By Frank Shostak
Milton Friedman and the monetarists believed that fluctuations in the money supply caused the boom-and-bust business cycles. Their solution—keeping money growth slow and steady—would still lead to business cycles.
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42 sats \ 1 reply \ @0xbitcoiner 12h
I get how the money supply swells, but I've never understood how it shrinks.
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42 sats \ 0 replies \ @Undisciplined OP 12h
It depends on the monetary system.
If you think about physical cash and coins, some get lost or destroyed.
In a fractional reserve system, the money supply shrinks whenever debts are paid back or deposits are withdrawn. This is because banks lend in excess of how much their customers have deposited, essentially issuing IOUs that are treated like real money. Paying back a loan reduces the amount of outstanding IOUs and withdrawing deposits reduces the amount of IOUs that can be issued.
Bitcoin is most like the physical system. We have lost coins and dust that reduce the money supply.
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0 sats \ 0 replies \ @beyond_turbulence 9h
Thanks -> https://beyondturbulence.blogspot.com/p/the-alchemy-of-sound-money-from-lead-to.html?m=1
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