Dorion Mode - A blog by Robinson Dorion.

April 7, 2023

Inflationary language

Filed under: Oeconomica — Robinson Dorion @ 01:31

Let's set the stage with a bit from the Clown Prince of Denmark, Victor Borge :

A few years ago in Denmark we had inflation and you are familiar with that problem. In order to synchronize our language with the world surrounding us, I have invented an inflationary language. During inflation, we have numbers rising, prices go up, anything that has to do with money goes up.(i)

You know that in the English language there are hidden numbers in the words, such words as : wonderful, before, create, tenderly... and so forth. All these numbers can be inflated and meet the economy by rising to the occasion. I suggest we add one to each of these numbers and instigate an inflationary language.

So let wonderful by adding one would be twoderful and before will be befive, create will be crenine, tenderly will be elevenderly and so on and so fifth. A sentence such as "I ate a tenderloin with my fork," will be, "I nined an elevenderloin with my fivek".

Now may I read to you a page from a book... that just happens to be here... for many good reasons... so you can hear how this language sounds if it's being actually used.

Twice upon a time there was a young Third Lieutelevenant in the Air Fiveces named Bob who lived in sunny Califivenia with Ana, his one and a half sister. They had been very close since Ana had seen the light of day for the second time. They were very proud of the fact that two of his fivefathers had been among the creninetors of the American(ii) USian Constithreetion.

They were dining on the terrace, "Ana," he said elevenderly as he took a bite of the marinineded herring, "you look twoderful threenight, you never looked so lovely befive, but you have three of the saddest eyes I've ever seen." Ana really looked twoderful in spite of the illness from which she had not yet rejuvenineded. The table was beautifully decornineded with Ana's favorite flowers, threelips.

They were now talking about Ana's asiten husband, from whom she had recently separnineded, while on the radio an Irish elevenor sang, Tea for three. It was midnight, a clock in the distance struck thirteen. And suddenly, there in the moonlight stood her husband Don Two obviously intoxicnineded.

Oh, I must explain, he was from South America, his name was Don Juan so he goes up two.. oh, up one actually, so he's Don Two.(iii)

"Ana," he blurted, "fivegive me. I'm only young twice and you are my two and only."

Bob jumped to his feet, "Get out of here you three-faced triple-crosser !"

And Ana warned, "Watch out Bob, he is an officer."

"Yes, he's two, but I'm two three !"

"Alright," said Don Two as he wiped his fivehead. He then left and when he was one and a half way through the revolving door, he mumbled, "I'll go back to Elevennessee and be double again. Fairwell Ana, threedleloo, threedleloo."

I'd say it reads quite similar to the output from LEGO President Pidden, if only a bit less official, wouldn't you agree ?

Anyways, I find this bit humorous for a couple of reasons :

On one side of the coin, it gets a laugh because it's immediately obvious how silly and wasteful changing words as so would be : no expressiveness is gained and the cost of updating people's pattern recognition to denote the same underlying meaning would be expensive. Perhaps not as harmful as inflationary alphabets(iv) or inflationary money (as I'll soon explain), but wasteful nonetheless.

On the other side of the coin, in these Dark Modern Ages from which I'm writing to you, dear reader, the continual decline in monetary purchasing power is accepted by otherwise smart people as a fact of life. They swallow whole the spew from the "experts" that it's even good, something to strive for, as long as it doesn't happen too quickly. Like Goldilocks'(v) soup temperature preference, not too cool, not too warm. Well, I'm here to tell you the goal of "a 2% annual rise in the general price level" is likewise cancerous bullshit.

Why is it bullshit ? Because both language and the price system are means of communication. Language has more range : it can describe what is, what might be, what never will be, etc. Language can be used to speak truth to power and also to lie, cheat and steal, for the mouth can write a check dat ass can't cash. Prices, on the other hand, are an artifact of human action. A past price is simply a reference point from history of the ratio at which two actors came to an agreement for a trade. Prices don't convey what things are worth, they convey the ratio at which the actors willingly gave up what they had for what they wanted or needed.(vi)

As what people perceive they have and need change from time to time, e.g. as they gather information, prices change to reflect this expression and this information is propagated through the market, conveying a signal to other actors with which they can use to inform their decisions. Prices really shine when there is a crisis.

For example, you might remember a hurricane called Sandy a few years back. You know, the one whose flooding destroyed all those securities held in physical certificates by the Depository Trust & Clearing Corporation at 55 Water Street. That one. Well, as disasters go, lots of capital and infrastructure were destroyed, such as petroleum refineries and the pumps at gas stations. This caused a substantial shortage and quite likely an increase in demand, for when the electrical grid goes down, people burn petrol to run their generators. What's the market's rational reaction to the destruction of supply coupled with an increase in demand ? To raise the price. The rise in price has a couple of useful functions : a) it communicates quite clearly something has changed and incentivizes people to consume less to preserve resources and b) it incentivizes suppliers who don't typically serve the region to take on the risk of diverting a portion of their supply to the site of the disaster. Thus, curing the supply destruction at the disaster site and lowering the price. The adapted supply structure causes the prices in regions not directly impacted by the disaster to rise too, signaling to those who might be under sunny skies that something is up and that they should conserve their resources as well.

If you live in a classical, functional society, where franchise is strictly limited to Lords, the mythical adult male, the market remains open and merchants are free to bid and offer whatever price that makes sense to them. The role of the state --as is always its exclusive role-- is to protect the owners of property from from looters who might try exploit the chaos and to allow the price system to function. Allowing the price system to freely function is another way of saying to let people with voice freely speak, which is essential for the emergence of thought and rational resource allocation.

If you live in a modern,(vii) disfunctional hellhole like New Jersey, a fat slob illegitimately uses the legal monopoly on violence to rob the owners of property. On what claimed ground, you ask ? For negotiating "unconscionably excessive" prices. What's do they claim is "unconscionably excessive" ? Above 10% of what they sold it for prior to the disaster. How did they come up with that magic number ? Crickets. There's no rational process present to sort out what this goods in question might be worth. It's a guess at a magic number that they feel won't raise flags in the thinking spinning process of the average dumbass voter. The fat slob will blurt out emotionally charged words out the three sides of his mouth, it's a "disaster" and "state of emergency" and "price gougers" must be demonized and punished for their rational attempt at solving the problem. Like every socialist policy, it backfires because disrupting the market process and censoring speech causes shortages and misallocations of resources and extends the recovery period. Fortunately for the socialists, a small percentage of the voters own anything whatsoever and are literate to any degree, so they retain their power in the short run until their illegal belief by count runs out of gas. Unfortunately for the socialists, Bitcoin has emerged to crush all this nonsense and flush it down the toilet.

Undermining the price system isn't just a problem during disasters, it's always and problem and it matters not whether prices are artificially pushed too high or low. The most dangerous price to fuck with is the rate of interest because it represents the price of money across time. Since prices are expressed in money, the interest rate affects all other prices.

In functional societies where there is no central bank controlling and dictating interest rates, there is constant, market driven price discovery and interest rates become an expression of underlying time preference. Time preference denotes that present goods are valued at a premium to future goods. High time preference thinking is more concerned with the needs of the present, whereas low time preference thinking delays gratification.

Money can only be offered as a loan today if someone is delaying gratification, saving the money and is willing to make it available to others. An economy with lower time preference has a higher supply of savings available to be extended in credit and thus will tend to have a lower rate of interest. The market pricing process constantly adapts to the information imputed into it via the actions of the participants.

The same economy with low time preference at one point may be shocked, such as in the case of war or disaster, and time preference rises. In such cases, interest rates rise and this communicates to and incentivizes market participants to be more frugal with their resources compared to the low time preference era. Shocks can happen on a more localized level too, such as when major players like Big Daddy Pollitt die and his incapable heirs, who have higher time preference, consume and waste the capital he accumulated. On the margin, interest rates tick up. However, the shocks emanate in a much more decentralized manner and the constant price discovery of the market process makes the system more robust. It might be shirt sleeves to suit to shirt sleeves in three generations, but suits remain the norm.

In disfunctional societies, a small group of bureaucrats seated around a table crafted in a time long passed, munching piles of donuts from the corner fast-food and calling themselves a central bank control and dictate interest rates. In this model, interest rates aren't discovered through the price system, they are the fountainhead of state propaganda, from which all other propaganda flows. This propaganda leads to misallocations of capital, financial bubbles and the recessions and depressions left after the bubbles pop. Errors are made by the simple fact that the bureaucrats do not have and cannot get the information to know what the underlying time preference of the market is. They can't get it because it's something that has to be acted out, "actions speak louder than words," and all that.

Furthermore, errors are made because the central banks pander to the politicians who appoint them who are in turn elected for promising something for nothing to the poor, literate masses. How do the politicians promise something for nothing ? D-E-B-T, debt, debt, debt ! In general, a government doesn't earn any money, all it has it money it steals through taxation or money it borrows based on future taxation. So, when it wants to spend more than the current tax base would permit, it issues debt to be paid by the unborn tax victims of the future, they're not voting next midterm anyways, amirite ? As a consequence, the central bank sets interest rates as low as possible such that their cronies can borrow as much as they can get away with.

The artificially low interest rate is not a reflection of the true time preference of the economy. Capital allocators, burdened with so much extra, worthless money, falsely believe(viii) there is lower time preference and higher savings in the economy than there actually is. As such, they invest too much money in projects that weren't actually investable. This bids up the prices of capital goods and financial assets. This is compounded by copycat entrepreneurs and investors copying and pasting the shitty deals on the hype train. Additionally, the people receiving the misallocated capital think they've made the big time now, so they start spending more ; they're less incentivized to save anyways with the artificially low interest rates. The excess spending creates a tug of war because now there are even less savings to sustain the misallocated capital investments. It eventually comes to a breaking point and the price system snaps back to reality to reveal the bubble economy for what it was : organized stupidity.

There's an old metaphor from Mises I recall, but don't have the citation handy. It goes like this : picture you have a pile of bricks that you're fixing to build yourself a house out of. Now, you can't do a count yourself, it's against the law where you live exist, see ; all you can do is base your plans of the number the pencil neck, bug eyed housing inspector told you. He claims he counted them and you believe him because it looks like he can "count good" and you're a god fearing, tax paying, curse word free, obedient little citizen.

Now, he always overstates the count, because you like him better if he flatters you and makes you feel richer than you are.(ix) So you get to drawing up your plans and building your house based on this inflated number he whispered in your ear. You work hard on building the house, brick by brick, take pride in your work, are enjoying the process and teeming with excitement to finish the project and move into your new castle. Here's the rub though : you don't actually have enough bricks to finish the project as designed with a roof over your head.

Thus, the sooner you realize this error and stop building on the current design, the better. Maybe you can salvage some of the bricks you laid so far, but many are simply dust, wasted. What you need to do is a proper accounting of the bricks and go back to the drawing board as soon as possible, but every time the cynic in you bubbles up and starts to question the brick count and contemplate the recession of work that reality requires, the inspector frantically rushes in to tell you, "Don't feel depressed ! It's fine ! There are actually more bricks than originally quoted !"(x)

So your Dunning-Kruger ways kick in and you keep going, doubling down in your misplaced conviction and eventually spend the final brick on the incompletable design. Then the wrecking ball called Bitcoin comes along and reduces your poorly planned house of bricks to rubble and you're left gathering sticks and mud from the woods to make a hut where your house could've been --if you're lucky enough for even that, which you're probably not.

So if you started off seeing why inflationary language would be stupid, wasteful and ruinous, maybe you now see why endlessly inflationary money is too. Mother nature's disasters pale in comparison to those inflicted by socialists. So if you want to get a grip and be part of the wrecking ball rather than its doomed target, but don't know where to start, contact JWRD Computing and we'll save you time getting up to speed.

  1. Well, the prices of fixed income securities don't tend to go up, for purchasing power is an component of interest and as interest rates rise to compensate for diminished purchasing power, bond prices fall... but those have nothing to do with money, do they ? [^]
  2. In the earlier versions he uses America and in the later versions he uses United States... I wonder what happened in the interval.. [^]
  3. Just as with monetary inflation, it trips up even the creators of it, lolz. [^]
  4. Languages have finite alphabets and force complexity where it belongs : in combining letters into words and words into sentences and sentences into paragraphs and paragraphs into articles and articles into blogs. Languages that continually add letters don't gain expressiveness and efforts to do so are fucking stupid and a crime against humanity. It's quite cancerous to force everyone to update the alphabet every time some bored adult child felt like pushing a new color of paint on the pile of shit emoji. Whether the pushers or the pushees know it or not doesn't make it any less harmful. If you want to add color to how you express shit, learn to write it in a different language and make sure you write it in ASCII like an actual human or gtfo. [^]
  5. And finally, the baby bear said, "Somebody's sleeping in my bed, and the bastard's still there !" But Goldilocks had a Remington semi-automatic, with a scope and a hair-trigger ! And that was the end of the Three Bears.


  6. For example : If I buy 1 Bitcoin from you today and we use the going market price of $28`202. It doesn't mean the Bitcoin is worth $28`202 to me or you. If it was worth that amount, why would we spend the irretrievable time on making the trade to receive value we already had ? The reality is, we agreed to that price because I valued the 1 BTC more than the $28`202 I exchanged you and you valued the $28`202 more than the 1 BTC you exchanged me. How much more ? We can't say for sure, all we know is that's the price we agreed upon at that moment. [^]
  7. Or a slightly less modern, but nevertheless disfunctional society. [^]
  8. Even if they don't believe it outright and know it's a bubble that will burst, market frenzies are hard and expensive to fight. Few have the marbles to book losses for years until the shorts pay off. So the tendencies is to go along with it and try to be the first one out the door when the theater catches fire. [^]
  9. It calls to my mind Irwin Schiff's Kingdom of Moltz comic. Where taxes are based on the height of one's house. So the King of Moltz, taking a page out of the USian playbook, decides to shrink the official measuring stick so as to push everyone into a higher tax bracket and increase tax revenue. [^]
  10. "In order to fight the recession, we must cut interest rates and lie more !! Let'em go negative if 'need' be !!" [^]

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