Thread by @DyptoDurrency

A thread on time preference, credit money, fiat inflationism, future expectations and why I'm a Bitcoiner (and Bitcoin only).

1/

2/ In Austrian Economics there is the concept of time preference, in short: "the ratio at which individuals value the present compared to the future" ( @saifedean 's The Bitcoin Standard) ...

3/ Humans, like all animals, are born with positive time preference because of our finite lives. We value "immediate satisfaction of needs" > future satisfaction.
Time preference is different per individual and isn't fixed as we have different stages in our lives. ...

4/ In general, time preference of a human life time could be schematically seen as below.
-We come in the world kicking and screaming for immediate satisfaction with almost infinite time preference.
-As we mature, our time preference lowers: we settle down and start a family.

5/
As parents, you sacrifice your needs for those of your kids. You save money to provide.
-Elderly, ironically, at the end of a long life approach zero time preference (but always positive).
Time preference and its rate of change differs per individual.
...

6/ Now, follow me towards a fiat world:
The premise of human time preference is the same, except we introduce debt and fiat money. Let me add some more color through our boy Bob Ross (RIP):
...

7/
-We, are born at the peak of Time Preference Mountain and slide down uncontrollably fast
- Over time, as the mountain levels off, we are able to slow down, walk and look around.
- We have a career and at some point in life you're comfortable to think about settling down.
...

8/ Mind you, it's difficult to build a foundation on unlevel ground, so usually people settle down in a cosy house in the Valley of Maturity.
Enter fiat inflationism and debt.
As you frolic at the peak of TP Mountain certain choices trigger a snowball reaction: you get indebted

9/ All start debt free, but over time the pressure mounts: you move out early, get an expensive degree 'to get a job', follow along with your peers in consumerism.
You cut yourself some slack here and there. You deserve a holiday. Everyone does it.

10/ Slowly you accumulate more debt and have less savings: your dollars don't go as far as they used to and I need to look after myself now. Fiat ruins time preference.
Instead of maybe slowing down, your debt and spending habits follow you down hill.

11/ Over time, one would gradually slow down, but this is what fiat inflationism and a credit society invokes: we get pressured into running faster and longer because of High Time Preference choices we as a society are seduced to make.

12/ NB For the critical reader: the level of time preference is now how fast you run down the hill, not how high on TP mountain you are (like the diagram before).
Onwards...

13/
Every one feels the pressure. Taxes are used to pay interest on national interest of previous spending.
People without debt don't have much to run from, but due to inflation have to pay increasingly higher prices just to get by. Excluding unexpected expenses.

14/
Even people with a university degree feel the pressure: even though they earn enough money to either decrease debt or outrun it, they pay more in taxes and are seduced to more lavish spending habits. TP Mountain is always slippery.

15/ Monetary inflation is evil because a small group close to the money printer (bankers) get to spend the freshly 'printed' money first. People down the line don't know that the value of the money they accept has been diluted to a lower standard. This is the Cantillon effect.

16/ Inflation is an undemocratic redistribution of wealth from everyone to the people closer to the money printer. Fiat is regressive "taxation without representation or due process of law" (ht
@TraceMayer
QE has been described as socialism for the rich who own assets

15/ Back to TP mountain. People that have enough money or enjoy "dat sweet Cantillon Drip" slow down first and start buying up the Valley of Maturity. They can settle down and start thinking about preserving their wealth for their offspring. Real estate + Stonks > Fiat money.

16/ That is unfortunately not an option for us strugglers just trying to get by. The pressure mounts so high that some people decide not to have kids at all or take inbred dogs as proxies. NB. ‘Climate change’ invokes High Time Preference.

17/ Even if you manage to outrun your debt and feel comfortable to settle down you are faced with a higher price to settle down or conserve wealth. i.e. Valley of Maturity is already owned. Better all rush to the Valley behind it. Oh wait.

18/ It is not just housing: all hard assets have been bought up with Low Time Preference people with capital. Stonks, Bonds, Real Estate, Gold > Fiat. Strugglers have to pay a higher price to 'get in'. Everyone flocks to 'degrees' too while they provide less value (security).

19/ Enter Bitcoin.
Bitcoin, with the best monetary properties we've ever seen has the potential to put a stop to rampant fiat inflationism and reverse the effects of the debt fuelled spending habits.
(please read the src @real_vijay's Bullish case for Bitcoin:)

20/ Bitcoin's Scarcity is unique to anything digital we've seen so far. Bitcoin has a pre-determined 'inflation' schedule, that halves roughly every 4 years (the so called 'halvenings'.
Bitcoin's inherent monetary policy is protected by individuals that run nodes (Verifiability).

21/
Miners 'mine' Bitcoin, but they do this as a paid service to the network (nodes). All actors 'entering' Bitcoin agree to certain Terms of Service (Consensus rules). If miners violate the ToS, their block will not be accepted by the network and they don't get paid Bitcoin.

22/ Nodes protect the network protocol (their own Bitcoin), Miners provide the security of the history (UTXO set) by expending energy to mine Bitcoin.

23/ Back to TP mountain.
Strugglers are not able to invest in Bitcoin. They either simply don't have the money, don't have the time to wait (speculate) or have more pressing matters to deal with: health, food, kids, etc.

24/ If enough people put their foot down, curb their spending and opt –out, I believe individual and the societal ‘debt snowball’ can be stopped. Quite the Sysiphean task, but the monetary policy will do the work if your time preference is low enough = NUMBER GO UP.

At a certain stage of monetization, Bitcoin matures (enough market cap) and will have less volatile swings. Bitcoin is a fully fledged SoV (for hodlers), so people will start to ask to get paid in Bitcoin (or opt-out): Bitcoin will start to become a Medium of Exchange. =Payments.

26/ I believe that at this point, low income earners could enter Bitcoin and slowly save the fruits of their labours for the future. Their dirty fiat won't 'leak' value in the pockets of (central) bankers anymore via opaque inflation.

27/ Any altcoin is ages behind on market liquidity or has made trade-offs for more transaction throughput at the cost of trust minimization or censorship resistance.
i.e. Pre-mine, hard to run a full node, centralization. All High time preference design trade-offs.

28/ Now back to the Valley of Maturity.
With a new means to effectively Store Value, old money and high earners will slowly allocate to this new hard money. Plus, there's no Cantillon-drip. This takes the pressure off prices of all other 'hard assets': Stocks and Real Estate.

29/ These will become more affordable for everyone because they lose their SoV-premium.
Everyone is able to better store the fruits of their labour into the future, have to gradually pay less for their day-today, and housing is more affordable.

30/ People don't have to run as fast anymore, have the feeling they can settle down earlier and enjoy their lives more. Everyone just wants to live a happy and relatively care-free live with their little families in the Valley of Maturity.

31/ Bitcoin is the biggest shot we have at fighting the debaucherous fiat inflationism by central banks. Bitcoin inhibits the governments' means of taxation. Both direct, by levying income tax, as indirect via inflation. We will need trust minimization and censorship resistance.

32/ Unfuck the money first. One sat/node at a time. Marketed altcoins are high time preference distractions of this. Cheap trade-offs that could cost you dearly later.
If they're not outright scams.

@threadreaderapp unroll