Based on my Excel spreadsheet and a rigorous mathematical analysis over a period of several years, I value miles at 1.5c each. YMMV of course.

Miles will not go up in value, probably ever, unless AA wants to explain to their investors why they are seeing a drastic reduction in offloading AAdvantage liability on their balance sheets.

My prediction, in 3-5 years redemption will be $$$ based similar to how we buy tickets with CC points. The huge upside will be we can book any seat, but we have to pay what that seat is worth.

IMO trying to apply a supply and demand model to the worth of FF miles is incomplete. This is simply because the airlines have such a high degree of control over how easy/difficult it is to redeem them.

I assume you are referring to the lack of availability of domestic F saver awards as the stealth devaluation? It has always been true that all segments have to be in saver to use a saver award, but it used to be that scoring the J or F flight to Oz or Asia was the high five event. Now it is scoring the Y, J or F award in saver inventory from BOS to PHL.

And, yes, I realize that you can just buy that segment for short money, but (a) two tickets are harder to deal with in several ways; (b) you just shouldn't have to; (c) makes it hard when you are trying to change a BOS/PHL/CDG ticket when you can find PHL or JFK to CDG but not BOS to the gateway. Arghh.

The whole point of these changes - on both the earn side as well as the burn side - are intended to decrease what the airline gives back. Just because you are earning less miles now doesn't mean that the miles you earn will be worth more... that would undo what the airline is trying to accomplish.

The opportunities for high value redemptions exist only as long as the award charts are around. Once awards start to get priced based on the corresponding cash fare (and in my view we're not far off), things become much less interesting.

The OP argument seems to be that cost is the same as value and that because it costs more to get a mile, that it is worth more

With value being defined as "The worth of something compared to the price paid or asked for it" , this seems flawed

The worth of miles has dropped significantly over the years. For instance 150,000 miles could provide a circular trip of 26.000 miles with stopovers. More recently 120,000 miles could provide a r/t from Europe-South Pacific worth GBP2000 ; now the same trip requires 41% more at 170,000 ( 1st class raised 53% from 150,000 to 230,000 )

Cost of buying miles used to be ( iirc ) $1000 for 40k (plus taxes and fees) whereas now it costs $1180 ( 18% increase )

The worth of miles to me was around GBP2000 for 120k miles ( 1 mile worth 1.67p ) but at 170k miles 1 mile is worth 1.17p

With cost increasing by 18% but worth dropping by 30% , I cannot see how can argue that the value has increased in this situation. I know that some redemptions have dropped in price, but don't think that there are likely to be many where the worth has increased by more than the cost

Ridiculous analogy. Airline miles are not a security.

Has any loyalty "currency" ever appreciated over any long-term time period?

It has never been, in the past, wise to hoard miles. Miles have always been devalued, thus in my opinion, Earn And Burn is the wisest course of action.

Even after heavy advertising "Get Something For Nothing", they are loathe to give away something for nothing.

Wow, this is the silliest thing I've read all day. Award levels ALWAYS go up. And if you want to use the (flawed) money analogy, then think about this: rich people don't keep all the money in cash. It is just stupid.

1.5 CPM +
 

The miles probably have more value than this, but 1.5 cpm is my threshold value for use. Miles typically yield more value, e.g.,for longhaul C flights.

For EXP, there's value in fully flexible, or at least cancellable, award ticket reservations. Book an award ticket for a family member - if they can't get time off or whatever, cancel the ticket or cancel if a cheaper purchased ticket becomes available.

I understand what the OP is trying to argue. In the past accruing 300k RDMs for about $4k was easy. Today to get 300k RDMs would cost $27,200. So while before you could literally spend airline miles like funny money (and many, many people did), it would make sense to evaluate does it make sense at that XYZ redemption to use miles, or to pay cash. Before, outside of very minor instances it was almost always better to use miles (cash is king). How many of us were flying to Asia for $500 and then getting 35k RDMs for it? So spending 25k miles on a $300 ticket wasn't absurd.

Today, unless you MS the vast majority on here will earn fewer RDMs, which in a sense make the miles accrued "more valuable", since the ability to replenish our supply of them went up in price. So while "hoarding" makes no sense, the ability to easily earn 400k RDMs a year is gone for many of us, and so the willingness and ability to spend in large amounts diminishes.

In theory over the long haul, this should help increase the availability of awards as people earn fewer miles and ultimately use more than they are earning each year.

We shall see. Sometimes things that make sense "in theory" don't actually work out in practice...

Regards

Also its been stated that the majority of frequent flier miles out there are not earned thru flying but thru other channels (credit cards make up a good %)

For the record I expect an 90% devaluation of miles in less than five years. Can you say "S&H Green Stamps"?

For the record, 0% chance of anything even remotely like that.