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Comment by berberous | Hacker News Reader

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Many economies have collapsed or people have been severely harmed from runaway inflation. Even now in the US, the wealthy aren’t terribly affected by inflation, especially with home and stock prices rising more than enough to offset them, while the poor are increasingly struggling with currently no end in sight.

Perhaps a Bitcoin w/ 2% inflation would have been better than a deflationary one, but I still question whether the average person in the average country is better off with the risk that their government mismanages target inflation than with an algorithmic deflationary Bitcoin.

I also question whether Bitcoin being deflationary is really a bad thing when it’s also a store of wealth and not the only means of exchange in a country.

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> Many economies have collapsed or people have been severely harmed from runaway inflation

And the USA's economy was ruined in the 1930s by runaway deflation.

The poor don't like inflation _OR_ deflation. Both suck. The rich has the ability to move money around to maximize their gains in any situation, so the rich aren't really harmed by either.

Deflation means I have no motivation to spend today for a small car, when I know I can get an apartment for this money in a few years.

Sounds good doesent it, saving is good.

But it also means the company selling that small car wont sell that car, meaning they wont produce as many, meaning they wont employ as many people.

Essentially demand would go down to only essentials, supply would follow, unemployment would skyrocket, total production would plummet.

You dont want the Japan example, then how about The Great Depression.

Inflation on the other hand encourages spending, increases total economic output and encourages investment.

A deflationary store of value is good, and an inflationary currency is good. The problem is that crypto is trying to be both, so its failing at both.

> Many economies have collapsed or people have been severely harmed from runaway inflation.

False dichotomy. The last 50 years of monetary policy in developed countries show that you can have moderate inflation (yes, sometimes a bit too much, like now, but moderate overall) without hyperinflation.

Do you think 50 years is all that long in the historical context?

America showed that you could have hundreds of years of stable democracy until a simple combination of cable news, Twitter and a narcissistic president almost led to a coup.

The Roman republic was stable for hundreds of years until it collapsed.

The Turkish lira has lost more than 97 per cent of its value against the US dollar since January 2021.

I agree with you that the 1950-2010 world order and U.S. monetary system was better than Bitcoin. Where we disagree I think, is with our confidence in the stability of human institutions and the likelihood that the world necessarily remains stable in that world order for the next 1,000.

The question is not whether it's possible for a central bank to maintain a policy that leads to only moderate inflation, but whether your central bank will maintain such a policy. You seem to think that being a "developed" country will guarantee that. Like the highly developed country of Germany in the 1920s perhaps?

>but I still question whether the average person in the average country is better off with the risk that their government mismanages target inflation

In recent history (say the past 50 years), how many countries have experienced serious inflation problems that were caused by orthodox, well-founded attempts to manage target inflation?

As far as I know, the answer is none. If you have a country where the leadership (usually dictatorial, autocratic, one-party or some variation thereon) has adopted policies that are already leading to economic disaster, then hyperinflation is something you tend to get along with - it's a symptom, not a cause.

Most people who bought Bitcoin within the last year are underwater with their investment. Some have lost 45%. They'd have done better to keep cash and take the 8% inflation hit.

How is that a store of wealth?

>especially with [...] stock prices rising

Huh? What? Dow, Nasdaq and S&P all down over the past year. Is there a sector performing well atm?

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