patience first let us finish this one:
OK so far you claim that you have the same purchasing power with a stock that increase at the same rate as the inflation rate.
I've been trading stocks for over thirty years and know such is fallacy but you know it as well as I do. Even a novice stock buyer knows there are fess involved.
So when we use your example of an Oil stock increasing from $40.00 to $40.40 and then you claim you can convert it to dollars without incurring a fee we know you are being far from truthful. Stock Broker Fees, SEC fees, and of course the ever popular capital gains taxes.
Think we have proved beyond doubt your premise is not valid.
Infact to get the same increase in buying power to stay with inflaion you need a goodly amount above the increase in inflation depending on your tax bracket and the stock price.
now on to Par. Understand starting valuation is a standard (for issuance of a bond) here is the link to show such (its been 20 plus years since I took that particular class) there are instances wherein these can be different.
http://www.investorwords.com/3611/par_value.html
Then as I explained before, they repackage such and they change the underlying value. Allowing banks to lend on something that has no increased value other than accounting tricks. They did it with Subprime loans they do it with all sorts of other financial insturments. Then add in credit defulat swaps, mark to market accounting and know that again banks can lend money based on these things (Stocks of Corporations that invest in and use both) and the FED just allows it.
My claim is only that there are assets valued in dollars that do not lose value at the same rate as inflation. If you have 1% inflation, we agree that every dollar you own loses 1% in purchasing power, as per your example. I showed you a simple example where a dollar valued asset would keep its value.
I can come up with examples that actually gain in buying power, but why bother? You already admitted the point.
now on to Par.
Par has nothing to do with valuing a security for purposes of calculating bank capital or loanable cash.
If a bond is worth $900, it doesn't matter if par was $1000, $10,000 or $1,000,000.
Then as I explained before, they repackage such and they change the underlying value.
Your original claim was "Corporate bonds are valued at 1000 per while Municpals are valued at 5000 per and Federal are valued at 10,000 per"
I thought you were claiming a municipal bond allows 5 times the loans as a corporate bond of the same value? If that's not your point, I'm not sure what it is.