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Bitcoin & Markets

Sep 8, 2022

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This episode is a short clip of my Telegram live stream (also doing them as Twitter spaces) on 8 Sept 2022. The topic was a tweet thread by Mark Moss.

This is clip I detail why it is important for people to define inflation and deflation properly as changes to the money supply, and not falsely label all price level changes to "inflation". It is extremely misleading.

Mark tells us that the price decreases we've seen over the last several decades are a result of "deflation". That is wrong. Globalization was enabled by massive amounts of credit creation, and since money is credit (we have credit-based money), this was massive inflation.

The reason it is important to get the definitions right, is because price changes directly resulting from changes to the money supply (inflation or deflation) is the evil we are trying to avoid. In this case, money printing of the last 50 years led to globalization, economies of scale, artificial division of labor, and price declines. The evils of inflation was the lower prices and globalization.

Now, in the reflexive deflationary environment, birth rates to go down, mental health deteriorates, and cultures degenerate. The evils of inflation didn't look like evils, prices went down, but be other side of the coin, deflation, exposes the damage done.

Deglobalization is driven by deflation (shrinking of global credit) yet will lead to rising prices from losing efficiencies of globalization.

The natural state of things is likely higher prices, but also higher birth rates, better mental health, and flourishing cultures.

Initially, the deflationary environment exposes the evils of changing the money supply, but that forces a change in the form of money back to sound money, because the limitations of credit-based money have been reached, and the only way out is to change to a commodity money (I believe bitcoin).