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There are certain people who benefit from inflation (banks who loan money, governments who have their debt denominated in fiat currency) and there are people wh

There are certain people who benefit from inflation (banks who loan money, governments who have their debt denominated in fiat currency) and there are people who lose from inflation (anyone who saves their money in fiat, the value of which goes down the more money that’s printed). There is no such thing as something that’s “good/bad” for a “country” — countries don’t exist, only people do. Also, Bitcoin IS inflationary, there will continue to be more Bitcoin creates until sometime around year 2140 when the 21 Million supply cap is reached. It’s just not nearly as inflationary as fiat currencies, which have no cap and no one knows how much more will be created from year to year.

slg 9y ago
Let me simplify things. Deflation is good for the individual. Inflation is good for the whole. It is basically the tragedy of the commons. What is good for a single person is not sustainable when scaled up to the whole of society. With deflation spending and investing are discouraged. That is bad for economic growth. Also you are wrong about Bitcoin being inflationary. An expanding money supply is not enough to make a currency inflationary. The rate of the increase in the money supply needs to outpace growth in the economy. That isn't happening with Bitcoin. The obvious proof of this fact is the increase in the value of Bitcoin.
- polotics 9y ago
  Simplify? "Obvious proof is the increase?" One Bitcoin is still worth 1BTC in my books, inflationary dollars' drop in value notwithstanding.
  - slg 9y ago
    10,000 Bitcoin used to be enough to purchase a couple of pizzas. Now it has enough value to purchase an entire office building in San Francisco. Either the value of Bitcoin increased or the value of everything else on Earth decreased.
- sbenitoj 9y ago
  You’re using a different definition of inflation. There are two phenomena we’re talking about here — an increase in the supply of money and the decrease in the purchasing power of money. The term inflation is broadly used to apply to both of these but they’re different which is where part of the hang up is. In any case, the supply of Bitcoin will continue to increase until it hits 21m coins in approximately 2140, but if it becomes the world’s dominant currency, its purchasing power will continue to increase. Why should spending and investing be encouraged, can you think of any downsides to encouraging this?
  - slg 9y ago
    You are the one who described inflation as "stealing from savers, and transferring wealth to the people who are the earliest recipients of the inflated currency". That is talking about purchasing power and not money supply. There are certainly some situations when you want to encourage saving over spending and investing. However I would argue it is not an ideal stable state. It is more difficult for an economy to grow when people don't circulate money through spending and don't increase future productivity through investing. The benefit of a central bank that can control the money supply is that you can adjust these things on the fly depending on what is happening in the economy. Bitcoin cannot adjust the money supply in reaction to the economy.
    - sbenitoj 9y ago
      Well, the Austrian Business Cycle Theory [0] has shown that the continuous, never ending increase in the money supply is actually responsible for greatly exacerbating the boom and bust cycle, so there are in fact many losers of this (people who invested money thinking it was safe when in reality it was a highly speculative market, eg real estate in 2007, internet stocks in 2001, etc). Increasing the money supply ultimately leads to a decrease in purchasing power, which is stealing from savers. If the market (individuals cooperating with one another voluntarily) valued a continuously inflated currency, then fiat currency will win and crypto will fail. I suspect the market values a fixed or slow-increase-in-the-money-supply version of money like gold as they demonstrated with their money preferences before governments used coercion to stop it, one of the biggest reasons crypto is so popular is because people can’t use gold as money, but governments can’t effectively stop people from using crypto. [0] https://en.m.wikipedia.org/wiki/Austrian_business_cycle_theory https://en.m.wikipedia.org/wiki/Austrian_business_cycle_theo...

slg 9y ago

Let me simplify things. Deflation is good for the individual. Inflation is good for the whole. It is basically the tragedy of the commons. What is good for a single person is not sustainable when scaled up to the whole of society. With deflation spending and investing are discouraged. That is bad for economic growth. Also you are wrong about Bitcoin being inflationary. An expanding money supply is not enough to make a currency inflationary. The rate of the increase in the money supply needs to outpace growth in the economy. That isn't happening with Bitcoin. The obvious proof of this fact is the increase in the value of Bitcoin.

polotics 9y ago
Simplify? "Obvious proof is the increase?" One Bitcoin is still worth 1BTC in my books, inflationary dollars' drop in value notwithstanding.
- slg 9y ago
  10,000 Bitcoin used to be enough to purchase a couple of pizzas. Now it has enough value to purchase an entire office building in San Francisco. Either the value of Bitcoin increased or the value of everything else on Earth decreased.
sbenitoj 9y ago
You’re using a different definition of inflation. There are two phenomena we’re talking about here — an increase in the supply of money and the decrease in the purchasing power of money. The term inflation is broadly used to apply to both of these but they’re different which is where part of the hang up is. In any case, the supply of Bitcoin will continue to increase until it hits 21m coins in approximately 2140, but if it becomes the world’s dominant currency, its purchasing power will continue to increase. Why should spending and investing be encouraged, can you think of any downsides to encouraging this?
- slg 9y ago
  You are the one who described inflation as "stealing from savers, and transferring wealth to the people who are the earliest recipients of the inflated currency". That is talking about purchasing power and not money supply. There are certainly some situations when you want to encourage saving over spending and investing. However I would argue it is not an ideal stable state. It is more difficult for an economy to grow when people don't circulate money through spending and don't increase future productivity through investing. The benefit of a central bank that can control the money supply is that you can adjust these things on the fly depending on what is happening in the economy. Bitcoin cannot adjust the money supply in reaction to the economy.
  - sbenitoj 9y ago
    Well, the Austrian Business Cycle Theory [0] has shown that the continuous, never ending increase in the money supply is actually responsible for greatly exacerbating the boom and bust cycle, so there are in fact many losers of this (people who invested money thinking it was safe when in reality it was a highly speculative market, eg real estate in 2007, internet stocks in 2001, etc). Increasing the money supply ultimately leads to a decrease in purchasing power, which is stealing from savers. If the market (individuals cooperating with one another voluntarily) valued a continuously inflated currency, then fiat currency will win and crypto will fail. I suspect the market values a fixed or slow-increase-in-the-money-supply version of money like gold as they demonstrated with their money preferences before governments used coercion to stop it, one of the biggest reasons crypto is so popular is because people can’t use gold as money, but governments can’t effectively stop people from using crypto. [0] https://en.m.wikipedia.org/wiki/Austrian_business_cycle_theory https://en.m.wikipedia.org/wiki/Austrian_business_cycle_theo...