6 ms·

Let's compare it with the baseline alternative, the fiat currency called the US dollar - Call it $1USD, no vote. With USD, the long-run target inflation rate a

by lowkey 5y ago

Let's compare it with the baseline alternative, the fiat currency called the US dollar - Call it $1USD, no vote. With USD, the long-run target inflation rate as stated by the Federal Reserve is 2% per year. Seems small, some would argue - a small price to pay to avoid the dreaded risk of deflation. (Side note: why is deflation expected and approved of in computers and electronics but not healthcare or higher education?) What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year? What if I told you that the current inflation rate according to official sources is over twice the target inflation rate and all signs indicate it will remain elevated for years to come? What if I told you that the real problem with fiat currency is all the trust required? What if I told you that as a worker you now have an alternative to store a portion of your wages in a currency that is engineered using properties of digital scarcity, incredible security, and ingenious game theory to preserve, store, and even grow the purchasing power of your savings at a long-term rate of return that greatly exceed the rate of inflation or the performance of even the riskiest stocks. Why is it bad for workers to have another option for storing their savings, an option that doesn't leak value due to manipulation by centralized actors? No one is forced to use Bitcoin. Bitcoin is a choice. IMO Bitcoin is the better choice. YMMV.

virgilp 5y ago
> Side note: why is deflation expected and approved of in computers and electronics but not healthcare or higher education? That's... not deflation? It's literally building wealth. Cheaper computers means more people can afford them/ people can afford more of them. This is a good thing! Cheaper healthcare (or higher ed) would also be a good thing. But for it to be a good thing, you would have to make it objectively easier for more people to access the same-or-better-quality healthcare or higher ed! If by "deflation" here you simply mean "there's the same overall quality and quantity of higher ed, but older people (who had time to hoard money) can access it a lot easier, to the detriment of young people"... that would clearly be a bad thing. Money is not like that, though. There's no economic advantage to be gained from people hoarding money - they're supposed to be a medium of exchange. If money increases value, you're not spending or investing them, which means less economic activity, hence less wealth for everyone. Money is just a vehicle, never an end-goal. Tl;dr: wealth is, largely speaking, "more and better stuff for everyone!". More and better computers, electronics, higher ed, healthcare. And money, too, I guess? Except that "more money" is typically associated with "inflation" - which shows you that money doesn't really count, it's just a vehicle.
- spurgu 5y ago
  > That's... not deflation? Isn't inflation/deflation about purchasing power? I.e. how much housing you can buy for a month's salary (for example), how much computing power, how much food you can buy? If you hoard money you can buy more computing power down the line. Isn't that "deflationary"? While if you hoard money and buy food down the line you'd get less of it. So food would be "inflationary".
  - rsj_hn 5y ago
    > Isn't inflation/deflation about purchasing power? No, that is the exact opposite of inflation/deflation. Inflation/deflation are about nominal prices of goods and services. If you want to talk about the price of a good in terms of a real quantity, then that is not measured by inflation or deflation and you need to specify what your measuring stick is, whether ounces of gold, or gallons of gasoline, or a median hourly wage in a specific labor market. There is one special term, called "real" prices, where the measuring stick is a weighted consumption basket, but that too is not going to represent purchasing power, which suggests deflating by either household income, or wages, or wealth.
seoaeu 5y ago
> Call it $1USD, no vote. USD is managed by the federal government, which despite all its flaws, is still a democracy. > What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year? You'd be lying. The average worker spends the majority of their earnings immediately meaning that inflation doesn't cut into them, and puts most of the rest towards assets that track inflation (houses) or exceed inflation (stock market / retirement accounts).
- lowkey 5y ago
  Exactly who do I vote for to end the inflationary, easy money, Zero interest rate policy of the Federal Reserve. You may have been taught in school that the United States is a democracy but I am afraid that does not apply to the Federal Reserve which is an unelected unaccountable quasi-goverment entity at best. > You'd be lying. Nope, not lying - just calling out the truth that the government systematically steals the purchasing power of the common man by means of inflation, officially at the rate of 2% per year, but I believe the rate is actually much higher. Currently the official rate is 6.4%, so over 3x the target rate. I’m curious how anyone could see this situation and not be concerned for the future. See 1971 Cost of Living for example https://imgur.com/3YApK5i https://imgur.com/3YApK5i Bitcoin fixes this.
leetcrew 5y ago
> What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year? how did you come up with this number? rational people don't just accumulate a big pile of cash over forty years. to the extent they have a surplus that doesn't immediately go towards expenses, they purchase assets. by the way, I don't think it's "bad" that crypto exists as an option. having options is great! but I do think you'd be a fool to park an amount of money that matters to you in crypto.
- lowkey 5y ago
  That is because rational people know that the scam that is the fractional reserve banking system with it’s artificially low interest rates, is the direct reason why workers have no option to save their money in the bank while coming out ahead of inflation. If there were no inflation and banks had to pay you a meaningful rate to save with them, then there would be a viable option for those who do not wish to risk their life savings in the stock or real estate markets. Tell me why is it, in a functioning economy, that the only option for wage earners to stay ahead of inflation is by risking their savings on volatile stocks or real estate? Why is it not possible to save conservatively in a bank while staying ahead of inflation? In my opinion it is by design because it is easier for governments to steal wealth by inflation than it is by taxation. Inflationary monetary policy is a scam designed to steal generational wealth. Bitcoin fixes this.
notahacker 5y ago
> What if I were to tell you that the average worker who works for wages for 40 years will lose 40% I'd point out that this was true only of workers who stored all their earnings over those 40 years in cash, and approximately 0% of workers do this. The actual average worker spends a portion of their income pretty quickly on goods and sticks savings into some combination of pension, savings accounts and a house. > Why is it bad for workers to have another option for storing their savings? Because "workers" aren't the people with vast reserves of wealth, they're the people who are paid by people with vast reserves of wealth. Make the vast reserves of wealth a zero or negative sum game, and they'll store that wealth in deflationary currency instead of businesses that generate less revenue each year, and the workers will find that their ability to get paid goes down every year.
- throwaway248329 5y ago
  The workers, unlike capitlists, earn a fixed salary. Inflation makes this salary have increasingly less buying power. This way workers are forced to negotiate a raise every year just to keep up with inflation and don't become poorer. So, to be able to save, workers are forced to buy real estate that they don't need, making it less affordable for people who actually need to buy a house or get exposed to stock market risks. All these problems caused by absence of hard money.
  - notahacker 5y ago
    "Workers are forced to buy real estate that they don't need" No, the average worker definitely isn't forced to buy more houses than they live in :D I mean, it's always been obvious that the "lack of Gold Standard is the real reason workers are poor" is an astroturf movement by the ultra rich who have successfully lobbied for tax breaks for the rich and elimination of worker protections to blame something else [which removing would further benefit them] for the logical consequences of their actions, but the complete failure to understand what an average worker actually does with money is particularly amusing in this subthread. Strong people who don't work for a living cosplaying people who do energy here... Since falling wage levels literally are deflation it's a bit hard to argue with a straight face that what the workers really need to be better off is a good old dose of deflationary currency.
hakfoo 5y ago
I don't think traditional economic models think of 2% inflation in terms of "40% of the value being lost over a career." It's more this is where, from experience, we have an socially positive balance between economic rictus (a deflationary economy tends to discourage discretionary spending) and undermining real-world projects (high or volatile inflation makes long term project financing difficult or expensive)
- lowkey 5y ago
  > I don't think traditional economic models think of 2% inflation in terms of "40% of the value being lost over a career." Well maybe they should? I mean it is a real measurable cumulative effect of 2% inflation compounded over 40 years. It may not be convenient to mention this negative impact of a cheap money inflationary policy, but it is important for us to understand the reality of the situation. Those who claim that ‘deflation bad’ have only marketing materials from the FED or thought experiments by traditional economists to rely on. Bitcoin is giving us a real-world experiment that allows us to understand what time-preference means in a deflationary currency. Will it really be the catastrophe that the central bankers tell us or will life go on? Or will offering the public a new option - a money designed to preserve and even grow purchasing power over time? What if it allows wage earners a new option to consume now or save and consume later, while enjoying the benefits of compounding and the time value of money, one that isn’t manipulated by central bankers to ensure that there isn’t a bank in the world that will pay interest on a savings account sufficient to keep place with inflation? What if this new option provided a disruptive new option that shifted us from a mass consumer economy - destined to destroy the planet - into a saver economy, where consumption is deferred until it is required. Instead of shopping till we drop, we as society could save for a more affluent future, build epic projects that span generations instead of always thinking so short term. Again, Bitcoin fixes this.
  - hakfoo 5y ago
    The canonical example of hard money failing is the Great Depression. You had a demand shock, and deflation contributed to that. If you had money, you had less motivation to spend it. Once you gain the power to debase the currency on demand, it lights a fire under people's behinds-- I've got to turn those dollars into goods and services now! There are definitely real-world examples of currency with an explicit expiration date or that required maintenance fees (i.e. Alberta's Prosperity Certificates) to boost the circulation rate. I suspect the problem is that we're stuck with the current economic machine on a high level. We don't have facilities to keep the population fed and housed without the side effects of a lot of consumer spending churn. If you had a partially planned economy to deliver those basics, then you could switch to a harder currency, because an economic slowdown wouldn't head to avoidable mass starvation or homelessness.

by lowkey 5y ago

virgilp 5y ago

> Side note: why is deflation expected and approved of in computers and electronics but not healthcare or higher education? That's... not deflation? It's literally building wealth. Cheaper computers means more people can afford them/ people can afford more of them. This is a good thing! Cheaper healthcare (or higher ed) would also be a good thing. But for it to be a good thing, you would have to make it objectively easier for more people to access the same-or-better-quality healthcare or higher ed! If by "deflation" here you simply mean "there's the same overall quality and quantity of higher ed, but older people (who had time to hoard money) can access it a lot easier, to the detriment of young people"... that would clearly be a bad thing. Money is not like that, though. There's no economic advantage to be gained from people hoarding money - they're supposed to be a medium of exchange. If money increases value, you're not spending or investing them, which means less economic activity, hence less wealth for everyone. Money is just a vehicle, never an end-goal. Tl;dr: wealth is, largely speaking, "more and better stuff for everyone!". More and better computers, electronics, higher ed, healthcare. And money, too, I guess? Except that "more money" is typically associated with "inflation" - which shows you that money doesn't really count, it's just a vehicle.

spurgu 5y ago
> That's... not deflation? Isn't inflation/deflation about purchasing power? I.e. how much housing you can buy for a month's salary (for example), how much computing power, how much food you can buy? If you hoard money you can buy more computing power down the line. Isn't that "deflationary"? While if you hoard money and buy food down the line you'd get less of it. So food would be "inflationary".
- rsj_hn 5y ago
  > Isn't inflation/deflation about purchasing power? No, that is the exact opposite of inflation/deflation. Inflation/deflation are about nominal prices of goods and services. If you want to talk about the price of a good in terms of a real quantity, then that is not measured by inflation or deflation and you need to specify what your measuring stick is, whether ounces of gold, or gallons of gasoline, or a median hourly wage in a specific labor market. There is one special term, called "real" prices, where the measuring stick is a weighted consumption basket, but that too is not going to represent purchasing power, which suggests deflating by either household income, or wages, or wealth.

seoaeu 5y ago

> Call it $1USD, no vote. USD is managed by the federal government, which despite all its flaws, is still a democracy. > What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year? You'd be lying. The average worker spends the majority of their earnings immediately meaning that inflation doesn't cut into them, and puts most of the rest towards assets that track inflation (houses) or exceed inflation (stock market / retirement accounts).

lowkey 5y ago
Exactly who do I vote for to end the inflationary, easy money, Zero interest rate policy of the Federal Reserve. You may have been taught in school that the United States is a democracy but I am afraid that does not apply to the Federal Reserve which is an unelected unaccountable quasi-goverment entity at best. > You'd be lying. Nope, not lying - just calling out the truth that the government systematically steals the purchasing power of the common man by means of inflation, officially at the rate of 2% per year, but I believe the rate is actually much higher. Currently the official rate is 6.4%, so over 3x the target rate. I’m curious how anyone could see this situation and not be concerned for the future. See 1971 Cost of Living for example https://imgur.com/3YApK5i https://imgur.com/3YApK5i Bitcoin fixes this.

leetcrew 5y ago

> What if I told you that the average worker who works for wages for 40 years, will lose 40% of the value of their lifetime earnings if inflation was 'only' 2% per year? how did you come up with this number? rational people don't just accumulate a big pile of cash over forty years. to the extent they have a surplus that doesn't immediately go towards expenses, they purchase assets. by the way, I don't think it's "bad" that crypto exists as an option. having options is great! but I do think you'd be a fool to park an amount of money that matters to you in crypto.

lowkey 5y ago
That is because rational people know that the scam that is the fractional reserve banking system with it’s artificially low interest rates, is the direct reason why workers have no option to save their money in the bank while coming out ahead of inflation. If there were no inflation and banks had to pay you a meaningful rate to save with them, then there would be a viable option for those who do not wish to risk their life savings in the stock or real estate markets. Tell me why is it, in a functioning economy, that the only option for wage earners to stay ahead of inflation is by risking their savings on volatile stocks or real estate? Why is it not possible to save conservatively in a bank while staying ahead of inflation? In my opinion it is by design because it is easier for governments to steal wealth by inflation than it is by taxation. Inflationary monetary policy is a scam designed to steal generational wealth. Bitcoin fixes this.

notahacker 5y ago

> What if I were to tell you that the average worker who works for wages for 40 years will lose 40% I'd point out that this was true only of workers who stored all their earnings over those 40 years in cash, and approximately 0% of workers do this. The actual average worker spends a portion of their income pretty quickly on goods and sticks savings into some combination of pension, savings accounts and a house. > Why is it bad for workers to have another option for storing their savings? Because "workers" aren't the people with vast reserves of wealth, they're the people who are paid by people with vast reserves of wealth. Make the vast reserves of wealth a zero or negative sum game, and they'll store that wealth in deflationary currency instead of businesses that generate less revenue each year, and the workers will find that their ability to get paid goes down every year.

throwaway248329 5y ago
The workers, unlike capitlists, earn a fixed salary. Inflation makes this salary have increasingly less buying power. This way workers are forced to negotiate a raise every year just to keep up with inflation and don't become poorer. So, to be able to save, workers are forced to buy real estate that they don't need, making it less affordable for people who actually need to buy a house or get exposed to stock market risks. All these problems caused by absence of hard money.
- notahacker 5y ago
  "Workers are forced to buy real estate that they don't need" No, the average worker definitely isn't forced to buy more houses than they live in :D I mean, it's always been obvious that the "lack of Gold Standard is the real reason workers are poor" is an astroturf movement by the ultra rich who have successfully lobbied for tax breaks for the rich and elimination of worker protections to blame something else [which removing would further benefit them] for the logical consequences of their actions, but the complete failure to understand what an average worker actually does with money is particularly amusing in this subthread. Strong people who don't work for a living cosplaying people who do energy here... Since falling wage levels literally are deflation it's a bit hard to argue with a straight face that what the workers really need to be better off is a good old dose of deflationary currency.

hakfoo 5y ago

I don't think traditional economic models think of 2% inflation in terms of "40% of the value being lost over a career." It's more this is where, from experience, we have an socially positive balance between economic rictus (a deflationary economy tends to discourage discretionary spending) and undermining real-world projects (high or volatile inflation makes long term project financing difficult or expensive)

lowkey 5y ago
> I don't think traditional economic models think of 2% inflation in terms of "40% of the value being lost over a career." Well maybe they should? I mean it is a real measurable cumulative effect of 2% inflation compounded over 40 years. It may not be convenient to mention this negative impact of a cheap money inflationary policy, but it is important for us to understand the reality of the situation. Those who claim that ‘deflation bad’ have only marketing materials from the FED or thought experiments by traditional economists to rely on. Bitcoin is giving us a real-world experiment that allows us to understand what time-preference means in a deflationary currency. Will it really be the catastrophe that the central bankers tell us or will life go on? Or will offering the public a new option - a money designed to preserve and even grow purchasing power over time? What if it allows wage earners a new option to consume now or save and consume later, while enjoying the benefits of compounding and the time value of money, one that isn’t manipulated by central bankers to ensure that there isn’t a bank in the world that will pay interest on a savings account sufficient to keep place with inflation? What if this new option provided a disruptive new option that shifted us from a mass consumer economy - destined to destroy the planet - into a saver economy, where consumption is deferred until it is required. Instead of shopping till we drop, we as society could save for a more affluent future, build epic projects that span generations instead of always thinking so short term. Again, Bitcoin fixes this.
- hakfoo 5y ago
  The canonical example of hard money failing is the Great Depression. You had a demand shock, and deflation contributed to that. If you had money, you had less motivation to spend it. Once you gain the power to debase the currency on demand, it lights a fire under people's behinds-- I've got to turn those dollars into goods and services now! There are definitely real-world examples of currency with an explicit expiration date or that required maintenance fees (i.e. Alberta's Prosperity Certificates) to boost the circulation rate. I suspect the problem is that we're stuck with the current economic machine on a high level. We don't have facilities to keep the population fed and housed without the side effects of a lot of consumer spending churn. If you had a partially planned economy to deliver those basics, then you could switch to a harder currency, because an economic slowdown wouldn't head to avoidable mass starvation or homelessness.