The purchasing power of one US dollar is 64% of what it was in 2008 when BTC was invented, and is on track to be worth half of what it was in 2008 by 2032, the same year that the social security trust fund is on track to go insolvent and see benefits automatically cut by 22%, which surely will not be papered over with more money printing :)
So 3% yearly Inflation? The target is 2% so not too bad. You don’t want your actual currency to gain value just by waiting.
I understand the rationale around targeting inflation and seeking to actively avoid deflation. That being said, I wish the inflation target was less than 1%.
Eventually, possibly within my lifetime, a Big Mac meal is going to cost $50.
> Eventually, possibly within my lifetime, a Big Mac meal is going to cost $50.
Is the problem the number or the concept?
Your salary should also go up so the only thing affected is the cash you hold. Would it be better if the currency would be version-bumped every 10 years and rescaled to remove the inflation?
Salary should go up, you say… how well is that holding true?
In the US wages have outpaced inflation. Obviously that's an aggregate measure so it's not true for everyone.
That last comment was more of a reflection on how old I’m getting. I did a poor job of conveying that.
I am curious if I’ll live long enough to see the United States issue higher denomination bank notes again.
What if you are too old and cannot work?
Pensions and social security are indexed to inflation. 401ks should beat or match inflation.
Pensions in Finland are not "indexed to inflation" in the sense that you mean. Our pensions are wildly underfunded and people of working age generally expect to get back LESS than the NOMINAL VALUE of what they've paid towards their pensions during their working life (*when we count "employer contribution" into "employee contribution", which is what it is in reality).
Investments outpace inflation even more than wages (r>g).
> You don’t want your actual currency to gain value just by waiting.
Relative to what? Talk of BTC gaining value is primarily wrt USD; I'd be perfectly happy with my actual currency (GBP) gaining value wrt USD.
I suppose BTC can only 'deflate' in the long-run (and with an assumed supply of goods and services available in exchange for it) since the mintable volume is fixed. But perhaps it exposes that talking of currencies inflating is a bit sloppy, as it doesn't really make sense for BTC, and it's the economy or banking system that inflates really..
That's why it's not safe to hold fiat money, it's by design. Governments don't want people to hold it, they want them to cycle it, spending it, investing it, and lending it out.
The existence of harder forms of money (gold, bitcoin, etc) is an expected consequence of how the system is designed, and not in any way a subversion of it. Somehow, both sides seem to miss this point.
Why do you think "holding fiat money" is something that is inherently good or desirable in the first place? Such a weird premise. Money is for the purpose of exchanging goods and services; you're supposed to hold a minimal amount of it. The rest you invest.
> The existence of harder forms of money (gold, bitcoin, etc) is an expected consequence of how the system is designed, and not in any way a subversion of it. Somehow, both sides seem to miss this point.
Can you expand here? Governments don't want to incentivize storing value in order to encourage spending, but people want to be able to store value because that's what we've been doing since farming.
Is it because money is a medium of exchange and not a store of value?
Governments may want as much economic activity as possible but we've learned the hard way that this is detrimental to the financial system, because it creates damaging boom and bust cycles.
So we empower central banks to intervene in various ways in the monetary system in order to achieve low inflation and system stability.
Activity is only the secondary objective. System stability is the first. Stability doesn't mean that markets cannot go up and down even violently. It means that when they go violently up and down, there remains faith in the currency and people are not suffering from mass unemployment, etc.
When a currency is healthy and has low inflation, hard assets are not a threat. Gold doesn't pay any interest, it doesn't have any earnings. You don't need to convince people to buy stocks and bonds instead of gold, they do that by themselves.
When a currency is unhealthy, hard assets can become a threat to it, but notably it's usually other fiat currencies that are the biggest threat.
Hard assets are useful tools for the financial system because they are less correlated with the market. You can criticise Bitcoin in various ways but the criticism that it is a hard asset with a fixed supply that by not inflating somehow damages the financial or monetary system doesn't land. Fiat money is intended to facilitate the existence of markets in other things, including hard assets.
It kinda is too bad because every inflation miss compounds, permanently. The 6 and 7% annual rates the US experienced a few years back are permanently embedded in price levels - it's not like the Fed adjusted its target down for a few years to counteract past years of high inflation, nor is it even evident that current policies are working, given that inflation hasnt actually been at 2% since 2018 (excluding 2020) and inflation is rising again in 2026. Obviously the late 70's were worse, statistically, but the Fed took enormous steps while the current Fed seems far more hesitant to ignore the government and Wall St.
>You don’t want your actual currency to gain value just by waiting
You might not, I do.
Tell you what: you go short btc/usd, I'll go long btc/usd, and let's circle back in 10 years and see who did better.
>> You don’t want your actual currency to gain value just by waiting
> You might not, I do.
Then you don't want a currency. For something to be money it needs to (among other things) be a medium of exchange, and nobody really wants to trade away a thing today if they know it will be more valuable tomorrow.
Yeah, I want the assets I hold to increase in value, too, or at least not decrease.
Suppose you have some control over currency. You run a country. I'm that case, so you still want the currency to gain value compared to the alternatives?
Your choice is basically: holding currency is more profitable than building a house or running a business (or lending to those who do), or else less profitable. If you run a country, do you want houses and jobs and all that kind of thing, or do you want people to do better if they choose to hoard currency?
What about when the US dollar was backed by gold? Were there no houses or businesses?
If I need a house today I'll buy it. I might not invest in real estate or stocks as much if my currency will be worth more tomorrow but I'll still buy stuff I need or want badly enough.
The price of gold was fixed in the US in that period. Gold lost buying power as the years passed.
I mean as someone managing a state. If there’s a guaranteed way to make money by holding your currency, you’re not really incentivized to invest your money in semi-risky endeavors. Why would I fund a company to make me some single digit returns if I can just hold the money? If the central bank would actively enforce a deflationary currency, nobody would invest anymore.
This justification never makes any sense to me. There’s already a safe way to make a percentage back that will generally be higher than inflation: government bonds, offered by the very same government that supposedly wants inflation. There are even TIPS bonds in the US that match inflation directly. And people do measure whether or not a risky investment will make more than just holding bonds. Inflation just screws over people who don’t have the ability to invest their money into other assets.
If you buys bonds you’re not sitting on money.
The bond seller is intending to put it to productive use to generate the yield.
This differs from deflation where people will (more the before) actually sit on money and not buy bonds. Then people who need liquidity cannot get it as the money supply drys up.
This is true for corporate bonds, but governments plan on generating their bond revenue by taxing citizens (which I guess could be a whole separate conversation on whether or not that’s productive) and by printing more currency, which seems rather circular in logic.
There's still relative rates of return i.e. 100% of money isn't in gov bonds even though it should outperform inflation
Why do cryptobros always refuse to admit investing exists? Forex and crypto trading are always zero sum, but you don't have to choose between dollars under your mattress or bitcoin on a thumb drive, you can actually invest in productive assets.
SPY has outperformed BTC over the last 5 years, and with far less volatility.
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Sure, but you could also have used this dollar to buy oil, gold, stocks, bonds etc
Sure. Since the invention of say Bitcoin, which of those assets would you have preferred to own and why?
> Since the invention of say Bitcoin
Convenient date to pick there.
> which of those assets would you have preferred to own and why?
NVDA.
It's a productive use of resources, not a last-fool-standing pyramid scheme.
hindsight is the best hedge fund
You know that you can’t just judge an investment by past return, right? Would it be rational for a lotto player to tell you how great lotto is as an investment? Or people winning at the casino? Success doesn’t mean it was the rationally optimal decision.
Compare a purchase of any commodity, bond, precious metal, or ETF/mutual fund in 2008 to BTC's performance since 2008. Or 2009, or 2010, or 2011, or 2012, or 2013, or 2014, or 2015, or 2016, or 2017, or 2018...
It’s a bit cherry-picking, but right now BTC’s 5-year growth is 28% while the S&P is 67%.
To be fair bitcoin’s initial years were extraordinary. By any metric you use though the rate of increase has clearly slowed.
BTC has ~26% less purchasing power than it had at the beginning of 2026. I’m not sure its volatility is a win.
>$1 in 2008 is worth $1.56 today
That's an odd way of phrasing it, since the $1 is still worth $1, and a naive reading would make you think it's "worth more" when the buying power has actually reduced.
Wouldn't it be clearer to say $1 today only buys you 64% of what you could have bought in 2008.
Tbh both ways of phrasing are fine to me. $1.56 today will get you as much as $1 in 2008, looking at it simplistically.
It may be technically correct, but one phrasing can be easily misunderstood while the other can't.
The US dollar is worth less than it was in part because the US economy has grown.
This is mathematically provable:
1. A dollar in 2008 could buy 1/14tn of the value created by the US economy (the GDP) in 2008.
2. A dollar today can only buy 1/32tn of the value created by the economy in 2025.
It's obvious a 2025-2026 dollar is worth less than a 2008 dollar. That's just math.
But. A dollar in 2008 could buy 230% more of the economy than it can today. And you say its purchasing power has only eroded 64%. That means the dollar is actually worth more today, compared to the size of the economy it's in. Weird, I know.
EDIT: I'm fine with downvotes but tell me why I'm wrong.
Like I said, prove me wrong.