Quote:
Originally Posted by piepounder
I'm talking about modern democracies when I say inflation isnt a problem.
Venezuala is a mess for a lot of reasons beyond the central banks control. If noone wants to invest in the country exchange rate will plummet with the capital leaving the country and until that stabilizes there will be huge inflation. Companies that do business there are at risk of assets being seized.
I didnt read that full reports but yes the net effect is there is instability and because of that capital will leave the country. where it goes to usd or crypto or gold, im not sure it matters - perhaps crypto makes it easier. Its capital thats leaving driving down the buying power of their currency which raises the price of imports therefore high inflation. With r without crypto the capital will flee an environment like that, but with more options it will flee faster.
Ah yes, now I am talking about international stability. We can't say inflation isn't a problem if some select countries have it under control BUT at the expense of others, because that ultimately isn't (necessarily) stable for everyone. I think it could be argued they are related to each other.
Is it correct to say capital is leaving though if bitcoin is entering? Venezuala was incredibly oil heavy but oil dropped out of favor (interestingly oil has historically served as a very liquid inflation hedge as I understand). Investment is one savior but it could also be that oil or some form energy is transferred into bitcoin mining and if bitcoin has a long way to increase in value then this could boost the economy.
There are systematic issues but I'm not sure they are separable from the problem of the wealth they lost in the oil bust.
Quote:
Originally Posted by BooLoo
who is holding their savings in fiat today, if it's a significant amount (say >50k$)?
nobody.
Yes so the premise of the thread is that we have a growing new asset for savings that is optimal (not necessarily true but thats the premise). Other assets for savings aren't necessarily very secure as such. Markets crash, commodities can have over supply etc.
So there is a restriction on bitcoin's use as a world currency, but not to the extent (at least for this thought experiment) that it can't arise to be a very accessible hedge for inflation.
If this were a bigger trend people would circulate fiat and hold on to bitcoin and this would effect the velocity of fiat to extent that it would need to be considered by central banks.
Also remember in easy examples like venezuala, people are certainly holding savings in USD as a opposed to bolivars.
Last edited by Mike Haven; 11-16-2017 at 06:30 PM.
Reason: 2 posts merged