frphank on Nostr: > I simply don't think prices have to be *nominally* stable for us to be able to ...

> I simply don't think prices have to be *nominally* stable for us to be able to financially plan things. Sure we need to avoid situations where a beer is 5$ one year, 13$ the next, 1.15$ the year after that etc etc

Exactly but I think the price swings need to be much lower than that. Current inflation in the single digits already seems too much to some people.

> But that could only happen in two scenarios:
> - either the money supply changes in crazy ways due to bad central bank planning,
> - or the inputs to beer production go from being incredibly scarce to incredibly abundant due to natural disasters or incredibly positive changes in natural conditions, provided demand for beer stays the same of course.

Both are possible but unlikely. The 3rd option is that there is just more production and consumption than before, or less. The inputs stay the same and the central bank money stays the same but people just work more, or less as individuals, or there is more automation, or the population grows or shrinks so the population as a whole works more less. That's the #1 cause for a changing economy.

> Nothing makes me think that planning is any easier with a managed money supply. That's because nobody is planning for a generic future, we're all planning that specific goods and services we might need are going to have certain price ranges when we need them.

Yes and we plan decades ahead e.g. when we're planning for retirement.

> Let's say I'm building a next generation videogame console but I fail to anticipate that AI demand is going to make GPUs much more expensive. Should I complain about it to the central bank? What if I'm planning to increase the production of cereals but then the strait of Hormuz gets blockaded and fertilizers get so much more expensive, what then?

Tech is unusual. We don't have a good way to plan ahead for that but we don't need to as our tech expenses are low compared to everyday stiff. The strait of Hormuz doesn't carry food, food comes from 10,000 individual suppliers spread evenly around the country and the world that makes planning much easier.

> If anything a fixed money supply allows the price signal to be as clear as possible: prices change only due to demand, supply, and technology. I argue this would allow much better planning than nominal stability.

Prices changing due to demand and supply can be planned against by central bank policy and that's what happens and it's good that way.