Ever bought a computer or cell phone?

Why? Why not wait until your money is worth more later compared to the price of that cell phone?

Because you need it.

Before mortgages people bought the amount of house they could afford. Married couples (instead of spending tens of thousands of dollars on a wedding) would buy a house and build a basement that they live in until they can afford to build the rest of the house.

People are living beyond their means. Once I switched completely over to BTC as my money I ended my debt and bought my house in cash.

You raise good points, but the example you chose involves debt-the mortgage. Debt has a place of primacy in a fiat system. That wouldn't be the case in a bitcoin based economy, though I'm sure debt will play a role. It's difficult to predict the real world consequences of a completely new economic system.

Firstly, Bitcoin is technically not deflationary. It's supply issuance is disinflationary as it drops programmatically with every halving. The net result of this may be price deflation when using bitcoin as a unit of account but that doesn't make the asset deflationary.

Now, as you correctly point out, if a lot of people lose their Bitcoin and it is unrecoverable it would be deflationary if lost supply was exceeding new issuance. I don't see lost bitcoin as a huge issue in the future though, we may have another wave of it as mass adoption hits, especially if people need to rush in, but the tech and tools and knowledge we have now is far superior to the early days when maybe 10% of supply was lost. There will always be some lost coins and I suppose at some point that might exceed the new issuance (isn't block reward 1 sat 76 years from now or something). But that crossroads seems so far in the future I don't think it's worth worrying about. If bitcoin is successful and hyperbitcoinization happens and bitcoin is the world's reserve asset, all these potential problems will get sorted out along the way. It's similar to the security budget debate. Sure, it's interesting to consider but if bitcoin is important to the world, it sorts itself out (maybe not in the way we like but it does).

As for the mortgage example you bring up. It's a fair one. Fiat is great at extinguishing debt over time via inflation, thus incentivizing more debt issuance which spurs economic activity, and that can be great in the short run but it's a trade off as it is disastrous in the long run. Jeff Booth has articulated this argument much better than I ever could why the deflationary forces of tech will require a non inflationary currency to offset them. I don't know if I totally agree with all his arguments but they are worth consideration and I also think you might be overthinking it from a fiat world view. If Bitcoin is the world's reserve asset, thinking about the value of a house over 30 years in fiat terms and Bitcoin value increase in fiat terms is the wrong way to look at it. Bitcoin would be much less volatile at that point, as the unit of account the only factors that should affect it's value would be issuance, participants in the network (population growth), and productivity, Who knows but if productivity grows at 2% and population grows at 2% and issuance is very little, maybe the cost of the house in bitcoin terms doesn't differ much over 30 years. Also you will be earning in bitcoin over that time. It's all hard to fathom when we live in this fiat paradigm. I think these are fair questions and maybe ultimately we do need a more elastic money with bitcoin playing the role of gold as a forcing function to keep people from abusing the elasticity.

It's a good thought experiment but again, if bitcoin succeeds, it likely sorts itself out.

How do you think things used to work when the world was on a gold standard ?

I think the fault in your reasoning is that you keep revaluing stuff back to shit fiat. Forget that USD even exists. You are faced with these facts:

Under these conditions, a mortgage would be a good choice for you. The problem with deflation is that your employer might repeatedly lower your salary over these years (to adjust for purchasing power) which would bust your idea.

There are two solutions:

Under fiat, you borrow the money to buy the house. Debt is leverage.

Under BTC, you borrow the house to save money. Equity is leverage.

I invite you to re-frame your thinking. Could it be possible that current rates of consumption are actually too high, because of decades of artificially low interest rates due to central bank manipulation? If consumption is postponed because savings are more valuable, would that be such a bad thing?

I'm inclined to think we need to move away from the mainstream economic thinking of "growth in consumption/production=good" and "decline in consumption/production=bad". This may have been true 100 years ago when economic development was necessary to provide basic quality of life, like electricity and water, to citizens. But these days when the marginal product is something like Facebook/Twitter (at least in advanced western economies), I'm not so sure.

You make a point alot of people have made. I hope you came here with an open mind

If you told people on a sound money standard to live all their lives in debt they would think you lost your mind. And they would be right.

Have fun staying poor and economically illiterate you worthless, ARROGANT moron 🤡🤡🤡

All ye replying in earnest to this fool are yourselves fools for engaging with this cocky douche who knows no humility and has likely never done anything of substance in his life. I refuse to waste time with arrogant assholes like this who have no curiosity about the world, just like I do not attempt to converse with hyenas!

All of your concerns are easily addressed through normal price mechanisms. Making up a scenario and then saying it can't work isn't any sort of argument. If your scenario really doesn't make sense that just means it won't happen that way.

People will make lending and borrowing decisions based one their expectations of what revenue flows and purchasing power will be like in the future. Some will make bad choices and take losses, while others will good choices and make profits. That won't be different on different monetary standards.

The biggest flaw I see in your scenario is the rate of deflation once Bitcoin is the reserve. Once it's in wide circulation, the only reasons for a major increase in purchasing power are massive loss of Bitcoin quantity or a technological breakthrough that makes us radically more productive. The first scenario is extremely unlikely (why would people be more likely to lose Bitcoin after it's established?) and the second involves a huge gain in prosperity, which would make repaying loans easier.

Saifedean explains it well in The Fiat Standard.

In the 1980s a hard drive cost orders of magnitude more per MB of storage than it does now. People knew prices would only drop, yet they bought hard drives, because they needed them.

The GDP would drop, but GDP is a poor metric, because it measures money spent, not value added to the economy. Read up on the broken window fallacy, e.g. https://www.economicshelp.org/blog/150529/concepts/the-broken-window-fallacy/

In a Bitcoin world, the role of debt in the economy would be vastly reduced because loaners would have a much lower incentive to loan out a currency that is deflationary. People would buy houses upfront because mortgages would be very expensive and risky to take.

This would mean that instead of getting a mortgage and paying it off for 30 years, people would likely rent for an extended period of time till they save enough to outright buy a house.

Housing will get cheaper (utility asset iso financialized asset). People will save until they can buy a house, like they used to.

The price of housing would drop drastically, coming back to its utility value based on supply and demand only. No more government interference in housing prices.

People could actually save up to buy a house again.

In today's world, it is not possible to "save up" to buy a house. Inflation in housing is moving faster than our paychecks.

In a Bitcoin world, housing prices would be more stable, even slightly deflationary over time against the currency (Bitcoin). Gone will be the concept of borrowing today in order to beat inflation in the future.

Sure, lending will still exist, somewhat. And people will still borrow in order to buy a house. But not nearly as much as they do today. It will be common to save up, because borrowing would make very little sense for the average person. And an average house would be only a few years' salary for the average person. Like it used to be before fiat.

Separate from the reserve currency aspect...

I would love a world where devaluing currency is no longer a driver of consumption. Buy what you need. Stop buying shit because your money will be worth less in the future.

Maybe we won't burn the planet to dust.

The entire point of Bitcoin is to do more with less. So even if people are encouraged to save more than they spend this does not mean economic throughput drops. It means people are able to afford to do more with less. The rest is just an abundant safety net. In this way Bitcoin generates abundance.

If my lifestyle cost me $50,000 a year but my net worth in Bitcoin increases so many times the amount the cost of my lifestyle does not decrease and neither does my economic throughput. The only thing that decreases is the amount of the tool that I need to transfer value.

Bitcoin exists, and the genie doesn't go back into the bottle.

Hope some day you can come to terms with that.

If you told people 100 years ago we would have a system backed by debt and violence they would've laughed but here we are. I think there will be much less lending on a Bitcoin standard, but I still think it will be a thing. I also don't think fiat goes completely away it just becomes much less entrenched. I think Bitcoin will eat away at nation-state bonds because as you point out Bitcoin's ngu will convince people they should just hodl

Have fun staying poor regard. We aren’t going to have mortgages (death contract) in the future

Yg jelas jika aku punya 1 btc akan ku donasikan sebagian

There's no need to assume there will be a positive interest rate on credit. Competition and automation (decentralized finance) may very well drive nominal interest rates to zero or negative by factoring in expected Bitcoin appreciation.

If BTC is the unit of account for the world, then it would generally increase in value at about the level of productivity growth of the world. Say, for example, 4% per year. So, 96 sats 1 year from now will be equivalent to 100 sats today in purchasing power. As a creditor, you might take the expected appreciation of the asset into account. If you want receive 5% real return on your value (for example), you charge a 1% nominal interest rate (5% return - 4% expected appreciation of the Bitcoin).

You can see how this may even result in a debtor paying a negative interest rate on credit, while still resulting in positive return on real value for the creditor.

I find your comments fascinating and it makes me wonder. What is your bitcoin theses? What is its utility? Based on your comments in these threads it makes me wonder why coming from your perspective we even need bitcoin at all.

You're thinking in fiat still.

The opposite seems to be the case. There is no way an inflatable asset will become the world currency. For example the dollar can be inflated at will and the movement away from it seems to be growing.

Btc already became our reserve asset. Everything is getting repriced in btc terms, you can't see it. Bitcoin wasn't made to grow production, to grow GDP, to get rich quick. Bitcoin was made to standardize a ethical accounting system, that everyone can agree and verify it. Bitcoin economically impacts "bad interaction, behavior and beliefs" by forcing people play the rules. Whats wrong with it?

Why would you need to borrow money or large somes of money over long periods in a deflationary world? Your income will continue to close the gap coupled by deflation removing cost on expenses to give you savings to acquire what you want

That obviously wouldnt make sense. I suspect under Bitcoin standard price of house would drop to its consumable price, not pseudo-store or value it is now. It used to be kinda normal for houses to cost the cost of materials and labor. You would not borrow money for shoes or sofa or other non-productive assets like a house.

Today , an idea to saving up for house is out of the question. This would change under Bitcoin standard.

You would only borrow money for productive enterprises. If you had a business proposition with good chance of outperforming Bitcoin price.

100 years of this Keynesian way of thinking has definitely not resulted in low income inequality. However it has brought society to the brink of collapse by destroying our ability to save in money that cannot be debased for the benefit of those who control the money printers, while plummetting every one else to skyrocketing, backbreaking debt, and driving the runaway consumerism that is actually destroying the planet. It's time to try something else.

The way how you understand economy will change, the way how you buy will change. In the actual economy the money is debt, on the bitcoin economy the money is savings. You will buy with savings, no with debt, forget about mortgages and being slave for live to jobs you don't like just to be able to have a place where to sleep. Bitcoin doesn't need to be the worlds reserve currency to help you get out of slavery. Bitcoin can be YOUR reserve currency.

Have you seen this?

When economists say something won't work because of [... whatever] they are saying they would advise against it, and those in control of the monetary systems heed that advice.

But today, I am my own bank. I do maintain some control over the "monetary system" (at least, the parts I interface with).

If I have bitcoin as MY reserve currency, then there is no THE reserve currency, there are instead reserve currencies. As in multiple.

Efficient or not, .... Harmful to economic growth or not, etc etc ... that can (and likely will) be our future.

It would work just fine