Without central planners manipulating cost of capital and relentlessly expanding base money supply, humanity would be 100 years ahead.
End the state. End banks. End central planning.
Just #Bitcoin
Discussion
Have you ever heard George gammons argument that humans will create money (credit) in tight money situations. And its what allows for "maximum global economic growth"
I’ve listened to George and I have heard that theory. I don’t agree.
In a situation where base money CAN be created, I agree. The temptation in crisis is knee jerk and very much a “bail out our buddies” reaction. But if those bail out didn’t come, things would settle and move forward. The entities that made bad decisions flushed out. The new ones likely not to make the same mistakes again and probably would make improvements to ops / goods / services etc.
Also, if cost of capital is artificially low, it allows a lot of fluffy junk to exist in the economy. Creating systemic weaknesses. I think a market setting the proper cost of capital (and no ability to create more base money as a backdrop) would reduce crisis’ ten fold. It would be a more efficient and serious economy. You play the game different if you only have one life…
I tend to agree. I think his argument about money being created is that broad money is created by lending and that’ll happen even on a hard money standard. But yes I agree over time it won’t be as sustainable
I like your “you play the game different” very true
Yeah, typically in recessions credit dries up as lenders become more risk averse. But I think if credit is needed and there are productive uses for it’ll be extended.
Under a Bitcoin standard I think cost of capital would be waaaay higher. Which in the end markets would set the rate but I think if cost of capital was higher then it would flush out a ton of the crap from economies and leave only the best, most productive borrowers as legitimate candidates for creditors. I think it would be a huge net positive for society.
Yeah I think it would totally change the current vc model. Flood small companies with so much cash they can scale up fast to exit fast. Its probably asinine for most of the companies and would be more of a self funding, build to last type of businesses would become a lot more attractive as the risks would be much lower.