I feel sick. If I'm comprehending this well enough, this whole thread deserves to be in all caps.
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If that happened, it could make Bitcoin holders feel wealthier, which would make consumption go up. That is helpful in a recession.
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Here is the sense in which we don't have a haircut: the rule we recommend says that paper currency should always earn either a zero return or the same return as Treasury bills. If inflation is at least zero, I can't see the Treasury bill rate ever going below -9% over a year.
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How would you enforce that? People would hold cash or convert to gold or crypto which would undermine those policies.
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You need to read: https://blog.supplysideliberal.com/emoney A lot of our paper is about how to deal with the paper currency problem. Gold and crypto are not a problem because their price can go up enough that flight to gold or crypto doesn't inhibit investment.
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You might also ask, what about flight to foreign assets. Here, the increase in the price of foreign assets is a depreciation of the exchange rate that stimulates net exports. And if the whole world goes to lower rates, there is no depreciation, but also no foreign asset to flee 2
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I don't understand how flight to foreign assets is a threat to your proposed policy but capital flight to gold or BTC isn't.
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Flight to foreign assets *isn't* a threat to our policy. Neither is flight to gold or BTC.
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No asset that can fluctuate in its nominal price is a threat to our policy.
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Only problem is when prices are set in something that inherently has a 0 rate of ROR in terms of itself. Currently, paper currency is somewhat like that, but that can be fixed. If prices were set in something else that inherently had a 0 return in terms of itself that's a problem
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