Hacker News Reader

Hacker News

Comment by netbioserror | Hacker News Reader

Parent Full thread

netbioserror

Reminder that:

1) Price is the baseline measure.

2) Inflation is the first derivative.

3) Rate of change of inflation (reflation, disinflation) is the second derivative.

4) Rate of change of the rate of change of inflation (change in reflation/disinflation) is the third derivative.

Just to keep the talking head smoke blowing to the right receptacles.

View on HN

The example I use for those who didn't take calculus, which usually prevents glazed-stare onset:

1) Position

2) Velocity

3) Acceleration

4) Jerk

Except that non-calculus, non-physics people don't know what jerk is. If you try to explain, they'll decide that it's you ;-)

Jerk is accelerating acceleration. Acceleration is the feeling you get when you're pushed back in your seat in a car or amusement park ride. Jerk is what happens when the depth into your seat is increasing (or decreasing).

Yeah, but that's actually what draws renewed interest about half the time, as a TIL.

And if neither that or the overall comparison works, you probably never had a chance anyway.

ETA- And 9/10 when I use it, it's in the context of engineering, explaining pavement damage and impact loads or similar.

It's a great early tell for which version of the explanation you're going to get.

Snap, Crackle, and Pop come next.

https://en.wikipedia.org/wiki/Fourth,_fifth,_and_sixth_deriv...

As a corollary to 2), a reduction in inflation does not return prices back to previous levels. That's a misconception I see all the time. Negative inflation, or deflation, can reduce prices of course, but you really, really don't want deflation.

Why?

I'd guess because it makes hording cash a good investment and thus disincentivizes economic activity.

Edit: corrected misspelling (cache -> cash)

If saving is a better investment than stocks or business, isn't that a healthy way to counter speculation, risk, malinvestment, and scammy exuberance cycles? Seems like a direct answer to the whole-market financialization that people complain inflation incentivizes.

It incentives holding cash and letting it sit, not putting it into productive investments. Deflation was a big part of Japan's economic woes for years. It's hard to climb out of.

Well it doesn't only counter the bad kinds of economic activity, it also counters the good kinds. If a mom-and-pop store with low margins can make more profit by hoarding cash than by expanding their business and employing more people, it can't be good.

If everybody is hoarding cash, then, if we assume markets control interest rates and not a central bank, would banks not lower their interest rates as the supply of deposits increases? Loaning money would become cheaper, and at the same time withdrawing to invest in other things would become incentivized. In sum, high savings would signal that it's safe to start lending and investing.

Because it makes debts grow in real terms. https://en.wikipedia.org/wiki/Debt_deflation

Periods of deflation have been very bad historically. Economists debate whether it was cause or effect.

Reply on news.ycombinator.com