Re:Bitcoin has crossed $6,000 USD for the first time
by sbenitoj on Friday October 20, 2017 @09:13PM
(#15520136)
Well, the Austrian Business Cycle Theory [0] has shown that the continuous, never ending increase in the money supply is actually responsible for greatly exacerbating the boom and bust cycle, so there are in fact many losers of this (people who invested money thinking it was safe when in reality it was a highly speculative market, eg real estate in 2007, internet stocks in 2001, etc).
Increasing the money supply ultimately leads to a decrease in purchasing power, which is stealing from savers.
If the market (individuals cooperating with one another voluntarily) valued a continuously inflated currency, then fiat currency will win and crypto will fail. I suspect the market values a fixed or slow-increase-in-the-money-supply version of money like gold as they demonstrated with their money preferences before governments used coercion to stop it, one of the biggest reasons crypto is so popular is because people can’t use gold as money, but governments can’t effectively stop people from using crypto.
[0] https://en.m.wikipedia.org/wiki/Austrian_business_cycle_theo...
There are certainly some situations when you want to encourage saving over spending and investing. However I would argue it is not an ideal stable state. It is more difficult for an economy to grow when people don't circulate money through spending and don't increase future productivity through investing.
The benefit of a central bank that can control the money supply is that you can adjust these things on the fly depending on what is happening in the economy. Bitcoin cannot adjust the money supply in reaction to the economy.