How to know the value of a thing in a currency over time

General
1

I've tried to answer this question for a while by myself using PTA, but I'm at the point where I would need some help. Disclaimer: I am no accountant; so if this is easy stuff for accounting folk, ELI5 for me, please.

Let's assume…

  • I transact in CUR, but the world's treaty currency is TTC
  • I bought a piece of land for 1000 CUR in 2021
  • As at when I bought this land, 1 CUR = 3 TTC
  • I plan to sell this piece of land in 2024

How do I know what price is profitable to sell the piece of land for this year?

P 2021-02-01 CUR 3 TTC
2021-02-02 * Land Purchase
  Expenses:Land  1000 CUR
  Assets

Reason I'm asking this is… seeing the current macro-economic landscape, there's a possibility that what I think is gain on the piece of investment, really isn't. Some things which may affect this cost are

  • land appreciates per year (assume 5%)
  • inflation is attempting a moonshot (assume 15% growing 3% YoY)
  • CUR is losing value against TTC faster than an oil rig strikes oil (assume 33% YoY for mathematical concreteness)
  • some other factors I can't think of now
P 2024-04-01 CUR 0.111111 TTC
2024-04-04 * Land Sale
  Income:Land  -??? CUR
  Assets

This could be used as some sort of forecast as well if phrased like so "Seeing the economic landscape of such-and-such, with parameters X Y and Z, would it be wise to put P CUR in some investment for Q years?" OR "How much gain can be made on an investment all things considered?

Can such a question be answered with PTA?

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2

Interesting question! I think the following shows the effect of currency fluctuation, to start with:

P 2021-02-01 CUR 3 TTC

2021-02-02 * Land Purchase
  Expenses:Land  1000 CUR
  Assets

P 2024-04-01 CUR 0.111111 TTC

# Let's say it sold for twice the original amount:
2024-04-04 * Land Sale
  Income:Land    -2000 CUR
  Assets

# There's a possibility that what I think is gain on the piece of investment, really isn't.
# Some things which may affect this cost are:
# 1. land appreciates per year (assume 5%)
# 2. inflation is attempting a moonshot (assume 15% growing 3% YoY)
# 3. CUR is losing value against TTC faster than an oil rig strikes oil (assume 33% YoY for mathematical concreteness)
# 4. some other factors I can't think of now

The same transactions valued in TTC on the transaction dates:

$ hledger print --value=then
2021-02-02 * Land Purchase
    Expenses:Land        3000 TTC
    Assets              -3000 TTC

2024-04-04 * Land Sale
    Income:Land    -222.222 TTC
    Assets          222.222 TTC

We gained 1000 CUR:

$ hledger reg --invert Land
2021-02-02 Land Purchase        Expenses:Land            -1000 CUR     -1000 CUR
2024-04-04 Land Sale            Income:Land               2000 CUR      1000 CUR

But effectively lost 2777 TTC:

$ hledger reg --value=then --invert Land
2021-02-02 Land Purchase    Expenses:Land     -3000.000000 TTC  -3000.000000 TTC
2024-04-04 Land Sale        Income:Land         222.222000 TTC  -2777.778000 TTC

To model land appreciation, perhaps you'd use a LAND commodity and adjust its value in fiat currency over time.

And for inflation... I guess value fiat currency in some stable reference commodity (gold ? watt hours ? decarbon coins ?)

3

If you are buying an asset in foreign currency, you are exposing yourself to exactly two risks:

  • asset value; and
  • currency fluctuation.

Note that you should be protected against inflation (specifically, In the event of a monetary, worldwide, widespread inflation).

I would do the calculation off-PTA and not inside it.