Imagine your boss factoring in a standard pay cut for everyone each year, to keep ip with deflation. That would be so demoralizing.
Is that any different than a standard pay raise to keep up with inflation? Other than the number getting smaller but if you standard of living stayed the same or went up, does the smaller number matter?Imagine your boss factoring in a standard pay cut for everyone each year, to keep ip with deflation. That would be so demoralizing.
Negative interest rates! To keep with the analogy, imagine having to pay your boss every day for the privilege to work.Is that any different than a standard pay raise to keep up with inflation? Other than the number getting smaller but if you standard of living stayed the same or went up, does the smaller number matter?
It isn't what we think about our "money". It is how the government and banks can manipulate our "money" in the name of monetary policy.So much of our notion of value is already based on fiat and notional money.
You're a billionaire. Net worth = assets - liabilities, not liquid assets - liabilities.Does it really? So much of our notion of value is already based on fiat and notional money. If I own a bunch of Tesla stock am I a billionaire or just a potential billionaire?
Doge Coin slippers!It might be time for a Wizard of Oz reboot, this one with a modern monetary policy allegory about crypto currency instead of precious metals.
(Come on and ease on down...)
Until musk tweets something silly and your stock tanks. Is it really an asset or a liability?You're a billionaire. Net worth = assets - liabilities, not liquid assets - liabilities.
It’s an asset. You can borrow against it.Until musk tweets something silly and your stock tanks. Is it really an asset or a liability?
It's not a liability unless it's a debt someone can collect from you, and shares don't work that way. Worst case, the company goes into bankruptcy and the share value goes to 0. It can't go negative; no matter how badly the company does, if its assets are wiped out, the creditors can't collect against other assets of the ownership. That's like the entire point of a limited liability corporation, and where the whole "limited liability" part comes from. Our ancestors figured out that debtors' prison tends to stifle innovation.Until musk tweets something silly and your stock tanks. Is it really an asset or a liability?
I'm fully aware, but that's irrelevant to the point I'm trying to make here. The point is the general concept of limited liability.FYI, most companies listed on the NYSE or NASDAQ aren’t LLCs
Right, but if you borrow against it and your lifestyle depends on it then you're hosed if it goes to zero because you can't pay a mortgage off of zero.It's not a liability unless it's a debt someone can collect from you, and shares don't work that way. Worst case, the company goes into bankruptcy and the share value goes to 0. It can't go negative; no matter how badly the company does, if its assets are wiped out, the creditors can't collect against other assets of the ownership. That's like the entire point of a limited liability corporation, and where the whole "limited liability" part comes from. Our ancestors figured out that debtors' prison tends to stifle innovation.
The term you're looking for is "volatility."
Negative interest rates! To keep with the analogy, imagine having to pay your boss every day for the privilege to work.
It isn't what we think about our "money". It is how the government and banks can manipulate our "money" in the name of monetary policy.
Me too. But it has happened in several places including Japan.The ability of the bank to go to negative interest rates is not something I am sure I am comfortable with.