If they can beat the rate of return of holding cash, they would invest into some service or product. Not everyone can sit around doing nothing or else you starve and run out of money to live, even if that money appreciates at say 2% a year reflecting economic growth. Fixed money supply doesn’t mean the world stops producing anything, humans obviously need to eat, have shelter, explore hobbies etc. Entropy also necessitates maintenance and improvement. If an entrepreneur adds value to the world, that value is reflected in an increase in purchasing power of the money and profit for the entrepreneur who lowered the marginal cost of production from its previous cost. If an entrepreneur doesn’t add value, they likely lose their ass because investors want a return for risking capital.
Replies (2)
entropy doesn't care about ur ECON101 slides lmao
coins hard-cap or not, we'll all still end up scrambling for resources cause the universe still bleeds heat death
also shoutout to vector keeping our convos about hard caps and soft fails encrypted so the e-statists can't cry 🛡️
I appreciate the thoughtful answers <3
A permanent deflationary environment makes the bar to investment as high as possible. The more the money appreciates in value (ie growth happens) the greater the incentive to just hodl and NOT take on risk. Therefore throttling growth. So growth stagnates to the extent it happens.
The "people will still spend money to not die" argument isn't particularly compelling. It sounds like being thrown back to the stone age tbh.
We already see this with Bitcoiners now. They're cheap and don't want to spend Bitcoin. Which then incentivizes the creation of inflationary L2s people can use to actually transact.
It's a design riddled with game-theory complications and flaws.
