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In a world where central banks can print in a few months their entire money supply, doubling it, and can then declare inflation "transitory" and refuse to do th

In a world where central banks can print in a few months their entire money supply, doubling it, and can then declare inflation "transitory" and refuse to do their job of raising interest rates for an entire year, there's definitely a demand for sound money. Not sure if Bitcoin will be that, but after the events of last years, nobody can pretend that fiat currency doesn't need competition.

ethanbond 3y ago
The fact that our economies are pulling through a near-total shutdown relatively unscathed except moderate inflation (so far) is actually a phenomenal positive argument for fiat currency. And it’s another good demonstration of the top-to-bottom uselessness of a deflationary currency. The thing about competition is that no one needs to pretend or believe anything. If Bitcoin were competitive then it’d be competitive. It’s not, because it’s not.
- machina_ex_deus 3y ago
  I'm not complaining about 2020, I'm complaining about 2021. I'm not sure whatever it was that led to "transitory inflation narrative", it felt like the Fed was acting like a third world country, like Turkey's central bank, ignoring basic economical consideration everyone knows. These levels of irrationality caught me and many others off guard. I did not at all expect the central bank to wait an entire year in what seemed like no brainer rate hike. I'm not sure what they were stalling for, but I already lost my trust in fiat then. Inflation isn't going back down until people are sure that central banks aren't going to be weak again. By the way, just look at the markets. They are all calling the Fed's bluff right now. The markets are screaming "the Fed is weak, he'll pivot". Nobody believes the current Fed has the stomach to fight stagflation. Everybody knows he has to, but everyone already saw him chickening out of raising rates for a full year with "transitory inflation" narrative. EDIT: A full year isn't "few months". It's a whole year. A whole year during which the Fed has completely eroded the trust in the central bank. Inflation was already 4.1% at April 2021, continuing to climb, up to 7% in December 2021, yet only in April 2022 the rate hikes started. That's not rounding error. It's a full year during which the problem transformed from somewhat manageable to full blown economic disaster and this train wreck isn't even close to stopping.
  - ethanbond 3y ago
    I don’t think “I would’ve moved rates a few months earlier or later” is a super compelling counter argument. That seems close enough as to be a rounding error in most scenarios, and indeed in this scenario it seems (again, so far) like it’s playing out pretty okay, all things considered. I would be very careful of ascribing a motive or singular opinion to “the market.” It’s way too easy to just project your own theses onto it. Edit: Replying to your edit in an edit of my own... I'm very curious to hear what you think is the "full blown economic disaster" that we're in right now?
    - prepend 3y ago
      > "full blown economic disaster" Not OP, but I think to crypto people who got in at the peak, they are in the midst of a full blown economic disaster. Trillions in “value” distorted from garbage coins and exchanges crashing.
    - adammarples 3y ago
      The Fed's actions in 2021 were not a rounding error. They poured huge amounts of fuel on an already raging fire. Not just by maintaining zero rates when inflation was out of control, but by continuing to expand their balance sheets aggressively for a long time after it was clear they should have stopped. The effects will take a long time to subside and they will have to go much, much further than they ever would have to reverse it. 2021 was just a footnote though, to the decade plus of ZIRP and QE that they've kept going since 2008. The speculative mania, the bank collapses, etc, are only happening now because nobody in this whole generation believed the Fed would ever even try and do their job, given their track record of kicking the can down the road.
  - bungeonsBaggins 3y ago
    The Fed is not a single guy. Do you think it's a single guy? Are you just parroting something you heard somewhere else without understanding it?
- bko 3y ago
  If money is supposed to be a rough tool for measuring aggregate wealth in society, i would expect a shutdown to cause valuations and GDP to go down. If it's meant to be a tool for control and manipule society, then yes it's a marvel that an entire shutdown resulted in asset valuations to grow by around 30% in 2021. Trying to control the economy by manipulating money supply is like trying to control climate change by manipulating thermometers
  - marcus0x62 3y ago
    I think it is supposed to be a tool to allow people to exchange goods and services without resorting to barter.
  - ethanbond 3y ago
    Money is not supposed to be a rough tool for measuring aggregate wealth in society. Hope that helps clear things up.
- rhaway84773 3y ago
  Exactly. People greatly under appreciate the tremendous job the govt/Fed have pulled. Also, in response to the GP, we actually had a direct comparison between the “inflationary” economics the US followed and a more conservative approach right after the 2007-2009 financial crisis. The Fed “printed money”. The EU didn’t. And the U.S. economy grew faster with lower inflation and a stronger dollar than the EU. Several EU countries are still suffering from the non printing austerity policies the EU followed. Also I’m really struggling to understand the claim that “printing money” has caused massive inflation. I think we can all agree that no entity has “printed” as much money as the US and the Fed have. And still inflation in the U.S. is lower than inflation in the EU or pretty much any other country in the world. It’s almost as if “money printing” isn’t the primary driver of inflation in the world right now.
  - ChainOfFools 3y ago
    And the Bitcoin zealots specifically are guilty of simply playing games with terminology in order to hide their own admission that were a deflationary currency to become standard, with a fixed circulation, you can "print money" just as easily by issuing further and further subdivisions of the initial units of distribution. Thus you hear among crypto zealots how if 21 million units is not enough they could simply start referring to the unit of currency by successive powers of 1/10. Imagine what these people would say if the government answer to inflation was to start gradually pressuring citizens to accept ten-thousandths of pennies as legal tender, the way that coiners advocate switching the bitcoin reference unit to satoshis. Infuriating to hear people advocate this nonsense, as if they think no one is clever enough to realize that expecting later adopters of their scheme to use microscopic shards of the tokens they themselves hold entire, isn't a shameless admission that they're only in this to grossy enrich themselves at everyone else's expense.
- BasedAnon 3y ago
  >The fact that our economies are pulling through a near-total shutdown relatively unscathed except moderate inflation in what world is the economy pulling through 'relatively unscathed'? It's quite literally teetering between hyperinflation and deflationary collapse monthly
  - ethanbond 3y ago
    Teetering between hyperinflation and deflationary collapse sounds like a long winded, alarmist way to say “in pretty good shape.” FWIW I agree, the v i b e s are extremely weird right now. But it’s pretty hard to say what’s wrong exactly?
    - BasedAnon 3y ago
      > Teetering between hyperinflation and deflationary collapse sounds like a long winded, alarmist way to say “in pretty good shape.” No it's actually a less alarming way to say "we're at a point where the economy could collapse overnight (not exaggerating here, I quite literally mean it would take one night where very feasible events occur) and almost has on multiple occasions in the past 3 years" >But it’s pretty hard to say what’s wrong exactly? No it's not hard actually. Real inflation is still extremely high despite very high interest rates and despite job losses, consumer debt is insanely high, several banks have collapsed, the economies of several countries have collapsed, there is a growing anti-US economic block and monetary velocity is running off a cliff in an uncontrolled manner.
      - ethanbond 3y ago
        Which reality do you live in? At least in the US, inflation is not “extremely” high and it’s been coming down for several months now. Interest rates are not “very high” by any historical measure and likewise are stalling and even coming down already. The labor market is ridiculously strong. The “several banks” that collapsed should have collapsed due to their own poor risk management [0] and the systemic risk was mitigated effectively and quickly. Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.” [0] SVB’s risk model flashed red. So executives changed it. https://www.washingtonpost.com/business/2023/04/02/svb-collapse-risk-model/ https://www.washingtonpost.com/business/2023/04/02/svb-colla...
WeylandYutani 3y ago
People are buying BTC with €$ and cashing out in €$. But interesting that someone still remembers what BTC was supposed to be. Everyone's denying the Satoshi white paper ever happened these days.
HDThoreaun 3y ago
The money supply never doubled “in a few months”. You have to go all the way back to 2013 to have half the peak m2 supply.
Yizahi 3y ago
That's like comparing a 40 hour day job, which has poor compensation, to the robbers who "earn" a lot. Sure, currency operating adhering fully to law has a "competition" of a lawless token alternative. But unless you are a true libertarian or an ancap, I doubt you consider the absence of laws "an alternative" to anything.

ethanbond 3y ago

The fact that our economies are pulling through a near-total shutdown relatively unscathed except moderate inflation (so far) is actually a phenomenal positive argument for fiat currency. And it’s another good demonstration of the top-to-bottom uselessness of a deflationary currency. The thing about competition is that no one needs to pretend or believe anything. If Bitcoin were competitive then it’d be competitive. It’s not, because it’s not.

machina_ex_deus 3y ago
I'm not complaining about 2020, I'm complaining about 2021. I'm not sure whatever it was that led to "transitory inflation narrative", it felt like the Fed was acting like a third world country, like Turkey's central bank, ignoring basic economical consideration everyone knows. These levels of irrationality caught me and many others off guard. I did not at all expect the central bank to wait an entire year in what seemed like no brainer rate hike. I'm not sure what they were stalling for, but I already lost my trust in fiat then. Inflation isn't going back down until people are sure that central banks aren't going to be weak again. By the way, just look at the markets. They are all calling the Fed's bluff right now. The markets are screaming "the Fed is weak, he'll pivot". Nobody believes the current Fed has the stomach to fight stagflation. Everybody knows he has to, but everyone already saw him chickening out of raising rates for a full year with "transitory inflation" narrative. EDIT: A full year isn't "few months". It's a whole year. A whole year during which the Fed has completely eroded the trust in the central bank. Inflation was already 4.1% at April 2021, continuing to climb, up to 7% in December 2021, yet only in April 2022 the rate hikes started. That's not rounding error. It's a full year during which the problem transformed from somewhat manageable to full blown economic disaster and this train wreck isn't even close to stopping.
- ethanbond 3y ago
  I don’t think “I would’ve moved rates a few months earlier or later” is a super compelling counter argument. That seems close enough as to be a rounding error in most scenarios, and indeed in this scenario it seems (again, so far) like it’s playing out pretty okay, all things considered. I would be very careful of ascribing a motive or singular opinion to “the market.” It’s way too easy to just project your own theses onto it. Edit: Replying to your edit in an edit of my own... I'm very curious to hear what you think is the "full blown economic disaster" that we're in right now?
  - prepend 3y ago
    > "full blown economic disaster" Not OP, but I think to crypto people who got in at the peak, they are in the midst of a full blown economic disaster. Trillions in “value” distorted from garbage coins and exchanges crashing.
  - adammarples 3y ago
    The Fed's actions in 2021 were not a rounding error. They poured huge amounts of fuel on an already raging fire. Not just by maintaining zero rates when inflation was out of control, but by continuing to expand their balance sheets aggressively for a long time after it was clear they should have stopped. The effects will take a long time to subside and they will have to go much, much further than they ever would have to reverse it. 2021 was just a footnote though, to the decade plus of ZIRP and QE that they've kept going since 2008. The speculative mania, the bank collapses, etc, are only happening now because nobody in this whole generation believed the Fed would ever even try and do their job, given their track record of kicking the can down the road.
- bungeonsBaggins 3y ago
  The Fed is not a single guy. Do you think it's a single guy? Are you just parroting something you heard somewhere else without understanding it?
bko 3y ago
If money is supposed to be a rough tool for measuring aggregate wealth in society, i would expect a shutdown to cause valuations and GDP to go down. If it's meant to be a tool for control and manipule society, then yes it's a marvel that an entire shutdown resulted in asset valuations to grow by around 30% in 2021. Trying to control the economy by manipulating money supply is like trying to control climate change by manipulating thermometers
- marcus0x62 3y ago
  I think it is supposed to be a tool to allow people to exchange goods and services without resorting to barter.
- ethanbond 3y ago
  Money is not supposed to be a rough tool for measuring aggregate wealth in society. Hope that helps clear things up.
rhaway84773 3y ago
Exactly. People greatly under appreciate the tremendous job the govt/Fed have pulled. Also, in response to the GP, we actually had a direct comparison between the “inflationary” economics the US followed and a more conservative approach right after the 2007-2009 financial crisis. The Fed “printed money”. The EU didn’t. And the U.S. economy grew faster with lower inflation and a stronger dollar than the EU. Several EU countries are still suffering from the non printing austerity policies the EU followed. Also I’m really struggling to understand the claim that “printing money” has caused massive inflation. I think we can all agree that no entity has “printed” as much money as the US and the Fed have. And still inflation in the U.S. is lower than inflation in the EU or pretty much any other country in the world. It’s almost as if “money printing” isn’t the primary driver of inflation in the world right now.
- ChainOfFools 3y ago
  And the Bitcoin zealots specifically are guilty of simply playing games with terminology in order to hide their own admission that were a deflationary currency to become standard, with a fixed circulation, you can "print money" just as easily by issuing further and further subdivisions of the initial units of distribution. Thus you hear among crypto zealots how if 21 million units is not enough they could simply start referring to the unit of currency by successive powers of 1/10. Imagine what these people would say if the government answer to inflation was to start gradually pressuring citizens to accept ten-thousandths of pennies as legal tender, the way that coiners advocate switching the bitcoin reference unit to satoshis. Infuriating to hear people advocate this nonsense, as if they think no one is clever enough to realize that expecting later adopters of their scheme to use microscopic shards of the tokens they themselves hold entire, isn't a shameless admission that they're only in this to grossy enrich themselves at everyone else's expense.
BasedAnon 3y ago
>The fact that our economies are pulling through a near-total shutdown relatively unscathed except moderate inflation in what world is the economy pulling through 'relatively unscathed'? It's quite literally teetering between hyperinflation and deflationary collapse monthly
- ethanbond 3y ago
  Teetering between hyperinflation and deflationary collapse sounds like a long winded, alarmist way to say “in pretty good shape.” FWIW I agree, the v i b e s are extremely weird right now. But it’s pretty hard to say what’s wrong exactly?
  - BasedAnon 3y ago
    > Teetering between hyperinflation and deflationary collapse sounds like a long winded, alarmist way to say “in pretty good shape.” No it's actually a less alarming way to say "we're at a point where the economy could collapse overnight (not exaggerating here, I quite literally mean it would take one night where very feasible events occur) and almost has on multiple occasions in the past 3 years" >But it’s pretty hard to say what’s wrong exactly? No it's not hard actually. Real inflation is still extremely high despite very high interest rates and despite job losses, consumer debt is insanely high, several banks have collapsed, the economies of several countries have collapsed, there is a growing anti-US economic block and monetary velocity is running off a cliff in an uncontrolled manner.
    - ethanbond 3y ago
      Which reality do you live in? At least in the US, inflation is not “extremely” high and it’s been coming down for several months now. Interest rates are not “very high” by any historical measure and likewise are stalling and even coming down already. The labor market is ridiculously strong. The “several banks” that collapsed should have collapsed due to their own poor risk management [0] and the systemic risk was mitigated effectively and quickly. Would be curious to hear what critical path you have in mind is likely enough to happen in one night so as to put the entire economy in a position of “teetering.” [0] SVB’s risk model flashed red. So executives changed it. https://www.washingtonpost.com/business/2023/04/02/svb-collapse-risk-model/ https://www.washingtonpost.com/business/2023/04/02/svb-colla...

WeylandYutani 3y ago

People are buying BTC with €$ and cashing out in €$. But interesting that someone still remembers what BTC was supposed to be. Everyone's denying the Satoshi white paper ever happened these days.

HDThoreaun 3y ago

The money supply never doubled “in a few months”. You have to go all the way back to 2013 to have half the peak m2 supply.

Yizahi 3y ago

That's like comparing a 40 hour day job, which has poor compensation, to the robbers who "earn" a lot. Sure, currency operating adhering fully to law has a "competition" of a lawless token alternative. But unless you are a true libertarian or an ancap, I doubt you consider the absence of laws "an alternative" to anything.