guidoism

Value

Value is relative and dynamic.

When you have something that I value more than something I have and when you value mine thing more, then we can trade them and both be happy.

Inflation is when the thing that I have loses value in your eyes so that I can’t make the same trade I had in the past. The relative value increases in your favor.

Deflation is the opposite, the relative value increases in my favor.

But trading happens both ways so it’s not always that simple.

There is a perception of inflation even in extreme deflationary instances when what we “need” increases with time. In fact, one probably has more difficulity correctly perceiving extreme deflation when it occurs concurrent with extreme improvements.

Examples

Taxes

As long as I need to pay property taxes in dollars then dollars have a certain value to me. Even if everything else I do is outside the system then at the very least I need enough dollars to pay my taxes. In a normal neighborhood around me the median single family home price is 2¼ times the median family income and the property tax rate is around 1⅓ percent therefore one should expect to pay about 3 percent of their income in property taxes each year.

But how does one plan for this without income? Hmmm… I will need to think about that.

Words

The stock market ≠ The economy ≠ The Dow Jones ≠ The GDP ≠ The well-being of individuals ≠ The job market ≠ Wealth ≠ Money