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Comment by Empact | Hacker News Reader

Is it really so difficult to imagine a world where people spent less conspicuously, and invested more prudently?

In a sound currency world, interest rates are set by the relative availability of funds for investment - that is, they are counter-cyclically market-determined: if there is little investment, rates will be low, if the economy is booming, rates will naturally rise.

Secondly, the rate of deflation is determined by the rate of increase in the economy: if the economy is shrinking over time, there is no deflationary incentive to hold - so here again the currency is counter-cyclical, discouraging rapid growth while allowing for measured growth.

Is that sand? Or sanity?

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It's 'definitely not sane' to fix the amount of currency in circulation, either fiat or gold or crypto, arbitrarily.

It would be like saying 'we're going to fix the amount of roads we have' and 'people will be forced to use the roads more sensibly!'.

The only reason for 'fixing' currency would be to prevent bad actors from running the printing press. Now - this is actually a very real problem historically - however, it's a pretty crude solution.

The smart thing to do is manage your currency smartly - literally like everything else in civilization.

You need good Public Health Policy, you need good Monetary Policy.

Infinitely divisible money is an unit with unlimited ability to scale to the circumstances - if more is needed, simply add another zero. You err in comparing this to roads, which are necessarily in proportion to the amount of traffic over them. Money needs only to be able to represent value, and the relative value of different things.

Good monetary policy may be practicable by angels or saints, but not by men, who stand at the gates of unimaginable wealth that emanates from the printing press. Literal trillions of dollars - who can even conceive of that value, let alone decline the exercise thereof? Better to take it out of our hands.

No, this is not true.

If there was no elasticity in the monetary supply, then in both 2009 and 2021 the entire US economy would have collapsed probably taking down the world with in 2008, and most nations would have been wiped out in 2021 as well.

Also, most major currencies are managed well enough.

If you don't like your local fiat units, then don't hold on to them. Exchange them for anything else you value more and use local currency on as that - currency. Currency was never meant to be a long term store of value.

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