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On the contrary, the Bitcoin based global financial system would be robust, reliable, dependable, non-inflationary, neutral, and apolitical. Note after hyperbi

On the contrary, the Bitcoin based global financial system would be robust, reliable, dependable, non-inflationary, neutral, and apolitical. Note after hyperbitcoinization the volatility would be much lower than it is today, simply because it would take so much more to affect the price.

arcticbull 5y ago
"Non-inflationary" in supply terms only, of course, but that's just half the picture. You can easily have inflation in an economy with a fixed monetary supply if velocity increases disproportionately. [1] Worse, without a central monetary authority to adjust the supply boom and bust cycles are greatly exaggerated just as they used to be with the gold standard. There's no mechanism to address a deflationary spiral or runaway inflation (again that can happen with fixed supply). That makes it less reliable and less dependable. There's no such thing as neutral and apolitical money, certainly not at the point of use. This is broadly speaking wishful thinking and voodoo economics. Currencies need to be fungible, predictable, cheap to transact and hold their value as long as required to invest or spend on basic needs. Bitcoin is absolutely none of these things, making it crap money. Worse, it's the grey goo of energy usage. [1] https://www.stlouisfed.org/on-the-economy/2014/september/what-does-money-velocity-tell-us-about-low-inflation-in-the-us https://www.stlouisfed.org/on-the-economy/2014/september/wha...
- New_California 5y ago
  Keynesian vs Austrian once again - lets agree to disagree.
  - arcticbull 5y ago
    Re: Keynesian v. Austrian let me ask you this. As the money supply increased 25% last year why isn't everything 25% more expensive? As the M2 supply increased 15X since 1970 why are things only 7X more expensive? The idea inflation is supply side only is trivially falsifiable is it not? If the treasury minted a trillion dollar coin and gave it to me, then I threw it into a vault and never touched it the supply went up but prices stayed flat. Supply alone isn't a complete picture, obviously - what people do with that supply matters too. So what am I missing?
    - ItsMonkk 5y ago
      Oh, interesting. I was the guy correcting you on M2V from earlier. We actually agree with like 95% on our stances. Bitcoin is bad because it is a deflationary currency, you just made that point so we can move on. With the Federal Reserve setting artificially low interest rates that causes M2 to expand(which causes M2V to drop). That M2 has to go somewhere, and as money is not neutral, it goes based on the utility of the person who owns that money. You just mentioned neutrality, so we're in agreement here. That money causes the value of _something_ to rise, it has to. Whether the thing that rises is consumption items that affect the CPI or in stocks is up to the people who have the new money. This devalues the existing cash, and anyone who keeps cash is being feeling those effects. Anyone who pulled money out in 1971 and hid it under their mattress has been wiped out. The only alternative that these people have is putting it in other assets. The two main asset classes to pick from is housing and stocks. I hope I don't have to explain why housing is also a deflationary asset, and the only sustainable future we have there is a Land Value Tax. So let's look at stocks. The bulk of the money creation is coming in the form of corporate bonds, which the Fed is artificially holding up. They take those loans and buyback their own stock. We can see that the Stock Issuance vs Stock Buybacks has been negative for the past decade[0]. That's right, over the last decade the amount of stocks - the core value holding of the World Economy - is not only not growing, it is shrinking. Stocks are also deflationary. This explains the winners and the losers. This explains why prices are flat. Why buy more than you need when the utility provided in the future by buying stocks will keep getting greater and greater over time? This explains why GDP is rising only very slowly. There is no returns in actually taking a risk in creating value. Why work when you can just sit on your stockpile? [0, Figure 7]: https://www.yardeni.com/pub/fofusequity.pdf https://www.yardeni.com/pub/fofusequity.pdf
      - arcticbull 5y ago
        Btw, I was going to reply to the other one to say that I think we do agree on like 95% of our stances haha. Thanks for your thoughts! Interesting read - both here and the other thread! Re: housing, btw, it's a bit more complicated. On average, on an inflation-adjusted $/sqft basis, housing in America costs exactly what it did in 1973. [1] However, a few things have changed - mostly zoning related. In rural areas, houses are now twice as big, and the average family is smaller. This is likely attributable to zoning: minimum size, setback, etc. In urban areas, city councils refused to permit construction to meet demand - to the benefit of existing landowners. San Francisco added half as much new housing stock as necessary to meet the demand in the area over the last few decades. [2] Japan is a great counter-example, where housing has remained incredibly affordable - even in Tokyo. Likely attributable once again to zoning rules. They have national zoning rules which permit housing in every zone. [3] IMO housing is not deflationary because you can always build up, so while each square foot of ground space may appreciate, the price of usable square footage in aggregate doesn't have to. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa... [2] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [3] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning-more-liberal-than-us-zoning/ https://marketurbanism.com/2019/03/19/why-is-japanese-zoning...
  - plebianRube 5y ago
    For the best these people are victims of the blub paradox, but for financial systems. Blub paradox: (programming) The situation where a programmer (financial participant) sees less powerful programming languages (finacial sustems) than those he/she knows as lacking in important features, but more powerful ones as having bizarre or unnecessary features
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seoaeu 5y ago
> non-inflationary You have a pretty warped definition of inflation if you think Bitcoin is non-inflationary despite undergoing 70+% inflation over the last few months.

arcticbull 5y ago

"Non-inflationary" in supply terms only, of course, but that's just half the picture. You can easily have inflation in an economy with a fixed monetary supply if velocity increases disproportionately. [1] Worse, without a central monetary authority to adjust the supply boom and bust cycles are greatly exaggerated just as they used to be with the gold standard. There's no mechanism to address a deflationary spiral or runaway inflation (again that can happen with fixed supply). That makes it less reliable and less dependable. There's no such thing as neutral and apolitical money, certainly not at the point of use. This is broadly speaking wishful thinking and voodoo economics. Currencies need to be fungible, predictable, cheap to transact and hold their value as long as required to invest or spend on basic needs. Bitcoin is absolutely none of these things, making it crap money. Worse, it's the grey goo of energy usage. [1] https://www.stlouisfed.org/on-the-economy/2014/september/what-does-money-velocity-tell-us-about-low-inflation-in-the-us https://www.stlouisfed.org/on-the-economy/2014/september/wha...

New_California 5y ago
Keynesian vs Austrian once again - lets agree to disagree.
- arcticbull 5y ago
  Re: Keynesian v. Austrian let me ask you this. As the money supply increased 25% last year why isn't everything 25% more expensive? As the M2 supply increased 15X since 1970 why are things only 7X more expensive? The idea inflation is supply side only is trivially falsifiable is it not? If the treasury minted a trillion dollar coin and gave it to me, then I threw it into a vault and never touched it the supply went up but prices stayed flat. Supply alone isn't a complete picture, obviously - what people do with that supply matters too. So what am I missing?
  - ItsMonkk 5y ago
    Oh, interesting. I was the guy correcting you on M2V from earlier. We actually agree with like 95% on our stances. Bitcoin is bad because it is a deflationary currency, you just made that point so we can move on. With the Federal Reserve setting artificially low interest rates that causes M2 to expand(which causes M2V to drop). That M2 has to go somewhere, and as money is not neutral, it goes based on the utility of the person who owns that money. You just mentioned neutrality, so we're in agreement here. That money causes the value of _something_ to rise, it has to. Whether the thing that rises is consumption items that affect the CPI or in stocks is up to the people who have the new money. This devalues the existing cash, and anyone who keeps cash is being feeling those effects. Anyone who pulled money out in 1971 and hid it under their mattress has been wiped out. The only alternative that these people have is putting it in other assets. The two main asset classes to pick from is housing and stocks. I hope I don't have to explain why housing is also a deflationary asset, and the only sustainable future we have there is a Land Value Tax. So let's look at stocks. The bulk of the money creation is coming in the form of corporate bonds, which the Fed is artificially holding up. They take those loans and buyback their own stock. We can see that the Stock Issuance vs Stock Buybacks has been negative for the past decade[0]. That's right, over the last decade the amount of stocks - the core value holding of the World Economy - is not only not growing, it is shrinking. Stocks are also deflationary. This explains the winners and the losers. This explains why prices are flat. Why buy more than you need when the utility provided in the future by buying stocks will keep getting greater and greater over time? This explains why GDP is rising only very slowly. There is no returns in actually taking a risk in creating value. Why work when you can just sit on your stockpile? [0, Figure 7]: https://www.yardeni.com/pub/fofusequity.pdf https://www.yardeni.com/pub/fofusequity.pdf
    - arcticbull 5y ago
      Btw, I was going to reply to the other one to say that I think we do agree on like 95% of our stances haha. Thanks for your thoughts! Interesting read - both here and the other thread! Re: housing, btw, it's a bit more complicated. On average, on an inflation-adjusted $/sqft basis, housing in America costs exactly what it did in 1973. [1] However, a few things have changed - mostly zoning related. In rural areas, houses are now twice as big, and the average family is smaller. This is likely attributable to zoning: minimum size, setback, etc. In urban areas, city councils refused to permit construction to meet demand - to the benefit of existing landowners. San Francisco added half as much new housing stock as necessary to meet the demand in the area over the last few decades. [2] Japan is a great counter-example, where housing has remained incredibly affordable - even in Tokyo. Likely attributable once again to zoning rules. They have national zoning rules which permit housing in every zone. [3] IMO housing is not deflationary because you can always build up, so while each square foot of ground space may appreciate, the price of usable square footage in aggregate doesn't have to. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa... [2] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [3] https://marketurbanism.com/2019/03/19/why-is-japanese-zoning-more-liberal-than-us-zoning/ https://marketurbanism.com/2019/03/19/why-is-japanese-zoning...
- plebianRube 5y ago
  For the best these people are victims of the blub paradox, but for financial systems. Blub paradox: (programming) The situation where a programmer (financial participant) sees less powerful programming languages (finacial sustems) than those he/she knows as lacking in important features, but more powerful ones as having bizarre or unnecessary features

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seoaeu 5y ago

> non-inflationary You have a pretty warped definition of inflation if you think Bitcoin is non-inflationary despite undergoing 70+% inflation over the last few months.