some intuition around how virtuous inflation works if everyone only has 100 dollar bills then activity is limited to “big” stuff. inflation floods with 1 dollar bills so now “small” activities can happen
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e.g. u can’t do things like shine shoes or cut lawns or sell fruit by a stand if no one can make change inflation encourage these “small” economic activities
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e.g my fruit stand has a rate of return of 5% instead of say 50% for a hedge fund. the only way a bank is going support my fruit stand if is money is “free”. if it’s tight the bank will go “no, fuck your fruit stand”
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it’s similar to how casinos have different areas with different bet sizes. it needs to create different zones to cater to different sizes of economic flow and that can’t happen if the lowest chip size is 100 dollars
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so in essence inflation is saying “STOP dumping money into Project Phoenix and just solve the SMALLEST customer ticket’s problem omg plz!!!”
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basically a sovereign state equivalent of peterson yelling “for god’s sake just CLEAN YOUR ROOM instead of pretending to be the next napolean musk in your fantasy”
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in practice, just like peterson’s intentions, the result is opposite the loose money still chases “big” bet stuff like crypto and stock market & banks r being tight w money giving to established corps instead of risky fruit stands
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plus money is being saved because of all the existential terror the net effect is that there is still no small chip activity, just more focus on big chip activity
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so instead of bootstrapping the economy by starting with small economic activity and building it up bigly, everyone saves up for big chips and yolos it hoping daddy musk or the gme reddit army will save everyone with an army of shiba inus at the break of dawn
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obviously necessities like gas and wood and stuff r still needed so when supply drops and ppl need to fight over it like its black friday they suddenly unleash their reserves and bid up the price
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that is of course if it hasn’t been wiped out already by random doges falling down from a safe moon
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End of conversation
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