Their argument presumes that you people only purchase things because their money is losing value. It is false. And It borders on insanity people believe it WHILE at the same time using a phone that gets better every year, busing a computer or TV, eating food, etc.
Discussion
I give them the same argument. 🤔
However it seems they believe that growth is what makes an economy healthy. The argument is that Apple, for instance, could not be successful without having prices rising. While it’s production efficiencies are increasing, it cannot repay its debts if it reduces prices. Apple has to have prices rise because it has to service its debts. The argument continues. How can Apple invest in greater amounts of capital equipment without borrowing money first? It would need debt for that. Then later, sales would provide the money to pay off the debt. My answer to that is Apple would have to save enough money to invest in the capital equipment first. The response to that is “fine for Apple… that have lots of money but how would a startup get going without debt? …and if the value of money keeps going up, why start a new business if the return on savings incentivizes just hodling?”
There would still be debt. You could still take out loans. The goal would be to provide so much value with a new product that you make enough to cover your debt OR a company that figured out a way to reduce the cost of a product could borrow to start up and undercut the competition, therefore, capturing all that value to pay back to the lender.
Lending, borrowing, paying off, and defaulting all existed before the current system. To take Jeff's argument, people are so ingrained in this system and the wacky numbers that it's hard to see the other system.
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...
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.
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