He favors extremely limited intervention to restore equilibrium in extremely out-of-kilter situiations, but otherwise he obviously favors a bottom-up, free market approach. That’s very different from deflation as a first principle ala Bitcoin.
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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...and I think we all know where that would lead to.
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Hint, it rhymes with Charred Pork. :D
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