> "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".
This kind of motivation has arguably always been about people misunderstanding economics. In this particular quote: government bailouts are not a function of the exact mechanisms of the currency, but of whether you elect politicians that want to keep banks in check or not. Even if everybody used Bitcoin, a certain type of politician would still be tempted to do bank bailouts.
> - has a limit on maximum amount of currency that can exist (so it is free of inflation)
And this is actually an anti-feature.
It should be obvious that relative prices need to be able to adjust in order for markets to function well, and if you look at economic history without ideological blinders, it becomes clear that there are many important markets in which absolute prices move up more easily than they move down, notably but not only wages and salaries.[0]
Having a modest amount of inflation means that the absolute price that you as a seller can earn must increase if you want your relative price to be stable - a kind of economic Red Queen hypothesis. This makes it easier for relative prices to adjust downwards, which is good for the functioning of markets.
The economics behind Bitcoin has always been a bad idea.
[0] There are good reasons for this. In order to improve your financial position, you have to reduce your monetary outflows or increase your monetary incomes. The amount of effort you spend is proportional to the number of contracts you negotiate, not to the value of those contracts. So if you have many monetary outflows, but comparatively fewer (but larger) monetary incomes, then you'll rationally focus your efforts on increasing those incomes (or fighting against decreases of those incomes). Almost every household, and many companies, are in the position of having fewer incomes than outflows, so they all have an incentive to fight relatively harder against price decreases on their income. Which has the net effect that absolute prices move upwards more easily than they move downwards.
This kind of motivation has arguably always been about people misunderstanding economics. In this particular quote: government bailouts are not a function of the exact mechanisms of the currency, but of whether you elect politicians that want to keep banks in check or not. Even if everybody used Bitcoin, a certain type of politician would still be tempted to do bank bailouts.
> - has a limit on maximum amount of currency that can exist (so it is free of inflation)
And this is actually an anti-feature.
It should be obvious that relative prices need to be able to adjust in order for markets to function well, and if you look at economic history without ideological blinders, it becomes clear that there are many important markets in which absolute prices move up more easily than they move down, notably but not only wages and salaries.[0]
Having a modest amount of inflation means that the absolute price that you as a seller can earn must increase if you want your relative price to be stable - a kind of economic Red Queen hypothesis. This makes it easier for relative prices to adjust downwards, which is good for the functioning of markets.
The economics behind Bitcoin has always been a bad idea.
[0] There are good reasons for this. In order to improve your financial position, you have to reduce your monetary outflows or increase your monetary incomes. The amount of effort you spend is proportional to the number of contracts you negotiate, not to the value of those contracts. So if you have many monetary outflows, but comparatively fewer (but larger) monetary incomes, then you'll rationally focus your efforts on increasing those incomes (or fighting against decreases of those incomes). Almost every household, and many companies, are in the position of having fewer incomes than outflows, so they all have an incentive to fight relatively harder against price decreases on their income. Which has the net effect that absolute prices move upwards more easily than they move downwards.