Quote from: Foxpup on May 23, 2013, 08:43:50 AM

Quote from: jerye on May 23, 2013, 07:53:32 AM

I invest x today which buys one output so tomorrow I can get double the output for which the value is y. If y < x...

Hold it. If y is twice the value of x, then, by definition, y is not less than x (assuming positive values of x and y).

Quote from: jerye on May 23, 2013, 07:53:32 AM

...(we both agree in nominal terms we have less money), then it is certainly better I not invest x in the first place because y = 2 output and x > y, thus x > 2 output.

Impossible. x is 1 output, remember? How, then, can it be greater than 2 output? Oh, right, because you assumed that y < x when the opposite is the case. Roll Eyes

Quote from: jerye on May 23, 2013, 07:53:32 AM

Consider 2 periods t=0 and t=T.

Those aren't 2 periods. Those are just three ways of writing the number zero. 0 is zero, t is zero, and T is zero.

Quote from: jerye on May 23, 2013, 07:53:32 AM

Any any real positive value at time T will hold for time t=0 irregardless of the nominal value, wouldn't you say so? If I invested 10 at t=0 and get 8 at t=T and at t=T, 8 buys me 8 goods, wouldn't that 10, I spent at t=0, if saved and spent at t=T buy me 8 goods + more?

Uh, yeah. "Saving" 10 for a zero period of time is better than "investing" 10 and instantly receiving 8. Not exactly what I would call a good investment, though. Or a good savings, plan, for that matter. "Saving" and "investing" is generally something that you do for a non-zero period of time (at least, that's the way I do it). What was this supposed to prove, exactly?

Sorry, you seem to be misinterpreting a lot of these. Firstly it doesn't matter how you label 2 consecutive periods. It can be period 1 and period 2, today and tomorrow, period 0 and period 1, period t and period T, 2011 and 2012, etc. Its just a reference to 2 time periods.

For the first part:

y comes from investing x in the prior period. We both agree that the nominal value of what we have now decreases, thus the x that we had in period 1, in nominal terms would be worth more than y period 2, hence x > y. Suppose instead of using x to buy 1 good in period 1, we invest that and get y in the next period and y = 2 goods, then instead of investing x in period 1 we save it and bring it forward to period 2, because x > y (we both agree on this, the nominal value we get from investing anything is a lower nominal value next period, why? because of the limited supply of money) and y = 2 , then it follows that x > y = 2, i.e. we would be better off not investing.

Secondly,

No one said I'm investing 10 and "instantly" getting 8. I don't really get where you come across me saying non-zero period of time. Using 2 time periods again, period 1 and period 2. Both time periods can have a start and end (i.e. Jan 2011 and Dec 2011, Jan 2012 and Dec 2012, 2 time periods). At the start of period 1, we have the choice of investing 10 or saving 10. If we choose to invest, the return we get is at the beginning of period 2, the return of which is 8 (once again, we both agree the nominal value of what we are holding drops if we invest). If we choose to invest, we get 8 in period 2 which we can use to buy 8 goods. BUT what if we decided to just put the 10 into our pocket at the beginning of period 1 instead of investing it? THEN at the beginning of period 2, we most certainly still have 10 of which in period 2 can buy us 8 goods + more. This proves we are better off putting the 10 in our pocket instead of investing.