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ChicagoSchooler
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March 09, 2015, 07:16:14 AM
Last edit: April 07, 2015, 01:52:28 AM by ChicagoSchooler
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Possum577
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March 09, 2015, 07:26:05 AM
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If the currency deflates it gets weaker, which means prices of goods will inflate because the currency can no longer buy the same amount of goods and services.

Lower demand can deflate an asset but it isn't the only way for currency deflation to occur.

NUFCrichard
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March 09, 2015, 09:03:57 AM
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If the currency deflates it gets weaker, which means prices of goods will inflate because the currency can no longer buy the same amount of goods and services.

Lower demand can deflate an asset but it isn't the only way for currency deflation to occur.

You mean that investment goods & services will become more nominally expensive, correct?  Yes, I agree, and this is a concern of mine, wholeheartedly.

Strangely, demand is robust.  The traders and producers have extreme overlap, yet they haven't seen fit to sell out or buy in.  They're content with the current market capitalization, it seems.  I have no explanation for the prices except that the Founding Accountholders are concentrated, so the market is naturally demanding far above average prices.

The Argus-Nemesis is designed to manage price instability, but these prices are extreme.  Quantitatively, this should be a formality, but outliers like these provoke a negative emotional response from me.

Statistically, price stability, assuming that the Argus-Nemesis manages price change in the world economy appropriately, should produce the lowest possible nominal rates with the highest possible real rates.  However, we have no mentionable financial structure to reference yet.  If required, I will throw off my anonymity to build it.  We have now entered into talks with local private investors for liability funding, but the local laws are not the most accomodative.  That phase may take longer than should be expected in the generalized developed world.

Needless to say, I take this very seriously, and these astronomical prices make me nervous.  I am concurrently reexamining Argus-Nemesis to be assured that it can manage these magnitudes.  I will provide updates to cost of living in this thread.

The price of good will rise as the currency devalues, but not the whole amount.  The Economist has the big mac index, this uses the cost of a big mac to show the cost of living in many countries.
It is obviously a bit crude, but it does also show that the prices of goods vary and have have to be taken into account when working out the cost of living and the strength/weakness of a currency.

I would be very surprised if a currency depreciated 50%, if prices rose 50%.  Local products should change in price far less, as should wages, only international products should change by the full 50%, but that would make the overall change far less than 50%. I believe this is exactly what is happening now in Ukraine.
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