Quote from: ChicagoSchooler on February 21, 2015, 01:41:28 PM

Quote from: kjj on February 21, 2015, 04:31:24 AM

Nonsense. You are claiming to have stabilized the prices of "all goods", but in reality you've stabilized the prices of none of the goods.

More appropriately, it would be "the general price level" that's stabilized.

"The general price level" is a phantom. It exists only as a phrase we use. It isn't even an abstract thing. No one can describe it adequately, nor calculate it.¹

Quote from: ChicagoSchooler on February 21, 2015, 01:41:28 PM

Back to the thought experiment, if I, alone in this universe, bought 2 gallons of milk for 1 MØ each & 2 dozens of eggs for 1 MØ each, later 1 gallon of milk for 2 MØ & 4 dozens of eggs for 0.5 MØ each, then the general price level has remained stable during large shifts of supply & demand of milk and eggs.

Lucky you to live in a universe where money is not subject to supply and demand.

Quote from: ChicagoSchooler on February 21, 2015, 01:41:28 PM

Quote from: kjj on February 21, 2015, 04:31:24 AM

Your goal, of course, is to have a stable value for the unit of currency. This is a fool's errand. There is no objective yardstick against which to measure the currency. The best you can do is make a basket, but then you are just measuring your own biases, and you'll wake up tomorrow with an obsolete basket because the world is not and cannot be made into a static system.

The Fisher Index has already mostly accounted for the shifting basket as in the above thought experiment. The ~~optimal~~ correct inclusion of goods & services is still unknowable.

Fixed it for you. The "correct" basket isn't possible. "Optimal" is only meaningful from some particular subjective point of view.

Quote from: ChicagoSchooler on February 21, 2015, 01:41:28 PM

Quote from: kjj on February 21, 2015, 04:31:24 AM

In your example, you imagine that "your best labor" is a worthwhile measure, but it isn't. While you were sleeping, someone has invented a machine to make your job easier, devaluing your labor, or someone has retired from your profession, decreasing supply and increasing your value, or something. That your labor can "still demand" a set price is an abomination, not a goal.

Of course, but that introduces new complexity into the thought experiment's universe; nevertheless, the quantity theory of money does account for increases in productivity.

I don't think that many bitcoiners are looking for a prescriptive theory of money that involves privileged actors. And I'm not aware of any (non-trivial) predictions that it makes as a descriptive theory.

1 One may object that we can construct a basket and calculate it. This is not a calculation of the general price level, but a calculation of that particular basket, and not of "the general price level". You could define the basket as "everything", but that isn't calculable either, not even if you had perfect knowledge about all economic transactions, because transactions occur in lumps and smears, rather than flows. You'd need to slice up time, and now you are just calculating that particular choice of time rather than the general level.