| > There's a reason why 0% inflation is not thought to be optimal. Because money sitting in a box under your bed isn't doing the economy any good. We saw a lot of the productive gains that lead to total GDP growth in the 80s because inflating fiat meant higher (predictable, not stagflation) money velocity. Having inflation, and a dollar losing value, is good because it means you don't want to just sit in the dollars, you spend them on things and keep moving them around the system. You instead invest your money, and optimally have stocks or business interests using your money to make you returns while keeping the money circulating. I don't think the problems with modern fiat are necessarily because you have inflating money - it is more that corrupt legal monopolies on counterfeiting will funnel new money into a select few, while the printing is hurting everyone else. It is more the unequal rigged distribution of new funds than anything. Of course, bitcoin is a great replacement for bonds or gold, because it inevitably is going to deflate when it has market saturation, no more btc is minted, but wallets are lost so the monetary base shrinks. So you can reliability predict it getting more scarce over time, and if everyone else agrees it still has value it would get more valuable too. And on the flipside you have something like Doge or Peercoin, the former with fixed monetary base expansion of a fixed number of coins (which means the total inflation drops each year and approaches 0% when you have enough Doge that adding 5 billion coins a year is a small fraction of the total monetary base. I guess eventually it would reach equilibrium, where your money lost from lost wallets or people forgetting passwords matches money generated each year. I think Peercoin is interesting because the inflation scales with the monetary base, so 1% more of all active coins is meant to be printed each year, so you have a near constant 1% inflation. I also think there is room for a cryptocurrency with predictive analysis of the monetary base - if the velocity is low relative to the number of coins, it means you aren't inflating enough and people are sitting on funds. If the velocity is too high you are inflating too much and should cut back printing. It would be neat to see an algorithm to balance that, which is why in common economics something around 1% inflation in the long run is considered optimal. |