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RE: Is The Need For Inflation a Myth?

in #bitcoin9 years ago

Most cryptocurrencies have a monetary policy that causes, or would cause, price deflation. If you pay for a product in say Bitcoin, it is quite likely that you will be paying a higher price now than you would in the future.

IMO, this is a bug, not a feature. (or at least if it is a feature, its one that the creator would not have expected)

The deflationary nature of BTC (and by extension other cryptos) comes from the demand side, not the supply side. BTC is increasing in price because the number people using it, especially those using it for savings.

This is hard for many who live in the "first world" to see. But without a rising number of unbanked second and third world buyers, bitcoin would very likely be not just at equilibrium but at an equilibrium far lower than the current price levels.

In the same sense, the price-inflationary nature of currency in the modern era is also a bug, not a feature (and note that it is a relatively modern bug). Part of this is the wage/price rachet. Part of it is the fact that GDP (and thus money supply) has grown tremendously.
That said, i think its refreshing to hear someone talk about real inflation, not the money supply theory garbage that currently passes for economic theory in most posts on this site.

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