There isn't a default opinion to be had for/against inflation/deflation when you talk Hayek, it all depends on context. He did argue against static inflation such as Keynes was for, and is the prevailing monetary policy of central banks today though.
I think BTC could be a big 5T+ Neo-Gold-like SoV. The strict Fixed-supply, however is unprecedented. I’m trying to wrap my head around if it could become a good MoE/UoA at huge size, hard to say if pp-volatility would be low enough to allow good UX as MoE/UoA. Thoughts?
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I think the reality at the moment is that most economies are so skewed pricing wise that gold, and other traditional SoV's have basically been made irrelevant. Volatility is simply too high.
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do you have a view whether a fixed-supply currency like Bitcoin could be used as MoE/UoA? Some say the eventual deflation is fine, others say its unworkable...
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Would first have to assume that the predominant currencies are no longer volatile against Bitcoin, eg. if we get a stable coin like the Solid Hayek described, or if Bitcoin itself is the predominant accounting currency. And this is very unlikely given you pay tax in fiat.
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1) But what if State’s accept Bitcoin for tax? Wyoming already does etc. 2) If Bitcoin is used for accounting, do you think that enables lower volatility enough to be a good MoE/UoA?
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1: Doesn't mean Bitcoin is the accounting currency, which makes it unpredictable how much tax you need to pay. 2: When I say accounting currency I mean tax accounting.
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If governments start allowing you to choose your own accounting currency, then it would be possible I suppose. But volatility would still be a problem for demand, since your customers have to acquire BTC to pay you. Just moves the volatility a step away, doesn't resolve it.
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My primary concern is that if, hypothetically the world adopts Bitcoin as their money, at equilibrium, BTC purchasing power would grow at 3-4% per year... wouldn’t that decrease risk-taking / investments and risk a deflationary spiral?
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I think volatility will prevent that from happening, but yeah, if the world adopted a statically deflationary currency, it would probably lead to a contraction of credit supply. I think it would also lead to an immense social pressure to increase issuance though...
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