It’s unfortunate that this challenge has had such a bad initial reception (-21 net downvotes right now). There is obviously a real question of economics here, and none of the other answers have even bothered to engage with it. They’re all trying to win on the cheap by focusing on your use or misuse of the word “theorem”. I would have thought that the prospect of $10,000 would inspire more serious replies.
As for the topic itself… As you point out, Chile is already implementing what you recommend, with its “unit of wealth” accounting for long-term loans (and it seems Mexico and Uruguay may also do something similar?). However, this was first implemented under conditions of hyperinflation, and Milton Friedman’s essay in favor of Indexation of interest payments was written in the context of the high American interest rates of the early 1980s. AI tells me that western countries don’t currently need this because they have price stability (relatively low inflation), and that they instead rely on financial markets (in particular, Treasury Inflation-Protected Securities or TIPS) to hedge against inflation risk.
I think the way the question was posed is part of why it has a bad reception. The theorem presented was not an economics theorem at all, but a theorem about the internal mental state of four people. Presumably this was intentional, and it basically precludes a discussion of economics, as the economics are not remotely the strongest reason the theorem is false.
The other reasons for the poor reception:
I find it unlikely this person will ever pay $10,000 as a result of this post
The resolution criteria suck. Is whoever gets the most votes in this post going to get the money? What if it’s Carl Feynman, who makes a general meta-argument that the theorem is absurd, without attacking the theorem directly? What if it’s someone whose argument is considered invalid by Bruce Middleton, perhaps because they don’t address the economic question? Or will there be a vote at a later date? “after either party affirms that in their view real proof has been presented and further debate would be pointless” So what if the best answer doesn’t have the person say “this is a real proof and further debate is pointless”? Is that answer no longer eligible for the $10,000? This is really poorly framed and makes me doubt this will ever resolve.
The general vibe of “I know more about wealth than the ninth richest man on Earth” without any real justification for that position, and the crackpot vibes that come with “so and so famous person signed off on my ideas”, again without justification in this post.
I would have probably just preferred a nice explainer post of Bruce’s position. I lack the economics knowledge to follow his mortgage rates post.
AI will generate language, which may or may not make sense, if you don’t push it. That AI answer does not hold water: you’re telling me I don’t need more borrowing power because TIPS bonds exist? Non-sequitur; next question: presume I want to buy a house. Won’t indexing give me the power to spend more? AI: yes.
It’s unfortunate that this challenge has had such a bad initial reception (-21 net downvotes right now). There is obviously a real question of economics here, and none of the other answers have even bothered to engage with it. They’re all trying to win on the cheap by focusing on your use or misuse of the word “theorem”. I would have thought that the prospect of $10,000 would inspire more serious replies.
As for the topic itself… As you point out, Chile is already implementing what you recommend, with its “unit of wealth” accounting for long-term loans (and it seems Mexico and Uruguay may also do something similar?). However, this was first implemented under conditions of hyperinflation, and Milton Friedman’s essay in favor of Indexation of interest payments was written in the context of the high American interest rates of the early 1980s. AI tells me that western countries don’t currently need this because they have price stability (relatively low inflation), and that they instead rely on financial markets (in particular, Treasury Inflation-Protected Securities or TIPS) to hedge against inflation risk.
I think the way the question was posed is part of why it has a bad reception. The theorem presented was not an economics theorem at all, but a theorem about the internal mental state of four people. Presumably this was intentional, and it basically precludes a discussion of economics, as the economics are not remotely the strongest reason the theorem is false.
The other reasons for the poor reception:
I find it unlikely this person will ever pay $10,000 as a result of this post
The resolution criteria suck. Is whoever gets the most votes in this post going to get the money? What if it’s Carl Feynman, who makes a general meta-argument that the theorem is absurd, without attacking the theorem directly? What if it’s someone whose argument is considered invalid by Bruce Middleton, perhaps because they don’t address the economic question? Or will there be a vote at a later date? “after either party affirms that in their view real proof has been presented and further debate would be pointless” So what if the best answer doesn’t have the person say “this is a real proof and further debate is pointless”? Is that answer no longer eligible for the $10,000? This is really poorly framed and makes me doubt this will ever resolve.
The general vibe of “I know more about wealth than the ninth richest man on Earth” without any real justification for that position, and the crackpot vibes that come with “so and so famous person signed off on my ideas”, again without justification in this post.
I would have probably just preferred a nice explainer post of Bruce’s position. I lack the economics knowledge to follow his mortgage rates post.
AI will generate language, which may or may not make sense, if you don’t push it. That AI answer does not hold water: you’re telling me I don’t need more borrowing power because TIPS bonds exist? Non-sequitur; next question: presume I want to buy a house. Won’t indexing give me the power to spend more? AI: yes.