3 ms·

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 experien

by 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.
  - lowkey 5y ago
    Hard money didn't cause the Great Depression any more than Bitcoin caused the Great Financial Crisis. There were multiple causes for the great depression but sound money was not one of them. > 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. This is pure speculation. Luckily we will see the experiment play out with Bitcoin over the next few years. I hardly believe it will lead to mass starvation or homelessness, though the Fiat standard we are currently on already has led to both.

by hakfoo 5y ago

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.
- lowkey 5y ago
  Hard money didn't cause the Great Depression any more than Bitcoin caused the Great Financial Crisis. There were multiple causes for the great depression but sound money was not one of them. > 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. This is pure speculation. Luckily we will see the experiment play out with Bitcoin over the next few years. I hardly believe it will lead to mass starvation or homelessness, though the Fiat standard we are currently on already has led to both.