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Inflation and Technology

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CrowEpistemologist
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BA:

 

All I mean is if there are 100 real things you need to trade, and if no one translated the value to any standard, if you wanted to know the market average of each and every possible trade you would ideally have tabulated a direct exchange rate for every possible pair.  Gold and water, pizza and water, gold and pizza.  The formula is simply an expression of how many direct pairs there are between N things, i.e. how many direct exchange rates that would be.

 

Of course you might also want to double this number by keeping track of which side is initiating the exchange: asking for gold with pizza may differ from asking for pizza with gold. 

 

In any case setting sell and buy prices according to a universal standard unit as we all know removes many of the administrative problems with trade.

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All I mean is if there are 100 real things you need to trade, and if no one translated the value to any standard, if you wanted to know the market average of each and every possible trade you would ideally have tabulated a direct exchange rate for every possible pair.  Gold and water, pizza and water, gold and pizza.  The formula is simply an expression of how many direct pairs there are between N things, i.e. how many direct exchange rates that would be.

 

Ok, got it. Its the combinations that add up to some sort of relative price index. But then every pizza is different, with different topings and ingredients and coming from differently skilled pizza makers, and so is water, some is cleaner or more minerally rich than other, so there would need be some normalized value for all pizzas, but not specifically your pizza. That's ok though, jjst gives you the indicator of what pizzas have been selling for in the recent past.

 

But how do you propose to initiate the transition from the present pricing statndard to the new one? It is too complex to be assumed spontaneously, without a ready interface, so the whole thing hinges on development of the platform, a pricing calculator. I think that would be the necessary first step. Just to have one out there, freely accessible online, and then issue monthly pricing reports etc. and hope it will catch on.

 

Ideas are one thing, but implementation is the greatest challenge, because someone has to learn the tools and then do the work with no certainty of return. Are you up to it?  :worry: 

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  • 7 months later...

I'm afraid that on top of not really understanding what your theory is here, what I believe I understand about it I don't agree with. So let's start off with what the theory itself is: Are you saying that because of the ease with which transactions can be made in our present day, that inflation occurs extremely quickly and with very few hitches?

 

I'm afraid that I simply don't see the punchline in what you are saying in the OP, where you have your longest explanation of your thesis. You state that sophisticated investors never really get harmed by crashes, but so what? I don't see how this has anything to do with inflation one way or another; it's just being an intelligent investor able to hedge losses. Modern technology might help the speed with which they do this, but it certainly does not prevent inflation from occurring. If your argument is here that no one is actually harmed by inflation, there are more advanced arguments against inflation harming business coordination, and there are still problems of smaller less advanced firms and the influence upon labourers.

 

Finally, you mention that money is primarily now kept electronically and in a bank account. But so what? It still represents something that is considered to be real and in which all prices are expressed. I don't see how this increases the speed of inflation or decreases the downsides.

 

So would you be kind enough to clarify your point?

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You state that sophisticated investors never really get harmed by crashes, but so what?

Also, they do get harmed by it. The OP's notion is based on a false "rational market" idea where we call all predict the shenanigans of central bankers and take appropriate action. The OP better be a billionaire before I'll even start to believe that assumption.
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[...]

So would you be kind enough to clarify your point?

 

I guess where you got hung up is this: I never denied that inflation of a particular currency possible or even probable. I am only saying that it doesn't have the power to hurt anybody anymore. I'm saying that there's no longer a reason to care about currency inflation. Yes, this in turn might make the probability of a particular currency's inflation smaller since governments only hurt themselves in this scenario, but that's a secondary point.

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Also, they do get harmed by it. The OP's notion is based on a false "rational market" idea where we call all predict the shenanigans of central bankers and take appropriate action. The OP better be a billionaire before I'll even start to believe that assumption.

 

Why would one's net worth make any difference? The danger of inflation is to savings. Somebody living hand-to-mouth doesn't care about inflation in any case.

 

***

 

"Through speaker whom, too obviously, are in no such danger...".

 

...which is to say that most of the inflationaphobes you hear from tell you how they know what's coming and have therefore invested in gold or real estate or bullets or whatever.

 

If everybody were like this (and my thesis is that that they are or would be if they needed to be) then... my thesis is correct...

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"The danger of inflation is to savings"

 

Not to derail the subject, rather to tie it to some thoughts expressed in "Fiat Money as Economics’ Floating Abstraction?", are both "money" and "fiat money" in danger of inflation? And, if money is more importantly a "tool of savings" - does money apply to both "money" and to "fiat money"?

 

Call me an "inflation-a-phoebe", if you must. I try not to evade this issue with regard to my finances.

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Yeah, okay, I should have qualified that US dollar inflation can only be a threat to savings if, and only if, you actively invest in US dollars.

 

I guess I'm an "inflationaphone" with every financial instrument I own, be it AAPL, DZZ, GBP or USD. I watch all of these things and trade out of them if I think they will go down in value...

 

Once you understand that US dollars are just another investment instrument then fears we commonly have about "inflation" are vastly overblown.

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