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You are stating this like it's a fact and a known quantity but the reality is that it isn't. Many countries who manage their money supply have wildly unstable
by anm89 6y ago
You are stating this like it's a fact and a known quantity but the reality is that it isn't.
Many countries who manage their money supply have wildly unstable currencies. Turkey for example.
On the other hand many economists belive Nobel Prize winner Milton Friedman's assertion that "Inflation is always and everywhere a monetary phenomenon" (more economists disagree with this probably, my point being that these are not settled matters)
And we have absolutely zero long term evidence of how currencies with pre determined supplies behave.
So, sure, state your case, you might be right, but don't make it out to be like this is some law of physics.
- carlob 6y agoNot OP, but I think you are misreading their point. They didn't say that having a governing body is a sufficient condition for having a stable currency, they said it's necessary. It might not be a settled question how monetary policy affects inflation, but cryptocurrencies effectively have no monetary policy apart from a ramp decided when they are created. That doesn't take into account lost wallet keys or number of people using it and mining it...
- eruleman 6y agoEthereum is pioneering a new monetary policy with EIP 1559 (which is going live with Berlin fork this summer). Under EIP 1559, each block will burn ETH — the amount of ETH burned increases as blocks fill up. The ETH burned can offset & exceed the ETH block issuance. Over time, if ETH block space is full, the amount of ETH will decrease.
- proto-n 6y agoWhich is, if I understand correctly, a kind of balancing feedback loop. People are spending -> make it deflationary. People are hoarding -> make it inflationary. It will be really interesting to see if this has any stabilizing effect in the (very) long term.
- 1helloworld1 6y agoGame theoretically, you want to be the hoarder. Let others spend and you reap the rewards of a deflationary asset. In effect, people will still try to hoard as much as possible, and only spend when absolutely necessary.
- proto-n 6y agoThat's true as long as there are hoarders and spenders as well. As soon as there are too many hoarders, inflation comes back, and there's personal incentive for everyone to spend. There is no equilibrium at either everyone being a spender or everyone being a hoarder, thus the self-balancing nature.
- skzv 6y ago> like this is some law of physics. And I don't think it can be. Economics is ultimately the study of people's behaviour, and that is subject to irrationality, emotions, culture, and times.
- imtringued 6y ago>Many countries who manage their money supply have wildly unstable currencies. Turkey for example. This is true, Erdogan decided to take control over the money supply, which is generally the job of the central bank which is an independent branch of the government. Countries with independent central banks usually have stable currencies. >On the other hand many economists belive Nobel Prize winner Milton Friedman's assertion that "Inflation is always and everywhere a monetary phenomenon" (more economists disagree with this probably, my point being that these are not settled matters) What Turkey needs is reforms and financial aid for the agriculture sector not control over the money supply because "inflations" aren't caused by interest rates, they are caused by shortages in the relevant sector. If there is enough food for everyone, then food inflation will go away and it could go away despite the money printing.
- anm89 6y agoTurkeys monetary issues go back way further than the example you are citing.
- mam3 6y agoI am confused about taking ANYTHING from your comment.. are exactly saying "no on agrees on anything about curencies" ?