tag:blogger.com,1999:blog-264226589944705290.post7607224209673643408..comments2021-12-14T05:53:12.175-08:00Comments on God Plays Dice: Which comes first, the nominal or real record high?Michael Lugohttp://www.blogger.com/profile/15671307315028242949noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-264226589944705290.post-63754202927978385472011-07-19T21:32:50.128-07:002011-07-19T21:32:50.128-07:00This article reminds me of the mathematics behind ...This article reminds me of the mathematics behind the economic fallacy: "cutting taxes always increases revenue for the government."<br /><br />Have you heard of this argument?dp1080https://www.blogger.com/profile/06656010332760512823noreply@blogger.comtag:blogger.com,1999:blog-264226589944705290.post-26880880925491719312011-02-19T20:46:52.350-08:002011-02-19T20:46:52.350-08:00Speaking as a wingnut, I thought we were more like...Speaking as a wingnut, I thought we were <i>more</i> likely to complain about a decreasing value of the dollar in general (also known as inflation) than about specific manifestations of it such as gasoline prices.Josephhttps://www.blogger.com/profile/04720409839023747889noreply@blogger.comtag:blogger.com,1999:blog-264226589944705290.post-64224159648092506892011-02-13T11:09:47.713-08:002011-02-13T11:09:47.713-08:00Tim, you're right that the assumption of conti...Tim, you're right that the assumption of continuity is unwarranted. And for that matter, the assumption that the inflation rate is always positive is unwarranted.Michael Lugohttps://www.blogger.com/profile/01950197848369071260noreply@blogger.comtag:blogger.com,1999:blog-264226589944705290.post-56651142077792327222011-02-13T11:02:59.861-08:002011-02-13T11:02:59.861-08:00If prices are at a record high at any particular m...If prices are at a record high at any particular moment, there's no guarantee that the derivative is zero at that time (there's a discontinuity because we don't have any prices of the future).<br /><br />You're correct that if there's a recent pair of local maxima on nominal & real prices and prices & currency values and their derivatives are continuous that the nominal price will have a local maxima that is after the local maxima of the real price.<br /><br />However, if instead of looking for maxima, we look for the time that the previous record is broken (which is what most people mean by "hit a record high"), then the nominal price will surpass the previously highest nominal price before the real price will surpass the previously highest real price.Tim Dierkshttps://www.blogger.com/profile/07090420235666122821noreply@blogger.com