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> because the population would struggle to see it [deflation] as an enemy due to the fact that it's desirable at the individual level. Deflation can be ruinous

by seoaeu 6y ago

> because the population would struggle to see it [deflation] as an enemy due to the fact that it's desirable at the individual level. Deflation can be ruinous at the individual level. If you are in debt (like many of the poorest members of our society) then significant deflation means that you'll have to pay back your creditors substantially more than you borrowed, and many won't be able to. Consider, would you take a mortgage denominated in Bitcoin? Of course not! If its price continued to go up (i.e. it continued to be deflationary) then you wouldn't be able to pay back the loan and would face foreclosure.

eric_cc 6y ago
> would you take a mortgage denominated in Bitcoin? Of course not! If its price continued to go up Only so long as Bitcoin is pegged to the USD. Once Bitcoin becomes the basis of value, and the USD is pegged to Bitcoin instead, things become different. Bitcoin stabilizes. You take a loan in Bitcoin, you take a salary in Bitcoin. Bitcoin isn't going up anymore in this scenario because it's not related to fiat currency. You're still thinking in terms of BTC going up in USD. 1 BTC = 1 BTC
- seoaeu 6y ago
  So you're saying that BTC will be a good currency once it stops being deflationary?
  - eric_cc 6y ago
    I think BTC and crypto are already good ways to transfer value. I think it'll "stabalize" in time such that it'll be boring in terms of its volatility.