Yeah, you are missing a couple things.
  • Not all wars are won based on the amount of money that is spent. If you think about it for a while you can come up with some examples yourself.
  • Printing money is in essence a hidden tax. It creates no new value. So in your example Fiat land is spending more on the war than bitcoin land. They are just using two methods. Taxes and printing. Your example is flawed.
When I think about the impact of a hard currency on war I think of the change in incentive structure. It takes away a tool the state uses to hide its war spending. It forces the state to tax which gets more attention of the citizens.
There's another aspect to this. In bitcoin land I suspect it might not be a democracy. Or at least not as centrally controlled. I also suspect it would be so much more prosperous that it would have better defenses than fiat land. I suspect there would not be a war. If there was it would be shorter than fiat vs. fiat.
You're totally right about money not being the only factor. I had that added as a reality, but didn't want my post to get too long. I'm talking about generalities in that often countries that spend the most on war have better odds of winning.
I'm not sure I follow your second bullet point. Fiat land is spending more on the war than bitcoin land - that's my point. They are spending nearly twice as much. It's the cantillion effect that allows them to do so. It's only after enough time that the folks took the government's money realized that what they were paid is worth less.
Or perhaps I have misunderstood you.
No you understand me. I'm saying it would be a better example if you compaired spending x from taxes vs x from printing.
Anyway, good discussion.