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Is the implication here that crypto coins are immune to inflation and instability? Genuinely asking because if I know my crypto history it basically says the o

• WalterBright 4y ago
  The history of fiat money is always one of endemic inflation, sometimes really wild inflation. When the US was on the gold standard, the inflationary periods were during the California and Yukon gold rushes, which had the effect of "printing" more gold. The inflation we see today in the US is due to massive deficit spending, which is enabled by fiat money. All countries today use fiat money, because then they can spend money without limit and without raising taxes. They always blame the resulting inflation on something else. The value of crypto currency is based on supply & demand. To me it seems more like collecting Beanie Babies than being a substitute for money. We'll see how it fares in the next few years.
  • WalterBright 4y ago
    Interestingly, when Spain looted the New World of gold and silver, it did not make Spain any wealthier. The result was just inflation - the gold was worth less. The more gold that was imported, the lower the value the gold had. It's just like the government deficit printing fiat money.
    • lmm 4y ago
      Sounds like there's no particular advantage to the gold or silver standard and no reason to complain about fiat money then.
      • WalterBright 4y ago
        Except that the net inflation from 1800 to 1914 on the gold standard is zero, and from 1914 to today is a factor of 30. Sounds like a particular advantage to me, unless you prefer your money to be worth about 3% of what it used to be.
        • lmm 4y ago
          I prefer my society to allocate valuable goods and services to those who are contributing positively to it today over those who had the luck to be born earlier and/or to wealthy families, so a stable but nonzero inflation suits me very well thank you.
          • WalterBright 4y ago
            Does inflation seem stable to you today? Inflation hurts poor people, too.
            • lmm 4y ago
              Compared to the horror stories of the gold standard days? Yes. 0% -> 5% overnight is not nothing but it compares favourably to most assets one could pick. Edit in response to your undeclared edit: inflation hurts those who hold cash, by its very nature; on average inflation is a transfer of real value from the rich to the poor, although of course there will be exceptions.
              • WalterBright 4y ago
                > horror stories What horror stories? The wages of the poor do not keep up with inflation. > inflation is a transfer of real value from the rich to the poor No, it isn't. It's a transfer from the rich and the poor to the government.
                • Eisenstein 4y ago
                  The fact of the matter is that the ability for the government to print money when needed and not be beholden to a scarce element for currency and wealth reserves has allowed our economy (and the world economy, and trade) to grow. If there is no 'extra' money when we need it, economies stagnate. The side-effect of 'extra' money is inflation. However, I think that we have a lot to show for it -- considering that economic disasters haven't completely destroyed the wealth of entire generations of people since we started doing it this way, and we have a least a passable system of class mobility. This whole 'pining for the gold standard' is ridiculous. Do you want to go back to zero-sum economics because you don't like the Fed? Everyone hates the Fed, but it happens to be the least bad option that we have come up with so far.