I was thinking about the recent papers by the ECB and the Minneapolis Fed and had the following thought train:
Man, maybe we are really coming into that then-they-fight-you phase people talk about. Huh, it's kinda handy that we got as much adoption as we have before this happened. I mean, they probably won't be able to do a full-frontal assault on bitcoin because we got the ETFs...bitcoin's incentives are incredible!
Many of you are doubtless of more rigorous mindsets and don't indulge in such silly "everything is fine" thinking. After allowing myself a few fantasies of hyperbitcoinization, I caught myself and stopped.
There is no perfect set of incentives a system can have that will perpetually lead to good outcomes for humanity or our society or whatever you want to call this thing we are all necessarily participating in.1
Bitcoin's design is impressive: it balances forces in society against each other and will hopefully result in a stable system that is better for humanity than central banking has been.
But even stable systems need to be tended along as society changes around them. Take, for example the US Constitution: it has created a remarkable stable basis for a lot of human flourishing. But it had to change a bit along the way to avoid becoming unstable.
The US may not have tinkered with their constitution lately (perhaps because their politicians have been too busy attempting circumvent the document), but the point is it had to change to avoid slipping into destabilization 2
Central banking is another system that has provided relative stability (so we're told--I'm not enough of a student of history to be able to make a call on this one, but central banking's objective efficacy isn't really relevant to my point). Certainly there were plenty of economic crashes and wars before central banking came into vogue. And the system has been frequently altered, often when the bankers are frantically trying to keep it from collapsing. Stable systems always need tending, altering.
Bitcoin is also a system we hope will provide a stable basis for human growth. But it should not be assumed that its incentives are perfect. If Bitcoin ends up being an integral part of human society, it will have to alter its incentives some as time goes by.
Footnotes
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Obviously, some systems achieve stability but aren't terribly good for human flourishing. Monarchies seemed like they were stable ways to organize humans, but growth in monarchies simply doesn't compare to democracies. ↩
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The 14th Amendment expanded constitutional protections to more than wealthy whites. The 19th Amendment expanded suffrage to a previously disenfranchised half of the population. Arguably, if these changes weren't made, the US would have been a less stable place. ↩
