Does the quantity theory of money help?
Because it isn’t a problem. It is an arbitrary and fictional situation which doesn’t reflect anything we know about man.
Again, you are using a narrative to inform your reason, instead of using reason to inform your narrative. As long as you do this, you will not be able to understand economics.
When Peter does that, it has nothing to do with economics, and everything to do with being a salesman.
Ceteris paribus, this may be true. However, good luck finding situations ceteris paribus in the real world. Your model is only useful, in so far as you can interpret fictional exercises where reality doesn’t matter. In the real world, some people would eat their sandwiches regardless of the rules, rather than trade them for shekels because they would calculate the cost of non-compliance to be less than the cost of compliance. A good example of this, is smoking marijuana. It is illegal in the US, but millions of people do it. Ceteris paribus, you would model that if the King/President made a rule no smoking pot, then people would obey it. Your model fails. You might say no people will do it, your model fails. You might pick some number of people who will do it, your model fails because it is impossible for you to calculate choices for any group of people.
The Soviets and every planned society already tried what you are trying. Billions has been spent educating and researching the perfect way to model and plan human action. Mises came up with an elegant solution in praxeology. One that is very difficult to contest. You haven’t demonstrated you understand it, and yet you’re here, proposing the opposite of what Mises and the Austrian school generally understand about human action, which might be the most important insight that the school of thought has to offer to mainstream economics.
There has to be some atheist science forum where people will indulge you in this. Or some market investor forum where you can be a celebrity for cooking up Mickanomics. But here, it just comes off like a lot of crankery, like the colonial scrip cranks we get every few months.
If your model can’t model reality, then why waste time modeling fantasy?
How is a sandwich a commodity? What do you call the things that go into making it?
You say there is no division of labor in this land? Every person, on his own plot of land, somehow:
grows his own wheat, produce his own leavening agents, raises chickens for eggs, raises cows for milk, grows the food and feed for those animals, makes his own oven, builds his own capital goods for reaping his crops and chopping wood for fire for his oven, etc, etc
And these sandwiches everyone produces aren’t homogeneous (you said people traded for “variety” (even though it is somehow at the same time a commodity))? Which persons’ sandwiches have more demand than others (e.g. the people who have the resources to make pbjs)? What happens to the people who have sandwiches that nobody desires? Instead of starving, can they just eat pieces of bread or cook scrambled eggs?
I don’t understand the scenario.
Sadly not. Interestingly, I may be able to derive the quantity theory of money from my model.
I’d love to see his response to that accusation.
The only reason I made the rule about not eating your own sandwiches was because it was a quick and easy way to specify something that happens already. In most modern societies, hardly anyone consumes their own produce. So my “fantasy” of strict enforcement of this rule is in fact “close to the real world”.
Please can you give me a reference for the soviet solution to my sandwich society problem.
I am extremely glad I posted this thread on this forum. Finding out that LvM himself had thought deeply about pretty much my exact question and was thinking along very similar lines to my solution shows that this forum is the absolute perfect place for this discussion.
A sandwich is not really a commodity. Its just a convenient, quantised, model of produce.
Well perhaps people specialise in certain types of sandwich… it doesn’t neeeed to be sandwiches at all, it could be anything really. But I wanted something that was conveniently quantised. Just something to make the formulation of the question simpler.
I already explained you won’t be able to derive anything on my post at like page 3.
I’d like to hear your response to that statement. Do you really believe he is running for Senate because he cares about liberty? He doesn’t even vote. This is going to be a boom for his business, even if he loses, because it will continue to raise his profile. That free political advertising is worth millions to his company.
Don’t get me wrong, I like that he is a salesman and a successful entrepreneur. But he’s not a radical libertarian, and he’s not a very strong economist. What he is, is a very savvy investor. Investing and economics are not the same thing.
They didn’t have one. Which is why the Soviet Union collapsed.
I tried to follow your line of reasoning earlier in this thread and lost it. How did Mises come to the same question and solution as you did? Mises was THE PRAXEOLOGIST. Your question, in an Austrian context, is completely ridiculous. The only reason I can see why this hasn’t sunk in yet for you, is that some folks continue to encourage you, thinking you might just be slow to come around, unaware of the threads you have already made for a positivistic approach to economics.
Why was he invited to give the 2009 Henry Hazlitt Memorial Lecture at the annual Austrian Scholars Conference, Ludwig von Mises Institute, 13 March 2009?
Perhaps they should have given me a call 
His regression theorem is addressing the question of “the value of money” which I what my question is all about. The lines “People value units of money because of their expected purchasing power; money will allow people to receive real goods and services in the future, and hence people are willing to give up real goods and services now in order to attain cash balances. Thus the expected future purchasing power of money explains its current purchasing power.” could have been used by me almost verbatim along the way to finding my solution.
Why not?
Like who’s? I don’t know of any at the moment (I’ve been too busy to follow yesterdays references… bit I certainly will). I’m sure there are plenty of economic models out there where the value of money is already anchored somehow. But I know of none where the value of money gets discovered by the model itself.
In my model, all the parameters will have a 1:1 correspondence with a real life phenomena, so that each one could be drawn from real life statistics.
Actually, I may have to re-phrase that somewhat. My model has yet to tie up some loose ends. So perhaps I should state that I am striving toward a model in which all parameters will have a 1:1 correspondence with real life phenomena. Perhaps my mk II or mk III will get there. At the moment my model is newborn and requires some more work.
Feelings are not numbers. What you’re thinking is that you can give my preference for X a number, but no one thinks about their preferences like that. The numbers you would come up with would have no meaning to the people you’re trying to describe.
Because the value of money is subjective.
See first response. Also, I think if I tried to model my brain, I would fail. The human mind can take on more states than there are atoms in the universe. Good luck with that.
LvM’s missed opportunity in a nutshell: I this article it states: “It is obvious that this vitally important problem of circularity (X depends on Y, while Y depends on X) exists not only in regard to decisions by consumers but also in regard to any exchange decision in the money economy.”
LvM assumed that problems in which X depends on Y and Y depends on X were insoluble and X and Y could not stabilise. But this is not always true. It depends on the nature of the relationships. Take for example X = sqrt(Y) and Y = sqrt(X), you can start with any old values for X and Y then iterate, then the numbers will converge to X=1 and Y=1. Indeed I just wrote a program in “C” to demonstrate it:
#include <stdio.h>
#include <math.h>
void main()
{
int i;
double a,b;
a = 12;
b = 7;
for (i = 1;i < 10;i++)
{
a = sqrt(b);
b = sqrt(a);
printf(“a = %.4f b = %.4f\n”,a,b);
}
}
The output when you run the program is as follows:
a = 2.6458 b = 1.6266
a = 1.2754 b = 1.1293
a = 1.0627 b = 1.0309
a = 1.0153 b = 1.0076
a = 1.0038 b = 1.0019
a = 1.0010 b = 1.0005
a = 1.0002 b = 1.0001
a = 1.0001 b = 1.0000
a = 1.0000 b = 1.0000
LvM did not realise this phenomena and that’s why his regression theory is so clumsy.
In the same article it states: “a wiping out of existing markets and knowledge of money prices would render impossible the direct re-establishment of a money economy” - I hope my example shows that this statement is in fact, not true.
emphasis on the word direct
geeez.
your sandwich game is absurd.
at game start: i have loads of sandwiches, i cant eat any since they are mine. game over
Mick, values are ordinal, not cardinal. How will you model ordinal values?
I think you missed a quote or something…
“a wiping out of existing markets and knowledge of money prices would render impossible the direct re-establish ment of a money economy”
Its against the rules of the game - I’ve already explained. You lose.
What are you insinuating? That he knew that the XY problem was solvable?