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0 sats \ 5 replies \ @andyleroy OP 6 Jul 2022 \ parent \ on: How does everyone think about Bitcoin and Inflation - is a 21 million *permanent* cap correct? bitcoin
I agree, lots of economic indicators have their flaws.
But just a hypothetical example to go very basic:
Suppose we have a society with 4 people (a farmer, a tailor, a carpenter, and a toy maker), we denominate everything in bitcoin (capped at 100), everyone makes their living, we can see money velocity, output, GDP, all the basics. And let's assume everyone ends the year with 25 BTC.
If the farmer has a child who helps in the fields, society's output increases, but is still denominated in 100 BTC.
Sure money will flow based on tradeoffs between food, housing, other goods, but my 25 BTC is now worth more value (not just the same purchasing power). It just seems that a capped money supply favors saving - which is great - but does this diminish incentives for investment in the future?
a capped money supply favors saving - which is great - but does this diminish incentives for investment in the future?
Sure. Something that encourages saving must at the same time discourage either spending or investment. What else can you do with your money other than spend, save or invest?
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More savings = more potential for investing. Over a period of time you are going to have the same if not more investment imo.
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This is not the definition of saving that I would subscribe to.
You save = you plan to consume later.
If you plan to invest your money later, then this money is not savings, it's the cash part of your investment portfolio.
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I appreciate the distinction but I dont believe it changes the argument because wether ppl save to invest or consume it still means more potential investment because consumption also drives investment
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No
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