Following people is really expensive. 😱 I need to carefull…

Look at content.
Not reputation.
That’s my advice.
We all are different.
In the best possible
Way👌🏽🙌🏽✌🏼🙏🏽

Follow me. I like burgers, sometimes I talk with full mouth.
Handling burgers with hard fork is better than with soft fork.

Followed! 😀👍

What are your interests?

What are you looking to talk about on Twetch?

Anything really. Science, news, economy, daily life stuff.

That'd be nice if Twetch had categories or tags we can assign to our posts. So people could filter or join groups of discussion.

Because I can see everything is kinda mixed rn, like on Twitter.

I agree. It's early days yet, though.

I see you've noticed a vast majority of the discussion is about BSV and Craig Wright. This, too, will change in time.

What would you like to start with to add some variety in topics?

I see your field is economics.

I have always wondered... Do you think that both inflation-based and deflation-based economic models are sustainable models for a global currency? Or is one better than the other?

I always wondered if long-term effect a deflationary currency could have on the economy long-term. People tend to hold on to savings instead of spending when prices are falling. Also, how would that work with an always growing human population?

Getting to the good stuff right away, I see :)

Let's start with a clarification... What makes a currency inflationary or deflationary? Is it just whether prices rise or fall? How does one measure that? As an aggregate? Lots of pitfalls there.

I tend to think of it more in terms of the supply of the currency, because then the currency becomes a stable or unstable abstraction from the real supply/demand over all other goods.

If a currency has a stable supply, prices may either rise or fall, all dependent on market conditions, and all independently from the rest of the economy.

In fact, I believe a stable supply currency allows the pricing mechanism to operate best.

Yes, in terms of supply is what I mean. 🙂👍

If prices tend to fall in a stable currency market, that indicates either an increase in production, or a decrease in demand.

If they tend to rise, it indicates either a decrease in production, or an increase in demand.

If people choose to spend more or less due to the apparent movements of prices in such a market, that is merely their values being represented in market actions.

If we assume the supply stable. The human population grows. It means that the new generation of humans will have less to spend. Meaning the price will have to fall in order for them to afford life. And if price falls, old generations will tend to hold. No?

The "deflation is bad" line has always amused me because decreases in prices increase purchasing power, meaning people are wealthier and more likely to spend. Subjective marginal utility. Forgetting the basics isn't conducive to sound monetary theory.

But I'll stop this rant here for now and take a look at your responses through the thread!

"decreases in prices increase purchasing power, meaning people are wealthier and more likely to spend"

Ah! That's a good argument. 🙂

What are the new people producing? Typically, an increase in population is followed in ~20 years by an increase in productivity, and population increases are typically a smooth curve over time. It's actually not as much of a shock as you'd expect.

What typically follows from population increases are complex and dependent on specific markets in the economy (aggregations are horribly bad tools for sound analysis,) but the short version is higher velocity and lower price levels over time.

Very interesting. Do you know if throughout history a deflationary currency has ever been attempted?

I consider Bitcoin as deflationary in terms of available supply. (knowing there is a hard cap, and coins will eventually get lost/locked over time)

Remember, MV = PQ
M = Money Supply (nominal units)
V = Velocity (how often are units spent on average)
P = Price level (aggregated)
Q = Quantity of goods and services bought/sold (buying/selling is a single event, not different events.)

So, M remains the same.

Q increases, too, but P and Q are together results of Supply/Demand... Short run, Q does not increase, P does. Long run, Q increases (more production = more supply,) so P falls again.

V increases as more sale events occur, and P falls relative to initial P. This is because all adjustments tend not to happen in a single variable, but as a mix in both available variables.

Any long term changes in M or Q must change V or P, or both.

To think of it differently, M and Q are the actual markets, and V and P are the resulting monetary exchange factors... How often a unit is exchanged, and at what relative value.

But MV = PQ is a simplification itself...

I agree.

My main concern would be that the distribution of money will likely be harder, in my opinion, maybe even widening gap between rich and poor. Inflation can be seen as a global taxation and redistribution of wealth from past to future generations.

Sorry, I mean redistribution of purchasing power. Not wealth.

Here's a related thread from a while ago now:
https://twetch.app/t/23a3b69b2e85ea08f8b6aa4140aeaf1414b2aebd1a964ce8e9a3a53eb952bc6c

And this, too:
https://twetch.app/t/fa1fdba30c60624dd6047e227e40875c60f4cbf8897815ab7363f2fb407f326c

Practically speaking, Bitcoin isn't deflationary. It's stable.

I don't know of a stable supply currency. Everything has been subject to things like mining and deterioration of the physical goods, as well as money printing of some sort or another.

Are purchasing power and wealth different? :) (I think they are, but most don't understand the issues.)

I'm not concerned with distributions of wealth. If the pie is big enough, it's a moot point.

I was about to ask about fixing M in the equation. It seems you answered my question in the old thread. Really interesting analysis! Thank you.

Any literature you would recommend to learn more about this specific topic?

We might soon enter a new era then. 🙂

That will be very interesting to see how a global economy based on a stable supply currency gets shaped.

I'd actually recommend going in a roundabout way to actually understand it... Capital theory. For that, Capital and its Structure by Ludwig Lachmann is an underappreciated treasure.

Absolutely. I think there is a lot to look forward to with a world running on Bitcoin.