> Meanwhile, the amount of misinformation around inflation and fiat money is getting ridiculous. Bitcoin proponents talk about Bitcoin as if the only alternative investment was to keep all of your savings in cash under your mattress. Too many people think that inflation means everything loses value except Bitcoin, all while ignoring the fact that inflation literally means the value of traditional assets and commodities goes up in dollar terms.
Exactly. Afaik the entire point of inflation modern monetary strategy is to force people to take the money out of their mattresses and participate in the economy.
Bitcoin is basically just a better mattress. The most compelling arguments for bitcoin's usefulness is as a store of value.
Environmentalists say to conserve resources, bring my own grocery bags to the store, and stop wasting.
So why is encouraging everyone to mindlessly consume through continuous debasement of the currency a good thing? If saving money didn’t mean I would constantly lose my wealth, given interest on cash savings is vastly lower than inflation, I wouldn’t have to buy whatever asset I could get my grubby hands on. I could focus more on quality, and vendors would have to put more effort into convincing me to part with my savings.
It’s another myth that inflation is purely the result of monetary policy or government intervention. Government intervention does tweak the trajectory of inflation or deflation, but it’s not the only input to the system or even necessarily the main input. It’s a lever.
Bitcoin proponents like to focus on things like M0 money supply while ignoring the fact that value isn’t created by the government printing money. It’s created by people producing valuable things and businesses.
Likewise, storing money under your mattress isn’t a useful thing to do, digital or otherwise. In the real world, investors don’t stuff cash under mattresses, they invest it in things that produce value. Bitcoin incentivizes the opposite of that: It discourages investing in anything that creates value and instead encourages people to not spend or use the currency at all.
The Bitcoin narrative only works as long as there is a net influx of people looking to stuff digital money under their mattress instead of deploying it to something useful.
> Likewise, storing money under your mattress isn’t a useful thing to do, digital or otherwise.
This is just not true. It is a tool to let prices properly represent the risk of future price changes. People who save money supply a net positive value to the economy while withholding demand to sometimes in future at the risk that they will afford less for the money. This lowers the price for people that need that immediate demand.
Fiat money and central banks completely destroy that kind of price discovery obviously.
"Exactly. Afaik the entire point of inflation modern monetary strategy is to force people to take the money out of their mattresses and participate in the economy."
Some inflation is required, I completely agree with that. But the inflation being pushed on the population is unreasonable and equates to stealing imo. Especially given the lack of wage increases over the last 50 years or so for 90+% of people.
Yes, CPI numbers are probably 1-3% depending on where you live. But CPI is bs.
It purposely leaves out things like healthcare, schooling, housing etc.
Real inflation rates is probably closer to 5-8% depending on where you live. That's just unreasonable, and is a result of governments not wanting to put in the hard work to fix real problems. So they take the easy, but worse route, and inflate.
> But the inflation being pushed on the population
I agree that inflation is too high, but the role of fiscal policy isn’t as singular or simplified as it has been portrayed.
At the end of the day, only one thing drives prices: Supply and demand. Home prices are going up because people are pouring more money into the housing market, and because low interest rates make that money go farther.
Think of it this way: How are home prices inflating (adjusted for interest rates, even) if people’s wages are simultaneously going down?
One of the biggest misunderstandings of financial stimulus is this idea that the average or lower class person will somehow suffer. That would be true if stimulus went straight to companies (as some of it did) but more recent proposals are at least focused on individuals.
CPI includes all of those things. Can argue with the measurement and the composition of the basket, but real inflation isn't much higher than CPI. Asset price inflation on the other hand....
Exactly. Afaik the entire point of inflation modern monetary strategy is to force people to take the money out of their mattresses and participate in the economy.
Bitcoin is basically just a better mattress. The most compelling arguments for bitcoin's usefulness is as a store of value.