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Inflation is a change in the price of money relative to the prices of all goods & services in the economy, and prices are set by the market. This means a curre
by lottin 5y ago
Inflation is a change in the price of money relative to the prices of all goods & services in the economy, and prices are set by the market. This means a currency cannot be made by design to produce low or high inflation rates, contrary to what the article claims. Only a monetary authority with the power to change the money supply can theoretically achieve that goal.
- kolbe 5y agoWell, public perception can also change it. BTC, for example, has experienced the most rapid deflation in the history of money, and it has nothing to do with a contraction in its supply.
- notahacker 5y agoThe irony is the USD actually is designed to achieve predictable and low inflation, whereas cryptocurrencies, whose demand bears little relation to current demand to hold it, lurch wildly in value
- lottin 5y agoI agree but the USD isn't designed to achieve low inflation. The Fed has a public mandate to achieve low inflation, which isn't quite the same thing.
- notahacker 5y agoIt's a moot point, but I'd consider the Fed and its mandate and operating procedures and target as part of the design of the modern USD (just as other regimes like Bretton Woods were also specific policy choices intended to achieve specific ends, not something which spontaneously appeared or naturally evolved)
- simo7 5y agoWell bitcoin does have an intrinsic monetary policy despite not having a monetary authority. It is possible to engineer currencies to be inflationary/deflationary without an external authority. It just cannot be a guarantee as there are many other factors to take into account.
- lottin 5y agoIndeed, bitcoin has an intrinsic monetary policy, but such a policy doesn't and can't have an inflation target. This is why claims that bitcoin is inflationary or deflationary are nonsense.