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50 sats \ 5 replies \ @SimpleStacker 12 Mar \ parent \ on: Why Bitcoin Will Not Replace The Dollar econ
Oh, so I don't think he was actually talking about Bitcoin's money supply... most of what he was talking about was saying that the inflation from 2021-2023 was driven by COVID-related supply shocks (meaning supply of real goods & services, not money supply), rather than money printing.
I mostly agree with what he said, though I would quibble with some things.
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For example, he said the the federal reserve doesn't actually create money when it increases bank reserves, because it doesn't go into the economy unless the banks themselves make more loans. But the thing is, increasing bank reserves does increase the banks' ability to make loans, because it loosens the reserve requirement.
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He also seemed to contradict himself when he said that expectations about inflation don't affect demand. But prior to that he said that the Fed manipulates behavior by making announcements to change expectations.
So, I would disagree with his take that the Fed can't really control the money supply. I think it can. But otherwise I agree with his overall assessment that the bigger culprit for 2021-2023 inflation was supply shocks from COVID.
I don't think he actually addressed the Bitcoin fixed supply / deflationary concerns.
You're right. He didn't address the fixed supply issue today. He had a debate/discussion with Lyn Alden last year on a podcast or maybe at a conference. From my non-expert position I don't agree with him, but he seems smart and I like the different perspective. I'll try to find a link to the Lyn Alden conversation.
Edit: Here it is:
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Pretty interesting discussion. I definitely understand the desire for a more elastic money supply. Personally, I'm not even against ideas like tail emissions for Bitcoin, though I might be crucified for saying so.
I think what I'd challenge Jeff Smith on is that just because the total supply is fixed, that doesn't mean there can't be elastic adjustments to the amount in circulation.
@Undisciplined makes this point often in that even though the total available supply is fixed, the supply curve determining how much is being sold and at what price still has an elasticity to it. And that's because different people have different levels of willingness to move their Bitcoin.
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I really wish the term "money supply" didn't use "supply" in a different way than it's normally used in econ.
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Supply is definitely one of the most overloaded terms in Econ
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Personally, I'm not even against ideas like tail emissions for Bitcoin, though I might be crucified for saying so.
I think @petertodd agrees.
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