Europeans love fiat, tho. It sustains their World Welfare Agency.
Discussion
I’ve been thinking about how to justify / steel-man fiat money. After all, the hard money mindset seems more akin to a thought experiment rather than something humanity will witness anytime soon.
So, here goes:
The government tells you via its central bank that the inflation target is 2%. This is good: transparency.
This means to be a winner you need to increase your income by more than 2% to increase your standard of living over time. This is good: people need targets.
If you can’t be bothered to beat inflation then you can rely on the state and claim welfare. This is good: you get to share some of the spoils of the winners who pay more tax because they beat the inflation target. (Self-respect doesn’t pay the bills. Also, welfare payments is a cheaper form of control than imprisonment.) This is also good for democracy: you will vote for the party which will do the least harm to your welfare payments. So, in effect, not only are you voting and approving for welfare but also the overall 2% inflation target.
2% sounds so very very reasonable.
There’s no reason for inflation though. It’s more complex than this, but I see it simply that things should get less expensive over time since tech improves, efficiency improves, etc…
I wouldn’t mind making _less_ if costs of things went down proportionately. It will probably never happen though - at least in my lifetime.
I just can’t square the circle that fiat is ever good (no matter how hard we try to steel man it).
If you want to watch something absolutely insane, look up “Finding the Money” on YouTube; the MMT’ers documentary on money. It hurts my head thinking about it.
Yeah, deflation is actually the natural state, due to technological advancement and declining demographics.
Deflation also comes from division of labor efficiencies. Technological advancement is related but not required.