Thread by @ObiWanKenoBit

0/Cash is king for those who are kings of cash. For the rest, cash is morning frost evaporating under inflation’s steady warm glare. Year after year banks & the state work tirelessly to debase money through inflationary schemes. A mega thread.

Fiat Inflation vs Bitcoin Deflation

1/Central bank obsession with inflation not only stems from an inherent bias to stimulate the economy but also from a deep fear of a deflationary economic environment and loss of mandate.

2/According to CBs this would be an unmitigated disaster. So much so that forcing rates down below zero (in the Eurozone) is seen a better solution than allowing markets to act organically.

3/Businesses borrowing at or near 0% encourages malinvestment, distorts consumer and producer dynamics and introduces undue risk across global markets. Risk that tends to migrate to the shadow banking sector.

4/Untested companies are funded, operate at losses, go public and become part of personal and corporate holdings. Stock buybacks artificially inflate equities creating the illusion of wealth and prosperity. New buyback ATH:

5/Ultra low interest rates compound artificial inflationary pressures resulting in misallocation of capital feeding a vast swatch of weak business concerns. In the absence of these policies they would be unable generate a profit and rapidly collapse.

6/Central banks understand that reversing (even pausing) modern inflationary policies will result in a dramatic economic reset coupled to loss of confidence.

7/They will lose lose control over money and must relinquish their self anointed mandate to manage the economy for our betterment. But the guilt is unbearable!

nytimes.com/2018/10/20/opi…

8/Intense political pressure will not allow them to pursue widespread financial re-engineering as it would reveal deep rooted corruption and decades of unprecedented looting of public coffers.

9/And so they continue to press inflation and deficit spending as a means to stimulate growth and “save” the economy. US debt is $22.7T as of Q4 2019.

10/Inflation has become part of the national fabric. It has created a movement against savings. Many individuals forgo holding even small emergency funds and yet have been set upon the path of the conspicuous consumer.

11/Consumers -avg workers- suffer the greatest inflation tax as they don’t have the luxury of participating in savings and growing wealth through real estate, equities, gold, Bitcoin. They are adversely impacted by runaway costs of living.

12/Inflation not only distorts prices but creates wayward incentives rewarding crony capitalism and graft. It pits employees against employers. Employees are forced to organize to protect their interests against poor monetary policies transmitted via aggressive employer behavior.

13/Inflation coupled to ultra low int. rates unnecessarily forces consumer spending & workforce mobilization. It contaminates the balance between consumption, production & employment. It surreptitiously reduces wages forcing workers to ever increase productivity & pile on hours.

14/Inflation is an insidious tax on time and leeches purchasing power year after year. $10,000 saved after ten years is worth at most $8000!

15/Inflation is unseen, vaguely experienced and reframed in terms of “work harder” “get a side gig” “hustle” etc. Wages creep up, cities impose living wage surcharges temporarily satisfying this vague but real discomfort.

16/Inflation leads to not only fiscal bankruptcy but a moral failing as well. It defiles work, saps savings and corrupts the individual’s right to live and work as he or she sees fit.

17/Kicking the debt can down the road burdens future generations with insurmountable fiscal obstacles. Fiat politics fosters short sighted thinking. Since abandoning commodity based money our social structure has tilted headlong into high time preference activities.

18/Baseless monies have given birth to a global economic construct forcing citizens to become indentured to a growing and all powerful state. Their tools include fiat, inflation, interest rate manipulation, NIRPs, UBI and an increasingly restrictive banking system.

19/Bitcoin shifts the locus of power from central banks to the individual. It reinstates the choice to spend or save. Saving (not hoarding) becomes productive capital. It is invested, earns interest, grows and participates in the economy at large. A bitcoin saver is a producer.

20/Bitcoin creates an economic space for deflation. Savers are rewarded for low time preference. Spurious spending is diminished. Innovation flourishes & free money financial speculation is a distant memory. Parasitic businesses are weeded out. There is no lender of last resort.

21/A Bitcoin economy is one of action and consequence. It is thoughtful, conservative yet fully committed to growth and parity. Yet it is no panacea promising rewards to those who do not exert effort. Bitcoin demands your proof of work.

22/Deflation is a scary word. Yet is outcome of sound money. The Industrial Rev. & 1800s US are examples of deflation coupled to immense, widespread innovation & growth. In the US the cost of living dropped, there was little government debt, no central bank and no income tax!

23/This great period of deflation was not surprisingly corrupted by the birth of the Federal Reserve in 1913 and finally put to rest in 1971 when the world left the gold standard. The resulting calamity is well documented here:

wtfhappenedin1971.com

24/Bitcoin is uncompromising. Deflation will punish debtors. Nations and individuals will face large scale and personal restructuring on an vast scale. This realignment will not be easy. Many will blame Bitcoin for their ills yet ignore decades of their own behavior.

25/The long term positive consequences cannot be underestimated. Deflation leads to an increase in purchasing power, lowers cost of living, and reduces prices of basic goods and services. Rent seeking behavior is blunted and businesses will work to extract sats from your hands.

26/Bitcoin’s deflation is good. It is a return to organic economic cycles and markets that work hand in hand with and for individuals. Bitcoin decouples money from politics and forces governments to from collaborative relationships and enterprises with its citizens.

27/Bitcoin and its deflationary pressure defangs the military industrial complex and its constant need for incessant warfare. The long lasting consequences of WW1 will finally meet a conclusive resolution.

Fin/Fiat and inflation are manufactured anomalies. Bitcoin will begin to right these wrongs. A Bitcoin standard will clear the fog and reveal state sponsored grand theft committed across generations. Scarce, sound money will once again power our economies. #bitcoin