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points by echoangle 5 hours ago | 0 comments

So 3% yearly Inflation? The target is 2% so not too bad. You don’t want your actual currency to gain value just by waiting.

[–] BuyMyBitcoins 5 hours ago

I understand the rationale around targeting inflation and seeking to actively avoid deflation. That being said, I wish the inflation target was less than 1%.

Eventually, possibly within my lifetime, a Big Mac meal is going to cost $50.

[–] echoangle 5 hours ago

> Eventually, possibly within my lifetime, a Big Mac meal is going to cost $50.

Is the problem the number or the concept?

Your salary should also go up so the only thing affected is the cash you hold. Would it be better if the currency would be version-bumped every 10 years and rescaled to remove the inflation?

[–] Den_VR 4 hours ago

Salary should go up, you say… how well is that holding true?

[–] wmf 4 hours ago

In the US wages have outpaced inflation. Obviously that's an aggregate measure so it's not true for everyone.

[–] BuyMyBitcoins 5 hours ago

That last comment was more of a reflection on how old I’m getting. I did a poor job of conveying that.

I am curious if I’ll live long enough to see the United States issue higher denomination bank notes again.

[–] codedokode 4 hours ago

What if you are too old and cannot work?

[–] wmf 4 hours ago

Pensions and social security are indexed to inflation. 401ks should beat or match inflation.

[–] baobabKoodaa 12 minutes ago

Pensions in Finland are not "indexed to inflation" in the sense that you mean. Our pensions are wildly underfunded and people of working age generally expect to get back LESS than the NOMINAL VALUE of what they've paid towards their pensions during their working life (*when we count "employer contribution" into "employee contribution", which is what it is in reality).

[–] verteu 4 hours ago

Investments outpace inflation even more than wages (r>g).

[–] OJFord 3 hours ago

> You don’t want your actual currency to gain value just by waiting.

Relative to what? Talk of BTC gaining value is primarily wrt USD; I'd be perfectly happy with my actual currency (GBP) gaining value wrt USD.

I suppose BTC can only 'deflate' in the long-run (and with an assumed supply of goods and services available in exchange for it) since the mintable volume is fixed. But perhaps it exposes that talking of currencies inflating is a bit sloppy, as it doesn't really make sense for BTC, and it's the economy or banking system that inflates really..

[–] zarzavat 5 hours ago

That's why it's not safe to hold fiat money, it's by design. Governments don't want people to hold it, they want them to cycle it, spending it, investing it, and lending it out.

The existence of harder forms of money (gold, bitcoin, etc) is an expected consequence of how the system is designed, and not in any way a subversion of it. Somehow, both sides seem to miss this point.

[–] baobabKoodaa 10 minutes ago

Why do you think "holding fiat money" is something that is inherently good or desirable in the first place? Such a weird premise. Money is for the purpose of exchanging goods and services; you're supposed to hold a minimal amount of it. The rest you invest.

[–] skinfaxi 3 hours ago

> The existence of harder forms of money (gold, bitcoin, etc) is an expected consequence of how the system is designed, and not in any way a subversion of it. Somehow, both sides seem to miss this point.

Can you expand here? Governments don't want to incentivize storing value in order to encourage spending, but people want to be able to store value because that's what we've been doing since farming.

Is it because money is a medium of exchange and not a store of value?

[–] listenallyall 4 hours ago

It kinda is too bad because every inflation miss compounds, permanently. The 6 and 7% annual rates the US experienced a few years back are permanently embedded in price levels - it's not like the Fed adjusted its target down for a few years to counteract past years of high inflation, nor is it even evident that current policies are working, given that inflation hasnt actually been at 2% since 2018 (excluding 2020) and inflation is rising again in 2026. Obviously the late 70's were worse, statistically, but the Fed took enormous steps while the current Fed seems far more hesitant to ignore the government and Wall St.

[–] anonym29 5 hours ago

>You don’t want your actual currency to gain value just by waiting

You might not, I do.

Tell you what: you go short btc/usd, I'll go long btc/usd, and let's circle back in 10 years and see who did better.

[–] lxgr 5 hours ago

>> You don’t want your actual currency to gain value just by waiting

> You might not, I do.

Then you don't want a currency. For something to be money it needs to (among other things) be a medium of exchange, and nobody really wants to trade away a thing today if they know it will be more valuable tomorrow.

[–] Arnt 4 hours ago

Yeah, I want the assets I hold to increase in value, too, or at least not decrease.

Suppose you have some control over currency. You run a country. I'm that case, so you still want the currency to gain value compared to the alternatives?

Your choice is basically: holding currency is more profitable than building a house or running a business (or lending to those who do), or else less profitable. If you run a country, do you want houses and jobs and all that kind of thing, or do you want people to do better if they choose to hoard currency?

[–] hackernudes 3 hours ago

What about when the US dollar was backed by gold? Were there no houses or businesses?

If I need a house today I'll buy it. I might not invest in real estate or stocks as much if my currency will be worth more tomorrow but I'll still buy stuff I need or want badly enough.

[–] echoangle 5 hours ago

I mean as someone managing a state. If there’s a guaranteed way to make money by holding your currency, you’re not really incentivized to invest your money in semi-risky endeavors. Why would I fund a company to make me some single digit returns if I can just hold the money? If the central bank would actively enforce a deflationary currency, nobody would invest anymore.

[–] gabruoy 5 hours ago

This justification never makes any sense to me. There’s already a safe way to make a percentage back that will generally be higher than inflation: government bonds, offered by the very same government that supposedly wants inflation. There are even TIPS bonds in the US that match inflation directly. And people do measure whether or not a risky investment will make more than just holding bonds. Inflation just screws over people who don’t have the ability to invest their money into other assets.

[–] lesuorac 4 hours ago

If you buys bonds you’re not sitting on money.

The bond seller is intending to put it to productive use to generate the yield.

This differs from deflation where people will (more the before) actually sit on money and not buy bonds. Then people who need liquidity cannot get it as the money supply drys up.

[–] gabruoy 4 hours ago

This is true for corporate bonds, but governments plan on generating their bond revenue by taxing citizens (which I guess could be a whole separate conversation on whether or not that’s productive) and by printing more currency, which seems rather circular in logic.

[–] throwawaythekey 5 hours ago

There's still relative rates of return i.e. 100% of money isn't in gov bonds even though it should outperform inflation

[–] ForHackernews 5 hours ago

Why do cryptobros always refuse to admit investing exists? Forex and crypto trading are always zero sum, but you don't have to choose between dollars under your mattress or bitcoin on a thumb drive, you can actually invest in productive assets.

SPY has outperformed BTC over the last 5 years, and with far less volatility.