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Understanding deflation is important to understand why Bitcoin brings abundance
Deflation has been publicly demonized from the viewpoint of our current system because this system would collapse if you couldn't continually inflate the money supply. So yeah, deflation bad, Japan etc. That's because this system is designed to debase money in exchange for "growth", in hopes wages keep up with prices etc. Technically, from the most basic economic standpoint; deflation is the natural state of a free market. If you have a static/sound money, and add value into an economy without the ability to debase the money, then prices naturally fall toward the marginal cost of production. When humans get better at making things and companies compete for your business, prices fall to the margin cost of production. If there is $10 and 10 apples in an economy, an apple's equilibrium cost in the market will settle at $1. If you add 10 more apples but you can't increase the money supply, those apples would now settle on a cost of $0.50 each. The opposite is true as well; add $10 and keep the same 10 apples and apples will settle on a cost of $2 each instead of one. This is why only tech prices generally fall; because their production outpaces inflation. And yes, even though a TV will cost 1/2 the price in a few months, people still buy TVs. If your money got more valuable over time, you would still buy clothes, food, shelter, cars, gas, have kids, etc. The argument that deflation would cause people to stop spending is bullshit. And again don't forget that deflation would be terrible for this system because we must print to continue so that is also where this lie comes from. Although we are taught about the different types of inflation, expansion of the money supply is the tide that rises all boats (prices) and the end all be all when it comes to long term inflation. This is a big reason, and also a big misunderstanding, on why people gain conviction on Bitcoin. You cannot print more, so if it were the money, every time someone produces more value into the economy, prices fall. You cannot let air of the bike tire (debasement) so the value goes to the people who hold the money. Essentially, if Bitcoin had already been the money, as tech advanced and we get better and better at making things, we could ALL work less etc. Instead people need to change jobs, add jobs, work harder just to keep up on the treadmill Bitcoin literally stops the treadmill and starts giving the value that used to be stolen via debasement and gives it back to the ones holing the money. The kicker: Even the very last person to adopt Bitcoin will see prices around them fall towards the margin cost of production, forever. submitted by /u/JerryLeeDog [link] [comments]
Deflation has been publicly demonized from the viewpoint of our current system because this system would collapse if you couldn't continually inflate the money supply. So yeah, deflation bad, Japan etc.
That's because this system is designed to debase money in exchange for "growth", in hopes wages keep up with prices etc.
Technically, from the most basic economic standpoint; deflation is the natural state of a free market.
If you have a static/sound money, and add value into an economy without the ability to debase the money, then prices naturally fall toward the marginal cost of production. When humans get better at making things and companies compete for your business, prices fall to the margin cost of production.
If there is $10 and 10 apples in an economy, an apple's equilibrium cost in the market will settle at $1. If you add 10 more apples but you can't increase the money supply, those apples would now settle on a cost of $0.50 each.
The opposite is true as well; add $10 and keep the same 10 apples and apples will settle on a cost of $2 each instead of one.
This is why only tech prices generally fall; because their production outpaces inflation. And yes, even though a TV will cost 1/2 the price in a few months, people still buy TVs. If your money got more valuable over time, you would still buy clothes, food, shelter, cars, gas, have kids, etc. The argument that deflation would cause people to stop spending is bullshit. And again don't forget that deflation would be terrible for this system because we must print to continue so that is also where this lie comes from.
Although we are taught about the different types of inflation, expansion of the money supply is the tide that rises all boats (prices) and the end all be all when it comes to long term inflation.
This is a big reason, and also a big misunderstanding, on why people gain conviction on Bitcoin. You cannot print more, so if it were the money, every time someone produces more value into the economy, prices fall. You cannot let air of the bike tire (debasement) so the value goes to the people who hold the money. Essentially, if Bitcoin had already been the money, as tech advanced and we get better and better at making things, we could ALL work less etc. Instead people need to change jobs, add jobs, work harder just to keep up on the treadmill
Bitcoin literally stops the treadmill and starts giving the value that used to be stolen via debasement and gives it back to the ones holing the money.
The kicker: Even the very last person to adopt Bitcoin will see prices around them fall towards the margin cost of production, forever.
[link] [comments]
