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The US dollar has lost 99% of its purchasing power since moving off the gold standard in 1933. Wonderfully stable if you consider $1 in 1933 = $1 in 2021, infl

by lowkey 5y ago

The US dollar has lost 99% of its purchasing power since moving off the gold standard in 1933. Wonderfully stable if you consider $1 in 1933 = $1 in 2021, inflation is hidden taxation and disproportionately affects widows and orphans.

AnimalMuppet 5y ago
And bitcoin lost 30% of its value in the last month. So yes, the dollar is in fact wonderfully stable by comparison.
- lowkey 5y ago
  No one is arguing that Bitcoin is stable. I was simply pointing out that the USD is not as stable as you presume on a long-enough timescale. In fact it loses approximately 100% of its purchasing power per century.
  - thehappypm 5y ago
    It took a century for USD to swing 99%, how long did it take BTC?
    - lowkey 5y ago
      I’m not sure I understand, has BTC ever lost 99% of it’s value? If I understand correctly, the value of Bitcoin has only gone up over the past 11 years. While the purchasing power of the US dollar has fallen in real terms every single one of those years.
      - AnimalMuppet 5y ago
        Depends on your time frame. It has definitely gone down at times - it's not at 55,000 any more. So "only gone up" might be true, if you pick your sampling intervals in a way that misses all the dips. It's definitely false as an absolute statement, though. And, to thehappypm's point: Has the US dollar ever lost 30% of its value in a month? No. This point was badly stated (bitcoin has never lost 99% of its value), but I think the point is rather clear: Bitcoin can lose value much more rapidly than the US dollar, and in fact has done so.
      - thehappypm 5y ago
        BTC is up 100x from a couple years ago, is that desirable for a currency?
        lowkey 5y ago
        It is desirable for a reserve asset and a store of value - which are use-cases for a currency. It is obviously not great to have a deflationary currency as the only option for spending. However, luckily we still have fiat currencies which are ideal for spending as well as Bitcoin which is the superior savings vehicle. Bitcoin has only been around for ~11 years and by all accounts it is still in price discovery mode. Eventually it’s value will stabilize and it may serve as a better unit of account. Until then, spend your fiat and Hodl your bitcoin.
  - hakfoo 5y ago
    The "how much value it loses per century" time scale is unimportant for most applications. You need a currency to be "not 1923 Germany", because it becomes impossible to plan for anything past your next meal. But the "loses 100% of the value per century" doesn't really seem to be a hindrance to our real-world financial needs. Lenders are capable of understanding this risk and extending 30+ year mortgages and even those weird century-plus infrastructure bond products. The whole long-term stability thing seems to be a very narrow scare tactic: a bugabear for those who are wealthy enough to hold a lot of cash, but too naive/risk-averse/fearful to invest it in any meaningful way o beat inflation.
    - lowkey 5y ago
      I appreciate your point of view but if we look at the origin story of Bitcoin and Satoshi’s vision of the hardest money ever created, the fact that all fiat currencies lose value over time is exactly why it was created. While bitcoin may be volatile in USD over the short term, I can tell you the exact inflation rate of Bitcoin today, tomorrow or 100 years from now. Try that with the US Dollar.
      - thehappypm 5y ago
        What is the inflation rate in terms of purchasing power?
    - lowkey 5y ago
      “But the "loses 100% of the value per century" doesn't really seem to be a hindrance to our real-world financial needs. Lenders are capable of understanding this risk and extending 30+ year mortgages and even those weird century-plus infrastructure bond products.” We are going to have to disagree on this point. To me inflation is taxation without representation. It is theft of purchasing power by Central Banks. It disproportionately negatively affects savers or those on fixed incomes and it benefits those closest to the new spending (read Wall Street Bankers) via the Cantillon Effect. I am less concerned with the needs of lenders to compensate for inflation than I am worried about the disastrous effect it has on those who wish to save for the future.
  - AnimalMuppet 5y ago
    The context was exactly bitcoin losing value very rapidly. When thehappypm said that the dollar was stable, that wasn't a claim of "absolutely stable" - it was "far more stable than bitcoin". I don't know if you're doing it deliberately, but in the context, you're kind of doing a motte-and-bailey here...

by lowkey 5y ago

AnimalMuppet 5y ago

And bitcoin lost 30% of its value in the last month. So yes, the dollar is in fact wonderfully stable by comparison.

lowkey 5y ago
No one is arguing that Bitcoin is stable. I was simply pointing out that the USD is not as stable as you presume on a long-enough timescale. In fact it loses approximately 100% of its purchasing power per century.
- thehappypm 5y ago
  It took a century for USD to swing 99%, how long did it take BTC?
  - lowkey 5y ago
    I’m not sure I understand, has BTC ever lost 99% of it’s value? If I understand correctly, the value of Bitcoin has only gone up over the past 11 years. While the purchasing power of the US dollar has fallen in real terms every single one of those years.
    - AnimalMuppet 5y ago
      Depends on your time frame. It has definitely gone down at times - it's not at 55,000 any more. So "only gone up" might be true, if you pick your sampling intervals in a way that misses all the dips. It's definitely false as an absolute statement, though. And, to thehappypm's point: Has the US dollar ever lost 30% of its value in a month? No. This point was badly stated (bitcoin has never lost 99% of its value), but I think the point is rather clear: Bitcoin can lose value much more rapidly than the US dollar, and in fact has done so.
    - thehappypm 5y ago
      BTC is up 100x from a couple years ago, is that desirable for a currency?
      - lowkey 5y ago
        It is desirable for a reserve asset and a store of value - which are use-cases for a currency. It is obviously not great to have a deflationary currency as the only option for spending. However, luckily we still have fiat currencies which are ideal for spending as well as Bitcoin which is the superior savings vehicle. Bitcoin has only been around for ~11 years and by all accounts it is still in price discovery mode. Eventually it’s value will stabilize and it may serve as a better unit of account. Until then, spend your fiat and Hodl your bitcoin.
- hakfoo 5y ago
  The "how much value it loses per century" time scale is unimportant for most applications. You need a currency to be "not 1923 Germany", because it becomes impossible to plan for anything past your next meal. But the "loses 100% of the value per century" doesn't really seem to be a hindrance to our real-world financial needs. Lenders are capable of understanding this risk and extending 30+ year mortgages and even those weird century-plus infrastructure bond products. The whole long-term stability thing seems to be a very narrow scare tactic: a bugabear for those who are wealthy enough to hold a lot of cash, but too naive/risk-averse/fearful to invest it in any meaningful way o beat inflation.
  - lowkey 5y ago
    I appreciate your point of view but if we look at the origin story of Bitcoin and Satoshi’s vision of the hardest money ever created, the fact that all fiat currencies lose value over time is exactly why it was created. While bitcoin may be volatile in USD over the short term, I can tell you the exact inflation rate of Bitcoin today, tomorrow or 100 years from now. Try that with the US Dollar.
    - thehappypm 5y ago
      What is the inflation rate in terms of purchasing power?
  - lowkey 5y ago
    “But the "loses 100% of the value per century" doesn't really seem to be a hindrance to our real-world financial needs. Lenders are capable of understanding this risk and extending 30+ year mortgages and even those weird century-plus infrastructure bond products.” We are going to have to disagree on this point. To me inflation is taxation without representation. It is theft of purchasing power by Central Banks. It disproportionately negatively affects savers or those on fixed incomes and it benefits those closest to the new spending (read Wall Street Bankers) via the Cantillon Effect. I am less concerned with the needs of lenders to compensate for inflation than I am worried about the disastrous effect it has on those who wish to save for the future.
- AnimalMuppet 5y ago
  The context was exactly bitcoin losing value very rapidly. When thehappypm said that the dollar was stable, that wasn't a claim of "absolutely stable" - it was "far more stable than bitcoin". I don't know if you're doing it deliberately, but in the context, you're kind of doing a motte-and-bailey here...