Yes. But crypto allowing for controled inflation that is needed for borrowing at reasonable interest rate has not emerged yet.https://twitter.com/MustStopMurad/status/993906998898036736 …
so it wouldn’t jump by a “sudden 20%”, wouldn’t be a “roughly predictable 3%” which would be factored into the loans/credit?
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1) I'm not sure if I understand the questions. Few more ideas: a) Final equilibrium can be a dynamic one (oscillating between complete dominance and some competition. Competing inflationary currency would be self defeating as its rise would diminish BTC's deflation.
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2) b) 3% deflation makes borrowing expensive, definitely encouraging other forms of money. c) You can model volatility, there is enough data and the general fact that volatility decreases with rising number of users is already obvious.
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3) So sudden 20% swings are very unlikely in cca 5 years (similarly to exchange rates of big stable currencies).
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3% appreciation of currency’s value per year doesn’t prevent lending
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If you have alternatives than it prevents landing. 3% appreciation compared to 2% inflation makes 5% difference on real interest rate.
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People will still lend for things which they think can beat 3%/year riskless growth
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I have spent a lot of time figuring how to have three kinds of money (I. BTC = best store of value + transaction money II. Fiat like inflationary money/crypto for cheap lending III. Hyperinflation money used by governments instead of taxes) working together. Not easy.
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And yes, people can live and lend in 3% deflation, gold standard worked well with 1% deflation. But stable low inflation really is best for growth and lending and the question is if we can have money that work that way long term or is deflationary BTC our best bet.
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What do you think is single best reason why low stable inflation is better than fixed-supply?
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