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This is a good answer, so many false assumptions in our economic thinking... The money manipulation is ultimately a political beast, as governments keep kicking the can down the road. It's not sustainable, but I fear the chaos that results is not going to make a transition to bitcoin easy or obvious for most.

We need better definitions... Wealth is only roughly correlated to things like money, it's actually created with new knowledge, and has no potential limit. "Wealth is the repertoire of physical transformations that one is capable of causing" - David Deutsch (https://www.exkn.io/optimism). This kind of thinking lies at the intersection of Austrian Economics and Critical Rationalism.

I'm skeptically hopeful knowledge creation (technological innovation) may change things fast enough that the money manipulation becomes irrelevant...

⚡️🌱🌙 2y ago

You can sustain a fiat system so long as your nominal tax revenue always grows faster than your nominal debt servicing cost.

If your nominal debt servicing cost is growing faster than your nominal tax revenue then you in a Malthusian catastrophe and your currency will eventually be debased to zero.

We currently have high inflation by design because it reduces the debt/GDP ratio and eases the burden of servicing the debt.

This isn’t an easy thing to do, because it means bondholders are losing purchasing power whilst it goes on. If they sell off it forces you to print more as buyer of last resort and you can actually blow yourself up.

So there’s a fine line, but Fed are trying to walk it. What else are they to do?

Meanwhile, commodities will inflate and you don’t want to be stuck in fiat denominated instruments during these inflationary debt/GDP realignments.

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Jeff Booth 2y ago

Combine this with an international fiat monetary standard where all parties are doing the same thing and you realize why the transition of the system will come from outside the system. #Bitcoin