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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 "en
by 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 ago1. 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 agoAnd now it’s too late to edit, I see an error: > $nominal_interest + $inflation Should either be: > $nominal_interest - $inflation Or: > $nominal_interest + $deflation