Oddbean new post about login | logout Question. I follow your reasoning. This means that the effect of living in a deflationary world for many people will be that it is harder to buy a house. Maybe some will not be able to put enough money aside to ever own a house or other luxury assets, while living on a minimum wage!for example. Does a deflationary world have a solution for this?
No, that is not what my reasoning is suggesting. In fact, quite the opposite. Following my reasoning, houses will deflate in value faster than your wages will go down. Wages are sticky. House would be subject to the naturally deflationary pressures of efficiency gains due to ever improving technology.
The purchasing power of your money, on a Bitcoin standard, should forever go up as the price of everything you want to purchase comes down. So as your stash of Satoshis increase as you save across time, the number of Satoshis needed to buy a house will decrease over time. If we were to plot on a graph, the increasing line indicting your savings will cross the decreasing line showing the price of a house. So as long as you save to buy your house outright vs attempting to buy your house with debt, a home will forever continue to become closer to within reach across time.
I’m thinking of people who live from paycheck to paycheck. If I am understanding correctly, also for them daily living will gradually become cheaper, as wages decrease slower then prices. Purchasing power goes up. So, even if they have no opportunity to save today, they might be able next year. And gradually the available amount to save will increase, next to the purchasing power of what is already saved. It sounds like a hopeful future for everyone. Is it realistic to think this will ever happen? If I listen to Michael Saylor for example, he seems to approach Bitcoin only from the fiat perspective. As of like Bitcoin will always be part of an inflationary world. Maybe this was not the initial utopian idea behind Bitcoin, but as of things are developing right now (with Microstrategy, the Blackrock’s and government stashing BTC’s), this seems to be a more realistic scenario than a deflationary future. I’d love to hear your thoughts about this. Thnx