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How is it fine? Even a currency like the USD has lost most of it's value over time: https://howmuch.net/articles/rise-and-fall-dollar https://howmuch.net/articl

How is it fine? Even a currency like the USD has lost most of it's value over time: https://howmuch.net/articles/rise-and-fall-dollar https://howmuch.net/articles/rise-and-fall-dollar I guess you could call it stable. A stable decline!

ben_w 5y ago
Indeed it has. First: That, within certain bounds, is deliberate — a small level of inflation helps the rest of the economy by encouraging spending. The last thing you want is people HODLing their paycheques. Second: your link shows an average halving time of the US dollar purchasing power of 22.5 years. Bitcoin has about the same price today as it was 6 and 12 months ago, but was about double that 3 and 9 months ago. Even the Brexit referendum’s effect on the GBP would be hidden in the noise of BTC’s volatility.
- kevinak 5y ago
  First: Ok, so. Let's imagine that there was a perfect sound money. One that couldn't be tinkered with, one that couldn't be debased. Would you still need to "encourage spending"? I definitely do not think that's a given. I'd even argue that the need to intervene in the economy by playing with the cost of money is a symptom of the current system. Second: Yes. No one is denying that Bitcoin is volatile. If you pick any arbitrary period of time you can come up with whatever statistic you want. This is not sound argument IMO.
  - ben_w 5y ago
    1. Crudely speaking, money that stays in a savings account acts like money destroyed, i.e. deflation. Deflation encourages more people to do the same, because the effective savings interest rate is ≈ $nominal_interest + $inflation, leading to a spiral. Except: money stuck in savings accounts also means the money isn’t spent on goods & services, so fewer jobs are supported, so productivity goes down, which is effectively +ve inflation even with the money supply perfectly fixed, but fewer jobs also encourages more savings and also triggers a spiral. Which effect dominates (+ve or -ve inflation) depends on other factors, but both ways are a spiral of economic pain. 2. What? This is specifically about which is worse, how can you not make this type of comparison?
    - ben_w 5y ago
      And now it’s too late to edit, I see an error: > $nominal_interest + $inflation Should either be: > $nominal_interest - $inflation Or: > $nominal_interest + $deflation

ben_w 5y ago

Indeed it has. First: That, within certain bounds, is deliberate — a small level of inflation helps the rest of the economy by encouraging spending. The last thing you want is people HODLing their paycheques. Second: your link shows an average halving time of the US dollar purchasing power of 22.5 years. Bitcoin has about the same price today as it was 6 and 12 months ago, but was about double that 3 and 9 months ago. Even the Brexit referendum’s effect on the GBP would be hidden in the noise of BTC’s volatility.

kevinak 5y ago
First: Ok, so. Let's imagine that there was a perfect sound money. One that couldn't be tinkered with, one that couldn't be debased. Would you still need to "encourage spending"? I definitely do not think that's a given. I'd even argue that the need to intervene in the economy by playing with the cost of money is a symptom of the current system. Second: Yes. No one is denying that Bitcoin is volatile. If you pick any arbitrary period of time you can come up with whatever statistic you want. This is not sound argument IMO.
- ben_w 5y ago
  1. Crudely speaking, money that stays in a savings account acts like money destroyed, i.e. deflation. Deflation encourages more people to do the same, because the effective savings interest rate is ≈ $nominal_interest + $inflation, leading to a spiral. Except: money stuck in savings accounts also means the money isn’t spent on goods & services, so fewer jobs are supported, so productivity goes down, which is effectively +ve inflation even with the money supply perfectly fixed, but fewer jobs also encourages more savings and also triggers a spiral. Which effect dominates (+ve or -ve inflation) depends on other factors, but both ways are a spiral of economic pain. 2. What? This is specifically about which is worse, how can you not make this type of comparison?
  - ben_w 5y ago
    And now it’s too late to edit, I see an error: > $nominal_interest + $inflation Should either be: > $nominal_interest - $inflation Or: > $nominal_interest + $deflation