Can they ever be reset? Or will one day a regular chocolate bar cost for example €50? House that costs €200k cost €1,000,000? Will the likes of the euro or US dollar one day be the same as currencies such as the YEN where “1” of them is essentially worthless?
In: Economics
The important thing to keep in mind is that the actual number doesn’t matter except relative to other things. An economy in which you have a list of prices {A,B,C,…} and people’s earnings {X,Y,Z…} is equivalent to one in which every price is {kA,kB,kC…} and earnings are {kX, kY, kZ…}
if you add a zero to every bill simultaneously, then absolutely nothing that anybody cares about changes: you can buy the exact same things with the same amount of labor. It doesn’t matter if it takes a hundred yen to buy the same stuff as one dollar if everyone earns a hundred times as many yen. One penny is essentially worthless, but when’s the last time you bought something with a pile of pennies? When’s the last time you suffered because your piles of pennies weren’t valuable enough to afford something with? You just use the hundred penny bill or the two thousand penny bill and it’s fine, just as the Japanese use their hundred yen bills and two thousand yen bills.
The amount of money that you call “one” isn’t important, it’s just a number.
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