Re:The political case for a blanket cryptocurrency ban
by pydry on Wednesday March 31, 2021 @03:54PM
(#26652247)
>Target inflation is specifically intended to promote consumption.
No, it's intended to erode debt. Inflation is effectively a transfer of wealth from creditor to debtor.
Re:The political case for a blanket cryptocurrency ban
by api on Wednesday March 31, 2021 @06:15PM
(#26653822)
It does do that, but the primary purpose is to push investment. To protect money from inflation you have to put it to work. Wealth is a verb, not a noun.
Re:The political case for a blanket cryptocurrency ban
by isolli on Thursday April 01, 2021 @02:58AM
(#26657382)
It also erodes real salaries, which is a useful way to adjust salaries in a world with sticky prices (where nominal contracts are not easily adjusted).
Re:The political case for a blanket cryptocurrency ban
by nradov on Wednesday March 31, 2021 @05:01PM
(#26653138)
No that's not how it works in the typical case. Lenders set their interest rates based on expected future inflation rates over the term of the loan. Debts only really get eroded when interest rates are fixed and actual inflation greatly outpaces expected inflation. Like in the hyper inflation that occurred in Zimbabwe, Venezuela, Serbia, etc.
Re:The political case for a blanket cryptocurrency ban
by pydry on Wednesday March 31, 2021 @05:43PM
(#26653514)
Interest rates for most debts are fixed. They are determined by supply and demand, much like any other price.
Re:The political case for a blanket cryptocurrency ban
by nradov on Wednesday March 31, 2021 @07:29PM
(#26654575)
And the supply is based on expectation of future inflation.
Re:The political case for a blanket cryptocurrency ban
by pydry on Thursday April 01, 2021 @07:59AM
(#26659345)
Partially, yes.
Re:The political case for a blanket cryptocurrency ban
by murftown on Wednesday March 31, 2021 @04:43PM
(#26652896)
Sure, but what debt does the average person own which is eroded? The money in their bank account.
Re:The political case for a blanket cryptocurrency ban
by dnautics on Wednesday March 31, 2021 @04:56PM
(#26653078)
No, it's a transfer of wealth from saver to debtor, reminding you that the biggest debtors are also creditors.
Re:The political case for a blanket cryptocurrency ban
by abakker on Wednesday March 31, 2021 @02:06PM
(#26650772)
This is valid, but not quite the same. Inflation encourages consumption of Goods. Bitcoin encourages the consumption of goods too. To just maintain bitcoin takes a lot of energy. It is a bigger stretch to blame environmental degradation on the math of inflation than it is to look at the direct environmental costs of actually maintaining the bitcoin network.
inflation encourages investment in renewables. the deflationary nature of bitcoin appreciation means owners of bitcoin are going to defer current investment in renewables because the future value of bitcoin is greater than the present value of clean energy.
Re:The political case for a blanket cryptocurrency ban
by webinvest on Wednesday March 31, 2021 @05:31PM
(#26653424)
Inflation has been encouraging investment in oil and gas companies. Just look at the stock market returns by sector since Jan 2021 and see which one stands out! >.>
Investors like oil & gas because has a low enough Price to EPS ratio to feel like an undervalued safe haven and it still pays dividends like nothing else.
Don’t forget: every $100 invested in bitcoin is $100 of bitcoin sold. There is always somebody on the sell-side. When they receive the money, they may also do productive (likely technology-based) work with it.
Target inflation is specifically intended to promote consumption. Consumption, particularly in the form of atoms, not bits, is approximately 90% correlated with greenhouse gas emissions, despite all our efforts to roll out renewables.
Setting the "inflation is good" argument alongside an article decrying the climate impact of inflation-resistant currencies is . . . well, it's an interesting take.
Unless and until we are manufacturing/growing and transporting consumptive goods via renewable and sustainable means, promoting inflation is most certainly contrary to climate stability.