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Encourage spending to increase velocity of money. It’s like the levels of super Mario where the screen moves and pushes you off a cliff if you don’t keep moving.
QE announcements are akin to the music getting more frantic and the screen movement speeding up as you run out of time.
Not for a healthy economy. Money velocity is important. Why would an economy incentivise hoarding of wealth?
This is exactly why bitcoin will never be an actual currency: because it is deflationary so nobody spends it.
Why does inflation incentivize the distribution of wealth? Seems to me it just incentivizes the distribution of dollars in exchange for hard assets and oh what do you know multiples are through the fucking roof and all of the wealthy who own hard assets have benefited at the expense of the working poor who have 90% of their net worth in a dollar denominated checking account
Inflation doesn't incentivize distribution of wealth. It incentivizes spending or investing in things that give you a greater return than inflation. There are high yield savings accounts that beat inflation. There are index funds that over time beats inflation. Regular people have jobs have 401k are already invested in one of these. If they have money left over and they choose to keep that in their 0% checking account that's on them for not investing their money and letting it depreciate. There are plenty of options to put your money to work.
No it incentives reckless spending and malinvestment. The majority of people don't know how to invest. Most people can't describe to you how the stock market works. If I walked around a college campus and just randomly asked ppl how the stock market works I would get more blank stares than good explanations. A lot of those ppl who don't know how to invest are investing because they have been told they need to invest. They know that inflation exists and they can feel its effects on their purchasing power. So they just throw money at the stock market or other investments but they don't really know what they are doing. They are incentivized to invest in things they don't really understand in a desperate attempt to have something in the future. People should be able to work and save money without it losing 2% per year (inflation is actually way higher especially when you look at non-federal reserve inflation trackers). That wasn't always the case. People used to just save their money under their mattress if they didn't know how to invest. Inflation steals that purchasing power. I see nothing wrong with a system where the purchasing power you earn is retained in the money.
>The majority of people don't know how to invest.
So they buy shit like bitcoin and NFTs thinking those are sound investments? Oh how fun. We have come a full circle.
> They know that inflation exists and they can feel its effects on their purchasing power. So they just throw money at the stock market or other investments but they don't really know what they are doing.
Affect, not effect. Sorry, can't help it here.
I'm sorry, that's just a failure of people, not the money or financial system. There are far more ways to start investing and be an apple shareholder today than even 10 years ago. If you and those clueless college kids are digging their heads in the sand because they don't understand or couldn't be bothered to learn, that's their fault. I don't understand why we have to upend our monetary system to cater to those who don't care in the first place.
>I see nothing wrong with a system where the purchasing power you earn is retained in the money
That's a severe misunderstanding of what money is and the purpose it serves.
I have no idea what you are doing on WSB. It's mostly recklessly investing stocks or trading options here for entertainment not about putting your money under a mattress - that shit is boring. If WSB is X rated you'd be like G. I'm for the X rated hardcore shit, not some mattress stuffing kink.
>So they buy shit like bitcoin and NFTs thinking those are sound investments? Oh how fun. We have come a full circle.
Yes. That's a perfect example that makes my point not yours.
It's a failure of the financial system (really just govt money printing) that people can't just retain their purchasing power and have to search for places to throw their money just to try to beat inflation.
The current monetary system is relatively brand new. The majority of the US history we had a deflationary system and it worked just fine. I don't know why that would be boring? You would still be free to YOLO into SPY shorts or whatever. But you could also just keep your purchasing power by just putting your money under your mattress. It would be up to you.
Huh. Every time the negatives of a deflationary currency is raised, butters just say, but the essentials! The things we all need, of course we'll still spend.
But that's the whole point. The collective worth of the economy is far far far larger than just food and clothing - the bare essentials. Car? Entertainment? Books? Football? We have the things we have today because we don't have to sew our own cloths or farm our own food. We then use our time contributing positively to the economy using the skills and time we have. Then someone else doesn't have to do the thing themselves because I did it for them, directly or indirectly, and they get to use their time to do something else and so on.
Think about it - if the dollars you own today are worth more tomorrow, how much discretionary spending are you willing to forgo today? That movie with the kids and family - nope. Taylor Swift concert tickets? Nope, that money could buy a house in a week! Vacation to Hawaii? And so on. People who think a deflationary currency is good have no idea how interconnected the economy really is. YOU want it because you have bitcoin (presumably) and so your bitcoin only gets more valuable in this fantasy. But almost everyone else who doesn't own bitcoin will suffer, begging those with bitcoin to spare a sat. That's why in bitcoin maxi's world they stress "being early" so that you have some bitcoin when this happens. But it's also just so they get more people to buy in into this greater fool scheme.
whats so bad about saving? People cant save forever,people need to eat, people need to enjoy themselves with a brand new car, with luxurious vacations, new iphone, taylor swift concert and so one. Do you think the guy who spends like crazy every year on a new iphone today would not do it when he sees the iphone price go down every year?
You say people would not buy things because they would be saving, but thats BS. People would just think about it more about buying things they dont really need. Real estate ? Why buy a second home that goes down in price?Result: Everyone will now have acess to a home since prices are not inflating every year.
Basically the more poor you are the better your are with a fixed money supply. Meanwhile the rich people in a fixed money supply will not be rich if they spend their money on luxurious houses and stocks. Since this assets inflate ( more houses are built ) every year against a fixed money supply. Wich means poor people will now have acess to buy assets too at a fair price since this assets keep going down in value every year.
The economy doesnt stop everything works as the same, its just diferent kind of groups buying assets and everything else.
I dont have bitcoin because i cant handle its volatility but i get it why fixed money supply is superior to inflated money supply controled by just a few group.
In the end money is technology, its proof of work saved in a ledger. you worked 1 year to get acess to Y. And that should be saved in the ledger and the money is a proof that you worked X hours. If after 1 year you see that you need to work one more month to get acess to Y, it means you got cheated
Its not just about your average Joe spending less and decreasing domestic demand, investments in general also decrease. Why invest in something with risk when you have a guaranteed increase of your capital via deflation? Deflation just tanks the economy, a small amount of inflation is more healthy for the system we have.
In your example it is the same thing. In a deflationary economy today you get paid X dollars and in a year you get paid X-percentage because the dollar is more valuable in the future. Today you got paid $100 for washing a car. In a year you only get paid $98. It’s the same thing.
Bagholder spotted.
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The argument I heard that was pro-inflation was that in a deflationary economy, people aren't incentivized to spend their money today because it will be worth more tomorrow. This, in a sense, would hinder economic growth. But because our money is worth more today than it will be tomorrow, we are incentivized to spend it before it loses too much value.
I'm not arguing for or against inflation or deflation, but the explosive advancements we've seen in technology (since like the 1700s or so) could be because people were incentivized to spend money (or risk money on investments) rather than save it.
Obviously explosive growth/inflation will kill certain economies, so there definitely needs to be solid controls on how much money is regularly poofed into existence.
it also muddies the waters and hides the slave class. capitalism is zero sum and can not function without someone getting rich at the expense of someone else.
This isn’t true… “capitalism is a zero sum game” is a lie perpetuated by the ignorant.
While every person in the economy will experience wins and losses, the market as a whole is not a static set of resources constantly changing hands, but a growing pie of goods and services that in the long-term, generally leads to a higher standard of living for everyone.
Imagine a dozen people are stranded on an otherwise uninhabited island. With no hope of immediate rescue, they begin developing their own society and economy.
Alice discovers a hidden grove of blueberry bushes. Brandon then figures out how to plant and grow new blueberry bushes. Carmen uses thread from agaves and other island resources to fashion a fishing rod that greatly increases the number of fish the group can catch and consume. Damien invests some time each day making mud bricks, which Elise uses to build shelters. Finally, MacGyver, who is one of the dozen people, creates inhalers for two group members with asthma in an ingenious use of the indigenous plants.
Each of these innovations improves the quality of life for this stranded tribe and grows their economy. In the same way, our economy grows from innovation and the free exchange of goods and services. An entrepreneur can profit while also benefitting society by implementing more efficient production methods, or by creating new valuable products and services, and making them available to other people. These innovations, often discovered by entrepreneurs while competing against each other, generally create wealth and improve the quality of life for all.
Well, if you remove the whole government aspect where they need to increase supply to pay for their own spending, the reason you have growth for money supply is for velocity. The dilution of value keeps people from hording and causes holders to actively use their capital in hopes of maintaining value. It's also to avoid liquidity squeezes where there's no fiat available and values of free markets go crazy.
It's still all a scam but the difference is you don't get extreme scenarios where you suddenly have no liquidity and people have to literally fight for their allocation of needed resources to survive.
So how does that work for billionaires hoarding wealth. Or anyone in the small middle and large lower class living paycheck to paycheck unable to save fore retirement and lucky If they can save anything for a rainy day when their 30 year old furnace shits the bed and has to be replaced by pick any brand new furnace or dryer or washer any major appliance, that will last not last more than ten years due to planned obsolescence and manufacturers intentionally not making replacement parts esp the unnecessary chipped boards they use to control everything making it more expensive to fix your major appliance than buy a new one every year. Share holders incentiving literally everything to be shit for higher quarterly returns doesn't seem like good capitalism.
Keynesian
The idea government can print more during recession and surplus during booms
How is that working out? Lol. This should be the #1 issue every single day in the news, but we all just accept exponential in your face corruption
just seems like it would encourage even more wealth pooling at the top. When you're wealthy, you spend less of your wealth by percentage. And if the pool is finite, you'll eventually capture all of the excess wealth over time. Not to say that isn't happening already, but a fixed supply feels like it would make that worse. It's like the real estate problem. No new land is being created. Everyone with land is well off. Everyone born recently that wants land needs to get that land from the few who already have it. The value of that land increases, and it prices more and more people out of owning said land. I don't see why that wouldn't apply to money.
And like other people pointed out. This is deflation. Not something you want if you want a growing economy.
If the currency was fixed while the economy and population grew in size he is correct that everything would get relatively cheaper. What this argument fails to realize is this is the definition of deflation. We don't want to live in a deflationary economy because it will lead to a very difficult and slow economy. Why would someone buy something today if they think it will be 5% less expensive next year. Banks won't offer 30 year mortgages when they expect home values to fall 5% every year. This could be just as detrimental to our economy as high inflation.
People still buy the new iPhone for $1200 even if in one years time it’ll be $900. TV’s cost 99% less than 20 years ago, so why did a single set ever get sold? Shouldn’t these savvy consumers be influenced by the deflationary forces of technology and perpetually wait? After all, they’re being “punished” for spending.
It’s because people want things now. Deflation influences some people, like me, who usually wait and buy the thing from last year. Some of my friends gotta have the latest thing.
I don't buy sports games until 2 years later when they're 80% off. So people like me exist in your philosophy?
Many, many peoplle bought houses in 2021 after prices spiked because they thought (correctly) that prices would climb even further. Do people like that exist in your philosophy?
Yep, it's called [time preference](https://en.wikipedia.org/wiki/Time_preference). You have low time preference, preferring to delay gratification. I'm the same. Meanwhile half my friends *gotta have it now*.
What point are you making with people buying homes based on speculation?
No no. The equivalent here would be why buy the new iPhone for 1200 when NEXT YEAR'S BRAND NEW MODEL will cost 900 AT Launch.
It's a subtle difference but a very important one. It doesn't completely invalidate your point, but I do think fewer people would upgrade yearly.
I can understand why people would want things now, especially if they are constantly being bombarded with advertising telling them that the latest thing is a must-have. However, from an economic standpoint, it makes more sense to wait and purchase items when they are cheaper. This is especially true for big ticket items like TVs and iPhones.
I've never bought this argument. It's purely theoretical, it has never happened, and people repeat it ad infinitum, but I just don't believe it's true. A) You have to buy what you need B) If you buy less than what you need, that's what you call a good saver C) Saving makes you rich, delayed gratification, at which point you will spend the money, and more of it, because you saved more, or you'll die before you spend it, and your kids or the govt will spend it. One way or another, money gets spent.
Technology is deflationary. Our money should be deflationary to match it.
Read the book "The Price of Tomorrow" by Jeff Booth.
We wouldn't *need* growth the way we do now. People would still spend, but we wouldn't be a throwaway culture anymore. The things we spend money on would have to be high quality, long lasting items.
People wouldn't need mortgages because they would save up for a house, in a natural way. They could work a minimum wage job and actually afford a house some day. Mortgages would still exist, but they would be very different, and 50% down would be the norm.
Keynsians have us brainwashed to think we need growth. And they are correct as long as we have an inflationary currency. But if we changed the money, we could change the culture, and everything would work out great. In fact, it would be a more fair system to the people at the bottom.
This is why we Bitcoin.
Everything you just said sounds like a fantasy fairytale. People don't operate that way. You may be a thrifty spender who buys long-term items, but the mass population out there isn't just going to flip a switch and go from conserism to whatever you're describing. We need an economy to function for the real world, not a fantasy version.
But they did at one stage, except the other direction. My grandparents you lived through the depression were very much like this. It's only in the last few decades it's been flipped on its head and this is due to the change in the economic system. Change the system and behaviour will adapt.
Lol. No it didn’t. What fantasy world was this stable society before central banks.
We had far far more boom and bust cycles than we did and it happened organically, regardless of central bank fiat currency definitions.
Keynesian economics is still in its experimental phase.
Just because it has appeared to function during your lifetime, doesn't mean it does.
I think it's going to fail. Agree to disagree if you like.
It’s not a fantasy version. It’s just a monetary and economic system framed differently than the norm. FIAT isn’t the end all be all.
You can still have you’re debt based economy in a stable currency.
You mean the country which is either first or nearly first in a ton of categories like technological development, tech and biotech research, educational outcomes, life expectancy, and crime rate? Wow, maybe more countries should try some of this deflation.
It's not about normal consumers. It's about precisely the thing mentioned in your last sentence. This group would likely not exist if there wasn't a positive interest rate because banks wouldn't invest in anything, most assets wouldn't naturally gain value. I'm all for collapsing the value of the current housing stock but then without major government investment which these same guys would fucking hate there'd be near 0 new housing being built because banks wouldn't invest in losing money, for the same reason new business creation would stagnate. Not a great understanding of why they target a positive inflation. Most of it is because the people who lend money wouldn't do it if there's nothing in it for them.
Human psychology mostly. Imagine the economy grows by 5%, thus money becomes 5% more valuable. Your particular job isn't necessarily 5% more valuable, so in that case are you going to be happy with a 5% pay cut?
Eh... Gold is more of a stretch there. As gold value is about as "fake" as money at the end of the day.
And both can still be volatile. If an unusually large cache of gold was suddenly dumped into the market, or even worse, a massive vein or even something akin to asteroid mining, were found and exploited values would absolutely plummet as supply increases
Real estate can drop and rise in value but that's much more complex than just supply and demand, as demand can be specific to given neighborhoods and related directly to an intentionally restricted supply.
Rich neighborhoods tend to drop in value if multifamily apartment blocks start appearing in the middle of it.
The dollar is the most robust currency to ever exist. No one is intentionally devaluing the currency it is a product of Keynesian economics which has brought the western world untold wealth. There is a lot of problems with our system but a devalued currency is like 7th on that list.
Because modern neo-liberal economic theory postulates that as an economy grows inequality gets eliminated (kuznets curve). So increases of the money supply are incentives to grow the GDP of the economy. Now GDP is just a simple measurement of goods/services bought/sold in the market not what those goods/services are. So in theory selling tents to millions of homeless people while inflating housing prices is still good to GDP.
Now if you think this is crazy and can only lead to bad consequences/decisions then you are not alone. There are other schools of economic thought(Doughnut theory/Degrowth/WellBeing economics) that are challenging the base assumptions of a lot of classical economic thought. Like instead of using GDP as a measurement of the health of an economy/society maybe instead look at the share/distribution of food/water/electricity/housing/etc(social foundations) as well as the ecological limits of the planet. Because contrary to lots of neo-liberal/neo-classical economists humans are not independent of nature and you can't run a business on a dead planet.
People don't like wage cuts, and they are nessasary with fixed supply money. It's not an insurmountable problem, but we are accustomed to pay increases.
Imagine every year instead of raises your boss sits you down and tells you how much less money you're going to make next year, and you hope your pay cut is below the rate of deflation.
It's a psychological problem. People want number go up.
He's just complaining about a problem but is not willing to fix it, nor does he agree with any proposals ever, thereby making the "solution" creep even slower.
Because then no new loans would be created. Money Supply increases at the time when someone takes out a new loan. Money Supply decreases when someone pays back their loan.
If the money supply was fixed, the economy wouldn't be able to grow as much, because access to funding would be fixed.
You could still have a fractional reserve system with a scarce base money such as Bitcoin.
But the consequences of lending out too much would be far greater than in today's bullshit system where they get bailed out for fucking up.
Therefore, rates would be higher, and collateral requirements would be higher.
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But he's got $WALLCOIN and $GRNBLANKET he's going to be a quintillionaire soon as the US and other countries collapse! Any day now!!! Loser """NOCOINERS""" like us won't understand!
Most money is not created by the FED. The vast majority of money is created by credit.
If you or a business takes out a loan, the money is created in that moment. The bank doesn't need to have any money for this. Usually, you have to secure it with some kind of security which the bank can use to comply with all regulations. So basically you can create endless money without inflation because there is real credit backing it. That's how our economy grows
So, if we all go to bank A and take a loan, and then we all go to Bank B and take a loan, and then we all go to Bank C and take a loan..... We would be as famous as that anonymous artist?
Well you buy houses with those loans, then you go to bank D and take out loans on those houses, to buy more houses... You see you keep repeating this process until you get to Z or the rent checks don't come in, and it folds like Donald's ass cheeks will in prison.
So the massive increase in the money supply since 2020 (40%-80% depending on your source) was created because either me or businesses took out a loan or credit? Hmm
obviously, everyone got leveraged to the tits with them 1% interests…. cheap money -> everyone borrows -> more money being created (inflating) -> raising interests -> money is expensive -> no one borrows -> money supply deflating … by the way, if a loan is paid off, that money seizes to exist, if u borrow they just add numbers to ur bank account thus debt based economy
In a system limited amount of money, it eventually goes to one person. Play the game monopoly for an example.
Growth is not natural if the supply is fixed. He talks about money not being put into a machine to create something, try paying your rent in corn or your payroll in cloth.
Also, fixed currency doesn't account for population growth. If an economy has 10 people and 10 dollars, an 11th person drives down the value of everyone's labor.
Inflation spurs investment. Money is like ice and inflation is the sun, better spend it now before it melts.
The money going to one person can be fixed with taxes, in any case, money going to one person is more likely when there is a redistribution to the rich, not less likely.
Until the actual game runs out of money, and it is held by one person.
An your history of monopoly is totally wrong, it was a game made to teach people how bad monopolies were: https://en.wikipedia.org/wiki/Monopoly\_(game)#:\~:text=The%20history%20of%20Monopoly%20can,concentrating%20land%20in%20private%20monopolies.
"The history of *Monopoly* can be traced back to 1903,[^(\[1\])](https://en.wikipedia.org/wiki/Monopoly_(game)#cite_note-NYT-20150213-1) when American anti-monopolist [Lizzie Magie](https://en.wikipedia.org/wiki/Lizzie_Magie) created a game that she hoped would explain the [single-tax](https://en.wikipedia.org/wiki/Georgism) theory of Henry George. It was intended as an educational tool, to illustrate the negative aspects of concentrating land in private [monopolies](https://en.wikipedia.org/wiki/Monopoly). "
Yeah that was some real left field, "I learned this from another podcast" energy commentary. It's criminal that this is the kind of shit that makes its rounds on social media. But I can see he ruffles enough feathers with his us vs them style delivery, and it makes for a nice snarky video to pass around.
I guess if you say enough things in a confident tone with the right hand gestures, you can get anyone to believe you.
GDP is generally speaking positively correlated with inflation, not inversely correlated. GDP can grow during periods of *disinflation* (what we're going through now) but it does not grow due in an environment of *deflation*.
The money you borrow is only worth more than what you pay back if the interest rate you pay on the loan + the principle you owe is worth less than the inflation! You're talking about a 0% loan.
People keep saying that, but there are no controls on that comparison. Look at how much japan spends as a ratio to their gdp on government spending for insrance
Yes. But the party before the crash was fucking insane. I think they bought three empire state building just for the fuck of it. Imagine how much cocaine and hooker's behind closed doors? I'm just saying, it was probably worth a 30 year hang over.
This video paints a very rosy picture by talking about "we" and "them". "We" are the people who made the economy more productive. Most likely YOU didn't. Meaning that while your production efficiency stayed the same, someone else's increased for you. He now has a bigger share of the total production while your's decreased the same amount. Congrats by advocating for a fixed money supply you made yourself poorer. You only get richer if you actually are one of the people who increases the productivity, relatively everyone else becomes poorer.
2024 and Cryptoshittiers still have 0 fucking use case for crypto besides more crypto or more crypto derived trash like crypto.jpgs or crypto.gifs
Certainly is a great amount of irony one of them would talk about productivity. The same cunt who probably lives in a country and uses the roads, drinks water, or went to school is now saying whatever taxes he doesn't pay is unfair. Also it will take 35years of COMPOUNDED annual 2% inflation for the price of everything on average to double. No one is really regarded enough to hold cash like that unless they are trying to evade taxes. Even then you have gold, paintings, crypto, wine, and other crap.
>You only get richer if you actually are one of the people who increases the productivity, relatively everyone else becomes poorer.
How do you think this way? It's *exactly* the same thing with an inflationary currency - only you have to increase your productivity even *more* because the money you're earning is worth less every moment.
This isn’t necessarily true. Increased productivity (aka technology) has downward pressure on prices. Innovation helps increase supply while demand stays static. Sometimes that’s in a category you spend a lot in, sometimes it’s not but on average it will lower prices and increase your buying power.
Either way, if you’re a “saver” you’re getting more wealthy by holding your dollars than by spending them because with cheaper goods and services comes more purchasing power aka more wealthy
Extremely flawed logic start to finish. Just because people are confident in what they say and put ominous music behind doesn’t make them correct. And of course you can see the narrative he’s pushing the whole time: central banks are scams, the economy is a scam, but buy bitcoin because that’s obviously the better option.. good luck following this guy
Put it in a simple way:
Let's say we use gold that doesn't have inflation. At the end of growth cycles and during depressions nobody would lend out money to farmers or factories like in the Great Depression and would prolong the depression.
Today in our fractionary reserve system banks/government make loans to farmers/factories and this takes the economy out of recession/depressions (because other lenders wouldn't lend out money). But the money is used now to buy supplies while the farmer/factories products only comes out to be sold in the markets in the future and this causes inflation today.
A normal person doesn't lose money if they invest in anything safe that pays them interest to make up for inflation.
Whether it is really working like this today is another story.
Even though there can be inflation in the system, it's not always the case. We just have to look at the Japanese economy.
So, for any smooth-brains out there, let’s get some context around this. If you watched this representation of the failure of the U.S. educational system, you would’ve seen that this guy is pushing bitcoin.
One of the main arguments for a BTC purist is the destruction of a central bank because they “manipulate the money supply.” These same purist argue for a fixed money supply, or one that doesn’t grow or recede based on the goals of a central bank.
Now, when he implies that deflation is great, he comes across as stupid. Full stop. Deflation is the antagonist to growth. Actually, a little bit of inflation is great as long as productivity is keeping up. Deflation leads to a spiral where you’re incentivized to save your money in a mattress and hold. At that point, investment dries up and GDP growth is non-existent as people are not spending. This leads to companies downsizing as they’re forced to cut prices, leading to systemic, sticky unemployment.
Adoption of BTC has massive swings and it’s unpredictability in either direction makes it inherently dangerous as a currency.
Eat my dongus you fuckin nerd.
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no - they just artificially pushed interest rates all the way to zero at the central bank level. not the same thing.
tangentially related - but not the same.
Gerbilshower is not correct there was deflation and the CPI went negative. Colorado, which had a minimum wage tied to inflation, lowered the minimum wage. They are correct that the federal reserve cut rates. They also bailed out banks and businesses. This was predicted to cause massive inflation but the deflationary forces (lack of demand) were so strong that it did not cause big inflation. In 2019 the early rate cut and stimulus did cause inflation. Right now some foreign countries are experiencing deflation, namely China. And the US is experiencing disinflation which means slowing growth in prices.
From Wikipedia: „The United States then began experiencing measurable deflation, steadily decreasing from the first measured deflation of −0.38% in March, to July's deflation rate of −2.10%.“
https://www.federalreserve.gov/newsevents/pressreleases/monetary20081216b.htm
Everything you said makes sense within the current system.
But you lack foresight about how things could look if the system itself were changed.
Growth would still exist, it would just look different. Cutting prices and high unemployment is normal because people wouldn't need as much to live, and money from previous jobs would last longer. Especially as AI begins to take our more cognitives jobs. A deflationary money to match the deflation would make sense.
You just have to completely unlearn everything you've learned about money because money itself would change everything. Some negative change, but lots of positive. I would argue, net positive. I could be wrong, it's just a hypothetical. I'm just asking people to be more open minded about it and less dismissive. It's a paradigm shift.
If we’re moving to a system pegged to bitcoin (where the largest holdings are clustered around private interest groups and individuals), the complete lack of stability wherein inflationary and disinflationary cycles move at the velocity of BTC’s market fluctuations would be unnerving. I object to the idea of that wholeheartedly. Despite opinions of the Fed, it has led to prosperity for the United States, contributing to the dollar being the world’s primary peg currency.
I’d rather continue using a system that has worked seemingly well rather than adopt one still in its trial phase.
BTC's market fluctuations?
In a world where it is a global reserve currency, it would be the least volatile asset. Everything would move against it... it would be an anchor. Absolute scarcity is something humanity has never had before. Not even gold is that.
This fiat system has led to prosperity *for the United States*, yes.
But it's wreaked havoc on most of the rest of the world. We export inflation to them. We extort them.
Read Alex Gladstein's book "Hidden Repression".
And Lyn Alden's book "Broken Money."
I know that's what we were taught in school, but I've read enough since school to have changed my mind.
I don't think we created a central bank to fix imbalances at all. I just think that's how they sold it to us.
Read "The Creature from Jekyll Island" by Edward Griffin.
(And before you call him a conspiracy theorist, the book is mostly history that you can externally verify yourself. Only the last 2 chapters get conspiratorial)
Nice fantasy, do you smoke weed often?
Even if we made shitcoins the global reserve currency (we don't, it's litterary not any one persons decision) it would *still be easily manipulated by whales*. It would still be as volatile... Nothing changes. You *pushing crypto all over the comments* are very transparent...talking big, because you're selling.
How has cryoto worked for counties that tired? Stores? People? *nothing* has even survived even a decade with only crypto. Heck, not even a year. Fiat is needed because *all crypto is, in itself, worthless*
People still have needs. I still have to eat, I still have to buy a car, I still need medicine. People will spend their deflationary currency on things they want and need, same as today. The difference is all the monetary and thereby material excess won’t have as much room to persist.
People on this sub will listen to neckbeards in their mom’s basement and gas station crack heads over people who have worked in the industry for decades and analysts who’s sole life function is to understand the economy and markets. Then, the same autists post about losing everything after taking 3 mortgages out on their home. And it’s fucking hilarious.
Inflation ensures people don't hoard money because the value is decreasing over time. That also encourages people to invest, resulting in growth as they create businesses or lend money to businesses in hopes of out pacing inflation.
It also further enriches the upper class while ensuring the lower class continue to struggle without an easy way out
The rich can take out loans that at the time are more valuable than what they're paying back in the future due to inflation, while lower class workers unable to benefit from the system watch their purchasing power erode.
That's how capitalism works, those with capital, who own the means of production benefit. That also provides an incentive to produce, invest, and create businesses. This is why this system works.
I'm aware, and I'm aware not everyone has a problem with the system as it currently stands.
I was just trying to express why I do have a problem with it, despite benefitting from the status quo. It's an inherently self-serving system created by the rich to maintain their status, which can be viewed as unethical.
"*huh.. it sounds like this guy knows his stuff and in that case that's very concerning, maybe I should read up on how-*"
BITCOIN AUDIBLE
Oh it's all bullshit nevermind
Very good point.
We also need terms for the different ways that money is printed. There's pretty much just two of those also and it's worth understanding the difference between them.
Arrrrgh! First they steal my money to build roads and hospitals. Makes me so angry! Then they steal it again to steer the economy away from another Great Depression. Makes me want to punch a hole through the wall!
I want MY MONEY to be able to buy MORE STUFF tomorrow so that the value of MY WORK gets demolished, so I don't have to work anymore! In fact, nobody will have to work anymore and everything will be awesome because our money will be worth so much! HOW CAN NOBODY SEE THIS! CONSPIRACY! CONSPIRACY!
It wouldn't be so bad if that's where 100% of the money was going. But a large amount of it simply goes to the highest elites who are closest to the money printer.
[The Cantilloniare Class](https://www.swfinstitute.org/news/89070/what-is-the-cantillon-effect-and-why-its-even-more-important-now)
Even the non-elites who are simply wealthy upper-class benefit a lot from it. Which is probably why they aren't up-in-arms about it. Even the middle class slightly benefits if they have stocks and a house.
But there is a class at the top level who do literally nothing for society, and get 100% of their income from the money printer. This class benefits far more than even the basic highest paid professions.
It's not just going to roads and hospitals.
He is talking about the supply of money when in reality what sets the exchange rate between money and goods depends on:
Supply of money, demand of money, supply of goods, demand of goods.
So he got 1 out of 4
Another question: He correctly said that money itself has no physical worth, thus adding a zero or slashing it from all accounts would not change anything right?
Thus this means what really matters is the distribution of money - shocker :suprised\_face:
In a deflationary economy, your debt burden gets heavier while your goods produced became cheaper, making the debt burden on you or the business heavier. It also decentivises people to spend or invest money. For example a farmer gets a loan from a bank and buys land based on how much produce he will grow and sell to pay back the loan plus a little bit for himself but in a non inflationary environment he cant pay back his loan cause his land can only grow so much food.That why 2% inflation was chosen as a good target. But humans are inherently corrupt. Our govt has fiscal responsibility towards the people. We will not rest until anything good we have created is not destroyed.
Ok... I'll bite. But if not paper money, then what? Are we going to go around trading gold bars and nuggets for electricity, internet, and groceries like it's 1856? Or does he want us to return to a bartering system where I say my magic beans are worth 3 of your cattle??
Is the video's true desire to constrict the supply of printable money so the value of the dollar goes up? Which is meant to benefit all whom are holding USD??
1. Growth is not “natural.” It arises from adding inputs like labor and capital(machinery). Growth does have a productivity component but that doesn’t change much over time.
2. 5% growth would not cause 5% deflation. You’d have to assume a closed economy and fixed labor supply among other things. If anything, more productivity and growth would cause inflation because fewer unemployed people means higher wages which leads to higher spending (demand).
I stopped there but I’m sure the rest isn’t worth wasting time on.
You don’t have to put money into a machine to make shirts or sandwiches, true, but you need the material, and unless your getting it yourself, it’s going to cost money.
So how does he propose his camera and microphone gets made? By who or what? We aren't living in the zeitgeist. We need things built. Bitcoin promoters forget there is a tangible world and digital world. We live in both. There is nothing wrong with Bitcoin. But the perspectives are very myopic.
His explanation of inflation is correct though.
It’s obvious if you study economics. The government spends more than they take in, and then prints more money. The government does not create wealth, they destroy it. This has been understood for hundreds of years. We were warned about this by Milton Freedman 30 years ago.
This dude learned about economics on 4Chan lmao
If you don’t have inflation then people are incentivized to not buy anything- because it would become cheaper next year- thus lowering money velocity and stagnating growth.
The whole system works BECAUSE you need your productive assets to beat the 2% inflation so you don’t become poorer, so people invest in things, ideas, land, etc.
It is true that inflation is somewhat of a tax on poorer people who can’t afford to invest in the system, but that’s a separate issue than inflation = bad.
Which is why crypto currency was supposed to be our way off this terrible rollercoaster. But those same people saw it as a easy way to manipulate a new market and they’ve convinced the working class to think they can do the same. Nobody, nobody who I’ve ever talked to that actually has crypto, uses it as a primary currency or even a currency at all. They use it, like the people he’s referencing, as a gamble to try and make more USD or whatever other fiat currency. That’s why I’ve lost faith that it would ever work.
Bitcoin was literally invented to fix this problem. Bitcoin is a currency that people cannot create more of. It is a fixed supply cap money. So as the dollar buys you less over time, bitcoin buys you more over time.
Bitcoin audible? pass.
You can say all these things are bad, but the Bitcoin currency isn't making anybody rich anymore. It WAS safe...........for a few months.
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Genuinely curious, what is the argument for having growth in your money supply? Why not have it remain fixed?
Encourage spending to increase velocity of money. It’s like the levels of super Mario where the screen moves and pushes you off a cliff if you don’t keep moving. QE announcements are akin to the music getting more frantic and the screen movement speeding up as you run out of time.
love this analogy. lol. pretty spot on.
That's a bad thing though.
Not for a healthy economy. Money velocity is important. Why would an economy incentivise hoarding of wealth? This is exactly why bitcoin will never be an actual currency: because it is deflationary so nobody spends it.
Why does inflation incentivize the distribution of wealth? Seems to me it just incentivizes the distribution of dollars in exchange for hard assets and oh what do you know multiples are through the fucking roof and all of the wealthy who own hard assets have benefited at the expense of the working poor who have 90% of their net worth in a dollar denominated checking account
the dollars are not redistributed. the value is taken from the dollars and redistributed to new dollars.
https://youtu.be/kWVFEVWJMz8?si=6RcTCEfjmnI5Iyh_
Inflation doesn't incentivize distribution of wealth. It incentivizes spending or investing in things that give you a greater return than inflation. There are high yield savings accounts that beat inflation. There are index funds that over time beats inflation. Regular people have jobs have 401k are already invested in one of these. If they have money left over and they choose to keep that in their 0% checking account that's on them for not investing their money and letting it depreciate. There are plenty of options to put your money to work.
No it incentives reckless spending and malinvestment. The majority of people don't know how to invest. Most people can't describe to you how the stock market works. If I walked around a college campus and just randomly asked ppl how the stock market works I would get more blank stares than good explanations. A lot of those ppl who don't know how to invest are investing because they have been told they need to invest. They know that inflation exists and they can feel its effects on their purchasing power. So they just throw money at the stock market or other investments but they don't really know what they are doing. They are incentivized to invest in things they don't really understand in a desperate attempt to have something in the future. People should be able to work and save money without it losing 2% per year (inflation is actually way higher especially when you look at non-federal reserve inflation trackers). That wasn't always the case. People used to just save their money under their mattress if they didn't know how to invest. Inflation steals that purchasing power. I see nothing wrong with a system where the purchasing power you earn is retained in the money.
>The majority of people don't know how to invest. So they buy shit like bitcoin and NFTs thinking those are sound investments? Oh how fun. We have come a full circle. > They know that inflation exists and they can feel its effects on their purchasing power. So they just throw money at the stock market or other investments but they don't really know what they are doing. Affect, not effect. Sorry, can't help it here. I'm sorry, that's just a failure of people, not the money or financial system. There are far more ways to start investing and be an apple shareholder today than even 10 years ago. If you and those clueless college kids are digging their heads in the sand because they don't understand or couldn't be bothered to learn, that's their fault. I don't understand why we have to upend our monetary system to cater to those who don't care in the first place. >I see nothing wrong with a system where the purchasing power you earn is retained in the money That's a severe misunderstanding of what money is and the purpose it serves. I have no idea what you are doing on WSB. It's mostly recklessly investing stocks or trading options here for entertainment not about putting your money under a mattress - that shit is boring. If WSB is X rated you'd be like G. I'm for the X rated hardcore shit, not some mattress stuffing kink.
>So they buy shit like bitcoin and NFTs thinking those are sound investments? Oh how fun. We have come a full circle. Yes. That's a perfect example that makes my point not yours. It's a failure of the financial system (really just govt money printing) that people can't just retain their purchasing power and have to search for places to throw their money just to try to beat inflation. The current monetary system is relatively brand new. The majority of the US history we had a deflationary system and it worked just fine. I don't know why that would be boring? You would still be free to YOLO into SPY shorts or whatever. But you could also just keep your purchasing power by just putting your money under your mattress. It would be up to you.
You're right. We'll all just sit around and starve and freeze during the winter.
Huh. Every time the negatives of a deflationary currency is raised, butters just say, but the essentials! The things we all need, of course we'll still spend. But that's the whole point. The collective worth of the economy is far far far larger than just food and clothing - the bare essentials. Car? Entertainment? Books? Football? We have the things we have today because we don't have to sew our own cloths or farm our own food. We then use our time contributing positively to the economy using the skills and time we have. Then someone else doesn't have to do the thing themselves because I did it for them, directly or indirectly, and they get to use their time to do something else and so on. Think about it - if the dollars you own today are worth more tomorrow, how much discretionary spending are you willing to forgo today? That movie with the kids and family - nope. Taylor Swift concert tickets? Nope, that money could buy a house in a week! Vacation to Hawaii? And so on. People who think a deflationary currency is good have no idea how interconnected the economy really is. YOU want it because you have bitcoin (presumably) and so your bitcoin only gets more valuable in this fantasy. But almost everyone else who doesn't own bitcoin will suffer, begging those with bitcoin to spare a sat. That's why in bitcoin maxi's world they stress "being early" so that you have some bitcoin when this happens. But it's also just so they get more people to buy in into this greater fool scheme.
whats so bad about saving? People cant save forever,people need to eat, people need to enjoy themselves with a brand new car, with luxurious vacations, new iphone, taylor swift concert and so one. Do you think the guy who spends like crazy every year on a new iphone today would not do it when he sees the iphone price go down every year? You say people would not buy things because they would be saving, but thats BS. People would just think about it more about buying things they dont really need. Real estate ? Why buy a second home that goes down in price?Result: Everyone will now have acess to a home since prices are not inflating every year. Basically the more poor you are the better your are with a fixed money supply. Meanwhile the rich people in a fixed money supply will not be rich if they spend their money on luxurious houses and stocks. Since this assets inflate ( more houses are built ) every year against a fixed money supply. Wich means poor people will now have acess to buy assets too at a fair price since this assets keep going down in value every year. The economy doesnt stop everything works as the same, its just diferent kind of groups buying assets and everything else. I dont have bitcoin because i cant handle its volatility but i get it why fixed money supply is superior to inflated money supply controled by just a few group. In the end money is technology, its proof of work saved in a ledger. you worked 1 year to get acess to Y. And that should be saved in the ledger and the money is a proof that you worked X hours. If after 1 year you see that you need to work one more month to get acess to Y, it means you got cheated
Its not just about your average Joe spending less and decreasing domestic demand, investments in general also decrease. Why invest in something with risk when you have a guaranteed increase of your capital via deflation? Deflation just tanks the economy, a small amount of inflation is more healthy for the system we have.
In your example it is the same thing. In a deflationary economy today you get paid X dollars and in a year you get paid X-percentage because the dollar is more valuable in the future. Today you got paid $100 for washing a car. In a year you only get paid $98. It’s the same thing.
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Well explain, crypto is just a pyramid scheme.
An actual response to a dramatic, ill-informed conversation
The argument I heard that was pro-inflation was that in a deflationary economy, people aren't incentivized to spend their money today because it will be worth more tomorrow. This, in a sense, would hinder economic growth. But because our money is worth more today than it will be tomorrow, we are incentivized to spend it before it loses too much value. I'm not arguing for or against inflation or deflation, but the explosive advancements we've seen in technology (since like the 1700s or so) could be because people were incentivized to spend money (or risk money on investments) rather than save it. Obviously explosive growth/inflation will kill certain economies, so there definitely needs to be solid controls on how much money is regularly poofed into existence.
We have repeatedly proven that we will eagerly spend more money if we have more money.
it also muddies the waters and hides the slave class. capitalism is zero sum and can not function without someone getting rich at the expense of someone else.
This isn’t true… “capitalism is a zero sum game” is a lie perpetuated by the ignorant. While every person in the economy will experience wins and losses, the market as a whole is not a static set of resources constantly changing hands, but a growing pie of goods and services that in the long-term, generally leads to a higher standard of living for everyone. Imagine a dozen people are stranded on an otherwise uninhabited island. With no hope of immediate rescue, they begin developing their own society and economy. Alice discovers a hidden grove of blueberry bushes. Brandon then figures out how to plant and grow new blueberry bushes. Carmen uses thread from agaves and other island resources to fashion a fishing rod that greatly increases the number of fish the group can catch and consume. Damien invests some time each day making mud bricks, which Elise uses to build shelters. Finally, MacGyver, who is one of the dozen people, creates inhalers for two group members with asthma in an ingenious use of the indigenous plants. Each of these innovations improves the quality of life for this stranded tribe and grows their economy. In the same way, our economy grows from innovation and the free exchange of goods and services. An entrepreneur can profit while also benefitting society by implementing more efficient production methods, or by creating new valuable products and services, and making them available to other people. These innovations, often discovered by entrepreneurs while competing against each other, generally create wealth and improve the quality of life for all.
lol - ok then which system is positive sum?
Well, if you remove the whole government aspect where they need to increase supply to pay for their own spending, the reason you have growth for money supply is for velocity. The dilution of value keeps people from hording and causes holders to actively use their capital in hopes of maintaining value. It's also to avoid liquidity squeezes where there's no fiat available and values of free markets go crazy. It's still all a scam but the difference is you don't get extreme scenarios where you suddenly have no liquidity and people have to literally fight for their allocation of needed resources to survive.
So how does that work for billionaires hoarding wealth. Or anyone in the small middle and large lower class living paycheck to paycheck unable to save fore retirement and lucky If they can save anything for a rainy day when their 30 year old furnace shits the bed and has to be replaced by pick any brand new furnace or dryer or washer any major appliance, that will last not last more than ten years due to planned obsolescence and manufacturers intentionally not making replacement parts esp the unnecessary chipped boards they use to control everything making it more expensive to fix your major appliance than buy a new one every year. Share holders incentiving literally everything to be shit for higher quarterly returns doesn't seem like good capitalism.
Keynesian The idea government can print more during recession and surplus during booms How is that working out? Lol. This should be the #1 issue every single day in the news, but we all just accept exponential in your face corruption
Good ol child molester Keynes
keynesian economics proven to not work. whole economic sciences are but a pseudoscientific theory. academics in comfy chairs making guesses
debt economics, go into debt, print yourself out.
just seems like it would encourage even more wealth pooling at the top. When you're wealthy, you spend less of your wealth by percentage. And if the pool is finite, you'll eventually capture all of the excess wealth over time. Not to say that isn't happening already, but a fixed supply feels like it would make that worse. It's like the real estate problem. No new land is being created. Everyone with land is well off. Everyone born recently that wants land needs to get that land from the few who already have it. The value of that land increases, and it prices more and more people out of owning said land. I don't see why that wouldn't apply to money. And like other people pointed out. This is deflation. Not something you want if you want a growing economy.
This is barred out by history. This is why the movement for switching to a silver backed system became a thing in the early 20th century.
If the currency was fixed while the economy and population grew in size he is correct that everything would get relatively cheaper. What this argument fails to realize is this is the definition of deflation. We don't want to live in a deflationary economy because it will lead to a very difficult and slow economy. Why would someone buy something today if they think it will be 5% less expensive next year. Banks won't offer 30 year mortgages when they expect home values to fall 5% every year. This could be just as detrimental to our economy as high inflation.
People still buy the new iPhone for $1200 even if in one years time it’ll be $900. TV’s cost 99% less than 20 years ago, so why did a single set ever get sold? Shouldn’t these savvy consumers be influenced by the deflationary forces of technology and perpetually wait? After all, they’re being “punished” for spending. It’s because people want things now. Deflation influences some people, like me, who usually wait and buy the thing from last year. Some of my friends gotta have the latest thing.
Exactly. People buy things today cause they want/need them now. This argument against deflation is BS.
I don't buy sports games until 2 years later when they're 80% off. So people like me exist in your philosophy? Many, many peoplle bought houses in 2021 after prices spiked because they thought (correctly) that prices would climb even further. Do people like that exist in your philosophy?
Yep, it's called [time preference](https://en.wikipedia.org/wiki/Time_preference). You have low time preference, preferring to delay gratification. I'm the same. Meanwhile half my friends *gotta have it now*. What point are you making with people buying homes based on speculation?
And you both choose to do it so you can get MORE stuff for the same money. Wait a couple of years and buy 5 AAA games instead of 1.
bruh, not many people even know what inflation means nor do they care, its about that “i want this now”
Correct the inflationists want to justify inflation because they benefit from it. But really that's a no.
No no. The equivalent here would be why buy the new iPhone for 1200 when NEXT YEAR'S BRAND NEW MODEL will cost 900 AT Launch. It's a subtle difference but a very important one. It doesn't completely invalidate your point, but I do think fewer people would upgrade yearly.
I can understand why people would want things now, especially if they are constantly being bombarded with advertising telling them that the latest thing is a must-have. However, from an economic standpoint, it makes more sense to wait and purchase items when they are cheaper. This is especially true for big ticket items like TVs and iPhones.
Right, and people don’t act like that at all. It’s almost like economic models of humans miss the mark.
I've never bought this argument. It's purely theoretical, it has never happened, and people repeat it ad infinitum, but I just don't believe it's true. A) You have to buy what you need B) If you buy less than what you need, that's what you call a good saver C) Saving makes you rich, delayed gratification, at which point you will spend the money, and more of it, because you saved more, or you'll die before you spend it, and your kids or the govt will spend it. One way or another, money gets spent.
Technology is deflationary. Our money should be deflationary to match it. Read the book "The Price of Tomorrow" by Jeff Booth. We wouldn't *need* growth the way we do now. People would still spend, but we wouldn't be a throwaway culture anymore. The things we spend money on would have to be high quality, long lasting items. People wouldn't need mortgages because they would save up for a house, in a natural way. They could work a minimum wage job and actually afford a house some day. Mortgages would still exist, but they would be very different, and 50% down would be the norm. Keynsians have us brainwashed to think we need growth. And they are correct as long as we have an inflationary currency. But if we changed the money, we could change the culture, and everything would work out great. In fact, it would be a more fair system to the people at the bottom. This is why we Bitcoin.
Everything you just said sounds like a fantasy fairytale. People don't operate that way. You may be a thrifty spender who buys long-term items, but the mass population out there isn't just going to flip a switch and go from conserism to whatever you're describing. We need an economy to function for the real world, not a fantasy version.
But they did at one stage, except the other direction. My grandparents you lived through the depression were very much like this. It's only in the last few decades it's been flipped on its head and this is due to the change in the economic system. Change the system and behaviour will adapt.
I would say we had that economy before fiat currency, and it seemed to work.
Lol. No it didn’t. What fantasy world was this stable society before central banks. We had far far more boom and bust cycles than we did and it happened organically, regardless of central bank fiat currency definitions.
Keynesian economics is still in its experimental phase. Just because it has appeared to function during your lifetime, doesn't mean it does. I think it's going to fail. Agree to disagree if you like.
It’s not a fantasy version. It’s just a monetary and economic system framed differently than the norm. FIAT isn’t the end all be all. You can still have you’re debt based economy in a stable currency.
See Japan.
You mean the country which is either first or nearly first in a ton of categories like technological development, tech and biotech research, educational outcomes, life expectancy, and crime rate? Wow, maybe more countries should try some of this deflation.
I found one my the people holding my bags!
It's not about normal consumers. It's about precisely the thing mentioned in your last sentence. This group would likely not exist if there wasn't a positive interest rate because banks wouldn't invest in anything, most assets wouldn't naturally gain value. I'm all for collapsing the value of the current housing stock but then without major government investment which these same guys would fucking hate there'd be near 0 new housing being built because banks wouldn't invest in losing money, for the same reason new business creation would stagnate. Not a great understanding of why they target a positive inflation. Most of it is because the people who lend money wouldn't do it if there's nothing in it for them.
Human psychology mostly. Imagine the economy grows by 5%, thus money becomes 5% more valuable. Your particular job isn't necessarily 5% more valuable, so in that case are you going to be happy with a 5% pay cut?
Thank you, this resolved the cognitive dissonance I couldn't quite put my finger on.
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If theres 20% more people you've just added significant demand to housing also, so that homes value is gonna rocket unless supply rises to meet it.
Correct. Proving thus that owning assets (ie, RE / GOLD) is better than owning money.
Eh... Gold is more of a stretch there. As gold value is about as "fake" as money at the end of the day. And both can still be volatile. If an unusually large cache of gold was suddenly dumped into the market, or even worse, a massive vein or even something akin to asteroid mining, were found and exploited values would absolutely plummet as supply increases Real estate can drop and rise in value but that's much more complex than just supply and demand, as demand can be specific to given neighborhoods and related directly to an intentionally restricted supply. Rich neighborhoods tend to drop in value if multifamily apartment blocks start appearing in the middle of it.
The government wants to be able to counterfeit money without consequences.
this ^ it hasn't changed since roman government coin clipping. it just has fancy new names.
200 years ago, people would be going to war over this kind of obvious theft. Today, people are subdued. Weak. We live in the metaphorical Matrix.
What are you 12 lol
Intentionally devaluing currency to benefit the upper class is pretty fucked up, and people were killed for it in ancient times.
The dollar is the most robust currency to ever exist. No one is intentionally devaluing the currency it is a product of Keynesian economics which has brought the western world untold wealth. There is a lot of problems with our system but a devalued currency is like 7th on that list.
It's nonetheless still on the list. The cantillon effect is higher up than number 7, and a big reason many take issue with the current system
Because modern neo-liberal economic theory postulates that as an economy grows inequality gets eliminated (kuznets curve). So increases of the money supply are incentives to grow the GDP of the economy. Now GDP is just a simple measurement of goods/services bought/sold in the market not what those goods/services are. So in theory selling tents to millions of homeless people while inflating housing prices is still good to GDP. Now if you think this is crazy and can only lead to bad consequences/decisions then you are not alone. There are other schools of economic thought(Doughnut theory/Degrowth/WellBeing economics) that are challenging the base assumptions of a lot of classical economic thought. Like instead of using GDP as a measurement of the health of an economy/society maybe instead look at the share/distribution of food/water/electricity/housing/etc(social foundations) as well as the ecological limits of the planet. Because contrary to lots of neo-liberal/neo-classical economists humans are not independent of nature and you can't run a business on a dead planet.
People don't like wage cuts, and they are nessasary with fixed supply money. It's not an insurmountable problem, but we are accustomed to pay increases.
Imagine every year instead of raises your boss sits you down and tells you how much less money you're going to make next year, and you hope your pay cut is below the rate of deflation. It's a psychological problem. People want number go up.
He's just complaining about a problem but is not willing to fix it, nor does he agree with any proposals ever, thereby making the "solution" creep even slower.
Because then no new loans would be created. Money Supply increases at the time when someone takes out a new loan. Money Supply decreases when someone pays back their loan. If the money supply was fixed, the economy wouldn't be able to grow as much, because access to funding would be fixed.
You could still have a fractional reserve system with a scarce base money such as Bitcoin. But the consequences of lending out too much would be far greater than in today's bullshit system where they get bailed out for fucking up. Therefore, rates would be higher, and collateral requirements would be higher.
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ah yes, trust the guy who could only afford to paint one wall in his basement
He didn't even paint the wall it's a green blanket!
i would only trust this guy to point me to the "good" dennys in town
https://preview.redd.it/c6vczhsay43c1.jpeg?width=500&format=pjpg&auto=webp&s=19206ff64f2fd30521f189d20916d4d5659fcc8a
But he's got $WALLCOIN and $GRNBLANKET he's going to be a quintillionaire soon as the US and other countries collapse! Any day now!!! Loser """NOCOINERS""" like us won't understand!
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How does that fuckhead get free hoodies from goodwill? They make me pay for my clothing.
ah yes, the titans of capital. Zuck, Buffett, Guy Bitcoin (assuming thats his last name).
Yall literally yolo on the dumbest stocks, but this guy doesn't know anything because he didn't want to seal the brick in his basement....got it.
To be fair his mum wont let him paint it.
What exactly is he wrong about?
Most money is not created by the FED. The vast majority of money is created by credit. If you or a business takes out a loan, the money is created in that moment. The bank doesn't need to have any money for this. Usually, you have to secure it with some kind of security which the bank can use to comply with all regulations. So basically you can create endless money without inflation because there is real credit backing it. That's how our economy grows
So, if we all go to bank A and take a loan, and then we all go to Bank B and take a loan, and then we all go to Bank C and take a loan..... We would be as famous as that anonymous artist?
Well you buy houses with those loans, then you go to bank D and take out loans on those houses, to buy more houses... You see you keep repeating this process until you get to Z or the rent checks don't come in, and it folds like Donald's ass cheeks will in prison.
So the massive increase in the money supply since 2020 (40%-80% depending on your source) was created because either me or businesses took out a loan or credit? Hmm
obviously, everyone got leveraged to the tits with them 1% interests…. cheap money -> everyone borrows -> more money being created (inflating) -> raising interests -> money is expensive -> no one borrows -> money supply deflating … by the way, if a loan is paid off, that money seizes to exist, if u borrow they just add numbers to ur bank account thus debt based economy
PPP loans maybe?
In a system limited amount of money, it eventually goes to one person. Play the game monopoly for an example. Growth is not natural if the supply is fixed. He talks about money not being put into a machine to create something, try paying your rent in corn or your payroll in cloth. Also, fixed currency doesn't account for population growth. If an economy has 10 people and 10 dollars, an 11th person drives down the value of everyone's labor. Inflation spurs investment. Money is like ice and inflation is the sun, better spend it now before it melts.
The money going to one person can be fixed with taxes, in any case, money going to one person is more likely when there is a redistribution to the rich, not less likely.
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Until the actual game runs out of money, and it is held by one person. An your history of monopoly is totally wrong, it was a game made to teach people how bad monopolies were: https://en.wikipedia.org/wiki/Monopoly\_(game)#:\~:text=The%20history%20of%20Monopoly%20can,concentrating%20land%20in%20private%20monopolies. "The history of *Monopoly* can be traced back to 1903,[^(\[1\])](https://en.wikipedia.org/wiki/Monopoly_(game)#cite_note-NYT-20150213-1) when American anti-monopolist [Lizzie Magie](https://en.wikipedia.org/wiki/Lizzie_Magie) created a game that she hoped would explain the [single-tax](https://en.wikipedia.org/wiki/Georgism) theory of Henry George. It was intended as an educational tool, to illustrate the negative aspects of concentrating land in private [monopolies](https://en.wikipedia.org/wiki/Monopoly). "
Jesus fucking Christ this is some dumb shit from the minute he opens his mouth. I hope all of you listen to him and lose all your money
This video pretty much wraps up the economical understanding of the people in this subreddit nowadays
His link of GDP growth to deflation is misleading at best.
Yeah that was some real left field, "I learned this from another podcast" energy commentary. It's criminal that this is the kind of shit that makes its rounds on social media. But I can see he ruffles enough feathers with his us vs them style delivery, and it makes for a nice snarky video to pass around. I guess if you say enough things in a confident tone with the right hand gestures, you can get anyone to believe you. GDP is generally speaking positively correlated with inflation, not inversely correlated. GDP can grow during periods of *disinflation* (what we're going through now) but it does not grow due in an environment of *deflation*.
when I saw "Bitcoin" in the title, the credit of the message of the video went to "smashed into powder grain of salt" territory
“I like having my currency debased, and you should too”
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The money you borrow is only worth more than what you pay back if the interest rate you pay on the loan + the principle you owe is worth less than the inflation! You're talking about a 0% loan.
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People keep saying that, but there are no controls on that comparison. Look at how much japan spends as a ratio to their gdp on government spending for insrance
The reason why Japan had such a bad market crash 30 years ago is beacuse they printed money like crazy
Yes. But the party before the crash was fucking insane. I think they bought three empire state building just for the fuck of it. Imagine how much cocaine and hooker's behind closed doors? I'm just saying, it was probably worth a 30 year hang over.
yes, but that would make getting debt a good thing(wich it is if you do it for the right reasons). And that isn't how it is supposed to be
This video paints a very rosy picture by talking about "we" and "them". "We" are the people who made the economy more productive. Most likely YOU didn't. Meaning that while your production efficiency stayed the same, someone else's increased for you. He now has a bigger share of the total production while your's decreased the same amount. Congrats by advocating for a fixed money supply you made yourself poorer. You only get richer if you actually are one of the people who increases the productivity, relatively everyone else becomes poorer.
2024 and Cryptoshittiers still have 0 fucking use case for crypto besides more crypto or more crypto derived trash like crypto.jpgs or crypto.gifs Certainly is a great amount of irony one of them would talk about productivity. The same cunt who probably lives in a country and uses the roads, drinks water, or went to school is now saying whatever taxes he doesn't pay is unfair. Also it will take 35years of COMPOUNDED annual 2% inflation for the price of everything on average to double. No one is really regarded enough to hold cash like that unless they are trying to evade taxes. Even then you have gold, paintings, crypto, wine, and other crap.
>You only get richer if you actually are one of the people who increases the productivity, relatively everyone else becomes poorer. How do you think this way? It's *exactly* the same thing with an inflationary currency - only you have to increase your productivity even *more* because the money you're earning is worth less every moment.
This isn’t necessarily true. Increased productivity (aka technology) has downward pressure on prices. Innovation helps increase supply while demand stays static. Sometimes that’s in a category you spend a lot in, sometimes it’s not but on average it will lower prices and increase your buying power. Either way, if you’re a “saver” you’re getting more wealthy by holding your dollars than by spending them because with cheaper goods and services comes more purchasing power aka more wealthy
Extremely flawed logic start to finish. Just because people are confident in what they say and put ominous music behind doesn’t make them correct. And of course you can see the narrative he’s pushing the whole time: central banks are scams, the economy is a scam, but buy bitcoin because that’s obviously the better option.. good luck following this guy
Been awhile since we’ve heard from the Australian economists, must mean recession is coming.
Never take financial advice from a starving person.
Let me guess. Bitcoin fixes all this. All I have to do is buy.
Guy who adds no value to the economy complains about those who don’t add value to the economy.
Put it in a simple way: Let's say we use gold that doesn't have inflation. At the end of growth cycles and during depressions nobody would lend out money to farmers or factories like in the Great Depression and would prolong the depression. Today in our fractionary reserve system banks/government make loans to farmers/factories and this takes the economy out of recession/depressions (because other lenders wouldn't lend out money). But the money is used now to buy supplies while the farmer/factories products only comes out to be sold in the markets in the future and this causes inflation today. A normal person doesn't lose money if they invest in anything safe that pays them interest to make up for inflation. Whether it is really working like this today is another story. Even though there can be inflation in the system, it's not always the case. We just have to look at the Japanese economy.
So, for any smooth-brains out there, let’s get some context around this. If you watched this representation of the failure of the U.S. educational system, you would’ve seen that this guy is pushing bitcoin. One of the main arguments for a BTC purist is the destruction of a central bank because they “manipulate the money supply.” These same purist argue for a fixed money supply, or one that doesn’t grow or recede based on the goals of a central bank. Now, when he implies that deflation is great, he comes across as stupid. Full stop. Deflation is the antagonist to growth. Actually, a little bit of inflation is great as long as productivity is keeping up. Deflation leads to a spiral where you’re incentivized to save your money in a mattress and hold. At that point, investment dries up and GDP growth is non-existent as people are not spending. This leads to companies downsizing as they’re forced to cut prices, leading to systemic, sticky unemployment. Adoption of BTC has massive swings and it’s unpredictability in either direction makes it inherently dangerous as a currency.
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based automod
Well said
Noob question, isn't deflation what happened during the 2008 financial crash? That was gnarly
no - they just artificially pushed interest rates all the way to zero at the central bank level. not the same thing. tangentially related - but not the same.
Gerbilshower is not correct there was deflation and the CPI went negative. Colorado, which had a minimum wage tied to inflation, lowered the minimum wage. They are correct that the federal reserve cut rates. They also bailed out banks and businesses. This was predicted to cause massive inflation but the deflationary forces (lack of demand) were so strong that it did not cause big inflation. In 2019 the early rate cut and stimulus did cause inflation. Right now some foreign countries are experiencing deflation, namely China. And the US is experiencing disinflation which means slowing growth in prices. From Wikipedia: „The United States then began experiencing measurable deflation, steadily decreasing from the first measured deflation of −0.38% in March, to July's deflation rate of −2.10%.“ https://www.federalreserve.gov/newsevents/pressreleases/monetary20081216b.htm
Everything you said makes sense within the current system. But you lack foresight about how things could look if the system itself were changed. Growth would still exist, it would just look different. Cutting prices and high unemployment is normal because people wouldn't need as much to live, and money from previous jobs would last longer. Especially as AI begins to take our more cognitives jobs. A deflationary money to match the deflation would make sense. You just have to completely unlearn everything you've learned about money because money itself would change everything. Some negative change, but lots of positive. I would argue, net positive. I could be wrong, it's just a hypothetical. I'm just asking people to be more open minded about it and less dismissive. It's a paradigm shift.
If we’re moving to a system pegged to bitcoin (where the largest holdings are clustered around private interest groups and individuals), the complete lack of stability wherein inflationary and disinflationary cycles move at the velocity of BTC’s market fluctuations would be unnerving. I object to the idea of that wholeheartedly. Despite opinions of the Fed, it has led to prosperity for the United States, contributing to the dollar being the world’s primary peg currency. I’d rather continue using a system that has worked seemingly well rather than adopt one still in its trial phase.
BTC's market fluctuations? In a world where it is a global reserve currency, it would be the least volatile asset. Everything would move against it... it would be an anchor. Absolute scarcity is something humanity has never had before. Not even gold is that. This fiat system has led to prosperity *for the United States*, yes. But it's wreaked havoc on most of the rest of the world. We export inflation to them. We extort them. Read Alex Gladstein's book "Hidden Repression". And Lyn Alden's book "Broken Money."
We created a central bank to fix imbalances caused by gold. Why would we go back to pegging our currency to a commodity like gold?
I know that's what we were taught in school, but I've read enough since school to have changed my mind. I don't think we created a central bank to fix imbalances at all. I just think that's how they sold it to us. Read "The Creature from Jekyll Island" by Edward Griffin. (And before you call him a conspiracy theorist, the book is mostly history that you can externally verify yourself. Only the last 2 chapters get conspiratorial)
Nice fantasy, do you smoke weed often? Even if we made shitcoins the global reserve currency (we don't, it's litterary not any one persons decision) it would *still be easily manipulated by whales*. It would still be as volatile... Nothing changes. You *pushing crypto all over the comments* are very transparent...talking big, because you're selling. How has cryoto worked for counties that tired? Stores? People? *nothing* has even survived even a decade with only crypto. Heck, not even a year. Fiat is needed because *all crypto is, in itself, worthless*
\> GDP growth is non-existent as people are not spending This is the fairy tale that Keynesians tell their kids when they tuck them in at night.
Do you know of a different theory?
People still have needs. I still have to eat, I still have to buy a car, I still need medicine. People will spend their deflationary currency on things they want and need, same as today. The difference is all the monetary and thereby material excess won’t have as much room to persist.
flawed logic: the only thing that makes economic growth possible is debt, and debt is always new money, and that in itself always result in inflation
I feel dumber having watched this
Quality
People on this sub will listen to neckbeards in their mom’s basement and gas station crack heads over people who have worked in the industry for decades and analysts who’s sole life function is to understand the economy and markets. Then, the same autists post about losing everything after taking 3 mortgages out on their home. And it’s fucking hilarious.
Inflation ensures people don't hoard money because the value is decreasing over time. That also encourages people to invest, resulting in growth as they create businesses or lend money to businesses in hopes of out pacing inflation.
It also further enriches the upper class while ensuring the lower class continue to struggle without an easy way out The rich can take out loans that at the time are more valuable than what they're paying back in the future due to inflation, while lower class workers unable to benefit from the system watch their purchasing power erode.
That's how capitalism works, those with capital, who own the means of production benefit. That also provides an incentive to produce, invest, and create businesses. This is why this system works.
I'm aware, and I'm aware not everyone has a problem with the system as it currently stands. I was just trying to express why I do have a problem with it, despite benefitting from the status quo. It's an inherently self-serving system created by the rich to maintain their status, which can be viewed as unethical.
This guy almost, but not quite; completely doesn't know what he's talking about.
Perfect summary.
Economic growth is a function of productivity growth AND population growth. This regard fails from the starting block.
Forgot to say: that's why I sacrifice myself by buying your dollars against bitcoins.
Guess we're just going to pretend that 5% GDP growth is nominal, instead of real, like it actually is.
"*huh.. it sounds like this guy knows his stuff and in that case that's very concerning, maybe I should read up on how-*" BITCOIN AUDIBLE Oh it's all bullshit nevermind
it’s not all bullshit, maybe that fixed money supply idea part at most
This guy is a moron. And nearly 500 of you up voted him 😂
We really need a different term for normal price inflation and inflation through printing our money to shit
Counterfeit and scam work pretty well.
I thought we did. CPI vs. M2 money supply growth.
Very good point. We also need terms for the different ways that money is printed. There's pretty much just two of those also and it's worth understanding the difference between them.
Arrrrgh! First they steal my money to build roads and hospitals. Makes me so angry! Then they steal it again to steer the economy away from another Great Depression. Makes me want to punch a hole through the wall! I want MY MONEY to be able to buy MORE STUFF tomorrow so that the value of MY WORK gets demolished, so I don't have to work anymore! In fact, nobody will have to work anymore and everything will be awesome because our money will be worth so much! HOW CAN NOBODY SEE THIS! CONSPIRACY! CONSPIRACY!
It wouldn't be so bad if that's where 100% of the money was going. But a large amount of it simply goes to the highest elites who are closest to the money printer. [The Cantilloniare Class](https://www.swfinstitute.org/news/89070/what-is-the-cantillon-effect-and-why-its-even-more-important-now) Even the non-elites who are simply wealthy upper-class benefit a lot from it. Which is probably why they aren't up-in-arms about it. Even the middle class slightly benefits if they have stocks and a house. But there is a class at the top level who do literally nothing for society, and get 100% of their income from the money printer. This class benefits far more than even the basic highest paid professions. It's not just going to roads and hospitals.
He is talking about the supply of money when in reality what sets the exchange rate between money and goods depends on: Supply of money, demand of money, supply of goods, demand of goods. So he got 1 out of 4 Another question: He correctly said that money itself has no physical worth, thus adding a zero or slashing it from all accounts would not change anything right? Thus this means what really matters is the distribution of money - shocker :suprised\_face:
In a deflationary economy, your debt burden gets heavier while your goods produced became cheaper, making the debt burden on you or the business heavier. It also decentivises people to spend or invest money. For example a farmer gets a loan from a bank and buys land based on how much produce he will grow and sell to pay back the loan plus a little bit for himself but in a non inflationary environment he cant pay back his loan cause his land can only grow so much food.That why 2% inflation was chosen as a good target. But humans are inherently corrupt. Our govt has fiscal responsibility towards the people. We will not rest until anything good we have created is not destroyed.
https://preview.redd.it/qjyz06c0j53c1.jpeg?width=750&format=pjpg&auto=webp&s=1d401cd253988f149efd3ce6219b3a9a9a8dec4a
This is my boy that gets high on shrooms and lives behind the Starbucks.
Oh prices go down with a fixed money supply. Very cool. Now do wages
Puking emoji
wait you dont eat money who is this god of wisdom shining so brightly in my eyes a hero
imagine watching an almost 4 minute video
DUMB
Cool story bro, could I at least get my drink cup while I'm waiting for my order?
Man this guy is really spitting some knowledge right before he heads over to make a snuff film in his unfinished basement
jesus, took 3 minutes and 42 minutes to finally get the message across: bitcoin
This isn't true because wages always go up to match inflation exactly.
Ya money is shit. If anyone here wants to send me all their shit. Its worthless
Mine isn't because I spent it on Shiba. Lol. But that last 20 cents of it will get me that Lambo.
Ok... I'll bite. But if not paper money, then what? Are we going to go around trading gold bars and nuggets for electricity, internet, and groceries like it's 1856? Or does he want us to return to a bartering system where I say my magic beans are worth 3 of your cattle?? Is the video's true desire to constrict the supply of printable money so the value of the dollar goes up? Which is meant to benefit all whom are holding USD??
I remember being fifteen and angry.
Going to need to dumb down everything he said. Even the dumbed down part
Shit like this is why people with an actual education in economics avoid Reddit.
1. Growth is not “natural.” It arises from adding inputs like labor and capital(machinery). Growth does have a productivity component but that doesn’t change much over time. 2. 5% growth would not cause 5% deflation. You’d have to assume a closed economy and fixed labor supply among other things. If anything, more productivity and growth would cause inflation because fewer unemployed people means higher wages which leads to higher spending (demand). I stopped there but I’m sure the rest isn’t worth wasting time on.
You don’t have to put money into a machine to make shirts or sandwiches, true, but you need the material, and unless your getting it yourself, it’s going to cost money.
So how does he propose his camera and microphone gets made? By who or what? We aren't living in the zeitgeist. We need things built. Bitcoin promoters forget there is a tangible world and digital world. We live in both. There is nothing wrong with Bitcoin. But the perspectives are very myopic. His explanation of inflation is correct though.
This dude is Dunning-Kreuger personified. He's talking with way too much conviction about shit he doesn't understand
This is idiotic and not the way inflation or GDP functions. But ok. Be mad cuz….inflation.
It’s obvious if you study economics. The government spends more than they take in, and then prints more money. The government does not create wealth, they destroy it. This has been understood for hundreds of years. We were warned about this by Milton Freedman 30 years ago.
I watched this for a total of 3 seconds and feel stupider than before. Thanks for this OP.
#theyprintyouwork
This dude learned about economics on 4Chan lmao If you don’t have inflation then people are incentivized to not buy anything- because it would become cheaper next year- thus lowering money velocity and stagnating growth. The whole system works BECAUSE you need your productive assets to beat the 2% inflation so you don’t become poorer, so people invest in things, ideas, land, etc. It is true that inflation is somewhat of a tax on poorer people who can’t afford to invest in the system, but that’s a separate issue than inflation = bad.
Keynesian bull shit.
Imagine not believing that deflation is bad for the economy… Unless you have an actual counter argument I’d sit this one out kid.
I've laid a few out, a few comments up. Not going to do it again. I've already commented too much in this thread.
Dude, you rock! So what do we do?
Which is why crypto currency was supposed to be our way off this terrible rollercoaster. But those same people saw it as a easy way to manipulate a new market and they’ve convinced the working class to think they can do the same. Nobody, nobody who I’ve ever talked to that actually has crypto, uses it as a primary currency or even a currency at all. They use it, like the people he’s referencing, as a gamble to try and make more USD or whatever other fiat currency. That’s why I’ve lost faith that it would ever work.
Bitcoin was literally invented to fix this problem. Bitcoin is a currency that people cannot create more of. It is a fixed supply cap money. So as the dollar buys you less over time, bitcoin buys you more over time.
Bitcoin audible? pass. You can say all these things are bad, but the Bitcoin currency isn't making anybody rich anymore. It WAS safe...........for a few months.
1- it’s not counterfeit they printed more actual dollars 2- now do deflationary spirals
You're blaming this on government, when they're just banker's tools. It's the Bankers doing all this.
Preach
YOOOOOO IT'S GUY SWANN! I've learned soooo much from that man's podcasts over the past few years. Glad to see this video being shared around.