A large player seems to be making decisions based in real terms, which is not revealed by the socially accepted AAPL chart which is based in dollars. Will future traders be enticed by such numerical values if it eventually harms them?
To be clear, in this idea:
"real terms" = the price as a proportion of total dollars, adjusted for debasement
TOTAL_USD = M2, a rough measurement of broad money
When we have the option of making decisions based on an infinitely expanding, numerical value (ex. 1 AAPL = X USD), which is purely speculative in current times, versus a ratio of 1 AAPL as a proportion of the total supply of dollars (1 AAPL / TOTAL_USD), at some point we have to take off the beer goggles and question what we are actually looking at. Especially when we know that the expansion of TOTAL_USD directly fueled the price rise of 1 AAPL. In this idea, we are talking about an absolute ratio that measures 1 AAPL to a pool of total claimable future wealth, we'll call that "money". Such wealth is expanding slower than the total number of dollars, which are IOUs on that wealth. It has become increasingly risky to use 1 USD as a measurement ruler for wealth when the ruler we're using measures a claim on debt (IOU), not the wealth it represents, and whose total supply changes size quickly in short periods of time. Take a few measurements, and it's hard to tell whether your stick changed, or the thing you're looking at changed. We reference TOTAL_USD as a more stable representation of this total pool of wealth. Perhaps in some other era, we'll use something increasingly valuable with a low supply as a ruler (it's almost as if it might already exist), but desperate times call for desperate measures.
Put another way: suppose you want to design a model to predict if a stone will skip on a pond, or sink into it. Would you rather have, relative to our stone, a surface to skip stones on which is 1) a non-uniform surface that will change texture and angle in any way at any time, or 2) a relatively flat surface? Even though the proportions of our stone might change (stock splits, acquisitions, etc.) it still makes more sense to choose something to bounce (price) it against that's relatively stable that we can aim at. Since 1 USD is relatively increasingly unstable across asset classes, ie. the speculativity of these assets becomes purely based on the revolving door of the total supply of IOUs, and not based on the purchasing power of 1 USD. Therefore, we use the total supply of dollars as our stable surface.
What do you think? Useful? Witchcraft? Future traders will be even more blind by the social acceptance of pricing things in 1 USD? Will they be less blind and come to their senses? Doesn't matter and markets will be exuberant anyways? You hated it?? Great!
Comments welcome ;) Cheers!
Note: M2, which is based in billions of dollars, was multiplied by 100 in the chart because there's a bug that doesn't show horizontal lines for chart values that are very small. So it does -actually- show a somewhat correct ratio in total dollars, but it's missing 0s behind the decimal.
To be clear, in this idea:
"real terms" = the price as a proportion of total dollars, adjusted for debasement
TOTAL_USD = M2, a rough measurement of broad money
When we have the option of making decisions based on an infinitely expanding, numerical value (ex. 1 AAPL = X USD), which is purely speculative in current times, versus a ratio of 1 AAPL as a proportion of the total supply of dollars (1 AAPL / TOTAL_USD), at some point we have to take off the beer goggles and question what we are actually looking at. Especially when we know that the expansion of TOTAL_USD directly fueled the price rise of 1 AAPL. In this idea, we are talking about an absolute ratio that measures 1 AAPL to a pool of total claimable future wealth, we'll call that "money". Such wealth is expanding slower than the total number of dollars, which are IOUs on that wealth. It has become increasingly risky to use 1 USD as a measurement ruler for wealth when the ruler we're using measures a claim on debt (IOU), not the wealth it represents, and whose total supply changes size quickly in short periods of time. Take a few measurements, and it's hard to tell whether your stick changed, or the thing you're looking at changed. We reference TOTAL_USD as a more stable representation of this total pool of wealth. Perhaps in some other era, we'll use something increasingly valuable with a low supply as a ruler (it's almost as if it might already exist), but desperate times call for desperate measures.
Put another way: suppose you want to design a model to predict if a stone will skip on a pond, or sink into it. Would you rather have, relative to our stone, a surface to skip stones on which is 1) a non-uniform surface that will change texture and angle in any way at any time, or 2) a relatively flat surface? Even though the proportions of our stone might change (stock splits, acquisitions, etc.) it still makes more sense to choose something to bounce (price) it against that's relatively stable that we can aim at. Since 1 USD is relatively increasingly unstable across asset classes, ie. the speculativity of these assets becomes purely based on the revolving door of the total supply of IOUs, and not based on the purchasing power of 1 USD. Therefore, we use the total supply of dollars as our stable surface.
What do you think? Useful? Witchcraft? Future traders will be even more blind by the social acceptance of pricing things in 1 USD? Will they be less blind and come to their senses? Doesn't matter and markets will be exuberant anyways? You hated it?? Great!
Comments welcome ;) Cheers!
Note: M2, which is based in billions of dollars, was multiplied by 100 in the chart because there's a bug that doesn't show horizontal lines for chart values that are very small. So it does -actually- show a somewhat correct ratio in total dollars, but it's missing 0s behind the decimal.