10 sats \ 2 replies \ @nerd2ninja 6 Jul 2022 \ on: How does everyone think about Bitcoin and Inflation - is a 21 million *permanent* cap correct? bitcoin
Oh hey, I got this one. First I would like to start with a basic fallacy lots on Kensians make. Its the mistake the Federal Reserve made about inflation. Do not assume any variable will be increasing at a contant rate.
So the msot simple economic equation is productivity = wealth. The Kenesian system (which is a system designed to prop up the business of usury) sees that the bubble that debt creates causes a reccession as prices need to adjust to the new money supply as the money is being destroyed (you have to understand that credit or debt is spendable as money just as much as money. Therefore, debt is money creation). They argue for bailouts and "liquidity" to effectively bail out the bank business model and keep the supply of money the same. It is a way of making the inflation caused by borrowing, official. It takes debt is technically money because its just as spendable, to here's some more money for your debt.
Now, get rid of debt. Money remains constant. People don't get suddenly rug pulled by a debt bubble burst. People plan around the economic situation they have as things are.
Bitcoin only becomes more valuable as people work to be more productive
So why would savers invest in businesses to pull forward economic growth? Because the value of Bitcoin will not increase without it. As a result, savers will invest in businesses they believe will outpace the productivity of everyone else and if a business venture does not seem to be able to outpace the growth of the larger economy, then may I suggest, such a business venture is not worth pursuing. It would indicate that there are more productive things we can do with our value and time.
Sorry edit: I want to add in the implications this has on volunteering and charity work as well because volunteerism does have a measurable impact on GDP, but I've already written an article here.
Totally follow all of this - but it's that last paragraph I'm hung up on from an incentives/game theory perspective.
If I know you have a large stack of bitcoin, and will work to increase its value (by becoming more productive), why should I bother working harder or taking any risks? My bitcoin savings will increase the same (proportionally) to yours, and I didn't do any extra work?
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So you don't, if you don't think you can outpace the productivity increase that my investment will have.
This is on purpose. I've heard the argument that there is a lot of time wasted by having everyone try to become an investor. Not everyone knows exactly what will and won't work.
Now if you don't work at all, this is a different problem. Now, you're looking at running out of money because you still have to buy food to eat and pay rent or buy a house or what have you.
Now if you own a business and you aren't looking at being more productive, now you're looking at the problem of more productive businesses earning money and nobody buying from your store.
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