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The legacy monetary system may have nice consumer protections on the micro scale, but it fails on the macro scale: 1. Inflation eats 2-4% of everyone's purchas

The legacy monetary system may have nice consumer protections on the micro scale, but it fails on the macro scale: 1. Inflation eats 2-4% of everyone's purchasing power each year, disproportionately affecting the poor. This inflation is desired by the central planners. 2. The American system of banking regulations introduces systemic risk into the financial sector. Sure, if you can prove that your transaction was fraudulent, you can get a couple thousand bucks back into your savings account. But you'll have to gamble your money in the market to beat inflation just to break even. And then, every so often, the entire system will collapse and destroy trillions of dollars of wealth. As an aside, you also get the bonus of having political control of banking relationships, so you can conveniently freeze and take the money of those who find the political winds aren't blowing their way. Edit: PLEASE don't take this is an argument for Libra (sorry I wasn't clear), merely an argument for sound monetary policy and decentralization.

arcticbull 7y ago
I’m consistently amazed by how many people here dont understand inflation at all and are confident they need to throw out the financial system before they figure it out. Inflation is an incentive to invest. If you invest in literally anything other than cash under your mattress inflation stops mattering completely to you, and all you have to think about is constant dollar returns. That’s why we have it. So long as your wages track inflation (broadly they do) you benefit from implicit depreciation in your debt obligations. It costs you nothing if you don’t hold cash like you’re supposed to, and it costs you effectively nothing if you hold money in a savings account as many offer 1.8% interest these days, matching inflation. What nobody arguing for a deflationary currency can tell me is why they think money should be worth more later solely by virtue of them having gotten it first. A risk-free guaranteed return at the expense of the next generation! It makes no sense. This is basic ECON 101. High school level home ec probably. Not some big conspiracy perpetrated by the central banking cabal.
- leg100 7y ago
  I'm not sure that is "why we have it". It sure is why the central banks are pumping money into the system (they quite rightly want people and companies to invest), but it's far from clear why we have it a priori.
  - glofish 7y ago
    The answer is simple - trivial even. As I mentioned before a dollar today should be worth more than a dollar next year since, if you are smart, you can make that dollar work for you for a whole year. Hence the inflation.
    - leg100 7y ago
      No, not "hence the inflation". You have not explained why; you've explained why you think we should have inflation. And why someone thinks something should be is a long way from explaining why something is.
      - glofish 7y ago
        But I did. The same amount will be worth less in the future! That's really all there is to it. A certain amount of money is not value, money is a number that has a value associated with it, that value will continuously change depending on what you can do with it. Inflation (deflation) simply reflect the change in value for doing something today versus tomorrow. When the economy works well you have inflation, when the economy works badly it becomes deflation.
        nybble41 7y ago
        > The same amount will be worth less in the future! ... When the economy works well you have inflation, when the economy works badly it becomes deflation. This is backward, actually. If the economy is working well then withholding consumption (i.e. saving) means that more goods are available for others to either consume or invest. The portion that ends up invested should result in higher future productivity and, in the absence of currency supply manipulation, decreasing prices (deflation), a natural reward for producing more than one consumes. Only in an economy which is consuming capital—investing so little that productivity is actually decreasing—should prices increase over time. In that case we need more investment to bump up production—the investments don't need to be all that good to be better than the status quo, and anything with a positive return is superior to just waiting for prices to increase further. In the deflationary case, however, we should be more selective about where we invest. It's better for the economy to simply hold our funds in reserve rather than actively compete against more competent investors to expend resources—not just money, but the labor and material it represents—on ventures that will provide lower-than-average returns. If we expand the currency supply to manufacture inflation and thus make it look like we need more investment when we actually don't then the net result is malinvestment, wasted resources, and a lower average rate of return. It's not good for the economy or the average citizen, but the extra transactions and higher nominal prices directly benefit the bankers and tax collectors with influence over monetary policy.
- glofish 7y ago
  Excellent point - Low inflation is a good thing - it is a sign of a properly functioning economy. A dollar today should be worth more than a dollar tomorrow. Too much inflation is not a good thing is usually sign of systemic failures of trust in a system. The two stages are usually conflated in many discussions.
- semiotagonal 7y ago
  Bitcoin in particular seems to be driven by people who are really obsessed with the idea of having a store of wealth with zero risk (assuming they never make a mistake handling it, or get tricked by swindlers, which I think they're seriously underestimating). But as you say, inflation is a tool; it motivates investment. Expropriation is a tool; I don't see how eliminating it is appealing at all to the billions of people with no savings at all. They may want to take money from the wealthy at some point. If there's ever a point where "the masses" really understand bitcoin, and how a few HODLers possess most of it's value, they're not going to want it.
- tromp 7y ago
  > savings account as many offer 1.8% interest these days I don't know where you live but I doubt it's western Europe. In the Netherlands for example, the highest interest rate available [1] is a lousy 0.2%. [1] https://www.spaarrente.nl/ https://www.spaarrente.nl/
  - arcticbull 7y ago
    I’m referring to a US audience (Ally offers 1.8%). These rates are designed to incentivize you to allocate capital accordingly. The point is you not put much of your money there. Depending on how you feel about the future exchange rates between the EUR and USD you’re welcome to invest in US treasuries, for instance.
- linuxftw 7y ago
  Your understanding of inflation is misguided. Inflation as we have it under central banking today is theft. A GSE creates money from nothing. Large banks are allowed to have this money at near-zero cost, and lend it to others and a higher cost. It's a free profit for large banks. It's 100% organized theft. This is the scenario that create the 'too big to fail banks' that we had to give even more money to keep the system propped up.
  - arcticbull 7y ago
    Ok round 2. > “inflation is theft” I think you didn’t read anything I wrote because my core focus is that inflation is 100% avoidable through investment which is the behavior explicitly being incentivized via, to your point, a stick and not a carrot approach. It’s theft like taxation is theft: it’s not. > a GSE creates money from nothing Yes that’s the point. The economy gets bigger and more people are born and the money supply expands. To not do so would create deflationary pressure which, again, creates a risk free return for existing money holders for no justifiable reason. In fact you haven’t justified it either, you say it as though it’s self evident. If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. All were then arguing about is how much. > money grubbing banks... Banks are paid for the role they serve in the economy: liquidity and security. Look at how much they make, it’s all publicly disclosed. Banks make around a 1% return on deposits (you know, the collateral for this lending thing). Almost nothing. It’s a shit business. The remaining “free magic money” is cost of doing business and paid out to employees, landlords, suppliers and so on. You know, business expenses.
    - linuxftw 7y ago
      > It’s theft like taxation is theft: it’s not. Taxation is also theft. > If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft. It's a complete perversion of free market banking and benefits the few over the many. > 100% avoidable through investment Not true, unless you're talking about investing in financial instruments. Investing in almost anything else subjects you to property taxes almost everywhere.
- stale2002 7y ago
  > why they think money should be worth more later Because it is my choice? If you want to use an inflationary currency, go ahead. But other people should have the option of opting out, and using a different currency, with different properties
  - arcticbull 7y ago
    That’s not a reason. Give me a justification for why you think money should be worth more later. Because it would be sweet for you isn’t really compelling. I gave you a reason for inflation and your counter was “because I would be rich” - see if you can make a better case and if not, maybe reconsider your position.
    - stale2002 7y ago
      > Give me a justification for why you think money should be worth more later My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions". I believe it is people's right to choose which money system that they want, and you should not have the right to prevent other people's voluntary choice to use a different money system. I am justifying why people should be allowed to make their own decisions about what money system that they use. Freedom of choice is a valuable principle in and of itself. You cannot just dismiss this important concept of freedom of choice. It applies to all parts of society. The only justification I need, is that I do not want people's freedoms to be infrindged upon.
      - arcticbull 7y ago
        > My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions". You're intentionally not answering my question which is: explain to me what benefit to society could potentially arise from money being worth more over time? I'm not saying you can't do it I'm asking you why. It seems you and everyone else can't point to anything other than making yourselves wealthy.

arcticbull 7y ago

I’m consistently amazed by how many people here dont understand inflation at all and are confident they need to throw out the financial system before they figure it out. Inflation is an incentive to invest. If you invest in literally anything other than cash under your mattress inflation stops mattering completely to you, and all you have to think about is constant dollar returns. That’s why we have it. So long as your wages track inflation (broadly they do) you benefit from implicit depreciation in your debt obligations. It costs you nothing if you don’t hold cash like you’re supposed to, and it costs you effectively nothing if you hold money in a savings account as many offer 1.8% interest these days, matching inflation. What nobody arguing for a deflationary currency can tell me is why they think money should be worth more later solely by virtue of them having gotten it first. A risk-free guaranteed return at the expense of the next generation! It makes no sense. This is basic ECON 101. High school level home ec probably. Not some big conspiracy perpetrated by the central banking cabal.

leg100 7y ago
I'm not sure that is "why we have it". It sure is why the central banks are pumping money into the system (they quite rightly want people and companies to invest), but it's far from clear why we have it a priori.
- glofish 7y ago
  The answer is simple - trivial even. As I mentioned before a dollar today should be worth more than a dollar next year since, if you are smart, you can make that dollar work for you for a whole year. Hence the inflation.
  - leg100 7y ago
    No, not "hence the inflation". You have not explained why; you've explained why you think we should have inflation. And why someone thinks something should be is a long way from explaining why something is.
    - glofish 7y ago
      But I did. The same amount will be worth less in the future! That's really all there is to it. A certain amount of money is not value, money is a number that has a value associated with it, that value will continuously change depending on what you can do with it. Inflation (deflation) simply reflect the change in value for doing something today versus tomorrow. When the economy works well you have inflation, when the economy works badly it becomes deflation.
      - nybble41 7y ago
        > The same amount will be worth less in the future! ... When the economy works well you have inflation, when the economy works badly it becomes deflation. This is backward, actually. If the economy is working well then withholding consumption (i.e. saving) means that more goods are available for others to either consume or invest. The portion that ends up invested should result in higher future productivity and, in the absence of currency supply manipulation, decreasing prices (deflation), a natural reward for producing more than one consumes. Only in an economy which is consuming capital—investing so little that productivity is actually decreasing—should prices increase over time. In that case we need more investment to bump up production—the investments don't need to be all that good to be better than the status quo, and anything with a positive return is superior to just waiting for prices to increase further. In the deflationary case, however, we should be more selective about where we invest. It's better for the economy to simply hold our funds in reserve rather than actively compete against more competent investors to expend resources—not just money, but the labor and material it represents—on ventures that will provide lower-than-average returns. If we expand the currency supply to manufacture inflation and thus make it look like we need more investment when we actually don't then the net result is malinvestment, wasted resources, and a lower average rate of return. It's not good for the economy or the average citizen, but the extra transactions and higher nominal prices directly benefit the bankers and tax collectors with influence over monetary policy.
glofish 7y ago
Excellent point - Low inflation is a good thing - it is a sign of a properly functioning economy. A dollar today should be worth more than a dollar tomorrow. Too much inflation is not a good thing is usually sign of systemic failures of trust in a system. The two stages are usually conflated in many discussions.
semiotagonal 7y ago
Bitcoin in particular seems to be driven by people who are really obsessed with the idea of having a store of wealth with zero risk (assuming they never make a mistake handling it, or get tricked by swindlers, which I think they're seriously underestimating). But as you say, inflation is a tool; it motivates investment. Expropriation is a tool; I don't see how eliminating it is appealing at all to the billions of people with no savings at all. They may want to take money from the wealthy at some point. If there's ever a point where "the masses" really understand bitcoin, and how a few HODLers possess most of it's value, they're not going to want it.
tromp 7y ago
> savings account as many offer 1.8% interest these days I don't know where you live but I doubt it's western Europe. In the Netherlands for example, the highest interest rate available [1] is a lousy 0.2%. [1] https://www.spaarrente.nl/ https://www.spaarrente.nl/
- arcticbull 7y ago
  I’m referring to a US audience (Ally offers 1.8%). These rates are designed to incentivize you to allocate capital accordingly. The point is you not put much of your money there. Depending on how you feel about the future exchange rates between the EUR and USD you’re welcome to invest in US treasuries, for instance.
linuxftw 7y ago
Your understanding of inflation is misguided. Inflation as we have it under central banking today is theft. A GSE creates money from nothing. Large banks are allowed to have this money at near-zero cost, and lend it to others and a higher cost. It's a free profit for large banks. It's 100% organized theft. This is the scenario that create the 'too big to fail banks' that we had to give even more money to keep the system propped up.
- arcticbull 7y ago
  Ok round 2. > “inflation is theft” I think you didn’t read anything I wrote because my core focus is that inflation is 100% avoidable through investment which is the behavior explicitly being incentivized via, to your point, a stick and not a carrot approach. It’s theft like taxation is theft: it’s not. > a GSE creates money from nothing Yes that’s the point. The economy gets bigger and more people are born and the money supply expands. To not do so would create deflationary pressure which, again, creates a risk free return for existing money holders for no justifiable reason. In fact you haven’t justified it either, you say it as though it’s self evident. If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. All were then arguing about is how much. > money grubbing banks... Banks are paid for the role they serve in the economy: liquidity and security. Look at how much they make, it’s all publicly disclosed. Banks make around a 1% return on deposits (you know, the collateral for this lending thing). Almost nothing. It’s a shit business. The remaining “free magic money” is cost of doing business and paid out to employees, landlords, suppliers and so on. You know, business expenses.
  - linuxftw 7y ago
    > It’s theft like taxation is theft: it’s not. Taxation is also theft. > If you don’t believe the value of existing money should go up then you agree the money supply must expand to match economic growth and population growth. The unit of exchange (money/currency) should remain relatively constant. That's the point. Maybe it will go up some, maybe it will go down some, but having it manipulated for the profit of large banks is theft. It's a complete perversion of free market banking and benefits the few over the many. > 100% avoidable through investment Not true, unless you're talking about investing in financial instruments. Investing in almost anything else subjects you to property taxes almost everywhere.
stale2002 7y ago
> why they think money should be worth more later Because it is my choice? If you want to use an inflationary currency, go ahead. But other people should have the option of opting out, and using a different currency, with different properties
- arcticbull 7y ago
  That’s not a reason. Give me a justification for why you think money should be worth more later. Because it would be sweet for you isn’t really compelling. I gave you a reason for inflation and your counter was “because I would be rich” - see if you can make a better case and if not, maybe reconsider your position.
  - stale2002 7y ago
    > Give me a justification for why you think money should be worth more later My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions". I believe it is people's right to choose which money system that they want, and you should not have the right to prevent other people's voluntary choice to use a different money system. I am justifying why people should be allowed to make their own decisions about what money system that they use. Freedom of choice is a valuable principle in and of itself. You cannot just dismiss this important concept of freedom of choice. It applies to all parts of society. The only justification I need, is that I do not want people's freedoms to be infrindged upon.
    - arcticbull 7y ago
      > My justification is freedom of choice. Or, in other words, the reason is "because I want it to, and I am justified in making my own free decisions". You're intentionally not answering my question which is: explain to me what benefit to society could potentially arise from money being worth more over time? I'm not saying you can't do it I'm asking you why. It seems you and everyone else can't point to anything other than making yourselves wealthy.