Why Bitcoin Will Never Have A Problem With Deflation
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In the s, a turning point occurred in humanity. The British and Dutch empires adopted a new concept, that enabled them to take over the world and change it in the process. Their powerful new weapon? The notion of credit, where they abandoned the idea that the old was sacred.
In our lifetimes, we are about to see another transformation. And ironically, due bitcoin causes deflation the opposite reason: Every man and his dog is talking about Bitcoin and crypto bitcoin causes deflation.
But one thing few people seem to talk about, let alone understand, is that Bitcoin has a fixed supply — specifically, 21 million. Bitcoin causes deflation world where prices, like what you pay for in shops and what you get paid as salary, are decreasing?
Short term, it means producers of output get more money, which makes economic output higher. That is, in a best case scenario. Debt funds consumption and investment, which grows output in an economy. Savings are a leakage from the economy which do the opposite. So in this sense, this political philosophy broadly speaking, is bitcoin causes deflation with growing the system.
Economic output How do you grow an economy? The easy answer is that exports bring cash into an economy, but what about actual global output? If we take out this artificial growth, which is a transfer of cash between economies through trade, what actually creates net growth?
It basically comes down to two things: More people also means more workers, and remember, labour is a factor of production so the more available people and time we havethe more we can produce. If we can pair productivity growth to population growth, bitcoin causes deflation get economic growth: By the definition of GDP, which is based on consumption, more goods being output and more people consuming means voila: Debt The invention of credit created the world we know today.
But a thing that makes me scratch my head is how every government and citizen in this world seems to be in debt. Which basically implies one thing: In the present, this is great: Which brings us to the magic of inflation: Assuming of course, the highway robbery from cash holders continues and inflation is constant. Inflation targets will now become de flation targets, but bitcoin causes deflation the same goal of price stability. Instead of prices creeping up each year, they will creep down each year.
However, not all is lost. If investments can return a higher rate than what a saver would get hoarding their cash, bitcoin causes deflation investment will still occur in the economy. And with investment, comes not just more cash into a system bitcoin causes deflation also innovation, which might spark productivity bitcoin causes deflation. This increases economic bitcoin causes deflation. Governments will be forced to stop abusing their position to borrow money to be paid by future generations, and instead, investment managers and entrepreneurs who can execute a higher return than deflationary returns, will instead be the custodians of increased economic output.
Which puts creativity, risk taking, and ingenuity, as the sole creator of economic prosperity. Which is how it should be: In the process, this will make creativity the new scarcity, which is a powerful concept because it is less scarce than gold or fiat currency today.
In fact, I posted something along these lines on LinkedIn recently: He has a point. Wonder what your bitcoin causes deflation are on this? The whole concept of fractional cash system blows my mind. These banks are creating loans out of thin air! Bitcoin causes deflation also, what is it that is putting demand on that debt? The market would adjust. Less borrowing is going to definitely reduce economic activity.
So before we hit this crisis, which will happen in the next century due to birth rates declining Japan and Italy are going to be an interesting to watch for this reasonwe need to better way to measure progress. And so by changing the equation of what is progress, we change the inputs. It is an interesting point you raise, given countries control the cash rate which impacts lending and inflation, as well as being the local store of value.
Right now, the greenback is the reserve currency off the world and economic statistics are bitcoin causes deflation in USD not to mention directly impact some dollarised countries. If they became quoted in BTC, that would certainly change the perception of where the numbers are. On the assumption BTC becomes the global store of value, this is a shift in dynamic on the global bitcoin causes deflation that will turn everything on its head.
Case in point is internet commerce: So pricing with be evident there. Enter your email address to subscribe to bitcoin causes deflation blog and receive notifications of new posts bitcoin causes deflation email. I've been blessed with not just one but two unpronounceable names: I pronounce them as E-lee-uh s bi-ZAH-nis.
Need to write a bio about me? Use the one here. Powered by WordPress and K2. Entries Feed and Comments Feed. Why Bitcoin or another deflationary currency will lead to an economic revolution Published on October 15, in cryptocurrency.
Meaning, inflation bitcoin causes deflation evil, but in a good kind of way so we encourage it if we can control it. But not with Bitcoin. Itai October 16, at 4: Elias October 18, at Whit October 18, at 6: Elias October 20, at Subscribe via Email Enter your email address to subscribe bitcoin causes deflation this blog and receive notifications of new posts by email.
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