[bko]

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure.

Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technological progress.

The argument that prices can't get cheaper or [bad thing will happen] was never very convincing to me. Prices already do get cheaper for large swaths of the economy that have technological progress grow faster than money supply. Cell phones are rapidly depreciating. You can wait 6m to a year and get a significant discount on the latest iPhone version. People don't stop buying iPhones, and Apple doesn't stop investing in iPhones. This is even more true w/ AI models. Investors/companies are burning billions to build tech that will only get cheaper and obsolete in years if not months.

So if you were to try to convince me that deflation would reduce investment or spending, tell me why this doesn't apply to tech products that get cheaper every year.

[margalabargala]

> Imagine a world in which prices regularly go down

That world results in a lot of people individually deciding "why buy now, when I can buy for less later" and sitting on their money.

That in aggregate makes the economy much worse.

You're up against human nature here. Money may be an arbitrary numerical denomination of value, but people's behavior around it and how that affects the economy at large need to be accounted for. Having prices slowly creep upwards over time (low inflation) tends to result in more, better things sooner.

[bko]

Keep reading the comment.

Why do people buy iPhones today knowing that they can get a significant discount in 6-12m for that same iPhone

[margalabargala]

The state of tech goods is such that they become obsolete and have a finite lifespan, due to battery and compute needs, as well as the "fashion" element of having the newest thing.

The price is dropping over time because you're getting something literally less valuable. The analogy would be, would you pay the same for a bag of rice expiring in 2 years, as one expiring in 2 months?

The argument you're trying to make, would be valid and convincing if Apple lowered the price of a new iPhone with each subsequent release.

[bko]

Finite lifespan and batter don't degrade on a new iPhone that happens to be last years model.

The "fashion" element is BS. Almost no one can tell what iPhone is which.

It's literally the same phone now or 6 months from now. It doesn't "expire". You're really stretching here.

Same thing is true for Android and pretty much most electronics or TVs.

[margalabargala]

Okay, sure, if you don't personally value the things other people value that decrease over time, then it wouldn't make sense for you to buy things at full price.

Other people value those things, and can in fact tell the difference, and thus buy full price iPhones.

[bigfishrunning]

Because an iphone is a status symbol, and in 6-12m that same iphone won't grant the same status, a newer more expensive one will.

[bko]

Same applies for Android phones and TVs and most electronics.

[boppo1]

>That in aggregate makes the economy much worse.

Does it really? A lot of our problems seem to stem from conspicuous consumption. People will still need things (food shelter clothing) and that will motivate purchasing. "Oh n0es people won't buy flavor of the month consumer garbage, what ever will we do" just doesn't track.

[margalabargala]

> Does it really?

It does, really.

Conspicuous consumption is a miniscule part of the economy, and for every person whose conspicuous consumption drops, you'll have 5 people who can no longer afford food and shelter.

If you'd like to learn more, I'd encourage you to take an economics class at any local community college. Intro level should teach you about lots of new things including this, much more than you'd learn reading HN comments.

[boppo1]

I took multiple econ classes in college. Just because it's in the books doesn't mean it's true. Not to mention some of the books we studied were contributed to by people involved in the interventionist monetary regime. LIRP scooped the guts out of the middle class & handed it to the tech industry and I've seen nothing convincing to the contrary. Expecting everyday people to learn about inflation and manage a portfolio to try and make sure their earnings aren't eroded is borderline class-war. And I'm no socialist.

[margalabargala]

Did you miss the part in the classes where depressions happened ever decade or two before current policy?

Those who refuse to learn from history are doomed to repeat it. History spent a lot of time being deflationary, and most of that time had abysmal economies for anyone who wasn't nobility.

[throw0101d]

> Prices should get cheaper.

Does that include the price of labour? Are you okay with your salary going down? Because the historical record shows that's what happens during deflationary periods: producers of good/services see the price that they can sell things for goes down, and so they insist on their suppliers and inputs—including labour input—reduce their prices as well.

[bko]

Why would it go down? The person is becoming more productive? Do employees at Apple salaries go down because the iPhone they're working on is worth less every year?

Again, tie it to things that decrease in price over time.

[throw0101d]

Let us say a farmer had taken out a mortgage in 1928, and let us say his mortgage payment was US$20 (equivalent of 1 oz. of gold). In May 1929 he would have had to have sold 114 pounds of cotton to earn $20 (or 18 bushels of wheat, 23 of corn, 44 of oats). By May 1932 he would have had to sold 369 pounds of cotton (or 38 bushels of wheat, …):

* https://www.sciencedirect.com/science/article/abs/pii/030439...

* https://econbrowser.com/archives/2012/02/why_not_abolish

If he had 4 farm hands and paid each $5 (total $20), that's a lot more crops that need to be sold to cover payroll; or he could cut staff.

And it would have been the same for selling any good or service: to pay whatever debts you had (mortgage, car/business/student loans) you would have to work more to earn the same amount of money. Or a company that makes widgets needing to pay the same wages: sell more widgets to cover payroll, or reduce payroll (per head, or total heads).

[OnlyANeurosci]

> I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal.

Gimme all the gold contacts in all of your electronics please, we shouldn't be using gold for those I guess....

[dessimus]

>Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper?

This can only really happen if the rate of efficiency gains consistently out pace resource and labor costs, such that the marginal cost of delivering produce to market is flat or decreases for the farmer over time.

[wwweston]

Tech product price dynamics benefit from a bunch of things that food doesn’t: they’re optional purchases, they’re early stage developments which have more low hanging fruit, and purchase price can be subsidized with later plays (subscriptions, data sales, network effects, freemium to enterprise pipeline).

Also - I think if you look at the data you’ll find periods off the gold standard where food prices grew more slowly than inflation and even wages, ie food becomes cheaper. 80s and 90s for example.

[skywhopper]

If prices get cheaper all the time, there would be no way for anyone to ever borrow money. Tech products like phones used to get cheaper because 1) they start out at a wild markup; 2) they have intense competition by rivals to build the latest and greatest; 3) the ability to make things faster/smaller continued to increase. Those factors are non-existent for most industries, and they are reducing in effect for tech products over time.

[triceratops]

> We get better at growing food every year, why shouldn't food get cheaper?

It has gotten cheaper, as a percentage of people's income and spending.

[ramesh31]

>"We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down."

Because a lot of people earn their living by producing or selling food. Your other necessities don't become more affordable just because food prices go down, but if that's your livelihood it becomes at risk. Food was incredibly cheap during the great depression. There's an amazing quote from the PBS documentary series on it; "A sack of flour cost a nickel, but where were you gonna get a nickel?". Steady, controlled inflation via fiat is the only way to keep a capitalistic economy functioning, because you can't micromanage or control the price of everything, and people need money to live. The real issue is stagnation of wage growth while assets explode. It's the transfer of real wealth from earners to owners that has put us in the current position, not absolute prices.

[wolpoli]

Recall that real interest rate = interest rate - expected inflation. The goal of the central banker is to keep real interest rate low. If you have negative expected inflation, that sets a lower bound on the real interest rate since interest rate could only go as low as zero. This gives less flexibility for monetary policy to handle crisis and that scares the central bankers.

[chadgpt3]

I suggest a bread standard. It's more useful than gold, and it worked in Brazil.