Why would people accept bitcoin IOUs when the real thing is more interoperable, saleable, private etc.etc. and of course doesn't require trust in the issuer. The answer is force [0]
The same reason people accept IOUs for literally anything else: credit. It is actually extremely useful to be able to borrow productivity from the future and use it today.
In this case stealth rather than force but same principle. It's also a lot harder to do stealth with a non-inflating currency that has proof of reserves.
Lending in Bitcoin can happen in two ways: the first is through imaginary Bitcoin (“borrowed from future installments”) in a layer 2, which is what he was describing, although I agree that, unless the government mandates accepting money from that layer, it is hard to make it systemically used.
The second one is to only lend coins that you have. In a deflationary monetary policy, lending is strongly disincentivized, as it would need to beat both the rate you would gain from the value of your coins increasing, and the default risk.
Much of monetary policy is about finding a balance where financial institutions will be incentivized to lend despite the risk (which is already a hard sell even under inflation!) without nudging prices.
It is plausible that a Bitcoin economy in stablestate (once coinbase transactions are no longer) would have very little lending. Is it outside of the realm of possibilities that, in such a world, innovation may decrease, and legacy becomes a more relevant factor for wealth?
I think a bitcoin economy in stablestate would have about the same amount of lending as a gold economy under the gold standard. There is enough history during gold standard periods to have some idea how this would be.
In short there would be less lending than under fiat with MMT, but certainly not zero lending. On the plus side, much more stability, and no hyperinflations, ever.
> [Bitcoin will have] much more stability [than fiat]
Why would it reach more stability?
Historically, cryptocurrencies have been significantly more volatile, not less.
Arguments were made back in 2013[0] that:
> this volatility will decrease as Bitcoin markets and the technology matures
But volatility has remained consistent over the past 10 years[1], seemingly uncorrelated to its adoption, market cap, and coin supply. In the same period, USD was an order of magnitude better[2].
The IOUs would be more private since your transactions aren't public. Likely faster with better user experiences too, per Moxie's argument for why blockchain systems already look more like that.
This was clearly a due process violation by the same man who set up concentration camps for Japanese Americans. He packed the Supreme Court so he could get away with it.