RE: Why Bitcoin’s Fixed Supply is Problematic - According to Yanis Varoufakis
To me, it sounds like the Author of the book is making calculations of the value of 'cars and gadgets' based on Bitcoin's value in FIAT, not based on the value in Bitcoin.
The Author therefor accepts that a gadget can't merely cost, for example, 0.00001 Bitcoin, into eternity.
We have to realise that nothing in this world costs more every year because of it's value increasing. It costs more, because the value of FIAT decreases due to inflation.
I'm not 100% accurate on my historical facts, but I believe it was in some Asian Dynasty a few hundred years ago that, for example, a single coin used to buy you a loaf of bread for over 500 years. The price of the loaf of bread didn't increase.
Something else that is possible with the Bitcoin code, is that the decimal point can be adjusted. As stated on the Wiki page for Bitcoin.
"A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts."
So, in case 0.00000001 BTC ever buys you a house, the protocol can be adjusted to allow for even smaller amounts to be used in order to purchase, for instance, a loaf of bread.
But if people aren't encouraged to spend, then they wont and as a result will end up screwing themselves out of higher wages because there will not be a market for their goods.
Whether they're paid/are spending in fiat or Bitcoin, it doesn't matter, right?
This wont actually fix deflationary pressure from the above issue though? It'll just allow for a true value to be found at the time?
they will get encouraged to spend when there food runs out and the goods they already have needs replacing.