RE: The Laws Of Information Technology And Deflation

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RE: The Laws Of Information Technology And Deflation

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aussieninja in LeoFinance • 6 months ago (edited)

I know we've discussed this before... but I really do think inflation is the most likely scenario in the coming years. I don't think the USA will see widespread hyperinflation or deflation.

Cell service might be lower in cost... but I would guess the average price for mobile devices is more expensive now than in 1997 and families spend more on communication technology now than in 1997. So yes, the technology is deflationary but companies have found ways to offer more to charge more. I'd also guess that telecommunication companies are making more profit now than in 1997.

Is making a movie cheaper now than 20 years ago or do they take those cost savings and spend it elsewhere? Furiosa cost 168 million to make. Mad Max cost 350,000 USD to make in 1979 ($1.6M today). The value of streaming services is incredible in comparison, but with so much content being split amongst different services, most families are probably spending just as much as cable. Movie theatre tickets aren't cheaper today.

I would say in most cases, the deflationary aspect of technology just means more profit and will not affect inflation.

I really don't think the use of AI in healthcare, education and construction will see lower, better prices for consumers. If anything, large companies will invest heavily in AI and push out smaller companies to make a strong monopoly for themselves... contributing to higher inflation.

I would absolutely love to be wrong... truly.

6 months ago in LeoFinance by aussieninja

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taskmaster4450le 6 months ago

but I really do think inflation is the most likely scenario in the coming years.

Depends upon what period you are discussing. Overall, certainly, in the next 5 years you will might not see much difference from the historical norm.

But when we look at technological deflation, it is penetrating throughout more of the industry.

but I would guess the average price for mobile devices is more expensive now than in 1997

So you are trying to compare a smartphone? Even still, the answer is no. This compares high end phones. There are obviously non Samsung and Apple phones that are much cheaper. My latest phone costs about $220.

families spend more on communication technology now than in 1997. So yes, the technology is deflationary but companies have found ways to offer more to charge more.

How so? The data reflects the costs of those services are going down. So what are you talking about in particular?

Of course, technology will eliminate the labor factor. It is why companies can offer stock trades for free. There are no people involved in the transaction anymore. The brokers are gone since we do the trade online and the traders on the floor of the exchanges were automated.

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aussieninja 6 months ago (edited)

Your phone might be $220, but I'd say on average people are spending just as much on devices as in the late 90s. Even with your graph you can see the iPhone X is about the same price as the Motorola and Nokia. Obviously the iPhone X can do way, way, way more than those phones and has significantly better hardware and features... but my point is that normal people aren't seeing those technological deflationary savings because companies find a way to keep prices high... which helps inflation.

At the moment my household pays $95 a month for cell service through Verizon. This is the cheapest package they offer. We're in an area where we can only get Verizon. AT&T and T-Mobile don't provide coverage here. So even though the costs of individual calls is cheaper, data is cheaper, I don't think people on average aren't paying significantly less than they were in the late 90s. The prices haven't been deflationary even if the cost of the technology has been.

Sure... stock trading has reduced in cost... but so many more things are more expensive than they were.. housing, education, healthcare, cost of living, etc. I'm finding it hard to think that these things will be dramatically cheaper in 10 years. They'll surely be more profitable, absolutely, but they won't be cheaper.

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taskmaster4450le 6 months ago

Is making a movie cheaper now than 20 years ago or do they take those cost savings and spend it elsewhere? Furiosa cost 168 million to make. Mad Max cost 350,000 USD to make in 1979 ($1.6M today). The value of streaming services is incredible in comparison, but with so much content being split amongst different services, most families are probably spending just as much as cable. Movie theatre tickets aren't cheaper today.

Feature length films are more expensive. Hell the character actors (not even the main star) gets more money for a film than the 1979 movies.

But does a computer generated film on YouTube that people put together cost the same? Not even close. It is a lot less than $1.6 million.

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aussieninja 6 months ago

Sure... but do people care about computer generated films on YouTube? People watch movies for the stories and characters that resonate with them... it's hard to believe AI will be able to accomplish that.

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taskmaster4450le 6 months ago

Who is the number on streaming service? YouTube. So there is obviously a lot of content (and hours being pulled away from movie studios and television networks).

People watch movies for the stories and characters that resonate with them... it's hard to believe AI will be able to accomplish that.

It seems based upon the numbers, Hollywood is failing at this. Hence, doesnt it come down to who is prompting the tools that generate the output, regardless of where/how it is created.

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