Economics is the backbone of how we understand wealth, production, and resource distribution in society.

Over time, different schools of thought have emerged to explain and manage economic systems.

The most prominent ones are Keynesian economics, Austrian economics, and now, in the digital age, the rise of Bitcoin economics. In this essay, we’ll explore each system and explain, in simple terms, why Bitcoin is emerging as the more favorable economic system for the future.

Keynesian economics, named after John Maynard Keynes, advocates for an active government role in managing the economy. According to Keynes, during times of economic downturn (like recessions), governments should spend more and borrow more to boost demand and create jobs.

The idea is that the government can stabilize the economy by balancing out the highs and lows of the business cycle.

Government intervention is essential to smooth out economic booms and busts.

Encourages deficit spending (spending more than the government earns) during recessions to stimulate demand.

Imagine a town where everyone is scared to spend money because they think the economy is bad. Businesses start to close, and people lose jobs, which makes things worse. The government decides to hire a bunch of people to build new roads and bridges, so now people have jobs and money to spend. As a result, businesses start to reopen, and the economy recovers.

Inflation: Printing more money or borrowing to stimulate the economy can lead to inflation, where the value of money falls, and prices rise.

Government debt: Constant borrowing leads to national debt, which future generations must pay back. So, instead of solving problems, you're pushing them down the road.

"Why did the government print so much money? Because it thought inflation was just a trend it could 'spend' its way out of!"

Austrian economics, popularized by economists like Ludwig von Mises and Friedrich Hayek, advocates for minimal government intervention in the economy.

They believe that individuals should make their own economic decisions based on their preferences, and that markets should be free to adjust naturally. According to this view, economic problems like recessions are caused by previous government intervention, like manipulating interest rates or printing too much money.

No government intervention: Markets are smart enough to fix themselves.

Focuses on the importance of individual choices and sound money (money that retains its value, like gold).

Think of a farmer who decides to grow corn because the price of corn is high. But, instead of the government telling the farmer what to plant, the market (the high price) naturally encourages the farmer to make this decision.

The same idea applies to all areas of the economy-people will make decisions based on supply, demand, and personal preferences without needing government interference.

Lack of action during crises: Critics argue that if the government doesn’t intervene during economic crashes, the pain might last longer or be more severe.

Too idealistic: In reality, economies are messy, and sometimes government intervention is necessary to prevent societal collapse.

#Fun Joke: "Why don’t Austrian economists believe in recessions? Because they think the market’s just taking a nap and will wake up on its own!"

Bitcoin represents a new way of thinking about money, one that blends some of the ideas from Austrian economics with modern technology.

Bitcoin is a decentralized, digital currency that operates without a central authority, like a government or bank.

There will only ever be 21 million Bitcoins, making it a scarce resource, which helps protect it from inflation.

Decentralization: No government or central bank controls Bitcoin.

Scarcity: Bitcoin’s fixed supply (21 million) ensures that it can’t be inflated by printing more, like traditional currencies.

Deflationary: Over time, Bitcoin is designed to increase in value as more people adopt it, and it becomes harder to mine new coins.

Imagine you have $100 in your savings account, but each year, inflation reduces its value. By the end of ten years, your $100 may only buy $50 worth of goods. Now, imagine you had Bitcoin. Because there is a fixed supply of Bitcoin and more people are using it, the value of your Bitcoin could grow over the same period.

Protection against inflation: Since Bitcoin has a limited supply, it can’t be inflated away.

Decentralized: No single entity (like a government) can manipulate its value for political reasons.

Censorship resistance: Because Bitcoin is decentralized, it’s difficult for any government to shut it down or confiscate it.

"Why did Bitcoin break up with fiat currency? Because it found something more decentralized!"

Bitcoin economics blends the Austrian emphasis on individual freedom and sound money with a digital, decentralized currency that can thrive in the modern world. It eliminates the problems of inflation seen in Keynesian economics and provides a solution to the overly idealistic, sometimes impractical aspects of Austrian economics.

Hyperinflation-proof: Look at countries like Venezuela, where hyperinflation destroyed the currency. Bitcoin’s scarcity means this can’t happen.

No need for trust: With Bitcoin, you don’t have to trust a government or central bank. The code itself ensures fair rules.

Global and borderless: Bitcoin can be sent anywhere in the world in minutes, without needing a bank.

Bitcoin represents a paradigm shift in how we think about money and economics. It solves the inflation problem inherent in Keynesian economics and offers a practical application of Austrian economic principles. By blending scarcity, decentralization, and digital technology, Bitcoin creates a fairer, more resilient financial system.

While Bitcoin still has challenges (scalability, energy use, adoption), its core features make it the best solution to the problems of both Keynesian and Austrian economics. As more people learn about and adopt Bitcoin, its value as a global, decentralized currency will only continue to grow.

John Maynard Keynes, The General Theory of Employment, Interest, and Money (1936).

Ludwig von Mises, Human Action (1949).

Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System (2008).

I created this with the help of AI but I’ve changed some things.

Thank you if you read it and hope was a nice read.