[Mistletoe]

Bitcoin fixes this for the first time in human history. I’m excited about a future without monetary debasement. How many wars have been started by the “print more money until it is worthless, oops I have to start a war to fix it” spiral?

https://en.wikipedia.org/wiki/Debasement

[MadnessASAP]

It doesn't in any way fix things. The underlying point of debasement and other schemes outlined in the article was to generate revenue for the government. Now governments use taxes to generate revenue and inflation to encourage circulation.

While taxes and inflation are generally unpopular they are also vital to the functioning of society and the economy. BTC and many other token schemes implicitly or explicitly stand in the way of that.

Breaking a system you don't like doesn't automatically get you a system that's better.

[ffgjgf1]

> Now governments use taxes to generate revenue and inflation to encourage circulation.

They always used taxes primarily whenever they could. Significant debasement was almost exclusively an outcome of extreme desperation when you had no other options left. If anything expanding the monetary supply is much easier now than when specie money was used. Debasement of course never worked longterm anyway but it was really only feasibly useful when you had the monopoly on issuing currency (e.g. the Roman Empire). In medieval Europe you’d just stop accepting the coins issued by the the city/lord/king who did that, which would be pretty easy when they put both their stamp and the year of issue on it.

[psychlops]

Coincidentally, inflation (effectively a hidden tax) is also a way for governments to ignore democratic society and divert wealth into pet projects such as unpopular global wars.

There is a reason war bonds aren't sold any more to fund them.

[TacticalCoder]

> Breaking a system you don't like doesn't automatically get you a system that's better.

At this point the US debt is growing by 1 trillion every... 100 days. The system is breaking by itself, not because of Bitcoin.

> While taxes and inflation are generally unpopular they are also vital to the functioning of society and the economy.

Some taxes and some inflation. We're way past these.

[MadnessASAP]

Pointing to a national debt without context does not make a point, much less prove the system is breaking.

Global inflation has very little to do with any one governments choice in economic policy. However it should be said that the current state of inflation would make the problems caused by the widespread adoption of a inflation "proof" currency significantly worse.

Tax rates and distribution are an incredibly subjective and political issue. Given any tax policy there will always be a healthy split of experts and laypersons who think it is woefully low and those who think it is grossly high.

[psychlops]

> Pointing to a national debt without context does not make a point, much less prove the system is breaking.

Belief in magic is why the system will peacefully continue until it breaks. While it dollar enjoys the status of the least ugly girl in the room, it too will eventually follow the same pattern of all fiat.

[jeltz]

Current inflation is mostly caused by fuel prices and that would affect BTC too.

[kmeisthax]

Bitcoin has debasement, it's called altcoins and hard forks.

More generally, Bitcoin solves the wrong problem, because Austrian economics got the history of money wrong. Money wasn't invented to track scarce resources, money was invented to track who had paid taxes to the correct military invaders. The traditional / pre-money form of economic system (in the sense of it being a system to track the usage of scarce goods) is the gift economy. This is the system humans are built to work in. But gift economies are backed by strong promises of identity in close-knit groups. A bunch of rapacious murderers extracting food out of the fifth town they've sacked this week aren't going to be able to tell the difference between John, son of John, John, son of the brother of John, and John, son of the cousin of John.

What money does is separate a person's identity from their ability to access scarce resources. This 'paraidentity' of money is rendered in the most extreme in crypto. Your identity means nothing, just the size of your wallet, to the point where even voting in cryptocurrency is proudly for sale. The thing is, separating access to resources from personal identity also centralizes control of those resources. Printing money to fund war is not a bug, it is a feature.

In fact, it's not even something Bitcoin fixes. The primary source of liquidity in the Bitcoin ecosystem is businesses buying it to pay data ransoms. Bitcoin, in the name of opposing statism, invented a new kind of state whose military consists of hackers penetrating and encrypting systems to force you to buy Bitcoin to decrypt them.

The way you debase Bitcoin is by inventing new kinds of Bitcoin. Because, remember, the scarcity isn't the thing bringing liquidity into the system. If the ransomware people decide they're only taking Ethereum this week, then people are buying Ethereum, not Bitcoin. All money exists to pay taxes, and if the tax collector wants a different kind of money, then they've successfully debased the old money.

[dnpp123]

Ignoring the half baked truths about Austrian economics (I'm not a fan of Austrian economics, but at least try to have valid criticism about them).

> Bitcoin has debasement, it's called altcoins and hard forks.

> The way you debase Bitcoin is by inventing new kinds of Bitcoin

Please read https://vitalik.eth.limo/general/2021/03/23/legitimacy.html

[reisse]

> The primary source of liquidity in the Bitcoin ecosystem is businesses buying it to pay data ransoms.

Well, maybe you can explain then why most of the crypto liquidity is not in crypto itself, but in derivative products (mostly perpetual swaps and ETFs), which have no use to pay on-chain ransoms?

[tomrod]

Almost. Because Bitcoin is highly energetic compared to currency, it isn't all the way there. And novel attacks exist for digital currency that are not present in physical currency. Currency has to be tradeable with marginal cost nearly zero (will never be exactly zero), and in my view digital currency has this as an issue. The analogue for digital currency, when appropriately crafted and not a sh*tcoin, is gold. Hard to get, limited in volume, costly to secure and appropriately manage. Gold can be used for currency, but it is awfully insecure to hoarding and banditry.

Fiat currency solves a _lot_ of problems while also having limitations broadly railed against by digital currency advocates.

[panarky]

You should be very excited indeed because the future of your dreams arrived two years ago!

Since early 2022, the US central bank has been "unprinting" money. Their balance sheet is shrinking and the money supply is falling.

https://fred.stlouisfed.org/graph/fredgraph.png?g=1rdgN

You don't need Bitcoin to save you from the inevitable war that's caused by an inflating money supply and printing money out of thin air because the opposite of this is happening!

The money printer has been replaced by a money shredder!

The end of war is a pretty big deal, how will you celebrate?

[creer]

They would still have to go a very very long way to get back to even pre-covid level. In the meantime: propaganda.

[ffgjgf1]

Bitcoin is basically the worst kind of currency I could imagine (well actually I couldn’t, if I didn’t know anything about it and someone told me to design the worst currency I can think of that would still be practically usable I wouldn’t be able to come up with something as bad…)

If due to some episode of mass psychosis everyone collectively decided to make bitcoin the default global currency it would result in the biggest economic/financial catastrophe in human history..

Extreme deflation, unlimited price volatility etc. but most importantly it destroys any reason for investing your money into anything potentially productive.

Why take any risk when you can just become richer and richer by hoarding cash?

Literally freeloading with zero effort whatsoever because you get a cut from anything that anyone does that might result in any economic growth (i.e. productivity increases -> prices constantly get lower -> if you’re an early “adopter” you just stay permanently rich with zero risk or effort). It’s basically if we just took some of the biggest flaws in our current economic/financial system and multiplied them by 10-100x for some insane reason).

Of course that whole problem is mostly hypothetical since there would be no real growth anymore and we’d just be permanently stuck in a severe economic depression…

It’s even much worse than gold/silver that was a compromise because no trustworthy and stable governments could exist in the premodern world and because economies were mostly static over multi-decade periods (of course there was still a huge amount or volatility year to year)

[thaumasiotes]

> How many wars have been started by the “print more money until it is worthless, oops I have to start a war to fix it” spiral?

Not many. The more typical case is that you're in a war, and you want to spend more money than you have, so you make some up.

[idontknowtech]

Bitcoin would make an awful legal tender, because by its design supply decreases while demand for it increases. An ideal, 0% inflation currency (assuming that is ideal) would expand and contract automatically with economic conditions. Satoshi considered this problem but decided it was too complicated to implement, which is why he went with the fixed supply route.

Still, it's worth remembering that a fixed supply currency will inevitably fail just as the metallic standards (which were semi fixed supply) did, and for the same reasons: politics. Metal backed currencies fell because the political will required to coordinate the system fell apart. Newly-enfranchised workers didn't find the message "suck it up, the gold standard requires it" very appealing politically, so they voted for other things that entailed fiscal and monetary policy. Central Banks, seeing the writing on the wall, abandoned gold en masse, with the US retaining it only for other central banks.

Bitcoin would have the same problem. It would be inevitably deflationary - halvenings, for example, are tied to computational power. Presumably, more demand for Bitcoin means more computational power, so its supply decreases just as demand increases.

Deflation is even worse than inflation for working people. Investment dries up, because why would somebody take a gamble on a business if they can keep their cash in their closet and make money, risk free? Employment therefore drops, while people decrease spending - why spend $100 on something today, if you can buy it for $85 in a year? Additionally, loans get more expensive in real terms, wages decline, and a whole host of other bad things happen.

That's why central banks target +2% inflation, in part. Inflation is preferable because it encourages investment, discourages nominal (and only nominal) wage decreases, decreases the real value of loans to the benefit of the debtor class, and other benefits. Central Banks also have a pretty successful record dealing with runaway inflation - hike rates, cause a recession, wait - whereas they lack tools to deal with deflation. At its simplest, the solution to deflation is for everyone to get a check from the government, but this whole field is considered weirdo experimental land and has only barely been tested.

All that is to say: Bitcoin is fundamentally ignorant of history and is incapable of becoming anything other than digital gold. It has a floor value which it cannot sink beneath: online gambling, illegal things, and privacy advocates (in that order) guarantee it will never truly hit $0.00. But it would be an absolute catastrophe for any country to adopt as its actual currency.

Now that I think of it, Bitcoin is perhaps one of the earliest examples of technophiles assuming society should work according to computer code, thereby "cleaning" these imperfect human systems by replacing them with the inevitable future: A philosophically-driven (rather than pragmatically or empirically, for example) system, with clear and inviolable rules, limited to no exceptions, and a happy ignorance of why existing systems came to be. After all, why study the past when we're creating the inevitable future?

[adolph]

> people decrease spending - why spend $100 on something today, if you can buy it for $85 in a year?

Imagine if everything suddenly was infected with the Osborn Effect.

Otoh, certain products like TVs do seem to get better and cheaper as time goes on, yet people don’t seem to delay purchases. It’ll be interesting to see if conventional wisdom about deflation holds, should it come to pass.

https://en.wikipedia.org/wiki/Osborne_effect

[Qwertious]

>Otoh, certain products like TVs do seem to get better and cheaper as time goes on, yet people don’t seem to delay purchases. It’ll be interesting to see if conventional wisdom about deflation holds, should it come to pass.

The problem isn't just the osborne effect, it's that deflation rewards a non-productive investment (money hoarding) that crowds out productive investments, which makes the economy less efficient.

Buying a TV comes out of spending money rather than savings/investment, and is harder to evaluate because if TVs are getting better and cheaper in the future, they're getting better and cheaper now and so people have more reason to upgrade in the first place - which offsets the incentive to delay the upgrade for future benefits.

[adolph]

The current "money hoarding" rate is around 5%. For an X of [de|in]flation, what do you think is the function describing the Y of money hoarding?

https://fred.stlouisfed.org/series/PSAVERT