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To provide a context here - one of the key value propositions of BTC is real interest rate. Cash real interest rate: 0% interest - 2% inflation through debasin
by dmichulke 9y ago
To provide a context here - one of the key value propositions of BTC is real interest rate.
Cash real interest rate: 0% interest - 2% inflation through debasing currency = -2%
BTC real interest rate: 0% interest - 0% inflation = 0%
Note how this benefit of BTC is not bubbly by itself (growth expectation usually is - due to it being based on past growth)
- runeks 9y agoPrices only remain flat (0% inflation) if no increase in productivity occurs. 2% inflation doesn't mean the currency has been debased by 2%, it means: if it has become x% cheaper to produce a basket of goods -- and the price of this basket of goods has increased by 2% -- the currency has been devalued by (2+x)%. Producers are constantly competing to cut the costs of production, in order to gain market share at the expense of competitors, so I don't see how flat prices can be a reasonable assumption.
- dmichulke 9y agoIncrease in production increases supply, so prices fall -> deflation. Yes, inflation can have other reasons than debasement (for example, productivity decrease) but this affects both types of "money" - fiat and bitcoin, so I left it out to keep it simple