[ben_w]

I think you’re conflating the economy and the monetary system. The latter is part of the former, but only part.

Money itself is mostly done fine. Mostly: There are exceptions, but (outside of wars) I know if only a handful of examples where governments had something less stable than Bitcoin.

[kevinak]

How is it fine? Even a currency like the USD has lost most of it's value over time: https://howmuch.net/articles/rise-and-fall-dollar

I guess you could call it stable. A stable decline!

[ben_w]

Indeed it has.

First: That, within certain bounds, is deliberate — a small level of inflation helps the rest of the economy by encouraging spending. The last thing you want is people HODLing their paycheques.

Second: your link shows an average halving time of the US dollar purchasing power of 22.5 years. Bitcoin has about the same price today as it was 6 and 12 months ago, but was about double that 3 and 9 months ago. Even the Brexit referendum’s effect on the GBP would be hidden in the noise of BTC’s volatility.

[kevinak]

First: Ok, so. Let's imagine that there was a perfect sound money. One that couldn't be tinkered with, one that couldn't be debased. Would you still need to "encourage spending"? I definitely do not think that's a given. I'd even argue that the need to intervene in the economy by playing with the cost of money is a symptom of the current system.

Second: Yes. No one is denying that Bitcoin is volatile. If you pick any arbitrary period of time you can come up with whatever statistic you want. This is not sound argument IMO.

[ben_w]

1. Crudely speaking, money that stays in a savings account acts like money destroyed, i.e. deflation. Deflation encourages more people to do the same, because the effective savings interest rate is ≈ $nominal_interest + $inflation, leading to a spiral.

Except: money stuck in savings accounts also means the money isn’t spent on goods & services, so fewer jobs are supported, so productivity goes down, which is effectively +ve inflation even with the money supply perfectly fixed, but fewer jobs also encourages more savings and also triggers a spiral.

Which effect dominates (+ve or -ve inflation) depends on other factors, but both ways are a spiral of economic pain.

2. What? This is specifically about which is worse, how can you not make this type of comparison?

[ben_w]

And now it’s too late to edit, I see an error:

> $nominal_interest + $inflation

Should either be:

> $nominal_interest - $inflation

Or:

> $nominal_interest + $deflation