Inflation and BITCOIN
Mike Champalanne
Digital Transformation - Data Collection and Processing Specialist - IT Auditor & Project Analyst - MSEE and IBM Systems Engineer -ta
INFLATION and the BITCOIN
Before we say anything about this, please see this video from Milton Friedman
If a Government DECIDES to PRINT MONEY (for whatever need or justification) RAPID INFLATION WILL FOLLOW.?If inflation was only the result of the compensation for Interests of Money borrowed for Production purposes, it would be a ‘tamed’ growth in inflation and with little impact on the peoples personal economy since their growth in generating more income will surpass it.
It is very simple to us to understand inflation with this little example: Suppose you go to the Flea Market and found a small beautiful statue in bronze which – to you – is a unique outstanding piece of art.??You pay for it $10.-?
Happy as you can be, you keep going around and then found another place, near the entrance. who has an exact piece of art and he is asking $20.-??(Inflation is like that, it not the same everywhere) , later at the end of the aisle there is a big truck selling these statues for $5 a dozen. (deflation).?There goes the happiness.
In one afternoon, you saw that depending on the location and according to the quality of people in that location, something (material) has more or less value.?But at the end, the real value of ‘something’ is the availability of it.?The more there is, the less is it’s value. So, keep in mind “value is proportional to the location and availability”. This is a ‘community’ value
The $5 you graciously gave to that homeless man, is worth very little to you who earns over the thousand a week, but for that man you helped is worth a fortune cause it will feed him and allow him to live another day.?So, “value is compared to the amount of similar things you own or need”.?This is a ‘personal’ value.
The thing is that on the first case, we are talking about ‘Demand and offer” or in another terms ‘Market of a lot of people", and the second the purpose is “Production or energy” for the person and of which material things he carries. ?A needed for production. As a commodity.
The exchange of the Value of things get’s confused tremendously when “Printed Money” or “promised money” enters the game.?There is a huge difference in “here is an ounce of Gold”, real and tangible, than in “Here is a Note in paper that the Bank will give you an ounce of Gold” , and the difference is that One thing is Material, and the other is a Promise or Non-material object.
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In any case, and in every corner – THE MORE THERE IS OF SOMETHING, THE LESS IT’S VALUE.
And, because we are used to Printed Promises, ETHEREAL, instead of material things, we do not have anymore control or knowleage of what exists or could be a false Promise. The BITCOIN falls into this ethereal things.
INFLATION (or the loss of value of a material or non material thing) is PRODUCED when that ‘thing’ availability is higher.?The more Promises you create or print, the less your Promises are worth.
The Stature of a PATRON is when we 'agree in' that SOMETHING, in it’s dimensions cannot be changed by us and will remain the same.?“0 degrees in Celsius is when Water freezes and 100 degrees when it boils”. A Meter is the result of dividing a fixed distance on Earth ( see https://physicsbuzz.physicscentral.com/2020/11/the-lengthy-history-of-meter.html ) and then made a ‘patron’ with the distance travelled by a beam of light.??The origin is not the subject of this conversation but it’s adoption as a Patron or Standard .
BITCOIN has exactly that purpose. Being a PATRON or STANDARD. ?There is a fixed amount of it and it is accounted by a brilliant system of Blockchain ledger. ?It should be the instrument to measure Inflation, but it has fallen into the hands of speculation.
Well, here comes the real word in the World: SPECULATION
SPECULATION is when by ‘having’ a lot of something ‘someone’ can control it’s value. ?I know that this word seems evil to most of us, but it is there and it is powerful. Wall Street thrives from it.?
SPECULATION is what has made BITCOIN unstable and unreliable.?Like Friedman said “people make value judgments”?but they are mostly for personal gain than for community gain.?And like the repulsion of the Metric system in the USA, the acceptance of the BITCOIN as a STANDARD is being repulsive. ?
A personal value judgment is that it WILL BE accepted, only when speculators accept it. So it is up to you Wall Street!.