It seems compelling to me. If I have a precious rock that I won't give up until there's something REALLY cool that I want but, I start starving, I am selling part of the rock to eat.
As far as "a hard cap isn't necessary" okay, so you want to try the same thing people have been trying for millennia. A money that can be expanded and the good will of men not to exploit that.
If there is a printer button it WILL be pressed. The only solution is to remove the button an realign the incentives of value with commodity supply.
The whole point of economics is to align resources to the place they are most needed. An inelastic money supply is the most effective way to do that because you won't have a mismatch between commodities and the coupons for that labor that we call money.
Replies (9)
curious, why is setting the bar for investment *as high as possible* the best possible scenario in your opinion?
imagine being a company and having a lawsuit from your shareholders because you're allocation of capital did not beat the rate of deflation of the money.
sure sounds like a knee jerk reaction to fiat insanity to me...
for example, nobody ever argued that the inflation rate of gold was *too high*
Ahh, I see the Monero supply expansion argument.
Okay, so fixed expansion is linear and so is a human life. By the time adoption of Monero would happen, the original holders would be massively diluted.
This is the same problem as Gold albiet fixed instead of sporadic.
The thing is there's no need to expand the stock of money when you can infinitely subdivide it. They serve the same function without dilution. As value increases, you spend fewer units for the same goods.
With monetary expansion you spend the same amount on the same goods while the value of each unit falls. (If you inflate at the same rate as productivity rises). If there is some productivity shortfall the monetary unit will inflate making prices rise. This is why fixed stock is better for accurate economic calculations.
The problem isn't NOT having enough units man
and it's better to have >0 cushion in the case of a productivity shortfall then absolutely zero.
not to mention the fact you have to secure the network somehow. making it the responsibility of a subset of group members to bear the entire burden of the security budget is bad policy and further disincentives spending. aka the free-rider problem.
In your scenario, they didn't save ENOUGH capital to see purchasing power return?
Investment is about belief. If I bet you a plastic button that my company will have record profits, you might think that I have no conviction in that belief.
If I bet my irreproducible money that is a strong belief.
Right now wall street is rake betting, malinvesting, and basically scatter shooting money all over the market. This makes the signal of what industry is thriving nearly impossible to determine. (See AI, most investment, least return)
With something VALUABLE on the line people make things happen where a lack of conviction otherwise would not. This is the benefit.
As far as Gold, yes since people conflate the dollar with gold the inflation they see in the dollar is percieved as "good." If gold was fixed that inflation signal would be way more obvious to everyone. Like I said slow inflation still distorts true economic signals. It doesn't break things it is just worse.
I feel like we could have a much more productive conversation in person because I feel so much is lost in text.
Energy itself being the security mechanism is the boon. If all the current miners quit, the value of Bitcoin would incentivise others to flood into mining. The incentive is bearing the burden not the individual doing the mining. If bitcoin was not valuable to mine, that would break the incentive structure and thus the security.
There would be an immediate correction by the way. There wouldn't be prolonged malinvestment (which is where the pain comes from) cushion is only necessary when you go the wrong way for too long, that wouldn't be the case.
most of the arguments against the inflationary nature of the gold standard depended on the arbitrary inflation rate as gold is mined. obviously those aren't a consideration here. I'd like to see a good argument for how a *fixed inflation rate that approaches zero* causes any appreciable distortion.
and about investment, this is just the same " people will spend money to not die " argument.
you don't need a hard cap for that and there's no good argument for setting the bar as high as possible.
we need economic stability, not to make investment as difficult as we possibly can.
I think you're right about that. it's a lot of nuance.
what I'm saying is that Bitcoin design is incentivizing holding, but transactors pay the security budget.
seems poorly structured.
I get why it seems that way but of what use is holding if not using it for resources. Sure people who can save their massive wealth stores will free ride for some time but eventually they use the wealth for their needs.
(Also, for the next few decades even empty blocks keep the security budget humming along until market utilization increases)
To be clear I totally see your perspective and grasp your argument. I would just say that "Bitcoin design is incentiving holding" is a feature of all money. For how long depends strictly on the scale of inflation of supply. You can hold dollars longer than you can hold Naira, but you can hold gold longer than you can hold dollars and you can hold Bitcoin longer than you can hold gold, while maintaining value. There's a through-line as to the reason.
Bitcoiners may be trying to min/max and that could be too lofty or idealistic, for sure.
