4 ms·
What do you have against fiat printing?
by baby 6y ago
What do you have against fiat printing?
- jtms 6y agoprobably the potential of rampant inflation. When a government summons trillions of dollars into existence (like most governments have been doing throughout the pandemic) it dilutes the underlying value of every single unit of currency in circulation. Its not nearly as simple as "double the money supply == halve your current cash's value", but some amount of dilution and inflation are definitely happening. BTC is theoretically a good hedge against this as it is deflationary by design.
- lottin 6y agoThere is potential for hyperinflation, just like having a police force means there is a potential for extrajudicial killings and all sorts of nasty stuff. The thing is when was the last time a western country experienced hyperinflation? I think Germany in the 1930s. Hyperinflation is a made-up problem.
- yxhuvud 6y agoHyperinflation can happen in any society if the productive capability of the society goes to the shitters. Printing money does not trigger such a collapse though. So if anyone is scared of hyperinflation, look at how industries and services in the country do instead of at how the money supply change.
- jtms 6y agoWho said anything about hyperinflation? Regular inflation occurs constantly (and by design) and must be compensated for. If you just leave your cash in a checking account and walk away for 10 years you will come back to radically less buying power than when you left it - the number might be the same, but the total money supply will have grown tremendously thus reducing that money's buying power. According to inflation estimates $1 USD in 1970 was equivalent to almost $7 USD in 2021 value. The point of an investment portfolio is to outpace this dilution so that your wealth grows and you are not diluted into ruin by the printing of new money. A balanced portfolio that has some percentage allocated to instruments that tend to hold a steady value or grow inversely to inflation are critical. BTC is shaping up to be a good choice to add alongside of gold and other precious metals which have historically been used for this purpose. It is short term VERY volatile, but long term it has consistently WAY outpaced inflation.
- lottin 6y agoNo. The point of an investment portfolio is not to outpace inflation. The point of investing (in general) is to trade an amount of present consumption for a greater amount of future consumption. This is true whether the inflation rate is positive, negative or zero. If you simply save and hedge against inflation (i.e. you invest in something that provides a real rate of return of zero), then it means you're trading an amount of present consumption for the same amount of future consumption. In other words, you lose because you're not getting compensated for delaying consumption. At any rate, neither gold nor BTC are considered good investments by people who know anything about economics and finance, since neither of these assets provide income, but of course feel free to invest your money in whatever you like.
- jtms 6y agoAnd you as well mr all knowing sage of finance
- matheusmoreira 6y ago> The thing is when was the last time a western country experienced hyperinflation? So it's alright because western countries aren't suffering any side effects? > Hyperinflation is a made-up problem. My country suffered hyperinflation multiple times. It was so bad we had to create new currencies with every iteration. I think the most recent episode happened in the 90s or so.
- baby 6y agoI learned the other day that this is not necessarily true, as long as the money printed creates value. Japan is an example: they have printed tons of money and haven’t had inflation.
- jtms 6y agoI have read about that too and know that there is quite a big debate about inflation. I still think that modern economic systems are sufficiently complex that there is no one person or government on the planet smart enough to allocate printed money in a way that is always 100% efficient - some amount of dilution is absolutely going to occur when you just will a couple trillion dollars into existence and inject it into the economy. Hopefully the value is greater than the dilution, but its not always going to work that way - this is what a well balanced portfolio will counter.
- baby 6y agoOne can argue money printing has really worked out for the US so far...
- gher-shyu3i 6y agoIt devalues everyone's hard work, other than the ones who will benefit from it. Then people complain about the wealth gap.
- genericuser314 6y agoIn the United States, most people are in debt. When you're in debt inflation doesn't devalue your hard work... it devalues your debt. For most people in the United States, some inflation would be objectively positive. [0]: https://www.bankrate.com/personal-finance/debt/average-american-debt/ https://www.bankrate.com/personal-finance/debt/average-ameri...
- gher-shyu3i 6y agoIt definitely devalues your hard work, it becomes very difficult to save. Some people don't want to go into debt because they don't engage in usurious transactions.
- genericuser314 6y agoIn fact, I've never met anyone who wants to go into debt, and yet here we are in the real world where "The bottom half of Americans combined have a negative net worth," [0]: https://www.businessinsider.com/bottom-half-of-americans-negative-net-worth-2019-5 https://www.businessinsider.com/bottom-half-of-americans-neg... In objective reality, setting aside philosophical objections to usury, since inflation devalues debt as well as savings it is a net benefit to the above mentioned Americans.
- gher-shyu3i 6y agoWe wouldn't be having this discussion in the first place if people refused to engage in usury.
- hellow0rldz 6y agoI wouldn't have anything if I would receive any of it. But otherwise it seems to devalue the fiat I own so we have to come up to solutions to counterbalance that.
- baby 6y agoIt apparently doesn’t, look at the inflation of japan and how much they’ve printed money and you will see that there are many more factors than impact inflation.
- matheusmoreira 6y agoIt inflates the money supply, reducing the value of the money we already have. Inflation is essentially a tax that gets constantly applied.