Long story short, they don't.
One simple tool used for this:
> Treasury Inflation-Protected Securities (or TIPS) are the inflation-indexed bonds issued by the U.S. Treasury. The principal is adjusted to the Consumer Price Index (CPI), the commonly used measure of inflation. When the CPI rises, the principal adjusts upward. If the index falls, the principal adjusts downwards.[8] The coupon rate is constant, but generates a different amount of interest when multiplied by the inflation-adjusted principal, thus protecting the holder against the official inflation rate (as asserted by the CPI)
So what happens is, the finance people use freshly printed money to buy up the things all the poor little people need. But let’s not call it speculation.
Crypto is a democratizing force in a corrupt and unaccountable world.
>Crypto is a democratizing force in a corrupt and unaccountable world.
Assuming that cryptocurrencies are successful they might cause some turmoil in the top 1% as early adopters with thousands of BTCs become the new 1% and current rich people who missed the bus might drop among the pleb. But after this initial period what happens? People who HODLed thousands of BTC will be hugely rich and remain so, people who don't have a lot of money still have to pay for housing and food so they can't save money to bridge the gap.
And I don't really see how Bitcoin are going to help with corruption and accountability when one of its main use cases today (beyond speculation) are powering online black markets.
No, I'm arguing traditional currency is no longer necessary. Rich people don't own currency, they own assets. Currency is for poor schmucks who don't know how finance works. Currency is for a convenient way of taxing the masses and devaluing their life's savings at the behest of the 1%.
What's the solution? Asset backed certificates. Store your savings in a diversified portfolio backed by the incredibly valuable "means of production". These certificates can be settled in real-time given their levels of liquidity. Merchants can sell things denominated in one asset, and customers can pay with arbitrary certificates (say, apple stock) - settlement occurs at transaction time instantly.
Howso? The ultra-wealthy elites managed to seize control of crypto in like two years. They control all of the major mining ops and a huge % of the coins themselves.
People say this all the time without backing it up. Tell us, exactly how is that true? What is the exact feature of BTC that somehow makes it incorruptible, and changes millenia of human behavior? What exactly about BTC would prevent the wealthy people from buying up all the things the poor little people need?
Right, deflation.
"In economics, deflation is a decrease in the general price level of goods and services.[1] Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but deflation increases it. This allows one to buy more goods and services than before with the same amount of currency."
Merely increasing the number of available coin doesn't create inflation unless it matches the demand for it.
At least if the current "1%" hoard dollars or euros in their mattress they slowly lose their wealth thanks to inflation. After a generation or two they'll have lost a significant share of their treasure. Therefore they have an incentive to actually invest the money to fight the effects of inflation. In doing so they contribute to the economy.
With a deflationary currency like bitcoin it goes like this:
1/ Buy bitcoins
2/ Bury your keys in a bunker in Antartica
3/ There is no step 3, just watch as you become wealthier while doing absolutely nothing. You want a loan to start your business or buy a house? Well tough luck, you should have mined BTC in 2013.
The deflationary nature of Bitcoin is why it managed to be successful in the first place, it gives a strong incentive to be an early adopter. However in the long term I don't see how it's sustainable, it makes it borderline useless as a currency. On the other hand I don't see how an inflationary cryptocurrency could gain traction if it's not backed by a huge entity such as a government or multinational company because who would bother buying SimiasCoin if you know it's going to lose value at a steady pace in the future? And why would a government or multinational corporation bother creating a cryptocurrency they can't easily control instead of printing bills like they do today?