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I mean, transport rather than translate; and the future hasn't happened yet, so it's speculative and entrepreneurial rather than "scientific"/trying-to-be-accurate.
If we can't compare the purchasing power of a dollar today with a dollar from 1950, how does money work at all?
This strikes me as a temporal issue, Misesian Regression theorem style... As in, by holding money I continually (say every day) reassess my decision to do so with knowledge of the market prices out there and goods on offer. I never have to make a 75-year comparison across economic eras. That should make a difference eh?
But this is curious isn't it? Translate versus transport. The point of money (at least a little) is to transport value.
Now, I have a quarter that was minted in 1936. If I take it to the store, I can't hardly buy what I could have bought with it in 1936. Bad transport of value. We want Bitcoin to fix this.
As we said in another thread: I got paid in Bitcoin last year. Bitcoin went down. Now I've got less purchasing power. That's frustrating, maybe even it makes Bitcoin bad money. Some kind of fixing.
Ideally, my purchasing power would be preserved. If it is, my sats today would be able to purchase as much as when I got 'em. I thought this is some of what we mean when we say something is a good money--it holds its purchasing power across time. If it does, wouldn't that tell us about the relative prices of other things? Transporting value is how you can translate it.
I've been spending way too much time with the regression theorem -- as you will see Monday or Tuesday.
I got paid in Bitcoin last year. Bitcoin went down. Now I've got less purchasing power. That's frustrating, maybe even it makes Bitcoin bad money. Some kind of fixing. Ideally, my purchasing power would be preserved
Exactly that. Preserved PP is like 90% of the argument for why bitcoin is better money, and why we ought to save in it rather than some other broken asset.
...and then it doesn't do that, indicating how poorly it functions — no matter how beautifully we may paint its world-domination future. Shit is dead, eh
Re: prices telling us. I suppose you're right here, because if we take away monetary effects on nominal prices all that remain is the real changes. So yeah. That's at least partly how bitcoin, and even more so gold, can make economies function better.
@remindme in 3 hours.
Gotta go watch the handball game first
It's funny because isn't translating value from the present into value in the future one of the main reasons we use money? Money is something you use because you believe (hope) that it will have purchasing power in the future. Isn't it supposed to carry value across time?
For instance, if I am deciding whether I want to go on a trip this year or buy bitcoin, I might be thinking about how much bitcoin could be worth five or ten years from now. Aren't I trying to translate a monetary value from now to a monetary value in the future? Or in the case of a business deciding whether to sell equity to raise capital or to use a loan to finance some expansion -- how else can they make the decision except by translating monetary value now into monetary value in the future?
I'm sympathetic with your points about finding it very difficult to compare life now to life in 1840 and know which is better...but I worry that another way to phrase the statement is "It's difficult to compare the purchasing power of a pound sterling now and a pound sterling in 1840." So now I'm going back on myself.
If we can't compare the purchasing power of a dollar today with a dollar from 1950, how does money work at all?