody that wasn't a foreign central bank to demand gold in exchange for dollars... > So on the data issue - the way you determine an inflection point on a noisy graph is just to look at the midpoints of the noise and graph them. The way you determine an inflection point is to determine the breakpoint between upward and downward trends or concavity or convexity. Neither of the graphs of labour share of income you have linked to have that functional form, irrespective of what averaging method you use to remove the economic cycles. I laughed mostly because it's actually really easy to find similar time series that do appear to have an inflection point some time around 1971, or at least between 1965 and 1990[3]. Here's one[4]. The trouble for you is that although it shows a fall in employee compensation as a proportion of GDI in the last 50 years, it also shows that it was lower still in the gold standard era's heyday back in 1929 (the 1920s were also the peak of post-industrial wealth concentration)... and that wage growth happened when the Fed inflated its way out of that mess... It's almost like those billionaire funded think tanks promising that a return to the monetary economics of 1931 (but keeping the tax cuts of the 1980s and other policy and technology shifts you're furiously pretending didn't affect anything) would make ordinary people get paid a higher share of income aren't telling the truth. [1]https://ourworldindata.org/grapher/food-expenditure-share-family-disposable-income https://ourworldindata.org/grapher/food-expenditure-share-fa... [2]fun aside: there probably is an inflection point in this time series at 1932, the last full year in which people could redeem their USD for gold with food becoming relatively more affordable afterwards. Although you'd probably want to see the trend for the 1920s and earlier to be sure, and since I'm not as monomanically currency obsessed as you I would never make the mistake of arguing that decoupling from gold is the only reason why food is much more affordable to the average person today than it was at any point during the gold standard era... [3]I mean, the silly website on that theme manages to find a graph to blame the end of Bretton Woods for divorce rates... [4]https://fred.stlouisfed.org/series/A4002E1A156NBEA https://fred.stlouisfed.org/series/A4002E1A156NBEA

somenameforme 3mo ago

I'm not the one arguing about definitions. You chose to take us down that path, adding a bunch of ad hominem while simultaneously misusing the terminology you were trying to be patronizing with. I 100% agree that it's completely inconsequential so long as we both understand what the other is saying, but I'm also trying to, within reason, respond to each thing you're stating. One major thing I'd emphasize here is that you're acting like the consequences of non-inflationary systems are speculative. The entire point of this discussion is we have a wealth of data to draw from, from both systems. With a non-inflationary system we have a system that was, more or less, stable over nearly 200 years through numerous catastrophic events. With the modern inflationary system we have something that already not only seems unsustainable, but is causing major societal issues after just 50 years of relative super-utopia. I say super-utopia because not only have we avoided anything on the scale of e.g. WW2, but it kicked off alongside the once-in-a-civilization super-economic boom of mass digitization that is now plateauing. So on the data issue - the way you determine an inflection point on a noisy graph is just to look at the midpoints of the noise and graph them. On the Fed's graph look at the slope of the midpoints from start to mid 70s, and then from the mid 70s to present. The brief spike at the dotcom bubble is just noise that gets smoothed out. For a comparable graph, with less noise, here [1] is a graph on labor's shares of gross domestic income. Again, you seriously can't miss the inflection point. For specific item prices, this [2] site is extremely interesting. I'm not fond of the author's overt partisanship, but his data is sound and eye opening. He's collected the price of Campbell's tomato soup over more than a century and graphed them. The fun thing about that is that they've been selling the same product in the same quantity, to a generally price sensitive customer, for well over a century. And so it helps give an image of raw price data over time in a way that aggregate measurements like CPI are often unable to do so. And again we see the exact same inflection point. It also gives some context of 40s inflation versus the modern system that we've created. [1] - https://fred.stlouisfed.org/series/W270RE1A156NBEA https://fred.stlouisfed.org/series/W270RE1A156NBEA [2] - https://politicalcalculations.blogspot.com/2026/01/the-price-history-of-campbells-tomato.html https://politicalcalculations.blogspot.com/2026/01/the-price...

notahacker 3mo ago
> I'm not the one arguing about definitions. You chose to take us down that path, adding a bunch of ad hominem while simultaneously misusing the terminology you were trying to be patronizing with. I 100% agree that it's completely inconsequential Technically I suppose it is me that keeps insisting you can't just redefine terms to make them mean the opposite of what they mean because that would be convenient to your argument. I didn't realise you considered making up new definitions of words "completely inconsequential", but it explains a lot. But one of the things about posting complete nonsense like "expected value [2] is a term you do not seem familiar with. It is a risk adjusted value of expected return on something" is that I'm going to patronise you for responding by posting incorrect definitions in a ill-advised attempt to patronise the person who knows what the words actually mean. > I'm also trying to, within reason, respond to each thing you're stating And yet your latest response to me continues to ignores all my points about risk, base interest rates, opportunity costs and the relative unprofitability of investing in productive ventures when average prices are falling and instead links to a trend line for Campbell's soup prices. I realise it's easier for you to triumphantly assert that inflation is correlated with the price of Campbell's soup to rise (well done, you managed to not get a basic economic relation the wrong way round for once!) than to learn why interest rates have an inverse relationship with money supply and why that might be relevant to the return on productive ventures, but it's a whole lot less relevant to anything I've said. Because, funnily enough, I never expected anything other than Campbell's soup increasing their prices in the last 50 years. Still, the proportion of budget spent on food, which matters a lot more, has gone down a lot since the gold standard era[1][2] and it's not like that's because Americans are getting skinnier! > One major thing I'd emphasize here is that you're acting like the consequences of non-inflationary systems are speculative. The entire point of this discussion is we have a wealth of data to draw from, from both systems. With a non-inflationary system we have a system that was, more or less, stable over nearly 200 years through numerous catastrophic events. With the modern inflationary system we have something that already not only seems unsustainable, but is causing major societal issues after just 50 years of relative super-utopia. I say super-utopia because not only have we avoided anything on the scale of e.g. WW2, but it kicked off alongside the once-in-a-civilization super-economic boom of mass digitization that is now plateauing. If we want to talk about stability verus "catastrophic events", the most notable periods of of sustained deflation (the thing you kicked off this exchange by praising) were called the Great Depression, Panic of 1893, Panic of 1873, the Panic of 1837 and the 1818-21 depression. So yeah, economists' alarm about deflationary spirals are not speculation but backed by a lot of data. If we're doing a natural experiment between deflation and steady 2% inflation even the names are a hint that the former state of affairs might be more problematic. It's funny that you think there was a single monetary system over that 200 year period (again, you're disputing a universally agreed historical fact rather than making a defensible theoretical argument about causation here) and perhaps funnier still that you believe there were no societal issues over that period and that "mass digitization" has been more transformational than the Industrial Revolution was. Disruptions like the Civil War and WWII were dealt with by completely disregarding convertibility to gold and the growth of 1950-1970 was sustained by the US giving away quarter of the entire world's gold supply, a luxury it can no longer afford. The Bretton Woods trade arrangement that made everyone need dollars largely worked for the US; the attempt to link it to gold was what killed it. And it would have died much earlier if FDR hadn't already suspended the ability of anybody that wasn't a foreign central bank to demand gold in exchange for dollars... > So on the data issue - the way you determine an inflection point on a noisy graph is just to look at the midpoints of the noise and graph them. The way you determine an inflection point is to determine the breakpoint between upward and downward trends or concavity or convexity. Neither of the graphs of labour share of income you have linked to have that functional form, irrespective of what averaging method you use to remove the economic cycles. I laughed mostly because it's actually really easy to find similar time series that do appear to have an inflection point some time around 1971, or at least between 1965 and 1990[3]. Here's one[4]. The trouble for you is that although it shows a fall in employee compensation as a proportion of GDI in the last 50 years, it also shows that it was lower still in the gold standard era's heyday back in 1929 (the 1920s were also the peak of post-industrial wealth concentration)... and that wage growth happened when the Fed inflated its way out of that mess... It's almost like those billionaire funded think tanks promising that a return to the monetary economics of 1931 (but keeping the tax cuts of the 1980s and other policy and technology shifts you're furiously pretending didn't affect anything) would make ordinary people get paid a higher share of income aren't telling the truth. [1]https://ourworldindata.org/grapher/food-expenditure-share-family-disposable-income https://ourworldindata.org/grapher/food-expenditure-share-fa... [2]fun aside: there probably is an inflection point in this time series at 1932, the last full year in which people could redeem their USD for gold with food becoming relatively more affordable afterwards. Although you'd probably want to see the trend for the 1920s and earlier to be sure, and since I'm not as monomanically currency obsessed as you I would never make the mistake of arguing that decoupling from gold is the only reason why food is much more affordable to the average person today than it was at any point during the gold standard era... [3]I mean, the silly website on that theme manages to find a graph to blame the end of Bretton Woods for divorce rates... [4]https://fred.stlouisfed.org/series/A4002E1A156NBEA https://fred.stlouisfed.org/series/A4002E1A156NBEA