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Comment by VikingCoder | Hacker News Reader

"since at a certain point it's guaranteed there's no inflation."

I'm sorry, but this is a statement you cannot make.

To make this claim, it would need to be true that the cost, in Bitcoins, of goods and services in the real world, would never rise.

There is no basis to believe this is true.

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"The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy." -L. Von Mises

It is worth noting that in (the crazy cult of) Austrian economics, inflation is defined as increasing the money supply. This sometimes makes discussions with them difficult, since for rest of the world (all serious economists) inflation means increasing prices

This!

The Austrians are 'crazy' when they inexorably link inflation to the supply of money growing faster than the demand for money, but when someone quotes Friedman on inflation, to wit: "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output," heads nod, and no one calls anyone crazy.

The difference between the two views is little more than semantics.

You don't understand how Austrians define inflation. If they had said it's "the supply of money growing faster than the demand for money" we wouldn't have an argument (oh, we would, but not over the definition of inflation) They claim it is the increase in money supply that is inflation. They don't care about prices. Also - Friedman (with his famous VM = PY ) obviously acknowledged the importance of demand for money affecting prices)

Both the Austrians and Friedman overestimated the role monetary policy can play. We've had a huge increase in the monetary base, but no price inflation since 2008. Austrians and to some extent Chicago-economists have predicted runaway inflation, and ended up with egg on their faces. But self criticism is of course nowhere to be seen as usual.

In that statement, L. Von Mises is presuming some things that are not true of BitCoin. In particular, the BitCoin creator has essentially made it impossible for anybody to change the number of BitCoins in circulation. Thus while it may be true that no governmental entity or currency controller will choose to inflate the currency through some activity, it is not true that the currency will therefore not vary in value over time when compared to some other things, and it isn't unfair to say that if I need more BitCoins to buy something now than I did last year, the currency has inflated, and vice versa. It may not be precisely the same as fiat currency inflation in every detail, but it's broadly the same, but it won't be the result of changing policy. (Arguably one could call it the result of an unchanging policy set at the beginning.)

In the sense that the quantity is not controlled by a government, BitCoin can be compared to gold. And the value of gold is highly unstable.

He meant the inflation of the _money supply_, not the inflation of the price of goods.

He is actually suggesting the opposite about the price of goods -- that they will deflate.

You absolutely can make the statement that the money supply of Bitcoin will not inflate in the long run, by the nature of their design.

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