You are at this point just confusing your readers with bad propaganda by claiming that a phenomenon roughly under the control of the debtor that can arbitrarily reduce the value of the debt is not a credit risk.
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Indeed, inflation risk, even when attempts are made to hedge it with e.g. an index, comes with the risk that inflation will be measured inaccurately. Such measurement faces fundamental problems such as the subjectivity of preferences.
The reason is propaganda: to mislead people into ignoring the high risks involved in government debt.
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Putting in indexing or interest clauses in non-financial contracts is usually too high transaction cost & error-prone. And many people, especially the most vulnerable, don't hold their $$ in interest-bearing securities, they just hold dollars.
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(also, the vulnerable are often debtors, so there are tradeoffs between what inflation might do to in-the-proverbial mattress savings and what it does to the burden of previously contracted debt.)
End of conversation
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i am perfectly content to substitute to word “default” for “credit” in that slide. it doesn’t affect the claim, which is that without bearing meaningful risk of default, despite misleading claims to the contrary, liquid USD sovereign assets have held their value well. i’m sorry
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if you imagine the choice of “credit” rather than “default” was driven by some nefarious propagandistic impulse. it was not, it was driven by the conventional description of own-currency sovereign assets as credit-risk-free. and that is the conventional description, by people who
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actually trade sovereigns and are in no way naive to the valuation and inflation risks that they bear.
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I feel like I should link the original slide deck into this exchange, so that readers can judge for themselves whether inflation/valuation risk was unfairly omitted or USD was used unfairly to stand-in for all fiat currencies. http://www.interfluidity.com/uploads/2017/10/Fiat-Is-Effective-Minitalk-light-edit-to-share.pdf …
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I wasn't describing your presentation, I was describing use of the slide by another person in the above context.
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speaking personally, i like you, i hope the feeling is mutual, so i am pleased (if) you don’t think of me as a crass propagandist. this talk was intended to be provocative to what i thought would be a bitcoin-sympathetic audience, sure. but it was intended to present a fair case.
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i’m also presently devoting much of my professional life to crypto (building on it, not criticizing it). i don’t think there are any knee-jerk haters here.
End of conversation
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