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> as an economist, I consider a deflationary, fixed-supply currency noxious I would think that as an economist, you would know better than try to dictate what
by AboutTheWhisles 9y ago
> as an economist, I consider a deflationary, fixed-supply currency noxious
I would think that as an economist, you would know better than try to dictate what people in a large system should do and focus more on the incentives that drive them.
The part that people who talk about the negatives of a fixed supply currency don't understand is that what economists thank people should do isn't going to come in to play. All else being equal, if someone can choose between a currency that inflates and one that doesn't, why would they choose one that will be stripping their value away? Inflationary currencies benefit only one party - the one that gets to create the money out of nothing.
Inflation is good for countries that can't control their spending and need to hide it behind eroding the value of people's wages. It is poor for anyone saving the currency for liquidity or anyone whos pay is denominated in it.
- qubex 9y agoBy way of your reference to incentives I assume by ”those who create the currency” you intend the private banks that through fractional reserve banking create about 97% of the money supply, not the central banks that create the 3% of base currency (”high powered money”). If so, I suggest you look at BaseCoin (which I am not invested in, and not affiliated with) and take a look at the scheme they propose, which makes sense to me. I must however point out that in an inflationary regimen the debtors also gets an advantage, as their debt load becomes progressively easier to service as inflation compounds to inflate their earnings, on average leaving more cash that can be funnelled into covering financial expenses after revenue has been duly deducted of operating expenses.
- karthikvellanki 9y agoIf you lived in a deflationary regime, what incentive would you have to work? You'd rather just sit on your wealth and do nothing. There would be no economic output.
- AboutTheWhisles 9y agoYou do realize that the current monetary system has only really been in place for about 45 years right? The world ran on gold for hundreds of years and somehow people still managed to find the motivation to work without someone printing off the money they use. (Also most inflation pragmatically comes in the form of fractional reserve banking)
- kaistinchcombe 9y agoEveryone would agree that right now and the US dollar is experiencing about 2% inflation, and the number of bitcoins in circulation is increasing about 4% per year, yes?