Nostr Web Client

I suggested that you wouldn't be able to just go to the bank and take out a 100 BTC loan with 10% interest and full return of principle, to build a new apartment building or whatnot, but I'm apparently the only one who thinks that.

Dr. Fernando Morales 1y ago

We don't know how a hyperbitcoinized world looks like, so it's just theories right now. Nonetheless, humanity has seen a steady long term decline in interest rates over the past 5,000 years, interrupted by the occasional calamities like war and natural disasters. This all stopped in the 20th century with fiat money.

Having said this, there's a possibility the trend could return and send interest rates to 0% or near it. How? Because money always has a carrying cost (bank fees for example or it being stolen) that is always larger than 0. So if holding money has a cost, then not lending money has a nonzero cost, meaning people would be offering to lend money at lower and lower rates.

Saifedean Ammous really goes into this on chapter 14 of his book, Principles of Economics, and he seems to be the only Austrian economist out there talking about this.

Reply to this note

Please Login to reply.

Discussion

Laeserin 1y ago

It sounds like we're doing the whole Bitcoin thing for no reason because it'll just be the same as now, but with sats.

Dr. Fernando Morales 1y ago

Minus all your wealth/work being stolen from you and being unable to save for buying a house or affording good quality food.

Laeserin 1y ago

I thought we were just going to have Bitcoin mortgages?

Dr. Fernando Morales 1y ago

If there's a demand for something, it will exist, but with a hard money you wouldn't need to forcibly get a mortgage just to buy your first house or plot of land. There's currently an excessive use of real estate for trying to preserve purchasing power over time, which inflates housing prices, couple that with money printing and government regulation on housing projects and it all creates a massive bubble in real estate.

It's the younger people who suffer here, since they don't come into the work force earning much, they then have to compete in the housing market (and inflation) with all the older/wealthier people trying to preserve their purchasing power. Bitcoin would suck much of the premium out of real estate, since bitcoin is a better asset long term; it doesn't inflate like fiat and hopefully technological progress will continue to bring down housing costs. The only major factor negatively influencing housing prices, in my opinion, would be government.