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Comment by BenoitEssiambre | Hacker News Reader

If bitcoins are to be used as a widespread stable currency, it is crucial that old coin holders get "diluted", that is that intrinsically worthless stores of value do not retain value at a real risk adjusted rate above what private markets can provide.

Otherwise, it basically blocks net aggregate marginal investment. It transforms people's savings from being tied to real physical things that are going to create value in the future when they want to redeem those savings to an accumulation of idle bits that won't be able to produce anything.

This is also the reason too low inflation in the eurozone for example, is so destructive.

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The problem with fiat money is that "inflation" is not visible. ECB, Fed, BoE, BoJ are all hyper-inflating and it will end very badly. Look at the balance sheets and you'll see the hockey stick growth. Has little to do with prices, but more with debt stockpiling.

Bitcoin is volatile, but its extremely useful as money (if you live in Argentina or Zimbabwe, etc.). Descendants types will be far superior to government debt as money. Deflation basically means price-appreciation versus other assets. Inflation as its currently happening is fraudulent accounting on a unprecedented scale. The blockchain by contrast offers honest computer based accounting.

The problem with these central banks is that they have kept price inflation too low for the investment markets to clear and money has been accumulating idle instead of being invested.

Because they were late in their money printing, velocity dropped and they had to print much more getting much less effect per unit and yes did put the world at risk of future spike of inflation if this money starts moving.

Sufficient high, well controlled, early enough inflation prevents velocity from dropping, prevents the investment and labor markets from jamming, prevents from having to print too much, prevents large stockpiles of idle money from accumulating and prevents later difficult to control spikes in inflation.

> * its extremely useful as money (if you live in Argentina or Zimbabwe, etc.)*

You mean, it could be useful as money in theory, but in practice it is not. It is not practical to meet one's needs transacting in bitcoin even in affluent regions where computers, internet access and general computer literacy are ubiquitous, so those economically strained regions where citizens are struggling just to meet their basics needs are places where bitcoin is a complete non-starter; it is not at all viable.

>This is also the reason too low inflation in the eurozone for example, is so destructive.

There is no evidence whatsoever that "too low inflation in the eurozone is so destructive". You're mistaking dogma with fact.

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