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Great depression was caused not by deflation, but by previously unleashed inflation (as in "inflated money supply"). Collapse of the bubble is a logical consequ
by oleganza 11y ago
Great depression was caused not by deflation, but by previously unleashed inflation (as in "inflated money supply"). Collapse of the bubble is a logical consequence of any bubble. Alternative - ever-increasing inflation was experimented in Weimar Germany, Zimbabwe and few other places. Hard money (Bitcoin or physical scarce collectibles) prevents people from inflating money supply, thus preventing global bubbles and thus preventing subsequent depressions.
Of course, local stock-specific bubbles can still exist, but they are always subject for arbitrage and voluntary exits. Global money bubble is more destructive because use of a certain money is enforced by laws and therefore people cannot easily exit or switch to alternative.
- JamesBarney 11y agoIf deflation didn't cause unemployment and the great depression, why did the collapse of the bubble lead to unemployment and the great depression? Hard money prevents the Fed from changing the inflation rate but it doesn't prevent random and severe changes in inflation and deflation. From 2010 to 2013 bitcoin had a deflation rate of 96%. Which is insane any normal economy would turn Mad Max if it had that type of deflation. If I had received a loan for my house for 100k in 2010 I would have had to repay $1.5 BILLION in 2013. Then from 2013 to 2014 it had an inflation rate 353%. If inflation leads to bubbles and we all used bitcoin this inflation would led to the mother of all bubbles.