[COFFEE] Value unit

P.S. I often think that we should take an example from the crypto crowd and measure financial value of everything in VT units.

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I vote for Big Macs as the measure of all things, they’ll be tradable even in a Mad Max scenario.

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Without working fridges… nah I don’t think so
Potatoes is the only valable unit :stuck_out_tongue:

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You’re right, the Big Mac really stands to the test of time but it’s still only, like, the silver of Mc Donald’s “food”. French fries is where the real untarnishing gold is at: The Decomposition Of McDonald's Burgers And Fries. - YouTube

Let’s call potatoes the raw ore standard by which all things could be measured and Mc Donald’s french fries the real deal by which all shall.

To continue with offtopic:

Guys, you are going into investing in commodities, and I am not buying this.

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How ‘bout a potato derivatives futures structured product, then? Sure, every component of it is a death trap but there are plenty of them so it’s fully diversified and thus very stable. All things’ value measurement material if there’s ever been one. BTC can go hide in shame.

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with over 3000 kinds of potatoes, it is hell of diversified

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It’s not that simple, you can “plant” potatoes and earn “planting” income. Can be easily 500-1000% APY, and you don’t even need internet access.

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Getting a bit more serious, in case of a Mad Max scenario I think it will be canned food that will become a unit of value. Or, if you need something standardized, batteries for example.

But if we continue with a reasonable economy, I think it is good to consider price development vs the total stock market. For example if you think that your apartment has grown in price, consider how many VT units it was worth before and now. Unfortunately VT is dividends distributing, so a compounded value growth is even higher. For Swiss residents, a comparison with a compounding total Swiss stock market index SPI might make sense.

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I agree on the relevance of measuring things in comparison with something we hold valuable, in this case, shares of the total stock market (or close to it). There are funds with accumulative share classes tracking the same index as VT, for example: https://www.vanguard.co.uk/professional/product/fund/equity/8617/ftse-global-all-cap-index-fund-gbp-acc

You’d have to convert the price of what you want to measure to GBP first to make use of it (then units of Vanguard’s FTSE Global All Cap Index Fund).

Edit: another way would be to use Backtest Portfolio with the reinvesting dividends option to get to a similar result in an USD/VT pair: Backtest Portfolio Asset Allocation

In my opinion, the closest thing to a real value unit would be the value of commodities, since we (and the modern world) could not exist without them. The average value of 1 kg across all commodities would be a good measure of the worth of fiat money.

How about CPI adjusted CHF as a Value Unit?

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So an average of 1kg of potatoes and of 1 kg of gold? Some weighting would be needed.

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I’m not sure that weighting would be needed. Some commodities (like gold) have heavily inflated values in fiat currency, while other (perhaps more important) commodities like rare earths and food are often undervalued. I think a clean arithmetic average across all commodities would be the closest thing to a genuine value unit. Unlike stocks, debt, and currencies, availability of commodities is physically limited. The only alternatives with similar features, in my opinion, would be time (time banking) and land. But unlike commodities, there is no clear, global data available for those which could be used to create a value unit.