77 sats \ 8 replies \ @joda 29 Feb \ parent \ on: Convince me I am wrong about these bitcoin themes meta
If people are incentivized to produce, then competition increases and the cost of labor (and therefore income) go down. This has a deflationary effect on prices, as fewer dollars are chasing the same number of goods (or even an increasing number of goods).
as fewer dollars are chasing the same number of goods
It's not fewer "dollars" with Bitcoin, though. The Bitcoin supply is growing, which is the definition of inflation. It is an appreciating currency, which means its purchasing power is increasing, but that's not the same thing as deflation.
You raise an interesting point about increased competition. I was thinking about it from the other side: delayed consumption means reduced demand, which also lowers prices.
reply
The Bitcoin supply is growing, which is the definition of inflation.
I have never heard this definition of inflation. I have always used and understood it to be a function of the price levels, not the monetary supply.
reply
The meanings became comingled, but originally "inflation" referred to an increase in the quantity of money and price changes were discussed as the common outcome of inflation.
It's a somewhat archaic bit of economic history, but I do think the distinction is important sometimes.
reply
fair enough - happy to use a different definition if it is the standard here.
reply
Ah yes my brain is still wired for fiat!
Another idea is that if you are a producer (say a craftsman or artist), then you want to get paid sooner than later (because your good or service will decline in price), so your incentive is to either get paid before you produce, or to cut corners and produce as quickly and cheaply as possible.
Quality production would have to demand a premium not just for the quality, but for the loss of purchasing power from not having the money. (Probably compounded by the need to purchases higher priced materials as inputs).
reply
you want to get paid sooner than later
With an appreciating money, you would want to get paid later, but at a price agreed upon earlier. It's the inverse of our fiat situation.
reply
If I am a craftsman, the price I can charge for a widget now is more than the price I can charge in the future (assuming Bitcoin standard).
I'm not sure why you'd ever want to be paid later, if the price is set. Isn't having the money now better than having the same amount of money in the future? Opportunity cost/time value of money, PLUS "not your UTXO not your Bitcoin"
reply
Yep. You're right.
I was thinking that the same amount of money will be worth more later, but since there are no significant storage costs, you would absolutely rather have it now and just save it for later yourself.
reply