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0 sats \ 5 replies \ @ZezzebbulTheMysterious 4h \ parent \ on: Is Bitcoin Going Cheech And Chong A Bad Sign econ
You are missing the other side of the trade.
Bitcoin doesn’t store the dollars. It doesn’t destroy them.
It stores the “value” of the dollars for the buyer of the coin. Obviously the seller wants to get rid of the dollars as soon as possible.
The dollars still exist in the system. They were printed, and then traded. They don’t go away. The only way dollars are removed from the system is through taxation (or tariffs). Tax is simply deleting dollars from the system.
The person that sold the bitcoin for dollars then purchases assets (because why else). So Bitcoin does not and cannot prevent price inflation (in dollars). Only reducing the dollars can do this.
Taxation doesn't destroy them because the gov spends that, it does slow velocity though...
Debt destruction is the only dollar destruction, since dollars are debt, and Bitcoin is a replacement for new debt... The Bitcoin sellers are selling Bitcoin instead of creating new debt to buy that stuff, they're buying it with debt that was already created and given to tether.
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The government prints the money it spends, the source, and taxation is the sink. Taxation is burning dollars to offset the printing. It’s not actually recirculating. If you print more than you burn you get inflation of the monetary base.
Bitcoin just lets you opt out. It’s not fundamentally changing the properties of M2 of dollars.
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That's the velocity component, spending exceeding taxation is a given since it can't run in reverse or there'd be no dollars.
Since there has to be new dollars, Bitcoin gives people a place to park them that doesn't moon shit we need like houses...
The sellers of that Bitcoin aren't getting those dollars from their own debt and therefore increasing the number of dollars (commercial banks create dollars too on consumer debt, not just the Fed on national debt)
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Ok, I think I get you. We are saying the same thing from the other side.
The existence of Bitcoin helps provide an alternative sink for value that is not other assets like Real Estate and Equity, thus helping keep prices from pushing up.
Yes, and I hope that our civilization can flourish when we stop inflating the value of real estate.
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No more zombie stocks tying up capital, currency wars between countries, Cantillon corruption... Going to be amazing
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