Hacker News Reader

Comment by mindslight | Hacker News Reader

> in 1 year, your money actually buys you more than it did last year, let's say for instance, 2% more. Under this weird environment

It's worth pointing out that this is not "weird", but rather the natural state of things! The effect is so strong in computing that we still see it, but technological progress means everything in general gets easier to produce.

This policy that "prices must always go up" is itself the aberration, instituted to keep the plebs working "full time" and to undermine their ability to save.

View on HN

I don't think deflation is the natural state of things. Even before fiat currency the money supply grew (e.g. gold mines) and we had inflation.

Productivity growth is normal-ish, but the amount you prices have been all over the place throughout history.

Gold mines were not the major cause of inflation during the pre-fiat era. It was almost always deducting the precious metal content of the accepted currency, often to fund things like war.

Deflation should be the natural order of things; for example the unit real cost of food had gone down massively since the first half of the 20th century, which is a huge part of why people don't starve to death during recessions anymore.

>Deflation should be the natural order of things

Yes, and it is, for existing unchanging things. But as productivity grows we invent and buy new and improved things.

I think you’re missing the meat of the argument: relatively speaking these things get cheaper over time. Bread has never been cheaper for most people. The average person can buy 2000 kcal for a few percent of their daily wages. However, in absolute terms, a few bucks today is many multiples of what it would have cost a century ago. The difference is that the increase in wages outpaced the increase in the cost of bread. And that is precisely what drives inflation. And that’s why talking in inflation adjusted terms (“real” terms) is so important. So even though bread costs 10x more than it did a century ago because people are earning 20x more so it’s actually cheaper. Compute works the same. Technological progress makes things cheaper in real terms and this is how quality of life improves.

You can have inflation as a market result though.

A lot of economic activity is adversarial and negative-sum. In the best case it's negative-sum but a multiplier of over 1, like police work. In the worst case it's value-destroying Uber vs Lyft wars, where companies spend on guns to fight each other with, which effort is forever lost for butter. Digital marketers are the soldiers in these battles, along with lawyers and security people.

In other words, just because everyone's rich doesn't mean there won't be someone willing to pay a lot of money to get more of the pie. Which leads to good scarcity (both from a smaller overall pie and the public having less access to it) and more money flying around, and boom, inflation.

We are in this situation today.

I think your natural argument rests on the idea that money is somehow a time-independent measure of "effort" but I don't know if that really makes sense.

I agree that is part of my argument. People certainly treat money as if it should be a time-independent measure of effort. Is there another objective metric that you can imagine money representing?

I do not think it makes sense to insist that money can only ever be subjective based on the possibility that transients can occur - eg a factory burning down does cause natural price inflation, but this is an exception rather than the rule.

I don't think have the luxury of imagining a metric that we wish money to represent any more than we can say that "the number of rats in New York" means anything in any abstract sense. The value of money is an emergent property of what people do with it and if its numeric measure fails to track our selected "objective metric", it's the fault of our metric, not money itself.

Objective measures are necessary to independently judge the actions of the people in charge of the money supply. To write off objective standards is to hand them an enormous amount of unchecked power, power which will invariably be abused for their gain.

That is both how it is viewed by the 90% and how it is treated by the entire system. This is the source of "Time is money".

> It's worth pointing out that this is not "weird", but rather the natural state of things!

Except in health care, education, and real-estate - all three of which are needs more fundamental than personal computing or electronics.

This is a correct and fair observation. How we measure inflation is complex and widely speculated to be gamed by governments worldwide.

Reply on news.ycombinator.com