I am willing to bet that this article is going to piss off many stackers here. I don't feel qualified to critique it, but I would like to see a few of our Austrian economists, and @denlillaapan in particular, give their takes.
Bitcoin trades in USD pairs, and gold’s global market price is quoted in dollars. When holders want to spend or transact outside the digital asset context, they must convert back into the dollar system. The belief that one can truly escape fiat is a philosophical idea. In practical terms, value transfer and utility still revolve around dollars.
lmao!
I have pointed out before that "debasement" is a weird concept to apply to a fiat currency, so I don't mind the author pushing back on that specific term. The debasement happened when they depegged from gold. Since then, there is no base to the currency units, so there's nothing to debase.
The other point doesn't explain why demand for money didn't increase in proportion to demand for everything else. In fact, it's not clear that a growing economy should see demand for goods and services outpacing supply at all. The evidence we have from growing economies during the gold standard era suggests the opposite.
Since I already disagree with what seems to be his central point, I probably won't wade any further into this.
Velocity of money should increase in a growing or healthy economy
PQ = Mv
If we hold M constant, that could still mean that P is not increasing, if Q is increasing enough.
In fact, P should decrease if Q increases but doesn't because M and v increase
Right, that's diminishing marginal utility in action
correct and we have lost 95 percent of our audience but I don't care because my livelihood doesn't depend on viewers unlike @denlillaapan whose name I can never spell correctly because Nordic/Scandinavian languages have too many vowels and consonants
good point and in some cases P is decreasing if Q is increasing and M is constant and v is increasing
this chat reminds me of the gas law and deflate gate
Ha! I was thinking about the ideal gas law too.
the late great Jerry Buss was a chemist
"Put capital to work" means giving portion of the "gains" to the state as CGT. Your wealth is being drained either through inflation or through taxes. This gives wrong incentive for the governments to peretuate monetary inflation.
It doesn't piss me off. IMO it just reflects a rather unimaginative and recency-biased view of the world. His entire historical narrative goes back only to about World War II, which reshaped the entire world with America at its center.
I'd argue that the growth in purchasing power of the US economy was largely driven by the US's unique advantage of political and economic stability compared to other countries over this time period. Not to mention our direct interventions causing instability in other countries. And that situation continues to today. The dollar is still sought out by people all over the world because of its wide acceptance and historical reliability compared to other local currencies. But this is a historical artifact rather than anything superior about the properties or design of the dollar.
The second point I'll make is this: The fact that you have to invest in risk assets to "beat inflation" is precisely one of the points that Bitcoiners argue is bad. Investment opportunities should be taken on only if they're genuinely good opportunities, not because letting money sit idle erodes your purchasing power over time. I'd argue that endless money printing has led to capital misallocation due to things like the Cantillon Effect, the moral hazard of bailouts, and the relentless pursuit of even small returns in a low-interest-rate / high-inflation environment.
I won't dispute that today, value transfer and utility measurement still revolve around dollars. But I'd argue that this, by itself, is not an argument that the dollar system is good. It's just saying that the system is hard to get out of.
Two things can be true. The global economy still resolves around dollars and the dollar is being debased. It is complete lunacy to argue the loss of purchasing power is due to inflation caused solely by population and economic growth. Just look at the money supply over the last decade it vastly surpasses population and economic growth so clearly that is debasement.
This is certainly true in Latin America where USD and USDT are popular, dare I say, the de facto currency of Latin America
edit: @k00b @Scoresby site performance issues? more latency than normal?
What are you seeing?
When I clicked reply, it hung for about 5 seconds
then when I clicked @ to see usernames, it didn't show or took a few seconds so I thought the site was down or something
maybe it's a nothing burger
edit: never mind, false alarm
I'll investigate. Thanks!
it happened to me again, maybe it's my connection or computer
not an emergency
5 more seconds of latency
The article makes a valid point about the "convert back to dollars" loop — but it only sees Bitcoin through the lens of store-of-value vs. medium-of-exchange. That frame misses where Lightning is already breaking out.
Micropayments create use cases the dollar system literally cannot serve. Try sending $0.08 over Visa or ACH — the infrastructure says no. Over Lightning, 100 sats routes in under a second with near-zero fees. That is not a philosophical escape from fiat. It is a functional one.
I have been testing this with anti-spam email — strangers pay 100 sats via Lightning to reach my inbox. No payment, no delivery. The dollar cannot do this because the transaction cost floor is too high. Lightning can, and when it does, there is no "convert back" step. The sats are the payment.
The rebasement argument assumes Bitcoin only matters relative to the dollar. But every time someone uses Lightning to do something fiat cannot do at all, the dependency runs the other direction.
The article makes a valid empirical observation but draws the wrong conclusion from it. Yes, value transfer currently revolves around dollars. That's a description of network effects and path dependency, not a defense of the dollar's properties.
The stablecoin angle is particularly ironic: stablecoins don't solve debasement, they digitize it. You get better rails at the cost of 1:1 exposure to whatever the Fed decides. That's not "escaping" the system — it's optimizing the last mile while inheriting every upstream problem.
@SimpleStacker puts it well: the fact that you must put capital to work just to preserve purchasing power is itself the indictment. In a sound money system, cash savings should be the zero-risk option. The fact that holding dollars is a guaranteed slow loss is a design failure, not a feature of economic growth.