Yes, we saw that in the 1800s and the subsequent period leading to the great depression. Money supply was growing too slow, deflation was pretty rampant and the economy was stuck in a permanent boom and bust cycle (with depressions which were generally much worse than anything we experience these days).
In such an environment using debt to invest becomes extremely risky. If the interest rates are relatively high (as they were) it makes more sense to just live on income from government bonds (how British aristocrats were able to maintain their lifestyle) than to invest into anything risky.
> which produce no useful goods or services, but do result in more money going into their pockets. Which is the situation we have now
In a deflationary system (i.e. based on gold in a growing economy/bitcoin/etc.) you'd become richer just by hoarding money it and waiting for its value to increase. That doesen't seem to be particularly better.
> Bitcoin is not fixed. People can mint more
It is effectively fixed. The amount being "minted" is insignificant relative to demand.
> So Bitcoin is irrelevant to analyzing the case where the quantity of money is fixed
Don't be silly. If that's the case so is gold (a lot less fixed than bitcoin) or anything else, this would make it completely pointless discussion.
Yes, we saw that in the 1800s and the subsequent period leading to the great depression. Money supply was growing too slow, deflation was pretty rampant and the economy was stuck in a permanent boom and bust cycle (with depressions which were generally much worse than anything we experience these days).
In such an environment using debt to invest becomes extremely risky. If the interest rates are relatively high (as they were) it makes more sense to just live on income from government bonds (how British aristocrats were able to maintain their lifestyle) than to invest into anything risky.
> which produce no useful goods or services, but do result in more money going into their pockets. Which is the situation we have now
In a deflationary system (i.e. based on gold in a growing economy/bitcoin/etc.) you'd become richer just by hoarding money it and waiting for its value to increase. That doesen't seem to be particularly better.
> Bitcoin is not fixed. People can mint more
It is effectively fixed. The amount being "minted" is insignificant relative to demand.
> So Bitcoin is irrelevant to analyzing the case where the quantity of money is fixed
Don't be silly. If that's the case so is gold (a lot less fixed than bitcoin) or anything else, this would make it completely pointless discussion.