Topic: The value problem - explained (Read 4766 times)

Japan economy:

https://translate.google.com/translate?hl=en&sl=auto&tl=en&u=https%3A%2F%2Fwww.amari-akira.com%2Fdiet%2Findex.html

"Seems resilience of the economy of the "July-September period is not as strong as the expected weather anomalies also have an impact. Fact that was pointed to the water consumed in the torrential rain and onslaught of typhoons every weekend also cause Do not one of "

There was a request and that I want you to explain to estimate that, whether there how much negative impact of weather from attending ministers. find yourself was investigated in various Cabinet Office, we reached the conclusion that 1.6% much or not than depress the GDP in the average value, because it is what Nobody has done. "

Where did I say that? Can you read? 

It's somewhat predictive, roughly, and in the long run. Sadly, for the science of it, it depends solely on the minds of the actors, which is not exactly measurable. The science, if you accept that it is a science, can disprove that money velocity is relevant. It is based on the axioms and some deduction.

You mean: Show some respect for authority? No, declined. It's the root of all evil.

Re: The spending problem is totally irrelevant.

uh, maybe. The current valuation seems to depend on the utility curves of a rather small population, the hoarders. I was wondering if there is a way to predict changes in the number of btc that enter the marketplace, to be held by new hoarders. Then your valuation theory might have some predictive skill.

I'm not arguing if Keynes was right or wrong.  Just pointing out that whatever Edrogan posted has nothing to do w Keynes.

The question is what to do in a recession

Keynes:  Boost aggregate demand.  Govt should create jobs so that workers have money to spend.  But we'll have to go into debt for this to happen
Friedman:  Govt should pump more money into the economy.  Companies have money so they'll invest more.  Tide lift all boats
Hayek:  Don't do anything because OMG! NAZIS!

I find it hilariously ironic that bit coiners don't understand the economic ideas of these guys.  Keynes should be the one they embrace because he's for the common man.  Friedman the Libertarian is for big business.  Hayek, well nobody cares about him

Then stop making up shit and calling it Keynesianism

Goods are paid with goods. Money is irrelevant for production. Check out Japan of today, and you(twiifm) will see.

I've heard this shit. There is nothing micro about the pockets of the elites.

The problem with the idea that aggregate demand drives production is that aggregate demand depends on production. After all, you can't get something without producing something else to trade for it. You could also say that aggregrate supply drives consumption. The key to the conundrum is saving and borrowing. Money decouples the direct relationship between production and consumption, and invalidates many of the simplifying assumptions made by Keynesians or Austrians.

Value is a societal construct. Nothing has value per se.

That has nothing to do with Keynes.  Keynes is macro not micro.  Furthermore, Keynes isn't political he doesn't care about power of govt.  Only that govt should use its power because they have that power

Keynes says aggregate demand drives production.  In times of recession, AD decreases.  Recession can set off deflationary spiral.  Max potential output sits there doing nothing and you get rise in unemployment.  If govt can artificially stimulate AD via stimulus spending then they should.  Keynes isn't against debt, if debt is used to backstop deflationary spiral.  But Keynes also says when equilibrium is reached then debt should be paid off.  Keynes proposes that govt use their power on counter cyclical policies

I agree with the current value: If the number of users were stable, and there is not much possibility for appreciation, the current price could be far lower than it actually is. But the vision that some users have, is that the user number will expand, because of spread of knowledge and the network effect, so they take action by holding early. In general, when you look at history, the value of money is not only dependent on the money volume, base or otherwise. The perception of the future value overshadows the money volume in the short term. Just take a look at Argentina, they have had 40% yearly money volume expansion and 40% yearly price expansion, but currently, with 20% yearly money expansion they still have 40% inflation. They just don't trust the future value of the peso.

The spending problem is totally irrelevant. To me, it seems like keynesianism today is about fooling the masses into spending, reducing their self governance, adding government power and pouring their wealth into the pockets of elites. Here is the proof that spending is not affected by rising or falling value of money: All trades have two parties, one is selling stuff and one is buying stuff, money is at the same time exchanged in the opposite direction of the trade. So, if noone would buy anything with falling prices, why would anyone sell with rising prices? Why would anyone sell a coke for 2 $, if he knows that he can get 3 $ next year? Would he not load up with cokes and earn 50 %? This is absurd.

Anyway, this would only be tested when all trade is performed with sound money.

Re: value is fictional
Yes, sure. Value is fictional in the sense that it arises from a subjectivity. But a practical or useful valuation arises from a collective subjectivity, so some elements of it are more-or-less objective.

Re: the thought experiment
Yes, I wanted to have about $2K on hand (back in 1989). But this relates to the time issue -- I wanted a couple of months of living expenses. This seems like a rational approach. Maybe it is worth working out some consequences.

Currently, it looks like there are on the order of a hundred people that are active readers of this forum. Everyone is different, but I would guess, on average, this group of people would like, say $100K of btc buying power as insurance against hyperinflation of the USD. [I am wildly extrapolating from my current motivation to ~hold~ a given amount of btc. [Of course, I have other reasons for spending btc and participating otherwise.]] Based on this logic, then the market cap of btc should be 100*100K, or only about $10M. My estimate that there are 100 people like me is wrong, but it probably isn't off by more than a factor of 10. This puts the current price of btc at about $100/13 = $8/btc. Even if there are 10000 people chasing the 13M btc for $100K each, the price would be $80/btc.

Thus, either the price if btc is horribly over-valued now, or there is another group of people with a different motivation who have established the valuation. I speculate that there is a group of early adopters who feel they are nominally rich, and can't bare the thought of loosing their stash. If there are 1000 people like me, but only 1M btc in circulation (at the current price), then the price could be in the $500 to $1000 per btc range. This seems plausible to me. I don't have much of a stash, but I've only spent about 1/50 of the btc I've bought [actually, I guess I've spent about 1/4 of what I bought; but I've spent none of what I mined. Interesting psychology there.].

But do you think the hoarders will spend more freely if the valuation increases, or do you think they'll spend more freely if the valuation decreases?

-pbtc

Value is an abstract concept that has real impact. There is no contradiction in the fact that a mutual agreement can have consequences in the real world.

If you observe which things are / have been used as money, you will notice that most of these things have no or only very limited utility in itself besides the mutually agreed value. It's exactly only the mutual agreement / common belief of value that constitutes money. Using money for other things (like plowing fields, feeding livestock, wiping butts ) where it gets damaged or depleted is in fact counterproductive in regard to its universal usability as a store of value.

It is human all right. Some animals can run faster, see better, navigate in the dark, navigate using earth magnetism, some can fly etc. Some animals organize in herds. Some animals create tools and use them. Some animals can learn. But no animal that I know of engage in trade. Exchange some item of value for another with a stranger, both parties being better off.

The value is assigned to something by each human. It is real. Imagine finding yourself in a strange country, where the locals look at you with suspicion and are ready to scare you away, you are hungry and freezing. Having some value in the form of money will make a very real difference.
 

And the strategy is simple: Buy and hold.

I think I established that the demand the urge to save value for later, and the supply is the urge to hold less than you currently hold. Aggregated, the urge to hold (measured in psychical value) is the total value of all coins.

Join me in this thought experiment: Remember back in your life when you were confident that you had enough money. Maybe just after you started earning, and before your consumption exploded (for some, that might be the current time). How much value did you hold in money plus deposits, measured in some form of value (the value of a car, the value of one month of consumption). For me, I have sometimes had the value of a used car in reserve, or stated otherwise, the value of a few months of food and rent. (Later, I bought flats and so on, excess reserves went into the loan. Don't include your other assets, only money and deposits). Lets say you can decide a number for yourself.

Now, imagine bitcoin is fully implemented, most people on earth define it as money, so you are quite sure that the value is easily exchanged for merchandise or readily exchanged for fiat, and the value of bitcoin is rather stable, but prices of merchandise expressed in bitcoin are slowly decreasing (weak deflation).

In this scenario, how much value would you prefer to have in reserve in the form of bitcoin. Compared to the first number you compiled above, is it less, the same, more, or far more? For me, it is certainly far more. No need to go upmarket in housing just to build equity.

The consequence of this (in case you and others also want to hold far more value in the form of bitcoin), is that the aggregated value of bitcoin also will be far more than the aggregated value of fiat and deposits as of now. Then divide by 21 million. I could say a number, but everybody can do that, and since we don't know, any number is as good as another. But you will quickly see that the value of a bitcoin can be quite high, far higher than now.

Now I will go back to being depressed because the current price is so low...

Value is FICTIONAL. A human mind made concept. Anything can have value if people agree it has value.

Sorry to be joining the conversation so late. I read the original post a couple of days ago, and it took a while to digest.

I think the OP presents a clear and valid discussion of the value problem, as far as it goes. But it obviously skirts the question of interest to most people, which might be phrased as, "What is a logical or rational price/utility curve?"

If you have a basis for identifying irrational price curves, then you could, in principle, hypothesize an "investment strategy," which might be as simple a deciding to consume later, or it might evolve into a more complex strategy of opponent modeling and exploiting irrational prices within a market.

I don't think this contradicts the OP's points, but maybe it clarifies some of the practical import of people's urge to identify an objective basis for the value of btc.

-pbtc