Replying to Avatar MAHDOOD

Let’s say I created my own currency called Pepecoin and controlled the printer for this currency. I print 100 Pepecoins and loan it to you at 3% interest. I expect you to pay me back 103 Pepecoins next year. I will only accept payment in Pepecoins.

A year has passed and payment is due. You were unable to magically create another 3 Pepecoins out of thin air because only I can print them. So you are in debt. Sounds like you need another loan. 🔁

Is this not how fiat works at the simplest level? #asknostr
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volition 1y ago

If you loaned the Pepecoin at 0%, but printed another 100 Pepecoins and loaned them elsewhere, the original borrower would need to repay 100 Pepecoins, that have now halved in value.

Anyone who sold assets to the original borrower for Pepecoin now have an ‘asset’ worth half the value and could not buy back what they sold, for the same number of Pepecoin.

The value of their Pepecoin has been ‘stolen’ by you. The beneficiaries are those that held assets other than Pepecoin when new ones were printed, as well as yourself.

Under fiat that is printed irresponsibly, it is not a bad idea to borrow, buy property, and wait for inflation to lower the loan for you whilst your property value ‘goes to the moon’.

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MAHDOOD 1y ago

That is when it gets more complicated but yes that is true. I was just trying to find the simplest way to explain it to a normie without frying their brains 😂