@icedquinn

The typical indexes are based on the buying power of everyday items.. so yea food is a way better measure. But it still pegs the value to the location it is in and not an absolute thing.

@anon00110 @johnnada

@freemo @icedquinn @johnnada Yeah it's pretty much a theory instead of an actuality, which is why you can buy things so much cheaper in some places even though based on exchange rates it should be equally costly - it's because they didn't price in cereal, or maid services, etc when pricing the exchange rates. Precious metals and the dollar are most often used to peg values.

@anon00110

Precious metals is just as bad a peg off value as anything else. Precious metals have real world use that cause their values to swing, often, even more so than fiat itself.

@icedquinn @johnnada

@freemo @icedquinn @johnnada That's true, but in practice those swings should effect the global market equally sans the consideration for transport and tariffs. It's also subject to the demand for the individual currencies. Would you be more willing to accept dollars or rubles for your gold in 1987? Such swings in pricing and in demand for currencies is where the arbitrage opportunities exist.

@anon00110
I'd be equally willing to take rubles and US dollar for my gold, since I would immediately (before either had a chance to crash) use that money to invest in things.

@icedquinn @johnnada

@freemo @icedquinn @johnnada That's a perfectly acceptable answer and others in the market would prefer one over the other and vice versa. Which is why the swings occur on demand for the currency as much as the comparable buying power for commodities.

@freemo @anon00110 @johnnada yup. is why i never got anywhere with my project to find out why americans are so overpriced compared to other places.

i thought "let's peg it all to milk" and then, bruh, can't measure india by that.

@icedquinn

I think the key in understand value of classical fiat is to understand that it is basically an IOU from the government. Its value is derived from the credibility of the government and its people. Its buying power is effectively directly linked to the GNP. This is why crypto is so unique, its the first money we have that isnt linked to a specific group of static people.

@anon00110 @johnnada

@anon00110 @freemo @johnnada there might be something to be done if you want to run pathfinding algorithms on each time step.

for each step take each currency, path to find the way to buy some stable thing (ex. gold) assuming you were to do a 1:1 forex exchange with no fees, which would give you something vaguely like a maximum spening potential in reference to the target comoddity (and would control against some weird exchanges because it would assume you were able to do something like EUR->USD->Au if for some reason that exchange was better that timestep)

@icedquinn @freemo @johnnada That's a basic model, yes and also the reason why frequency trading is so desirable. The quicker you can execute such opportunities the more you can make.