RE: 3 Problems Cryptocurrency Solves
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Cryptocurrency Provides Liquidity
Markets require liquidity to operate. This is something that comes as no surprise to anyone. Those who traded know how difficult it is to be in a non-liquid market. It is hard to make any forward progress when liquidity is lacking. This can cause large drawdowns.
So true, we have a hidden global deflation at the moment. That is why everyone is pouring loads of money into the economy, to counter it. Money was never so cheap, so this is why we have this vicious cycle that everyone takes it and we need more, without having enough liquidity circulating.
And yes, Cryptos can bring enough liquidity, also with a certain value behind them.
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There are also the ongoing technological trends which are only becoming a larger portion of the global economy. This is also extremely deflationary, requiring more money.
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True!
Inflation is bad, deflation is worse. Look at the lost decade in Japan. As the world runs with the economic handbrake pulled, we will need even more money, that will become worthless at a time. Who will pay the bill in the end? Mostly we, I suppose.
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Lost decades in Japan. That said, the average Japanese individual lives better today than he or she did 3 decades ago. We see how deflating of prices helps people.
Neither is good or bad. They are part of economic and monetary cycles. For the last 4 decades, in the US, we are in a deflationary supercycle. The is no doubt that life has gotten better for the average person in many ways.
Hyber of either is very bad and we could be facing hyper deflation without the money printing. When you look at the advancements being made in AI and the deflationary impact, we could see a time when this becomes a reality if not addressed.
Sadly, most are still stuck in the 1970s mindset that all this money printing will lead to inflation. Record deficits around the world by governments and we still see major economies contracting. The velocity of money is about zero at this point.
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Yes, for the average Joe the life got better in so many ways, from healthcare, to infrastructure till possibilities of achievement in life.
I mean that deflation is worse than inflation as it breaks the economic in all it's aspects. We see it now with the printing press working 24/7. It fights deflation, period. With technology advantages we will need to reshape the thinking of economy, as there will be a lot of surplus on the market. I'm not worried about this, as with new technologies(AI, crypto, etc) there comes also new chances. 100 years ago people were still sending post by horses and no one could imagine the e-mail we have today. A lot of industries have vanished and will vanish also in the future. The thing is to do wise choices now, expecting the next industry that will rise. Crypto is one as it disrupting banks and state issued currencies.
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They are trying to fight it..thus far it is a losing battle. Of course, they are not printing nearly enough to offset what is taking place.
The difference is that, with inflation, the central banks can fight it easily. There is a way to stamp it out in a few second, simply raise interest rates. That crushes inflation in a moment. Of course, it takes the entire economy down with it.
It is so true that we cannot envision things 100 years ahead of us. However, today I believe that we cannot even view what will be around in even 30 years. Things are simply moving at too quick a pace.
Ultimately, economics will have to be altered to embrace the new technological reality. Unfortunately, economists do not thoroughly understand the technological impact upon their field.
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With Covid19 we gained 10 years of advantages in technology. Even if it sounds macabre, it is the same technological advantage we gain in wars, where money does not matter anymore. I can't see in 5 years time what it would be.
Well, I see economists vanish like lawyers do. AI will beat them in almost every field. Law is an industry that is now changed as no one can learn so many laws and find so many data with correlation to a case.Same for economists, they will not be able to predict what AI can analyze. The work field will need data analysts, who can insert and read data coming from AI.
Thanks for the replies and the discussion.
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I am not sure it was 10 years but certainly we pushed things ahead a few years due to COVID-19.
Economists should disappear already, all they do is academia anyway.
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