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0 pointsnickff12y ago0 comments

The idea is that you are billed a nominal value, whose rate is fixed when you contract the service. Since the rate is always agreed to at the beginning of the trip, the time of payment has an impact on its value.

This joke is essentially the opposite of debt deflation (theory of recessions), as described by Irving Fisher;[1] the theory states that the debtor loses money during deflation, causing repayment problems. In the bus/taxi joke, the rider is a debtor, and the taxi driver is a creditor, with the length of the ride being the term of the loan. The inflation is essentially devaluing the loan.

[1] http://en.wikipedia.org/wiki/Debt_deflation

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csomar12y ago· 2 in thread

I thought you pay in advance when you take the bus too. At least that was the case in the few countries I visited.

icebraining12y ago

No, you only pay in advance when you take the bus. When you take a cab/taxi, you set the rate in advance, but only pay at the end (when the currency is less valuable).

jamesaguilar12y ago

I still don't get it. Let's say the real price is 1 peso per mile for both services. You want to travel 100 miles. On the bus, you pay 100 pesos up front. In the taxi, the meter is set to one peso per mile. Then you pay 100 pesos at the end. Unless you are going to convert from some other good into pesos and then pay, the cost is still the same.

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