The FED did cause the great depression and a lot of it had to do with currency being tied too closely to a deflationary token (gold).
>You cannot eat gold or bitcoin.
That is precisely the problem. The economy can get into a bad equilibrium where hoarding intrinsically valueless tokens displaces investing in productive assets. This state can persist because the firsts to invest in productive things are at a disadvantage to the token hoarders (at least for some time).
>The “hoarders” at some point will want to consume be it a pizza or a lambo.
Yes, then it becomes a game of "catch the peak" because when people realize all these tokens are sitting on the sideline but production has declined and there isn't much to purchase with the tokens, and that if they want to buy something at a good price they better be quick, the cycle can reverse explosively.
It's important for aggregate savings to be (at least indirectly) tied to things you "can eat" or the production thereof.
The FED did cause the great depression and a lot of it had to do with currency being tied too closely to a deflationary token (gold).
>You cannot eat gold or bitcoin.
That is precisely the problem. The economy can get into a bad equilibrium where hoarding intrinsically valueless tokens displaces investing in productive assets. This state can persist because the firsts to invest in productive things are at a disadvantage to the token hoarders (at least for some time).
>The “hoarders” at some point will want to consume be it a pizza or a lambo.
Yes, then it becomes a game of "catch the peak" because when people realize all these tokens are sitting on the sideline but production has declined and there isn't much to purchase with the tokens, and that if they want to buy something at a good price they better be quick, the cycle can reverse explosively.
It's important for aggregate savings to be (at least indirectly) tied to things you "can eat" or the production thereof.