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Comment by Quindecillion | Hacker News Reader

It's unfortunate that Bitcoin has become so mired in partisan politics.

For me its purpose is simple.

If my money is a representation of my time and effort, why should I accept the central banks' inflation "target" of even 2%, due to money printing? I don't see why anyone should be okay with that, particularly given that central banks rarely meet that target for long and more often than not overshoot by a significant amount.

It's insane to me that anyone should expect the purchasing power of their money to reduce, debasing their own time and effort. Why is that acceptable to people?

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Money is a leaky representation of your time and effort that we accept because it is better than isolated subsistence agriculture. It's purpose is to motivate you to devote time and effort to satisfying the needs and wants of other people, opinions differ on how well it accomplishes that. Mine is roughly it's not very good but I don't think bitcoin as it exists is likely an improvement.

I kind of suspect you're missing some idea about how your particular idea of money leaks but I can't tell from your comment what in particular you're missing. Maybe try thinking through the relationship between not consuming something now, and wanting to consume something in the future without using the idea of money?

> it is better than isolated subsistence agriculture.

Have you ever considered why banks look like temples?

Do you know the weight of a shekle?

Consider discovering more about these topics before you opine on "money".

> Maybe try thinking through the relationship between not consuming something now, and wanting to consume something in the future without using the idea of money?

Do you know about "time preference"? Do you appreciate how an inflationary currency promotes a shorter time preference? Can you see how that impacts the world by promoting rapid consumption?

Consider investigating how hard money impacts time preference.

> why should I accept the central banks' inflation "target" of even 2%, due to money printing?

If crypto were the currency of a small emerging economy, it would find company in the volatility of its peers. (It would still stand out in a class of its own.)

Most people in those currencies prefer steady +2%/year (worst case: eight for a few quarters) to -70% one year, +90% the next [1].

> Why is that acceptable to people?

Nobody financially literate experiences it. Real wages vary within a narrow band, and have increased over the decades [2]. If you're storing value over longer periods of time, you store it in appreciating forms of cash (e.g. Treasuries [3], interest-earning deposits) or securities (e.g. bonds, equities, et cetera).

The people who do get screwed by inflation, the poor, do because of commodity volatility. Turning around and making everything volatile by handing them a volatile currency is the opposite of helpful.

[1] https://www.upmyinterest.com/fund?tick=Bitcoin

[2] https://fred.stlouisfed.org/series/LES1252881600Q

[3] https://fred.stlouisfed.org/series/DLTIIT

> Why is that acceptable to people?

Because I can’t make 99% of my transactions with Bitcoin. Sure there’s a handful of vendors online that take BTC and a BTC ATM in the gas station in the shady part of town, but for majority of pitches, money is probably going to have to be converted to USD and go through a bank.

I can store the majority of my wealth in Bitcoin over the long term and know that my share of the total supply won't be significantly diluted, because it's disinflationary with a max supply hard cap.

This is not possible with fiat. You can't have any confidence how much fiat will be produced by central banks at the press of a button. Millions? Billions? Trillions? Who knows...

Whenever I need liquid cash to buy things I can quickly and easily convert to fiat at anytime, and gain the benefit of price appreciation over the long term (+4 years).

The only problem with that at the moment is capital gains tax, but I believe that will be addressed eventually.

People don't "accept" the reduction of their purchasing power. They live with it due to lack of better alternatives. Bitcoin doesn't adequately meet the criteria most people have for something to be considered money, namely portability and stability. All of the existing solutions that could help it meet the requisite criteria involve some kind of centralization, therefore it is not a better alternative.

It is insane to me that anyone should expect the purchasing power of their money to increase without spending any of their time or effort. Why is that acceptable to you?

The answer is this - a slightly inflationary currency offers the greatest good for the greatest number. It encourages people to _invest_ their money so it doesn't lose value.

Deflationary currencies encourage people to _hoard_ money as a viable strategy, and the more people hoard, the more valuable it becomes.

In a society where the most profitable and safe strategy is simply to hold your money and do nothing with it, no business ventures will start.

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So many questions people ask about crypto could be answered in a first year economics course - or simply by sitting down for a while and working out strategies with poker chips.

If people weren't so pugnacious about their complete lack of knowledge of economics, it would be rewarding to explain to people why things are how they are.

I hasten to add that as a socialist, I have a lot of issues with modern economics, but pretending that it's nonsense or that its mathematical models aren't useful is just silly.

> a slightly inflationary currency offers the greatest good for the greatest number. It encourages people to _invest_ their money so it doesn't lose value.

>Deflationary currencies encourage people to _hoard_ money as a viable strategy, and the more people hoard, the more valuable it becomes.

What's the primary source for this theory?

I hear it espoused a lot but it seems counter-intuitive. People still have to buy food, shelter and clothing in a deflationary environment.

Maybe if I read the larger arguments in works that established the idea I can get a better grasp on it.

>Deflationary currencies encourage people to _hoard_ money

People hoard things regardless. Inflationary currencies cause people to hoard property and we're watching the destruction from that unfold in real time in the US.

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