Topic: Inflation and Deflation of Price and Money Supply - page 46. (Read 1456828 times)

No.

Price-Inflation = increasing prices.

Price-Deflation = decreasing prices.

That's all actually. A Bitcoin (and any other unit of money) loses/gains purchasing power as a result of increasing/decreasing prices of goods and services.

Inflation =/= bitcoin stock market rate goes down.
Deflation =/= bitcoin stock market rate goes up.

Pretty sure we had a QE coin at one point and it was an excellent demonstration of value dynamics within that system


I think they can both be equally worthless.    The main point would be a written contract, in reference to dollar debt there is not fixed worth to 'the promise' only the idea of exchange or release from taxes within that nation and that relys on trade being in demand.  [If you hold a trillion of this promise, this is a worry and a liability]   Russia perhaps has a problem with this now as its main trade is oil and gas which has become too expensive to produce relative to their competitors retail pricing. It could apply to dollar also as USA is perhaps also too singularly reliant or leaning on one effect to balance the rest of its economy.
 
  I think December registered the largest ever manufacturing trade deficit, yet its not a problem while we are propped up and China can just make things for us.   China has their own problems and the West cant dictate how factors play out just as Russia could not dictate outside its borders and is weak

You all may be very interested in my new Federal Reserve of WIP coin, which is centralized and by fiat.  There is a discussion thread in here as well.

It is not stranger than your concept of debt without obligation, liability or engagement :-)

You forgot to quote my footnote.  Here, I'll post it again:


P.S.  LOL.  "own" some of his sympathy?  That's your idea of property?

It is a very good example because again it explains the difference between debt and property !

If I did something for a mob boss, and we wrote out clearly what he's supposed to do as a favor for me, then he has a debt.
For instance: "ok, I will give a false testimony to the police about when you robbed the bank to make you go free-out, but in return, you will go and smash the shop of my competitor, understood ! "

and I give my false testimony to the police, then the mob boss has a debt: he has to smash the shop of my competitor.

On the other hand, if I just propose to give a false testimony, to win his sympathy, with the idea that one day, he will return the favor, then there is no debt.  However, I own abstractly some of his sympathy.  That could be an illusion on my part.  I may have invested wrongly in what I think to be the sympathy of a mob boss, with the idea that one day, I might ask him a favor.  But if on that day, he laughs in my face, then I just invested wrongly. 

This is btw, something people do all the time.  You invest often in doing things for others, with the idea to build up a capital of sympathy.  But there are no guarantees of what it is worth.  You have simply the ownership of a very abstract entity which is what you think to be sympathy.

You often do that as an employee.  You do overtime, you work harder than you are supposed to contract-wise, with the hope of building up a capital of favor with your employer.   You can then ask for a raise.  But the employer doesn't owe you a raise.  He will only give you a raise if he thinks that this will motivate you further to invest your overtime in the company.  Not for what you have done.  Only for what he thinks he will still get out of you.  Your investing in overtime is not a debt of your employer you are engaging.  He didn't promise anything.

It would be different if it were like this: "OK, if you can finish this projet 2 months earlier than agreed, you will get a promotion".  NOW, there is a debt from the employer to you, if you succeed.  If you don't get the promotion, you can rightly complain: "hey, there was an agreement !".

If you did overtime, and then you ask for a raise, without such an agreement, you may get as an answer "I didn't promise anything !".

So in one case, you are the abstract owner of some sympathy capital (you think you have gathered), which may be worth nothing after all ; in the other case there is an agreement, and hence a debt.

Ok, but then I can play that game too.  "property of asset X by Y" is then:

A = ABSTRACT ; B = X ; C = Y

If I own a house, we can then say that abstractly one owes me a house, and I am enjoying the usage of that debt.

You can make it even more fun, and in fact define property as: A = Y, B = X, C = children:
if I possess a house, then in fact I owe a house to my children or who-ever comes after me when I will die  :-)
What defines property then, is the debt I will have towards my children if I die right away (because they will inherit it then).

Once you start emptying a concept from its fundamental characteristics (you call it "abstract") you can just say anything !

What is essential to me in the concept of debt, is that A and B are not abstract, and that punishment of some kind follows if it is not honored.  Otherwise it is not distinguishable from other concepts.

You can accept abstract units when it suits you, but only when it suits you.  The dollar doesn't need to have a fixed exchange rate to bread, nor does it represent a fixed fraction of all production, but it can have an abstract value of "whatever I can get for it".  This does not depend on any particular concept of money.

If a mob boss owes you a favor, do you imagine that there is no debt because there is no fixed exchange rate between "a favor" and loaves of bread, or between favors and global production?  You could argue that this isn't a debt for whatever reason, but if you ask a bunch of random people, I'm sure you'll find that pretty much everyone considers this to be "debt".*

I actually covered this, long ago, so I'm just going to recap and skip to the end.  Debt is of the form "A owes B to C".  Where we disagree is that you think that the essence of debt is in the nouns A, B and C, while I think it is the verb, "owes".

Mortgage: A=homeowner, B=cash payment stream, C=bank (in reality C is usually investors via a MBS)
Mob favor: A=mob boss**, B=(ABSTRACT), C=poor shopkepper
Bearer bond: A=bond issuer, B=cash, C=(ABSTRACT)
Dollar: A=(ABSTRACT), B=(ABSTRACT), C=(ABSTRACT)

* You can define debt narrowly and declare everyone else to be wrong, but this is folly.  Economics is ultimately the study of people.  If you disregard them, you are just jerking yourself off.
** If the movies are accurate, A can be abstract here too, as a son may well honor a favor owed by his dead father, or an underling may attempt to extinguish the debt without letting it get to the top.

visibly 

You need to have the last word, eh?

Yes, this is about semantics, but I am coming from completely useless Faculty of Economy, where the people fucked up everything, but the wiser can see what money is..

Money is the debt. The IOU that is widely accepted (as money). [Exactly as kjj wrote]
That is the essence of money and everything that will behave like that even in post_BTC future will be money.

Then there are some physical attributes of money, like the ability to be easily divided, durability and all those things, that are, in fact quite uninteresting. The "ptolemaic" theory is the only interesting here. Because all the attributes from "heliocentric" are just some physical atrributes. It does not go after the essence of money.

The essence is the only important thing here. Nobody can define symbols literally. It is the same as reading Bible and either argue, that it is all nonsence, because the events described there could not happen, which is idiotic. Or trying to persude ourselves, that dead people can be resurrected into life, walk on water etc. That is the same idiocy. And such idiocy prevents people to understand the concept of money (or religion - so they become either orthodox idiots or the same atheistic idiots). The key to understanding to world is to understand what symbol is.

If this is close to anyone, read this: http://www.amazon.com/The-Power-Myth-Joseph-Campbell/dp/0385418868 . Campbell really hits the head of the nail with explaining what symbol is.

I understood that that was the "debt based" view on money, and I also saw it like that earlier on.  When you receive money "society owes you something".  When you spend money, you owe society something.  Wait. No.  You already did something  for society !  If you give money to somebody, you have already earned it !  You don't have anything to do for him anymore !  Yes, you can argue that you just transmit the debt society owed YOU when you earned it.  I also understood money that way, long ago.

You could then think that money is just the accountant of all the partly indirect trades that are underway:

I would like apples for eggs.  I give you eggs.  You give me a piece of paper "good for apples from Joe".  With that paper, I go to Jack, and give him that paper, in return for eggs.  Jack gives the piece of paper to Jeff, to repair his car.  Now Jeff is entitled to obtain the apples from Joe.  But that piece of paper goes on and on and on.
As nobody really trusts Joe, we replace it by a "generally recognized piece of paper" that we call money.

That was my view on money long ago.  Money is the debt society owes you when you earn it, and the one giving it to you is just transmitting something society owed HIM, so it is not himself who is liable, but "society".

It sounds nice, and I saw it that way for a long time.

And then comes the problem: you cannot explain any behavior of money that way.  You cannot explain inflation or deflation.  You cannot explain exchange rates between different monetary assets.   If society owes me "a loaf of bread", but then they don't really owe me a loaf of bread, but rather whatever they are willing to give me in return for my unit of money, the concept of IOU with money goes beserk.  There is no possibility to have inflation or deflation with such a view, as what society owes you can only do two things:
- remain constant  (if society owes me a loaf of bread, then hell, it owes me a loaf of bread !)
- inversely change with economic growth (if society owes me a billionth worth of what is produced, hell, it owes me a billionth worth of what is produced).

There is no way in which one could "determine the price of money" by looking at it as a debt.
Hell, hyperinflation is not possible in that case: a debt is a debt !

By viewing money as an asset, of which the price is set by offer and demand, the behavior of money is much, much, much more understandable.  In other ways, it is a much more useful theory.  One can understand mechanisms concerning money which are well explained by price setting arguments, which are totally mysterious when seeing it as a debt.

"Debt" is the Ptolemaic theory of money ; "asset" is the heliocentric theory of money.  Both can explain why we see the planets move in the night sky.  However, the Ptolomaic theory falls on its face when we see the moons of Jupiter !

There are aspects of money that can be explained by both theories.  But the price setting of money can only be explained by money as an asset for which there is demand and offer.

When debt-based, you would then think that any form of inflation or deflation is "robbery".  It isn't if you understand that the price of money can be volatile.  That it depends on the desire of people to store value, or not (which can change according to mood).  That it depends on the production of it, and the eventual destruction of it.  That it depends on how much the asset is chosen as money over another asset or not.

You could explain the course of the west-German Mark circulating in Czechoslovakia in the good old Soviet days.  You can explain the course of cigarettes in a prison.  All that is not possible with the debt based view.  At a certain point, you have to recognize the superiority in explanatory power of the heliocentric model, even though you can add as many epicycles to the Ptolemaic system as you want.

 

It must be a commodity in the sense every unit must be perfectly exchangeable with any other units.
It doesn't matter if it is a material good or an immaterial one.
It must have some specific properties in a degree high enough and the commodity with the higher degrees of these will be adopted, in the long term, as money.

Debt is not perfectly exchangeable for other debt. If you owe me a loaf of bread it is not the same as dinofelis owe me a loaf of bread. I must evaluate your ability to pay the same debt and one will be ranked higher than the other, so one debt will be worth more than the other debt even if they nominally they are identical.

Fiat money, indeed, is a commodity. It is just a very inflatable commodity. And the government is the agent able to inflate it at will.
It severely lack in the "noncounterfeitability" aspect. Gold, instead, it is better in the "noncounterfeitability".
The advantage of paper money is in "transportability" where gold is a lot more difficult to move around.
In fact, paper money was born when instead of moving the gold from a bank to another they simply exchanged the title of credit for that gold.

Fiat money keep its value if the government do not print more units that it take back. If it is a limited commodity.
Postage stamps and phone time can be money. They also are debt of a third party.

Agree.

This is another definition of money


Could a debt have these characteristics?
I think not.

Durability (1) is the main characteristic of money that debts lack because if the debtor die the debt die with him.
But a gold coin retain its value even if the people that coined it disappear. A gold coin retain its value even after 2000 years or more.
The same can not be said of paper currencies.

Ok, I think I'm starting to see where you are coming from.  I think it is again a matter of semantics.  I think you are in fact calling "money" what I would call "price". 

Let me try to formulate it like this.
In a barter system with N different goods and services, there are of the order of N^2 markets and hence just as many prices (exchange rates).  However, one can assume that some transitivity is to hold, in that if A trades for 5 B in the (A-B) market, and B trades for 6 C in the (B-C market), then, although it would in principle be an independent market, A will probably trade for around 30 C in the (A-C) market, simply because of the arbitrage opportunity if it weren't.

As such, if there is transitivity, you can define a kind of "potential function" that expresses the exchange rates of everything with respect to a single reference.  That reference can be just anything.  It could be a commodity, or you could make it up.  It is the "unit of price" then.  Maybe that's what you understand then by "money": the fact that transitivity of prices implies a universal "price function" of which you can pick the unit (by convention).

Well I just quoted his definition of commodity where he quoted.
It is his definition and he claims that money has to be THAT commodity.

And I am saying no, that is not right.

What you write might be perfectly true, but the discussion is about money. And money is nothing from real world, where belongs for example economy. The real economy indeed needs money, but no one should think about money in the common material way. Money can never be understood via materialism. Money is special kind of human symbol, which can be collectively imposed on asset, commodity or many other things like maybe even blokchain. Inner material value or usability or something like that (yes, nitpicking aside) is not needed. What is needed is the common belief in money and exactly that belief and nothing else creates money itself from Satoshi's joke or from cigarettes in prisons.

If I were Slavoj Zizek, I would compare money to God. He would say: of course God does not exist, but if people start to believe in the obviously stupid idea that God exists, they would create church and one day they would surprisingly find the God in that church. Thank God I am not Slavoj Zizek.
https://www.youtube.com/watch?v=80X0pbCV_t4

There is stupid joke of economists that describes perfectly what is money is and is the same what would Slavoj say:

What would be doing economy without money? Inventing money.

I can't speak for painlord, but I think he means by commodity "asset",  that is "object to which property can be assigned".  It doesn't need to be a material object, it can be a conceptual object too.

A commodity usually implies some materialisation.  But this is nitpicking.

Why does one desire to have property of an asset ?  Why is one ready to provide effort, to provide other assets in order to acquire property of the desired asset ?

There are 3 motivations:

1) the asset is a consumption good (education, joy, entertainment, food, objects to show off with...)

2) the asset is a capital good (with which it is possible to produce other assets)

3) it is speculated that the asset will be tradable for other assets

Of course, 2) and 3) are "indirect" desires in order to provide more with 1) in the future.  The desire for them is simply part of a plan.

Asset is the object of property, and one of the characteristics of property is the right or the power of denial of access to others.

Good. It is vital to fork debate to nonsense, only because you want money as commodity.

While I can imagine the paper US dollar to serve as input for toilet paper, it is beyong my imagination what input can be digital money (botg cryptocurrencies and digital fiat).

There were many kinds of money in history like shells or stones, that were no way commodity (although such money is in very stupid way called commodity money and mixed for example with barley, which was commodity [and money]). The only purpose of those artefacts was...to serve as money. Same case as fiat money or BTC, the only difference is that fiat or BTC is not pshysical. And that was part of the monetary evolution. From physical money to something we can not touch.

You still mix it up with the commodity. Money of course is the symbol that people gradually agree on, that serves as money in long term! If something - in your case commodity - is accepted as money one time, it does not mean it really is money. Money by definition need to be accepted by most and in the long run. Therefore BTC btw. is not money yet. Commodities on the other hand have big disadvatage to serve as money especially in modern societies. This is why states with fiat money won over the states based on gold.

I understand completely the mindfuck in human brains. We see that money is in the middle of all real economy, so brain does not want to accept that themoney can be somewhat less real. And if it is less real like the fiat, then it is evil. Unfortunately such approach is just the mindfuck.

Well it is necessary feature of any money. All money can be seen as debt and debt is the reason why money exist. Today I do my work as car washer for example and because of specialisation, I am not directly rewarded. I get money instead. Form of IOU in special way that everyone accepts. Later I will pay to third party. That is the basics of economy and even thousands years ago it worked like that.


Do you think that teenagers think about some past link to gold? No. Most people accept money only because other people accept the same money..as money. Most people do not think even that deeply. Part of the people fall like you under very false rationalisation that there is or should be something behind money, but that is it. In the past people needed the false impression that money is backed more, but today, with complexity of the world, people just give up and use what works (it can be USD, smartphone or BTC). For money to exist it is not important why people believe in them. It is always some made-up mythology bullshit. The important thing aboutmoney is that people believe in it.

So that is why hopefully BTC can exist as currency. Postmodern people do not ask questions "how" or "why". Those questions make no sense by money. Money is 100% tautology. Money is money because it is money. If something is not money, then it is not money. Fortunatelly for BTC, most people now are so shallow, that they will swallow it and money can be freed from the quasi-state, where it had still pretend some pegging to gold or so.

I was trying to be nice and live myself into the "debt" paradigm you are proposing.   Consider that loaf of bread any inflationary slice of bread one may obtain from it.  But if you want to go into details:

It comes then down to an IOU whatever you will get for it, maybe even nothing.  Now that's a debt notion I would like my bank to consider too !
I have a mortgage, and my debt to them is whatever they will get from me, if anything, they'll find out the day they ask me :-)
Money is a debt for which you will get in return whatever you will get for it, if anything :-)

It is a debt of just whatever, or maybe nothing.  Now THAT's a useful view.