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Not required, but a deflationary asset used as currency discourages borrowing, and companies and governments love borrowing. If you knew that inflation was goi

Not required, but a deflationary asset used as currency discourages borrowing, and companies and governments love borrowing. If you knew that inflation was going to rapidly increase, the smartest thing you could do would be to take out as many loans as you can and buy usable assets, like a car and a warehouse full of canned beans. Imagine you take out a loan to buy a car. Tomorrow, hyperinflation happens and the currency has lost 99% of its value. You can now pay off your car with a can of beans. Inflation is also an avenue for a government to steal the excess value produced by an economy over time. Probably just a coincidence though.

whimsicalism 2y ago
It does not, in an ideal economic scenario, discourage borrowing - it just means nominal interest rates might be negative.
the_gastropod 2y ago
> Inflation is also an avenue for a government to steal the excess value produced by an economy over time What's the incentive here? "The government" (unless we're talking monarchies or dictatorships?) usually isn't some monolithic, self-interested entity capable of benefiting from things like "stealing" via inflation. Who's the evil mustache-twister behind all this? The way this is usually trotted out makes it sound like Nancy Pelosi—because there's almost always a Nancy Pelosi hot take—is siphoning $20's out of IRS revenue streams, and laughing her way to the bank.
- Ferret7446 2y ago
  It lets you increase taxes without actually increasing taxes. People get upset when you increase taxes (sometimes upset enough to create their own country), but less so when you increase the money supply a little bit.
- halfcat 2y ago
  By moving the goal posts of how CPI is calculated, the government can take in more, or pay out less. Social security, Medicare, etc are indexed to inflation. Tax brackets are indexed to inflation. So when the government needs more money, it can create it by paying less to elderly, poor, and sick people, or taking more taxes without the population aware. There are better ways of calculating inflation. But they allow less shenanigans. You know what would really make it hard to siphon money off to a black budget project, or to the business of a politician’s brother-in-law that gets the contract? A deflationary asset where there’s a cryptographically secure immutable ledger of all transactions.
  - the_gastropod 2y ago
    > You know what would really make it hard to siphon money off to a black budget project, or to the business of a politician’s brother-in-law that gets the contract? A deflationary asset where there’s a cryptographically secure immutable ledger of all transactions. I’m not sure how Bitcoin is simultaneously completely transparent, bringing daylight to big bad government fraud and also a privacy-protecting, regulatory circumvention tool. These things seem at odds. If scam artists and criminals can obfuscate their transactions sufficiently to avoid being tracked down, I’m confident any half-competent government could do the same for its black budget spending.
    - halfcat 2y ago
      Bitcoin is not privacy-protecting, per se. It’s public, but anonymous. And people often confuse anonymity with privacy.
      - the_gastropod 2y ago
        That's not the point either of us are trying to make, though. Can Bitcoin be used to mask the source or destination of money? I think the answer is an obvious: "yes" considering one of its most prominent use-cases is exactly that. And if the answer is an obvious "yes", then the whole thing about "immutable ledgers stop governments from spending money sketchily!" is obviously incorrect.
        npoc 2y ago
        The masking is obvious though.
        the_gastropod 2y ago
        We already know, to the dollar, how much the black budget in the US is. The question was: is that money being used by politicians to enrich themselves? Bitcoin was offered as a solution. It is not.

whimsicalism 2y ago

It does not, in an ideal economic scenario, discourage borrowing - it just means nominal interest rates might be negative.

the_gastropod 2y ago

> Inflation is also an avenue for a government to steal the excess value produced by an economy over time What's the incentive here? "The government" (unless we're talking monarchies or dictatorships?) usually isn't some monolithic, self-interested entity capable of benefiting from things like "stealing" via inflation. Who's the evil mustache-twister behind all this? The way this is usually trotted out makes it sound like Nancy Pelosi—because there's almost always a Nancy Pelosi hot take—is siphoning $20's out of IRS revenue streams, and laughing her way to the bank.

Ferret7446 2y ago
It lets you increase taxes without actually increasing taxes. People get upset when you increase taxes (sometimes upset enough to create their own country), but less so when you increase the money supply a little bit.
halfcat 2y ago
By moving the goal posts of how CPI is calculated, the government can take in more, or pay out less. Social security, Medicare, etc are indexed to inflation. Tax brackets are indexed to inflation. So when the government needs more money, it can create it by paying less to elderly, poor, and sick people, or taking more taxes without the population aware. There are better ways of calculating inflation. But they allow less shenanigans. You know what would really make it hard to siphon money off to a black budget project, or to the business of a politician’s brother-in-law that gets the contract? A deflationary asset where there’s a cryptographically secure immutable ledger of all transactions.
- the_gastropod 2y ago
  > You know what would really make it hard to siphon money off to a black budget project, or to the business of a politician’s brother-in-law that gets the contract? A deflationary asset where there’s a cryptographically secure immutable ledger of all transactions. I’m not sure how Bitcoin is simultaneously completely transparent, bringing daylight to big bad government fraud and also a privacy-protecting, regulatory circumvention tool. These things seem at odds. If scam artists and criminals can obfuscate their transactions sufficiently to avoid being tracked down, I’m confident any half-competent government could do the same for its black budget spending.
  - halfcat 2y ago
    Bitcoin is not privacy-protecting, per se. It’s public, but anonymous. And people often confuse anonymity with privacy.
    - the_gastropod 2y ago
      That's not the point either of us are trying to make, though. Can Bitcoin be used to mask the source or destination of money? I think the answer is an obvious: "yes" considering one of its most prominent use-cases is exactly that. And if the answer is an obvious "yes", then the whole thing about "immutable ledgers stop governments from spending money sketchily!" is obviously incorrect.
      - npoc 2y ago
        The masking is obvious though.
        the_gastropod 2y ago
        We already know, to the dollar, how much the black budget in the US is. The question was: is that money being used by politicians to enrich themselves? Bitcoin was offered as a solution. It is not.