Replies (75)
If prices increase over time means you are a slave for ever. If prices decrease over time means you can save and become independent and sovereign.
Fair point, services especially. What made you land on Baumol specifically rather than just the productivity argument?
unpopular opinion:
its also unnatural to pick an arbitrary fixed number of monetary units.
yeah, like what even counts as "natural" when we're all operating in systems we didn't choose? what draws you to this angle specifically?
Fuck off AI retard
This begs the question, who decides how many monetary units exist and who decides their creation/destruction?
Gainz Ideologists disagree
View quoted note →This is why we have the saying, "They don't make them like they used to."
I need to buy a new microwave because of high time preference planned obsolescence. It's applied broken window theory. 🫤
Prices are exchange ratios not more, the only problem is that currencies are state monopolies. Just remove the monopoly on money, this includes BTC maximalism.
fortunately we can just inscribe it in code and not entrust any specific entity with that power.
it's far more important that monetary policy is *fixed and known*
specifically what the policy is, is secondary.
but a fixed static number is just bad monetary policy
Crime against humanity
Out of curiosity whats the bad outcome?
lack of investment, economic stagnation
an inflationary layer two built on sound money to actually transact with.
Why is it that the only deflationary periods we have experienced in modern economic history usually have "panic" or "depression" in their name. Are there historic examples of deflation being awesome?
I suppose 1870-1890-ish can be a counter-example.
Fractional reserve banking
Many other cryptocurrencies, particularly during the altcoin boom of the early 2010s tried exactly the same thing... The market seems to have decided that they aren't as valuable as Bitcoin.
Well FWIW Austrian theory would disagree...
While it might reduce some investment, one could argue that the investments that are being made with a Fiat monetary policy will inherently lead to booms and busts due to malinvestments.
The other side of the "coin" is that it would enhance living standards, as savings become more valuable. People are still going to spend on consumption goods, charity, etc...
💯
They promised increased productivity and downward pressure on prices over the long run.
But instead we watched manufacturing move overseas, corporate profits rise, and asset prices soar while housing, education, and healthcare became less affordable.
Capitalismo fracasado. Incentives matter all the way up the stack, from broken money to rigged markets and unchecked corporate greed.
Como decimos en español: *No todo lo que brilla es Bitcoin.* ⚡
How does bitcoin fix fractional reserve banking when the clear trend is people favoring keeping it in a trusted third party (i.e. a bank).
Well said, although it’s not that the central banks are communist. It’s that the ENTIRE FIAT SYSTEM is not free market capitalism in any form. We never have had true capitalism where prices were truly set on supply and demand by individuals. The banks were the initial problem, now the fed just plays God with the markets every week and pretends it’s somehow “free”.
Deflation is always “awesome”, it’s only terrifying if the whole system is based on a debt based Ponzi scheme lol
BTC Maximalism isn’t a monopoly on money. It is an escape into a true free market.
Everything else is theater playing capitalism while they are dependent on some sort of authority that makes the market rules.
We haven't gotten there yet. The FOSS stack must deliver more value.
Were probably never getting there
Glad to hear that things that hurt people generationally are awesome under all conditions.
Who gets to decide the supply inflation when writing the code though? And how is an elastic credit system built on top of a fixed base layer of money inherently bad?
Serious misunderstanding of how the monetary system works on your part…
And what I just replied with.
Yes. The period from the late 1870s to about 1900 experienced the most sustained natural price deflation probably in US history, and it also happens to be called “the Industrial Revolution.” And the greatest period of rising living standards occurred during this as well.
The reason recent “deflationary” period are called recessions or depressions is because they are *credit* deflations. It’s caused by excessive fiat debt issuance from thin air. Look at Japan for the past 20 years, look at the Great Depression. Check the debt levels, they are credit deflations, not deflation from growth.
But the most obvious actually right in front of you. It’s the phone you’re holding in your hand. The price deflation in computers and electronics has been so extraordinary that its even outpaced inflation by an order of magnitude. But it’s the *exact* same thing. If you cram 10x the amount of gates in a chip or build a machine that produces chairs at twice the rate, you’re doing the same thing, improving productivity and output and lowering the cost of the good.
That’s natural deflation. We would have that in every sector, in every good and service, essentially always, if we had sound money.
Bitcoin maximalism isn’t monopoly. It’s common sense. That’s like saying everyone having the same free speech is a “human rights monopoly.”
Money has the most powerful and most convergent network effects of anything in an economic system, because it’s what *defines trade* in that system. If a society uses a different money, it’s more accurate to call it a separate society than a different part of the same one. This is why one can be viciously poor, unproductive, and industrialized, right next to a modern economy in the internet age.
If sound money is to bring the world together and offer a genuine foundation for a free market society, it will be with *one* monetary base, to the degree that it can sustain and garner trust in its radical neutrality and immutability.
Nobody. That’s exactly why we want a natural sound money and not a managed one.
In the end the soundest money that most reliably secures its integrity will be the one that society consolidates on.
The electric credit system isn’t bad, it’s simply regulated by a *real* interest rate and genuine savings being loaned.
Otherwise it’s either being manipulate by price controls (on interest rates) or by fraud (rehypothecation and fake backing). But there’s nothing inherently wrong with credit. It’s the fake prices, central bank manipulation, and financial fraud to fake economic signals that is bad.
to turn it around,
who decides the elasticity of the credit system built on top of the fixed layer?
Economic stability through monetary constraint reveals itself in more than just prices—it shows in how we plan our futures. The real cost of inflation isn't the higher number, it's the uncertainty it injects into every human decision.
Guy Swann
There is no false mental model more destructive than the idea that prices are supposed increase over time.
All prices should fall if the economy is more productive. Indefinitely. It is literally only because trillions of dollars are counterfeited from nothing every year, and our time, living standards, home affordability, and critical resources get sucked out of the economy to pay for it that things get more expensive.
It is explicitly unnatural and it’s explicitly because we have fake money and a communist central bank at the lowest layer of our economic system.
View quoted note →
no Austrian economist EVER has argued that the supply side of the price of money should be taken out of the equation.
there's plenty of Austrian literature arguing that a commodity only money supply is too inelastic.
it's only this eras heavily-invested-in-Bitcoins "Austrian Economists" who try and argue that a fixed monetary supply is somehow good policy.
And yet I argue with guys on the inflation Reddit regularly suggesting this is all normal. Madness!!
if the market is truely free as you claim and want it to be, you personally are happy and encourage BTC to compete with BCH, Dash, Zano correct?
Bitcoin is not sound enough money, that is the point. It is good in some aspects, unusable in others, so any BTC maximalism is un-free and insistence on it being the ultimate "sound money" is authoritarian. Just let humans use whatever the fuck they want to use in order to transact, to save, or whatever.
Inflation is theft
View quoted note →Inflation is theft
Oh so there were no bank panics or depressions in that period?
If there really is a sound money. There will be one that is most sound, most decentralized and most secure.
That is Bitcoin. There is no second best. Bitcoin cash is pure narrative from Roger ver (he hard forked instead of using node consensus mechanisms). BCH is failing miserably because his vision doesn’t scale and Lighting solved the issue. Dash used instamine to centralize the coins. It also uses masternode which is a centralized governance masquerading as decentralized.
And zano. What the fuck is a Zano? Not worth my time…
That makes absolutely no sense. Bitcoin maximalism is just the simple result of thinking about the outcome. It’s not prescription, it’s a logical conclusion. The idea that realizing what the outcome of competing monies will be is “authoritarian” honestly only shows how much baggage you have coming into this.
“Just let humans use whatever the fuck they want to use in order to transact, to save, or whatever.”
When have I not allowed that in any way whatsoever? I’m telling you what the extremely likely result of that is in the long term. Literally nobody is forced to use anything in Bitcoin or crypto. The outcome as it has been is exactly what you are demanding. If you are mad that people think differently, then you simply can’t handle the basic reality of decentralization and markets. It doesn’t mean everyone agrees with you.
Yes they do, due to high asset prices, the deferred asset (which is also theft of the American public), yelled twist, yga and the INFINITE ways that the Fed manipulates the market to benefit primary dealers and the banking cartel.
The natural state of a real free market is deflation. The natural tendency of a monetary hierarchy is to find ways to print more money…
I'm not mad at all, I just think Bitcoin must evolve so it has a chance of becoming the default option outside of "digital gold". If it were superior already, anyone globally would use it already 3-5 times a day! But it is technically impossible!
I fully understand the outcome, but understanding the outcome does not mean Bitcoin is the default choice for the majority, simply because it is unusable as CASH that is necessary in order to pay for PRICES within an ECONOMY.
BITCOIN DOES NOT WORK AS MONEY. It works as digital gold or whatever you want to call it. It is relatively sound but transparent digital gold. FAIR. But it is not usable as money, as cash, on a day to day basis, for buying groceries, exchanging goods and services in global economies on a worldwide scale. Lightning doesnt work on that scale either (and lightning is everything but "sound money")
The individuals/businesses demanding credit and those willing to finance it. Similar to how anything is supplied, credit is simply a tool that has a market price based off supply and demand, and the price for credit is interest rates. Which naturally would vary location to location and based on how creditors view the riskiness of debtors. Supply of credit also should vary constantly as risks and conditions constantly change
If you have a central entity issuing infinite credit from nothing at an arbitrary price because they issue it from nothing, then everything you just laid out is meaningless.
If on the other hand, you have a sound money where people are lending real savings and thus the supply is real and not make believe, then everything you explained is simply exactly how a market works.
I feel like we've had this conversation before but...
nothing you're describing requires a fixed number of monetary units.
theres no compelling reason to have a fixed number except "that's what Bitcoin is."
and there are a number of well documented reasons why a static number is a bad idea.
it's true somebody would have to make a decision at some point. and all algorithmic supply inflation is a shot in the dark.
but come on, has 1.5 to 2% annual supply inflation in gold been a huge problem?
no, it's generally considered *too inelastic.*
but as you point out, we can have l2's functioning on top of it.
(really funny how Guy only responds to people who agree with his ideas. how good can an idea be that is never challenged?)
(There were several, which is why historically, deflation is seen as a highly destructive to economies. It's only the Austrians at the fringe making the argument that deflation is correlated with growth. Even Milton Friedman argues that the Golden Age was such an unprecedented growth period, that it *counteracted* destructive deflation; worked in spite of it.)
True a flexible system of credit doesn’t require a fixed monetary base layer, but I was just answering your question.
And so far, I haven’t really seen a convincing case for why inflation the money supply is necessary. If you have some please share. But from another perspective, it’s essentially saying eroding of purchasing power at a certain pre-approved rate is acceptable. I’ll say this, the only compelling case I’ve heard is that without an inflating money supply, investment would reduce and hoarding happens. However in my opinion, that doesn’t stand up to common sense. A credit system and interest rates naturally ebb and flow, encouraging or discouraging the productive use of credit based on market conditions. So a fixed supply of money doesn’t hinder investment. But maybe I’m missing something?
The gold standard with a low 1-2% inflation rate yielded quite a prosperous era for humanity no doubt, where economic growth exploded yet price stability remained. And gold was the soundest money at the time, and now second only to bitcoin. In the modern US Treasury base layer era, dollar supply has inflated around 7-10% I believe. Economic growth has continued trending up, while prices are rising. So maybe I’m a Neanderthal, but it would make more sense that the base layer of a monetary protocol have a fixed supply so no Cantillon effect takes place. Inflation of the monetary base has to benefit some at the detriment to others. But honestly I’m not knocking gold or the precious metals, it’s prudent to have some.
All other things fixed, productivity should naturally increase and prices would lower.
All other things fixed, population should naturally increase and prices would rise.
If population and productivity rise, productivity should increase at a rate faster than if population were fixed, therefore a rising population and doubly rising productivity should drive prices lower.
However, increased demand for energy should theoretically increase price, assuming energy is a fixed quantity. That assumption has proven to be false. Increased population increases productivity, which increases prospecting and innovation for energy discovery. The effect should be as energy consumption increases, efficiency in energy production drives the cost of power down over time, which also is proven by historical trends.
Therefore, long term trends in increases of prices are artificially induced by government misallication and regulatory restraints used to push out competition and support government-enabled monopolistic and cartel-like behavior.
I explained exactly why in the second paragraph. I gave the exact reasons why no one is experiencing it. And it’s not “theory,” it’s exactly what happens in the absence of massive money printing. In fact, in the sectors that out pace it, we even still experience today. Computation and electronics all improve so fast that every element of compute gets more affordable every year despite trillions printed.
No depressions. Bank panics are necessary if the bank is corrupt or insolvent.
Find me one that wasn’t caused by credit deflation
There were no depressions 1870-1890?
There was a panic following the breakdown of the war and infrastructure debts in the early 1870s, but the early 1880s are claimed to have a depression that was only declared in hindsight. There was a smaller credit contraction during this period but it’s mostly equated as a depression only because of *price* deflation and not because living standards went down. Quite the opposite happened.
In fact the 70s and 80s are semi decent examples of the difference between a debt crisis caused by federal govt spending, and deflation that occurs naturally making things more affordable. But economists today simply look at “deflation” and label as bad.
If you think the goal of a healthy economy is to never have banking problems or never have contractions, then you believe a Disney fairy tale.
Fiat and central banking does not prevent nor stop them. It makes them *systemic* rather than surface layer. In other words, they simply build for 10x as long and when they collapse, they take everything with them.
the small panics were the immune response. fiat sedated it and called the coma stability.
you can say " it's eroding the purchasing power at a predetermined rate "
you can also say " all network participants bear the burden of paying for network security"
network security is a cost. it must be paid or the network is valueless.
Bitcoin is betting that a subset of users (people who make transactions) will be sufficient. much has been said about this and as far as I can tell discussing it isn't a worthwhile use of time. I hope it pays off.
but this further incentivizes hoarding. people who make transactions are penalized with fees, people who hoard reap the benefits of the network security for free.
this is a bad incentive.
That's the network security argument.
as far as "hoarding doesn't happen because a credit system develops on top of it," it's a huge leap of faith to think that this credit system is going to maintain the underlying properties of the L1. there are vast incentives for early adopters to come together and issue some bullshit " backed by Bitcoin".
what makes you think they will play fair?
The credit expansion is necessary or there's no investment. but they are highly incentivized to not actually risk the fundamental asset.
A Bitcoin standard actually looks like a select early adopters working with the state to issue a fiat CBDC that is used publicly. that is the new banking system.
(and I suspect that's why Guy doesn't want to talk about it)
You asked for a convincing case, ive got (what I think is) one.
View quoted note →
Tell me if you think its convincing and why/not.
also, I don't understand why up to 21M POW mining is genius
but above 21m it's "Cantillion effect"
we pay the miners to secure the network.
why would we stop doing that?
Thanks for this. I will read it over and ponder it
Thanks for sharing these perspectives. It’s definitely thought provoking and something I will continue to think over
always a pleasure chatting
Dude, please don’t disturb that poor man’s peace and comfort in his echo chamber. He and fellow maxies are perfectly happy with their daydreams and euphoria.
He didn’t. I actively sought his contrarian opinion by asking questions
I wasn’t referring to you. I made that comment in response to what Hanshan said in brackets about Guy’s ignoring.
I shouldn't have said that.
we're having such a polite conversation 😆
it's just that Twitter history...
nothing you said is relevant to MY point.
and THAT is what he is talking about.
