Wednesday, July 11, 2012

A store of value

Well here is a potential effect of inflation that never occurred to me before.
A second factor that I think has been much underestimated in the promotion of the most naked self-seeking is the now more-or-less permanent unsoundness of money as a store of value. No one can trust a dollar – or any other currency – to hold its value, bearing in mind that asset inflation is inflation like any other. Therefore, in order to secure ourselves against future impoverishment, we need to accumulate vastly more than we should if money were a real store of value. We must all speculate if we do not want to condemn ourselves to poverty. The unsoundness of money shifts the bell-curve of greed to the right, so that more people become what would formerly have been thought of as extremely greedy; while even the other-worldly now fall into the category of speculator.
Two effects of inflation are decreasing the value of debt and encouraging investment. But two other effects of inflation are decreasing the value of your retirement account and encouraging speculation, since you have to beat inflation unless you want to be eating grass. And pension plans have the same problem, I think, since their dollars are also declining in value.

And on a side note - How does this work with grace? I guess since there is a superabundance and it is freely given, the price can't decline. But then people talk about cheap grace? If I'm storing up treasure in heaven, do I want the price of that treasure to go up? Or does that not matter because the value is infinite? All very confusing. I guess that's why we should only apply economics to systems where there is scarcity.

The article also has some interesting things to say about the tendency and morality of banks screwing people over and holding their funds for long peroids of time somewhere in Jupiter space in order to earn interest on them. Seriously, I could use Voyager 1 as my communications method to transfer money across an international border and it would still be faster than using my bank, and Voyager 1 may not even be in the Solar System.

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