[littlestymaar]

Gold is also a terrible currency in today's world, that's why it has been abandoned by everyone during the last century.

Of course bitcoin is broken in many additional ways, but the economics doesn't make sense in the first place. (And it was created and promoted by people who were confident that the Fed's intervention in 2008 was going to trigger hyperinflation, what happened in the following decade should give you a pointer how economically literate these people are).

[detourdog]

I believed that for a long time but I have come around that to the idea that it makes sense to have physical gold like a secondary savings account. I now understand how gold can be personally useful during normal economic times.

[JumpCrisscross]

> makes sense to have physical gold like a secondary savings account

That’s fine. That’s a store of value. Stocks and bonds aren’t currencies either.

[roenxi]

> Gold is also a terrible currency in today's world, that's why it has been abandoned by everyone during the last century.

Open to question how bad though; there isn't really such a thing as a good currency. If the argument is that the US dollar is the best we have it is a bit of a disaster; it can't even be used to compare values over a 12 month span, the inflation is significant. And as I recall the abandoning done in the US was because because Nixon said the US government wasn't winning the game and flipped the table as opposed to any fair process, vote or even market consensus that gold was a bad idea.

I'd agree if the argument was to anchor currency value to an energy commodity to preserve some sort of $/Joule energy measure. That'd be really helpful for using money to track value. I'm still not sure why people are so unhappy at the idea of using money to track some constant amount of value.

[sobellian]

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]

> 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]

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]

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]

> 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.

[JumpCrisscross]

> 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]

> 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.

[littlestymaar]

> There are people who seem to literally believe that without inflation people will refuse to invest in anything

No. The problem comes without increase of the money supply. If there isn't enough growth to support the growth of the economy, then yes you're definitely hurting it (and if the supply is fixed, then your economy is going to be practically deadlocked).

The nice thing with commodity currency in the preindustrial era is that they accumulate roughly like the overall capital accumulation and productivity so it kind of works (it's not optimal though, and the massive increase of supply from the “new world” and the adoption of credit-based paper money triggered a period of higher growth that eventually led to the industrial revolution).

There's debate on inflation itself, but the economic consensus is in favor of price stability and that's what central bank are targeting. The reason why they are targeting 2% and not 0% is something you can learn from any book or economic resource on the internet, but there's nothing we can do against the fact that you somehow decided never to document yourself on the subject…

Your stance of “I've no idea how the works works or why it works this way and I won't try, but it definitely suck and doing this instead would be better” doesn't make you look good, you know?

[JumpCrisscross]

> 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.

[zie]

Because when the world blows up, people need someone to step in and get the system going again. If they don't it will take forever to get the economy going again.

See the GFC as an example. The US economy was about to implode, but the govt stepped in and said, heck no, not on my watch and fixed it. Instead of taking many many decades to right itself, we did it in 1 and the US govt made a nice profit to boot.

A counter point is Japan, they chose not to fix their capital markets and it's 30+yrs later and they finally are getting back on track.

[lupire]

Why on earth would you expect something literally called "currency" to have any longitudinal attribute in time? Currency is meant to be used immediately. That's it's entire value proposition, as the lubricant of trade. If your time horizon is longer, you shouldn't be holding your assets in currency.

[littlestymaar]

I'm going to stop here because of Brandolini's law. But I'd recommend you to read non-Austrian stuff on money.

At this point it's pretty clear that you have very strong opinions on stuff you have very shallow familiarity with, and the only way to fix that is to actually try understanding how the system works.

[lupire]

What is the unit of value? It doesn't exist.