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Comment by coinward | Hacker News Reader

you ask for a benefit. a benefit of Bitcoin is zero unexpected inflation. Zero unexpected inflation means the cantillon effect is reduced with adoption of Bitcoin as money, driving out the systems behind central bank caused wealth inequality

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Seems like bitcoin experienced a whole lot of unexpected inflation in early March this year. And fall of last year. And November 2018. And January 2018. And... well, you get the picture.

Bitcoin guarantees the supply remains fixed. But inflation is also a function of demand, and that is well outside its control.

Indeed it's the exact opposite: as the supply of the dollar is a function of its demand [at an interest rate which can be varied if an inflation target is expected to be missed] its inflation is almost entirely predictable. cf BTC, which predicts zero inflation but has experienced more diminution in purchasing power since late 2018 than the dollar has seen in decades.

The supply of dollars is a function of the monetary policy. Are you suggesting you can predict what M2 will be in 5 years, or even 6 months? Please share your expectation.

I can confidently predict that M2 will be whatever it needs to be to keep PCE inflation around the 2% mark.

wake up. real inflation in the US has been closer to 8%. Look at real estate, equities, gold. you can't see it coming, all fiat ends with hyperinflation

What inflation in early march are you referring to? From my view the fixed supply growth and production from new blocks went right on schedule. Nothing unexpected

The price in bitcoin of a basket of actual consumable goods went up significantly (ie, BTC's dollar value tanked). How is that not inflation?

Or are you claiming that was not "unpredictable"?

You are pointing to price volatility. The comment is talking about inflation. Price discovery occurs in all markets with varying degrees of volatility. Speculative bubbles, crashes, etc result occur when new information causes price discovery. Its an ongoing process in an ever-changing world. Inflation is specifically price increases from change in the amount of money in a system. The delta in money supply for Bitcoin is entirely predictable and that was the claim

> Inflation is specifically price increases from change in the amount of money in a system.

No it isn't. Inflation is a general rise in prices in an economy, period, of which change in the amount of money in circulation is only one possible cause [it can also circulate faster or slower due to change in demand, supply constraints, import prices etc].

You have confused monetary inflation and price inflation. I'm talking about monetary inflation as per https://en.wikipedia.org/wiki/Monetary_inflation

No, people that fixate on low rates of money supply growth whilst their asset halves in value over a very short time period are the ones confusing monetary and price inflation. Price inflation matters; it's what your money pays for in future [and what economists refer to when they say 'inflation]. 'Monetary inflation' matters only inasmuch as it influences price inflation, which turns out to be surprisingly little.

The original thread was about benefits. Fixing the money supply growth rate isn't a benefit if your asset's purchasing power drops over 60% in two and a half years. And money supply growing quite considerably turns out not to be a drawback when prices grow predictably and slowly and the system allows for the money supply to contract again if prices overheat.

"Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation." - Ludwig von Mises

Your 60% drop claim is rather vapid considering I could pull any other arbitrary time horizon and give you a massive increase in purchasing power.

It's a cute quote, but there's a reason modern economists don't conflate labour inputs and value or monetary expansion and price inflation. It's actually much more useful not to use the same words for phenomena when you're studying the degree to which they're related. And more useful to play semantic games when the data unambiguously refutes the argument that fixing one value necessarily holds the other constant, of course... (Getting the term 'inflation' associated primarily with price rises was the one battle Quantity Theorists won.)

You are welcome to prefer to use 'inflation' as it was used 100 years ago instead of as it is used now, but 'awful' and 'silly' were compliments once....

> Your 60% drop claim is rather vapid considering I could pull any other arbitrary time horizon and give you a massive increase in purchasing power.

No, what is vapid is the pretence that an asset has the advantage of 'zero unexpected inflation' when it's lost purchasing power at a rate which would be termed hyperinflation were it a national currency. It's a bit like defending the validity of immortality elixirs by arguing that over other time frames, the patient survived.

Calling early price discovery leg down for Bitcoin hyperinflation is dishonest at best. Even ironic as hyperinflation occurs when there is a continuing rapid increase in money supply.

If that was hyperinflation, what would you call Bitcoin's 150% leg up between December 2018 and today?

What is dishonest is to argue you have solved the problem of people being impoverished by the unpredictable [actually usually very predictable] downward price movement of the dollar by dismissing all Bitcoin's much larger and much less predictable downward price swings as 'early price discovery'.

I don't think I ever claimed to have solved any problem, just provided context for Bitcoin as a solution to the Cantillon Effect which is objectively a driving force for wealth inequality.

"In theoretical investigation there is only one meaning that can rationally be attached to the expression Inflation: an increase in the quantity of money (in the broader sense of the term, so as to include fiduciary media as well), that is not offset by a corresponding increase in the need for money (again in the broader sense of the term), so that a fall in the objective exchange-value of money must occur." - Also your guy

Even Mises acknowledges there are two parts to the system and that it's, in the end, about relative pace. If that is so, the phenomenon must still be able to occur regardless of how frozen your supply, just off the second variable.

"Our fringe school likes to use two common terms opposite from how everyone else does, hence you are wrong" isn't an actual argument, by the way.

This isn't opposite, its closer to a root cause than an opposite term. Anyway, supply and demand govern all prices, I wasn't arguing against such basic economic tenants. I'm just pointing to what inflation is and that is an expansion of money supply.

Not opposite term, opposite usage.

  char* inflation = austrian? monetary: price

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