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I'll go back to your original response here. "Subdividing a unit of value does not create new value." So what? Neither does printing money. Mutually beneficia

I'll go back to your original response here. "Subdividing a unit of value does not create new value." So what? Neither does printing money. Mutually beneficial economic activity creates value. The point is, the decline in the number of bitcoins does not impact it's usefulness for those who possess and transact with bitcoins.

jacques_chester 13y ago
Value was the wrong term. Substitute "unit of account" if you wish. Bitcoin units are summative and the maximum is fixed by design. Way up at my original post I was pointing out that bitcoin is not the gold bug's Huckleberry, because the monetary base will peak and shrink. Rothbardians are very exercised by the problems of monetary policy. They take the view that a growing money supply causes distorted behaviour. They view a fixed money supply as less distortionary (and deflation as a net positive over time). Bitcoin's fixed upper limit for total circulating monetary base, at first blush, fits neatly into that worldview. Except that, as I have pointed out, it doesn't. Bitcoin is not like gold because it can be destroyed. In fact I don't think any economic theory has ever seriously addressed the problem of an irreversibly shrinking money supply. The thing is that we know inflation does cause problems. And so does deflation. That's why most monetary policy these days aims at neither. Instead the goal is to maintain approximately stable price levels over time. To do that you must grow the monetary base in rough correspondence to the size of the economy. > The point is, the decline in the number of bitcoins does not impact it's usefulness for those who possess and transact with bitcoins. The point is that it affects the ratio of bitcoins to goods and services in a way that cannot be governed or reversed. Some consider that to be a feature. I don't.
- crystaln 13y ago
  I don't think the money supply will shrink at a rate that has any significant impact. Maybe it will increase deflation from 5% to 5.1% annually. It's money - people don't like to destroy money. There's a natural incentive to keep it. :) The problem with having a mechanism to adjust the money supply in proportion to economic growth is that someone has to make those decisions, and historically they have ALWAYS ended up abusing that privilege. Currently we have representatives of banks, hedge funds, and investment trusts making those decisions. Who's interest do you think are reflected in monetary policy?
  - jacques_chester 13y ago
    > It's money - people don't like to destroy money. They don't have to want to do it. > Currently we have representatives of banks, hedge funds, and investment trusts making those decisions. US anti-banking conspiracy theories aren't generalisable to all central banks.

jacques_chester 13y ago

Value was the wrong term. Substitute "unit of account" if you wish. Bitcoin units are summative and the maximum is fixed by design. Way up at my original post I was pointing out that bitcoin is not the gold bug's Huckleberry, because the monetary base will peak and shrink. Rothbardians are very exercised by the problems of monetary policy. They take the view that a growing money supply causes distorted behaviour. They view a fixed money supply as less distortionary (and deflation as a net positive over time). Bitcoin's fixed upper limit for total circulating monetary base, at first blush, fits neatly into that worldview. Except that, as I have pointed out, it doesn't. Bitcoin is not like gold because it can be destroyed. In fact I don't think any economic theory has ever seriously addressed the problem of an irreversibly shrinking money supply. The thing is that we know inflation does cause problems. And so does deflation. That's why most monetary policy these days aims at neither. Instead the goal is to maintain approximately stable price levels over time. To do that you must grow the monetary base in rough correspondence to the size of the economy. > The point is, the decline in the number of bitcoins does not impact it's usefulness for those who possess and transact with bitcoins. The point is that it affects the ratio of bitcoins to goods and services in a way that cannot be governed or reversed. Some consider that to be a feature. I don't.

crystaln 13y ago
I don't think the money supply will shrink at a rate that has any significant impact. Maybe it will increase deflation from 5% to 5.1% annually. It's money - people don't like to destroy money. There's a natural incentive to keep it. :) The problem with having a mechanism to adjust the money supply in proportion to economic growth is that someone has to make those decisions, and historically they have ALWAYS ended up abusing that privilege. Currently we have representatives of banks, hedge funds, and investment trusts making those decisions. Who's interest do you think are reflected in monetary policy?
- jacques_chester 13y ago
  > It's money - people don't like to destroy money. They don't have to want to do it. > Currently we have representatives of banks, hedge funds, and investment trusts making those decisions. US anti-banking conspiracy theories aren't generalisable to all central banks.