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Most of the value in defi is in stablecoins and most prices are quoted in dollars. Some crypto stuff will have good value accrual mechanisms, others wont. The i

Most of the value in defi is in stablecoins and most prices are quoted in dollars. Some crypto stuff will have good value accrual mechanisms, others wont. The idea crypto displaces the dollar as a reserve currency is insanity.

lowkey 5y ago
The US dollar is inflating at 40% year/year as measured by M2 money supply and there seems to be no end in sight. The US government is considering minting a $1 Trillion dollar coin to keep this debt-spiral going a little longer. The idea of using the US dollar as the world’s reserve currency is an insane 50 year old experiment that won’t end well.
- arcticbull 5y ago
  Wow that would be amazing if it were true or sensical or really even grounded. Inflation in the real world isn't defined by supply but rather purchasing power as measured by CPI. Your definition is closer to the Austrian definition, long debunked because what people do with that supply is as important as its existence. The M2 supply increased 15X since the 70s but purchasing power only dropped by a factor of 7, meaning without a doubt that supply isn't the be all and end all. TL;DR: The M2 supply is not a measure of inflation. It's just not.
  - lowkey 5y ago
    You are confusing cause and effect. Prices go up over time as measured in fiat because of monetary inflation (i.e. money printing) by the Fed which dilutes the purchasing power of the dollar. M2 monetary supply inflation coupled with the velocity of money causes CPI to increase, not the other way around. 70% of all the dollars ever created were created since the invention of Bitcoin. Please substantiate your claim that Austrian economics has been debunked (in favor of modern monetary theory I suppose?) From my perspective, Austrian economics is proving itself more and more each day. I would love to hear your explanation of how a nation can inflate it’s money supply by 40% in a year without affecting inflation.
    - bradwood 5y ago
      This. Plus also, lets for a moment remind ourselves how reliable of a measure of inflation CPI is. Its basis is a basket of products the composition of which is opaquely tweaked to suit an particular agenda. This makes it _less_ reliable than M1-M4 as a measure of inflation.
    - diatone 5y ago
      GP wasn’t stating that a larger stock of cash is definitively not a parameter of inflation, but that it is not the only parameter. As to your question about the other factors, here’s a thought experiment: if I printed cash daily but locked it up in a chest and sunk it to the bottom of the sea, will there be inflation? Going one step further: does inflation depend on the distribution of liquidity in the economy?
      - lowkey 5y ago
        > As to your question about the other factors, here’s a thought experiment: if I printed cash daily but locked it up in a chest and sunk it to the bottom of the sea, will there be inflation? Going one step further: does inflation depend on the distribution of liquidity in the economy? In your thought experiment No it would not impact inflation, but in the real world over the past year we have begun to see rates of inflation not seen in 40 years. Inflation is running at 3x the Fed’s target at a time when the Fed’s money printer is creating trillions of US dollars out of thin air. In September 2021, anyone diminishing or dismissing the impact of money printing on inflation is being willfully ignorant or intentionally disingenuous.
    - jjeaff 5y ago
      Not that it is definitive proof, but these same alarm bells were going off when we drastically increased the money supply to combat the financial crisis in 2008. And inflation never happened. The reason we aren't, at least for now, likely to see serious inflation due to the recent increase in money supply is because most of it entered the economy through the Fed's bond buying program. So the bonds went on the Fed's balance sheet and most of the money used to purchase those bonds went back on deposit with the fed. Those bonds will either reach maturity or the fed will sell them - at which point the fed can erase that from the money supply. But, as the other poster said, the simplified version is that money supply doesn't matter if it's not actually in circulation and being used.
  - bruce511 5y ago
    Agreed. For starters population growth is part of the equation. Consider the following scenario. There are 10 people in the world, and $100. So all being equal [1] each has $10 to spend. (Remember "money" is just a useful way of measuring accumulated social value.) Fast forward a few years, now there are 100 people, all creating social value. To maintain the status quo the money supply must now be $1000. 0% inflation as the money supply per person is still $10. [1] now imagine that all things are not equal. Some people add more social value than they consume. Ie their accumulated $ grows. In effect some number of $ are no longer in circulation. So more money has to be added to the supply to compensate. Equally some company or individual may move money out of the economy and store it externally. Think cash under a matrass, or sitting in a Bahamas bank account. That money can (and must) be replaced in the system or the system will fail. So the increase of money supply, taken as a measure by itself, is a meaningless number.
    - lowkey 5y ago
      > So the increase of money supply, taken as a measure by itself, is a meaningless number. The M2 money supply has been diluted by 40% over the past year. The population has not meaningfully changed over the past year. Official inflation is running at 5.6% (almost 3x the target) and un-official measures range from 12-20%. All other things being equal inflating the money supply absolutely has a disproportionate effect on inflation.

lowkey 5y ago

The US dollar is inflating at 40% year/year as measured by M2 money supply and there seems to be no end in sight. The US government is considering minting a $1 Trillion dollar coin to keep this debt-spiral going a little longer. The idea of using the US dollar as the world’s reserve currency is an insane 50 year old experiment that won’t end well.

arcticbull 5y ago
Wow that would be amazing if it were true or sensical or really even grounded. Inflation in the real world isn't defined by supply but rather purchasing power as measured by CPI. Your definition is closer to the Austrian definition, long debunked because what people do with that supply is as important as its existence. The M2 supply increased 15X since the 70s but purchasing power only dropped by a factor of 7, meaning without a doubt that supply isn't the be all and end all. TL;DR: The M2 supply is not a measure of inflation. It's just not.
- lowkey 5y ago
  You are confusing cause and effect. Prices go up over time as measured in fiat because of monetary inflation (i.e. money printing) by the Fed which dilutes the purchasing power of the dollar. M2 monetary supply inflation coupled with the velocity of money causes CPI to increase, not the other way around. 70% of all the dollars ever created were created since the invention of Bitcoin. Please substantiate your claim that Austrian economics has been debunked (in favor of modern monetary theory I suppose?) From my perspective, Austrian economics is proving itself more and more each day. I would love to hear your explanation of how a nation can inflate it’s money supply by 40% in a year without affecting inflation.
  - bradwood 5y ago
    This. Plus also, lets for a moment remind ourselves how reliable of a measure of inflation CPI is. Its basis is a basket of products the composition of which is opaquely tweaked to suit an particular agenda. This makes it _less_ reliable than M1-M4 as a measure of inflation.
  - diatone 5y ago
    GP wasn’t stating that a larger stock of cash is definitively not a parameter of inflation, but that it is not the only parameter. As to your question about the other factors, here’s a thought experiment: if I printed cash daily but locked it up in a chest and sunk it to the bottom of the sea, will there be inflation? Going one step further: does inflation depend on the distribution of liquidity in the economy?
    - lowkey 5y ago
      > As to your question about the other factors, here’s a thought experiment: if I printed cash daily but locked it up in a chest and sunk it to the bottom of the sea, will there be inflation? Going one step further: does inflation depend on the distribution of liquidity in the economy? In your thought experiment No it would not impact inflation, but in the real world over the past year we have begun to see rates of inflation not seen in 40 years. Inflation is running at 3x the Fed’s target at a time when the Fed’s money printer is creating trillions of US dollars out of thin air. In September 2021, anyone diminishing or dismissing the impact of money printing on inflation is being willfully ignorant or intentionally disingenuous.
  - jjeaff 5y ago
    Not that it is definitive proof, but these same alarm bells were going off when we drastically increased the money supply to combat the financial crisis in 2008. And inflation never happened. The reason we aren't, at least for now, likely to see serious inflation due to the recent increase in money supply is because most of it entered the economy through the Fed's bond buying program. So the bonds went on the Fed's balance sheet and most of the money used to purchase those bonds went back on deposit with the fed. Those bonds will either reach maturity or the fed will sell them - at which point the fed can erase that from the money supply. But, as the other poster said, the simplified version is that money supply doesn't matter if it's not actually in circulation and being used.
- bruce511 5y ago
  Agreed. For starters population growth is part of the equation. Consider the following scenario. There are 10 people in the world, and $100. So all being equal [1] each has $10 to spend. (Remember "money" is just a useful way of measuring accumulated social value.) Fast forward a few years, now there are 100 people, all creating social value. To maintain the status quo the money supply must now be $1000. 0% inflation as the money supply per person is still $10. [1] now imagine that all things are not equal. Some people add more social value than they consume. Ie their accumulated $ grows. In effect some number of $ are no longer in circulation. So more money has to be added to the supply to compensate. Equally some company or individual may move money out of the economy and store it externally. Think cash under a matrass, or sitting in a Bahamas bank account. That money can (and must) be replaced in the system or the system will fail. So the increase of money supply, taken as a measure by itself, is a meaningless number.
  - lowkey 5y ago
    > So the increase of money supply, taken as a measure by itself, is a meaningless number. The M2 money supply has been diluted by 40% over the past year. The population has not meaningfully changed over the past year. Official inflation is running at 5.6% (almost 3x the target) and un-official measures range from 12-20%. All other things being equal inflating the money supply absolutely has a disproportionate effect on inflation.