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Is it lack of understanding of the financial industry or the opposite? I observe that through Bitcoin much more people have become interested in (austrian) econ

Is it lack of understanding of the financial industry or the opposite? I observe that through Bitcoin much more people have become interested in (austrian) economics. I think especially in times when everyone says that the problems e.g. central banks are “solving” are too complex to understand for 99.99% of the people, an uptrend in a much more simple theory (that is hence also more compatible with Occam’s razor) is a good thing.

nly 5y ago
For me the ultimate problem with deflationary currencies is that you get rewarded for doing nothing. Every year as keys to wallets are irreversibly lost, or the value of the real economy grows relative to the supply of BTC, your Bitcoin gets more and more valuable. Many Bitcoin hodlers actually have an expectation of becoming extremely wealthy, despite having done nothing for society, because they've been swept up in the speculative mania and volatility. Gold bugs don't generally have this expectation. Gold is no longer a broadly accepted currency, and even the most vocal of gold bugs are only expecting a 2x or 5x return in the next few decades, assuming the $ does collapse. They only preach an expectation that N bricks of gold, where N will buy a house today, will buy them a house 50 years from now. The attitude is one of wealth preservation rather than speculation. It's a reasonable expectation assuming the demand for and supply of Gold remains balanced.
- AnIdiotOnTheNet 5y ago
  I would say it is even worse than doing nothing when one considers the environmental impact of mining BTC. These people have an expectation of reward for increasing energy usage and pollution in the world for basically no benefit to anyone but themselves.
- lazerpants 5y ago
  Deflationary currencies shouldn't be an issue if real prices adjust at a similar pace. The theoretical problem with deflation is mostly that wages are sticky and you can't lower someone's pay very easily. But if everyone has the expectation of deflation it would probably work fine. Expectations about inflation/deflation are important drivers of these phenomena (not the only ones of course) and if we break the paradigm with cryptocurrencies then it's possible the stickiness problems of deflation could be solved.
  - Nursie 5y ago
    None of that addresses the parent's concerns that idle cash grows in value, effectively benefiting from the economic output of others without even the need for investment.
    - lazerpants 5y ago
      It doesn't grow in value if real prices are adjusting simultaneously.
      - Nursie 5y ago
        But you’re talking about a deflationary currency, by definition prices fall compared to currency units.
- scsilver 5y ago
  You get rewarded for your risk, its not nothing, its second key building block for a financial system. Those that have time, trade risk for money, those that have money trade money for reduced risk over a period of time. If this wasnt the case, people couldn't retire safely, there would be no one to trade their money for lowered risk. What is interesting is that this setup has been exploiting youth for a long time. Its only now that, with crypto, GME, AMC, the younger investors can ramp up the volitility in the market, creating more risk for older more established investors, who then need to pay to reduce their expose to that risk. There a lot more to this that further blurs the morality of positioning yourself within this power struggle, but ultimately, its just market forces at work. At the end of the day, this revolution could be stymied by actually providing the next generations with a foreseeable path to home ownership, a family with good education and healthcare, and the american dream, without having to yolo it all, even on an engineers salary. But it seems the next generation is only path to enact change is by staking their assets for generational speculation war.
  - Nursie 5y ago
    In the situation where a deflationary currency is a country's currency, there is no risk. Neither is there investment, there is merely sitting on currency to gain value.

nly 5y ago

For me the ultimate problem with deflationary currencies is that you get rewarded for doing nothing. Every year as keys to wallets are irreversibly lost, or the value of the real economy grows relative to the supply of BTC, your Bitcoin gets more and more valuable. Many Bitcoin hodlers actually have an expectation of becoming extremely wealthy, despite having done nothing for society, because they've been swept up in the speculative mania and volatility. Gold bugs don't generally have this expectation. Gold is no longer a broadly accepted currency, and even the most vocal of gold bugs are only expecting a 2x or 5x return in the next few decades, assuming the $ does collapse. They only preach an expectation that N bricks of gold, where N will buy a house today, will buy them a house 50 years from now. The attitude is one of wealth preservation rather than speculation. It's a reasonable expectation assuming the demand for and supply of Gold remains balanced.

AnIdiotOnTheNet 5y ago
I would say it is even worse than doing nothing when one considers the environmental impact of mining BTC. These people have an expectation of reward for increasing energy usage and pollution in the world for basically no benefit to anyone but themselves.
lazerpants 5y ago
Deflationary currencies shouldn't be an issue if real prices adjust at a similar pace. The theoretical problem with deflation is mostly that wages are sticky and you can't lower someone's pay very easily. But if everyone has the expectation of deflation it would probably work fine. Expectations about inflation/deflation are important drivers of these phenomena (not the only ones of course) and if we break the paradigm with cryptocurrencies then it's possible the stickiness problems of deflation could be solved.
- Nursie 5y ago
  None of that addresses the parent's concerns that idle cash grows in value, effectively benefiting from the economic output of others without even the need for investment.
  - lazerpants 5y ago
    It doesn't grow in value if real prices are adjusting simultaneously.
    - Nursie 5y ago
      But you’re talking about a deflationary currency, by definition prices fall compared to currency units.
scsilver 5y ago
You get rewarded for your risk, its not nothing, its second key building block for a financial system. Those that have time, trade risk for money, those that have money trade money for reduced risk over a period of time. If this wasnt the case, people couldn't retire safely, there would be no one to trade their money for lowered risk. What is interesting is that this setup has been exploiting youth for a long time. Its only now that, with crypto, GME, AMC, the younger investors can ramp up the volitility in the market, creating more risk for older more established investors, who then need to pay to reduce their expose to that risk. There a lot more to this that further blurs the morality of positioning yourself within this power struggle, but ultimately, its just market forces at work. At the end of the day, this revolution could be stymied by actually providing the next generations with a foreseeable path to home ownership, a family with good education and healthcare, and the american dream, without having to yolo it all, even on an engineers salary. But it seems the next generation is only path to enact change is by staking their assets for generational speculation war.
- Nursie 5y ago
  In the situation where a deflationary currency is a country's currency, there is no risk. Neither is there investment, there is merely sitting on currency to gain value.