Cash isn’t an investment. It’s a temporary store of labor value. Since work now is worth more than work later, of course cash has value decay. If it didn’t, it wouldn’t be very good at its raison d’être.
The main reason the value of cash decays and the main reason central banks target 2% is downward wage rigidity. If you reduce wages of people, they get angry, sometimes very angry to the point of strikes. If the value simply drops, they don’t get as mad. It’s as simple as that, a matter of psychology and social institutions.
There is no reason why payment for labor should be a “temporary store of labor value”, whatever that means. There is no reason one cannot receive wage in productive assets, commodities, credit and whatnot.
>There is no reason one cannot receive wage in productive assets, commodities, credit and whatnot.
You're right about that. It's called the barter system and we don't use it anymore because it's inefficient and sucks shit.
>The main reason the value of cash decays and the main reason central banks target 2% is downward wage rigidity. If you reduce wages of people, they get angry, sometimes very angry to the point of strikes. If the value simply drops, they don’t get as mad. It’s as simple as that, a matter of psychology and social institutions.
No, it's because if cash has a fixed value, then the "temporary" part of labor storage goes away and the economy grinds to a halt.
> You're right about that. It's called the barter system and we don't use it anymore because it's inefficient and sucks shit.
Barter sucks because of coincidence of wants. It doesn’t suck because paying in S&P500 ETF doesn’t correspond to magical temporary store of labor whatever that is supposed to mean.
> No, it's because if cash has a fixed value, then the "temporary" part of labor storage goes away and the economy grinds to a halt.
What would grind to a halt exactly? Sorry, plebs, only rich people are allowed to be paid in stocks and other non-inflationary assets. You have to suffer, otherwise economy grinds to a halt!
>It doesn’t suck because paying in S&P500 ETF doesn’t correspond to magical temporary store of labor whatever that is supposed to mean.
How many shares of SPY does a car cost? Before you answer that, you cannot convert any value of this into currency first. I certainly can't answer it!
>Sorry, plebs, only rich people are allowed to be paid in stocks and other non-inflationary assets.
Rich people are paid in cash. When the CEO of a company gets $10m in stock grants, nobody involved in the transaction is working on number of shares of stock, they work with dollars and figure out how many shares they need to meet that number. If I get a $500 bonus from work and immediately buy a few shares of AAPL, there's no fundamental difference between that and me getting a $500 stock grant of AAPL. They're even taxed the same.
> How many shares of SPY does a car cost? Before you answer that, you cannot convert any value of this into currency first. I certainly can't answer it!
How many wons does a car cost? Why would I know it? You seem to keep missing the point that the unit of payment doesn’t need to be inflationary. And that there is no magical requirement for it to be a temporary store of labor value.
> Rich people are paid in cash.
You confuse a store of value with a unit of account.
> If I get a $500 bonus from work and immediately buy a few shares of AAPL, there's no fundamental difference between that and me getting a $500 stock grant of AAPL.
Ok? If there is no fundamental difference then how is swapping one for another supposed to bring an economy to a halt?
There is no reason why payment for labor should be a “temporary store of labor value”, whatever that means. There is no reason one cannot receive wage in productive assets, commodities, credit and whatnot.