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Are we really heading into inflation?
#11
Also, I disagree that the value of bitcoin, gold, and silver is objective.  The value of these too is subjective.  The difference between them and fiat currency is that they can not be created from nothing and their supply is hence limited.  The value of the dollar is in its liquidity. It is accepted by people everywhere, gold and bitcoin are not.


To prove my point, I offer the amusing but sad video of people choosing a Snickers bar over a gold coin from a guy in front of a coin shop.

https://m.youtube.com/watch?v=BgUxF7gvYeE
Monty Python: “There are a great many people in the country today, who through no fault of their own, are sane.”
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#12
(10-11-2021, 02:21 PM)doubletroublejim Wrote: Also, I disagree that the value of bitcoin, gold, and silver is objective.  The value of these too is subjective.  The difference between them and fiat currency is that they can not be created from nothing and their supply is hence limited.  The value of the dollar is in its liquidity. It is accepted by people everywhere, gold and bitcoin are not.


To prove my point, I offer the amusing but sad video of people choosing a Snickers bar over a gold coin from a guy in front of a coin shop.

https://m.youtube.com/watch?v=BgUxF7gvYeE

.

Thanks much DTJim, but really I never ever thought or meant to say anything like their VALUE was objective.
Only that they can be OBJECTIVELY MEASURED, unlike a Dollar.

for example, An ounce of gold is always and everywhere and every time, exactly the SAME.


however since the end of the supposed gold standard,
a dollar is VERY SUBJECTIVE (ie, always different and impossible to measure)



and this is what I mean when I say a dollar is subjective (and unknowable)
and Gold is objective
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#13
If you offered them a ten or even a five dollar bill, a gold coin or a Snickers bar, they would take the bill, ....but perhaps some of them would take the Snickers bar Undecided .  Now if you offered them a one dollar bill or a Snickers bar, many would take the Snickers (I would).  That says something about inflation.
Monty Python: “There are a great many people in the country today, who through no fault of their own, are sane.”
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#14
(10-11-2021, 01:55 AM)DaveGillie Wrote:
(10-10-2021, 09:35 PM)doubletroublejim Wrote: I see price inflation everywhere and the charts on commodities are showing lots of inflation in the pipeline.  That being said, I recently saw a chart of durable goods prices.  It was a hockey stick going straight up.  I then checked the cost of a refrigerator I bought 4 months ago at Home Depot.  It was $50 less than what I bought it for then.  Go figure.


CURIOUS,

for a thought experiment..........


have you ever thought, that IF the price in dollars goes up by 10%
at the same time the value of a dollar falls by 50%


then may be that means the REAL PRICE FELL by 40%??



THIS is what I've been asking about here for years,  nobody ever addresses it but I think once I can get an explanation of this I can formulate a better idea of inflation in an era where money has no objective definition.

Now of course, there is a greater philosophical aspect to your question - that is how does one measure "real prices". Not going to touch that one.

But, I will answer one facet of your question in a highly simplistic and purely mathematical fashion.

Suppose that I were to live in the US, and have easy access to "Constant Value Currency", or CVC for short. It stays rock solid in value over time.

If we start off where $1US = 1CVC, and we have a widget with a ticket price of $1 US, which we can also buy with 1CVC. Now, we also have the US dollar fall by 50%, then we have $2US = 1CVC. Furthermore, ticket prices increase by 10%, so our widget now costs $1.10 US. I can now purchase the widget with 0.55 CVC ($1.10US divided by $2US/CVC), so in constant terms, the "real" price has dropped by 45%.

That's just one of those weird things with math where percentages are not linear, and thus cannot be added. Such as if a price increases by 100%, then subsequently falls by 50%, the net change is 0%, not +50%.

Now of course, there is no such thing as a CVC, and there is no real constant store of value. Even 1 hour's labour isn't constant, given the addition of oil-powered machinery has vastly increased the productivity of such work. Clearly gold waxes and wanes in value - I personally like the stuff, but only think that it is a clear buy when they were almost giving the stuff away shortly after 2000.

I wouldn't even know where to begin to propose an idea for what would constitute a constant value metric.
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#15
(10-11-2021, 05:10 PM)doubletroublejim Wrote: If you offered them a ten or even a five dollar bill, a gold coin or a Snickers bar, they would take the bill, ....but perhaps some of them would take the Snickers bar Undecided .  Now if you offered them a one dollar bill or a Snickers bar, many would take the Snickers (I would).  That says something about inflation.

just that the average person is ignorant and uneducated about money & economics.
AND that "feelings ARE more important than facts" to a lot of people a lot of times.
.

Maybe instead of economics one should study mass social psychology in order to understand inflation.

.
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#16
(10-11-2021, 05:12 PM)brunt Wrote: Now of course, there is a greater philosophical aspect to your question - that is how does one measure "real prices". Not going to touch that one.
aw man!! But this is most likely THE key to the whole issue.

But, I will answer one facet of your question in a highly simplistic and purely mathematical fashion.

Suppose that I were to live in the US, and have easy access to "Constant Value Currency", or CVC for short. It stays rock solid in value over time.

If we start off where $1US = 1CVC, and we have a widget with a ticket price of $1 US, which we can also buy with 1CVC. Now, we also have the US dollar fall by 50%, then we have $2US = 1CVC. Furthermore, ticket prices increase by 10%, so our widget now costs $1.10 US. I can now purchase the widget with 0.55 CVC ($1.10US divided by $2US/CVC), so in constant terms, the "real" price has dropped by 45%.

That's just one of those weird things with math where percentages are not linear, and thus cannot be added. Such as if a price increases by 100%, then subsequently falls by 50%, the net change is 0%, not +50%.

Now of course, there is no such thing as a CVC, and there is no real constant store of value. Even 1 hour's labour isn't constant, given the addition of oil-powered machinery has vastly increased the productivity of such work. Clearly gold waxes and wanes in value - I personally like the stuff, but only think that it is a clear buy when they were almost giving the stuff away shortly after 2000.

I wouldn't even know where to begin to propose an idea for what would constitute a constant value metric.
Gold always tried to serve that function, till "they" figured out how to control manipulate it so

 the way BITCOIN is designed with hard limits, it could serve that function BUT FOR crazy psychology causing super swings
MY thought is, in the future, on a LONG Term average it may look to have worked well

till Super quantum computers 


anyways, I guess it's obvious how/why the powers that be, use monetary instruments like they do AND get away with it
it's just too complicated for us peons to understand.
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