right?

Discouraging unnecessary spending and investment is desired for a good society. The fiat debasement which encourages all manner of unnecessary fuckery such as financial engineering, share buybacks etc is not desired. One could argue about the right amount of monetary deflation and there is nuance there. Central bankers in the 90s adopted a 2% inflation target but there is zero trust there and also this inflation target is targeting changes in the price of goods and services, not increase in the money supply. If they had actually adopted a strict 2% per annum cap on the increase in the money supply that would be something but instead everytime humans get more efficient at producing goods and services at lower cost they use that as an excuse to print more money and "target inflation". That is to say any system which enforces strict limits on the increase in the money supply (on the order of the increase in Gold supply) is preferable to the current unlimited money system in place with the Fiat Standard.

I agree that something algorithmic and known is better than the status quo. a hard cap is a *design flaw* for several reasons this is one of them. Maxis need to stop pretending that deflation is only positive.

I think the hard cap is not as bad as it might seem today but not for a particularly positive reason. By the time increase in supply from the block rewards drop off substantially (+2050), the world population will be in decline as birth rates fall. This will mean GDP will be falling too, so a money that isn't increasing in supply will better match a global economy that is no longer growing.

maaaaybe

the way you write and format your posts makes them unreadable

its easier if you read them faster

This one I have to disagree with you. Take computers. For the last decades if you wait a year you can generally buy more for less. And yet, people still buy computers today. Why? Our time is finite. Having the potential to buy but never doing so means nothing. At some point you want to make use of what you've got, even if you know that had you waited, you probably would've gotten more for less.

You’re stuck in a fiat paradigm that confuses endless spending with economic health. Bitcoin doesn’t punish investment — it punishes wasteful investment. If your business can’t outperform a savings account, maybe it shouldn’t exist. That’s not a flaw, it’s a filter. Your shallow dismissal shows you’re not arguing with Bitcoin — you’re arguing with discipline, accountability, and real value creation.

what's going on here is you insist on a binary way with no spectrum or nuance, that deflation can ONLY be positive. define "wasteful investment" for me and we'll talk. a hard cap is a knee jerk reaction to fiat inflationary insanity. understandable, but it's shitty monetary policy.

You got it, deflation caused by technological advancement or increased productivity is not a negative. Very different than deflation caused by a credit bubble or monetary contraction.

I do not like this take 😤

Wasteful investment would be something like - in this context - to being fooled by the fake/distorted market signals being sent out stemming from supply manipulation and more generally interventionism. This causes you to misallocate capital, which eventually, when the musical chairs stops, causes you to lose your capital. You were chasing the wrong thing, fooled by echoes and distortions. Scarce honest monies which can't be manipulated result in your purchasing power naturally increasing over time (against a backdrop of technological development and inflating fake fiat). Because of that, you think twice before spending, and this makes you wiser and more careful and thoughtful in your financial decisions. But, much like the computer example I also gave earlier, eventually you do end up spending nevertheless. The difference? It was more deliberate, more thoughtful, more measured. And that's a good thing!

You act like all deflation is bad, but it’s about what it encourages: investing only in what outperforms just holding hard money. "Wasteful" is backing losers that can’t beat that bar. You dismiss Bitcoin’s hard cap as a “knee-jerk reaction” — which just shows you haven’t engaged with the idea, not that it’s wrong. It’s a mark of intelligence to entertain a thought without accepting it. You can’t even do that. Your issue isn’t nuance — it’s letting go of the fiat mindset you’re clinging to.

cool

its basically a separate conversation. but that technology-driven deflation DEPENDS on capital allocation, which is disincentivized in a monetary deflation. so who knows how these pieces all fit together

I really don't. Interestingly, the farther out you go in time, the closer your fixed emission tends toward no inflation 🤭 The only thing that nags me about what you've said related to topic is regarding lost coins and them being "replaced". I do kinda like that argument

Man what a discussion you guys are having. Youre not wrong you know, if your investment can't outperform a savings account it is not a worthwhile investment. But there's a problem with hard cap currency, it's worth noting no such currency existed in the world, ever, except bitcoin. That problem is this: I want to invest in some worthwhile endeavor, so I take capital and put it towards that endeavor. That leads to economic growth, which leads to increased value of the currency, because now more items chasing the same money, the opposite problem of monetary debasement. I can siphon some of the wealth from what you create via this process simply by holding currency. This is the exact inverse of the cantillion effect. So more people catch on to this. Hey, I don't have to produce anything with my sweat and imagination and capital, I can just get a little piece of what everyone else does by holding the money they want for it. What we have here is a very interesting tragedy of the commons, one of two particular ones caused by a hard cap supply currency, the other I've spoken about and you can find in my public bookmarks if you want. What this inevitably leads to is a stagnation of economic output, artificially, you can say that it is self regulating and that would be true more often than not, output stagnates so the money stops climbing in value so the people look for other avenues to gain wealth and start investing again. But it suppresses economic exploration, it has the exact opposite effect as fiat debasement has, where fiat debasement incentivizes valueless investment just to have somewhere to pur capital that doesn't lose value, this has the effect of people not creating as many amazing things as they otherwise would've. The self regulation regulates lower than natural and optimal, just like a continuous percentage of supply self regulates higher than optimal. Ideally, the concept of supply pacing exactly with growth of economic output is ideal, money never loses or gains purchasing power, the only way to gain wealth is to create it, and deciding not to participate costs you nothing. Of course, that's impossible. Behind that, a self regulating supply increase, that is, when the money goes up in value people produce more of it, otherwise they invest elsewhere, is fantastic. It can't be optimal all the time, but it is most optimal IMO. Gold has this property. The other one, algorithmic linear debasement, a flat amount every x periods of time, is also fantastic, it can't be optimal all the time, it smooths the effect a capped supply has and allows graceful reorganizing of the market indefinitely, but it still does downregulate economic production a little bit.

That is a terrible thought, especially when you consider the geriatric nature of a declining population.

You’re right, a hard cap introduces new dynamics like passive rent-seeking where some benefit without contributing. But that’s not unique to Bitcoin, fiat has its own version with the Cantillon effect. The difference is Bitcoin’s version gets better over time. As the market matures and price stabilizes the free ride shrinks. People will have to innovate to earn returns not just hold. This redirects capital toward real value creation not just financialization. It’s a good thing for the system overall and for the average person even if a few lazy ones ride the wave for a while. Progress isn’t perfect but it’s directional. Bitcoin raises the bar and that’s a feature not a flaw.

> As the market matures and price stabilizes the free ride shrinks. How does that work out? I thought we established that as economic output goes up so must the purchasing power of a supply capped currency? The only outcome in that case is downward pressure on economic production. It's cool to me that we can even attempt to experiment with a supply capped currency, this was impossible two decades ago, but that is not a problem you can hand waive away. The supply cap dooms bitcoin IMO, and it's not a dichotomy between hard cap and let Jerome Powell decide.

Bitcoin will do fine 50 years from now when the world is in the midst of a self induced population epidemic and the idea of positive global economic growth has been completely abandoned. By the time the supply cap has been hit in 2140 the world will have experienced a near 50% collapse in population from peak.

I live this today. Another way of looking at it is you have no idea what you have left in time and resources. You have no idea what the future holds. You do not know if what you thought was secure would someday not be secure.

This is so sharp. Ideologies shut down these types of conversations.

MM doesn't miss when he jumps in a conversation

But you are contributing. Helping stabilize the price by not being a lousy paper hands, becoming more invested in the network because your savings depend on it, giving credibility and social proof to the system so more risk-averse others can also make use of it in time, etc.

They do, and that's ok.

its really not in the best interest of human flourishing

You act like there's no other forcing function to spend, and that some universal baseline rate of savings decay is needed. Doesn't feel right to me, time is finite and immediate wants exist naturally too. It's minor in practice between monero low inflation and bitcoin supply schedule at the end of the day.

people will always buy necessities, thats why they're necessities. it isn't like we've had the last 50 years of technological growth DESPITE fiat money. fiat money paid for it. your smartphone, the Internet and the the rest of it exist largely because of easy money. if all that capital allocation just went away things would be very different. we can debate back and forth about where exactly things would land and whether it would be better or worse than the current situation. i think it would be mostly better. but growth would grind to a halt because of this retarded idea that monetary inflation is just bad. EVEN if monetary inflation tracks with economic inflation and purchasing power remains unchanged.

I don't really like to speak when I don't think I have anything valuable to say, unless I'm asking a question.

I stand by my thesis.

Scenario 1 is more money chasing fewer goods. This leads to inflation where future cash flows must be discounted to account for the loss of value in the currency over time. Scenario 2 is more goods chasing fewer money. This leads to deflation where future cash flows are discounted less — or even valued more through premiums — because the currency gains value over time. The only thing that matters is sound economic calculation. As long as the rate of monetary change is known and stable, people can adjust their decisions accordingly. The real difference is not in the math but in the behavior each system incentivizes. One rewards speed and spending. The other rewards patience and productive investment. You must be a Keynesian to paint this as you do. A Keynesian anti statist 😂

I respect that. It feels more utopian than practical to me but I don't think I can articulate exactly why yet. Great discussion though.

People will be always be incentivized to spend because they need to live their lives and enjoy them

there's spending for necessities and theres investment in new and daring projects. yes people will always seek to buy what they absolutely need. they greater the deflation, the more people restroct purchases to what is absolutely necessary.

There’s a tipping point tho. When it becomes “affordable” remember all the early bitcoiners buying homes and lambos? Those are not necessities.

the thesis is that on a hard money standard, monetary deflation will disincentivize innovation and economic growth not that shitcoiners wont buy trivial stuff when they get lucky

This is a better answer than I could have provided, but seems to me like you nailed it. Bonus for the zinger at the end

no its just a strawman and reducing the entire conversation to a simple binary question. which it isnt. nobody is advocating for more money chasing few goods.

I thought it characterized the essence of the argument quite well. You already know most of my arguments if you've read anything like bitcoin standard, so will spare you. With monero or BTC the difference is small enough (even in 50 years where BTC is effectively flat growth), that I think we're mostly in alignment that very small decay is best. If that's 0 or 1% probably doesn't make much difference. The greater problem anyway is how current system also directs new issuance (cantillion blah blah) imo.

its doesnt address the essence of our conversation*at all.* the question is "in a purely deflationary environment is innovation and economic growth incentivized enough?" hes like "yes, because increased producer efficiency" I'm like "no, because capital is now rarely allocated to increase producer efficiency" its true the market will adjust to whatever the standard is. irs just that a purely deflationary standard is probably pretty stupid.

I must be missing something. We agree BTC and monero are close to the same, right? And they approach 0% issuance anyway, so not even sure anymore why you have this view, assuming you endorse the monero supply schedule as is.

Not to mention leading to a recession.

but to answer your question I suspect theres a big difference between 0% and .83% so it depends where on the timeline we are speculating about doesnt it? i agree that on a long enough timeline its likely monero isnt *inflationary enough* to avoid the same problems I'm talking about. the meme is a joke I still haven't heard a reason why y'all would object to the money supply simply keeping pace with economic growth and purchasing power remaining constant.

While an elegant meme format, 2 and 3 are arguably the same if by money supply you mean that which is circulating (otherwise not entirely sure what 3 means), and that doesn't lead to 4, which is also effectively equal to 2 if you fast forward a "few years".

3 means that the growth of the money supply matches economic growth. so if there are more goods and services ("value") the money supply inflates to represent that, if there is less stuff, the money supply contracts. the result is the purchasing power of a monetary unit is constant year to year. not achievable but worth thinking about.

It’s not a new theory it’s the Keynesian economics viewpoint that Kanzan is taking where most bitcoiners view it from Austrian economic viewpoint.

Keep in mind here that I don't claim to be expert. in fact I so rarely articulate any of this that I find it beneficial to "spar" with you. Very few topics I dare take expert stance on. One quick thought is that such a measure can't be done. No way to measure unchanging purchasing power of every individual over time. Best leave pricing to free market. And I just don't see how some arbitrary external decay rule guides the free market system better. I'll think about it more maybe. Thanks for the insights

no thats just Bitcoiners armchair economic misunderstanding John Keynes was highly critical of constant monetary expansion. what he was an advocate for is *top down control of the economy* which is why he was an idiot. NOT because he was a proponent of monetary inflation but its fashionable to screech "youre a Keynesian" so I expect it.

Thanks for the conversation ❤️

hell Mises and Rothbard talked about state economic intervention to avoid the deflationary problems I'm talking about

Please forgive me if I sound economically illiterate, but isn't Keynesian economics about government intervention in the economy? So far I haven't seen Kenzan call for state intervention so people saying he is a Keynesian makes no sense.

Deflation can be bad but I fundamentally disagree that all any amount of deflation is always bad. It depends on degree and cause. If your thesis is that hard money disincentives investment and economic activity I disagree does it mean utopia no or that recession isn’t possible no, but if you have more capital from saving eventually there is a point where it is advantageous to invest or spend. Saving then investing vs borrowing to invest.

The idea that all deflation is always bad and always leads to recession or depression

That's very shallow of you. I literally wrote pages to explain this yet you clinge on to your money cult. Im done entertaining this now. Thanks

What I'm getting is that deflation leads to less spending, which can be a risk factor or recession/depression. However, I think there are way more factors that can lead to either scenario besides deflated currency.

It's just his style, he's not so different and occasionally says smart things. Nice to meet you, Keys

If there was truly enough capital for investing and spending then deflation would never be a concern to begin with.

Horseshit. No, Ludwig von Mises never advocated for government intervention to fight deflation. In fact, he strongly opposed such measures. Mises viewed deflation, particularly in the context of a sound monetary system, as a natural and healthy market process. He argued that attempts by governments or central banks to counter deflation through inflationary policies or intervention distort market signals, lead to malinvestment, and prolong economic adjustment.

which nobody here said

ok just Rothbard then 👍 but neither did Mises ever suggest that a permanent deflationary condition is an ideal. which is the Bitcoin maxi position. we're in agreement that deflation is a natural market correction phenomenon. im just saying orienting the macro environment so that its ALWAYS deflationary is a bad idea.

I'm wrong here about "state" part. Neither of those guys advocated for state intervention although Rothbard had some writings about structuring markets to avoid extremely deflationary conditions

nobody suggested than any amount of deflation is always bad I'm suggesting that structuring the market so that its *always* deflationary is bad.

Figured I'd help articulate something, it is not achievable because it requires predicting what people will create using their imaginations and how the world will react to those creations, how they'll find utility and benefit from them in their lives. You can't adjust real time to economic growth because it is an organic, distributed process flowing from the creative mind.

I think you need to write a full paper on your thesis id read it

lol thanks for the encouragement. its just that maxis are erring on the other side of the inflation/deflation spectrum than MMT guys but writing a paper would help me get my thoughts in order, which is usually most of the reason people write them... 🤔

which is why .6 units per block is the galaxy brained take 😂

I think I would better understand your position if you identified a type of person today that is allocating large amounts of capital today, that would be disincentivized to do so in the future. Is it the top 10%-20% that you're worried won't want to lose their place and will ride the coattails of the top 10% and the working class?

Mister monster put it eloquently in this post.

Well if everyone holds the currency since we are assuming this is the dominant currency to have control over the economy. Then everyone would get this effect meaning it would raise standard of living. Like you said no other currency has a hard cap so all we are saying all of us is theoretical because none of us have a crystal ball we can only make assumptions from our own understandings of economics and how we perceive the future will look.

I think we likely agree on many things but without a full picture of your theory it’s hard to say where exactly we agree of disagree since there are a lot of assumptions

Not explicitly but you said deflation stated that it will disincentivize investment which implies it is bad. I’m not sure where you stated it was ever good.

Is that a bad thing or is it just different?

You can't increase standard of living with numbers, you can only increase standard of living with production and economic growth. Numbers are how we measure that, once a metric becomes a goal it ceases to be a good metric. But since it's an adversarial system, that doesnt mean people will go "better not do that", they'll still do it and you get suppression of economic growth. You can't number massage your way out of these kinds of problems.

Well, yeah, the gold thing, where as the purchasing power of money (in this case gold) goes up, production of money also goes up, there's still a latency in that self regulating feedback loop there but it works well. Continuous linear debasement smooths these problems pretty well too, and trying to build a system that inflates like gold, as a response to increased purchasing power, would require an external price oracle which is a terrible idea for an independent currency, so we have to use something algorithmic and self contained with no self reference. UTXOLive is a pretty cool thing that maybe could do this, but it's certain to be gamed with that much to gain from doing so. And between hard cap, geometric supply growth and linear supply growth, linear wins out, so linear it is.

View quoted note → You don't even acknowledge your own statements. You're useless.