[Cryptography] deflation, was Montana: A Post-Quantum Blockchain with Time as Scarcity

[John Levine]

It appears that Ron Garret <ron at flownet.com> said:
>It is important to remember that at the exact same time that the Weimar Republic was experiencing its inflationary disaster, the United States was dealing with a
>deflationary disaster known as the Great Depression.  Herbert Hoover's Fed ran the USD as if it were BTC (at least in terms of monetary policy), and it took fifteen
>years and a world war to recover.  We escaped a similar fate in 2008 by the skin of our teeth *only* because the Fed had the ability to "fire up the printing
>presses" and provide liquidity.

The Weimar inflation was in 1923, while the Great Depression in the US didn't
start until the 1930-33 deflation. The Fed of that era was fixated on the gold
standard (like bitcoin but useful in jewelry and dentistry) and keeping the gold
price of the dollar at $20.67, but that was a decade after 1923. Dates matter.

In 1930-32 the German government under Heinrich Bruening was deflating the
German currency also trying to keep gold parity, and causing an even worse
depression there, leading to social unrest and the rise of you-know-who in 1933.

The historical record is abundantly clear that while hyperinflation is bad,
deflation is worse. Even if there were any possibility that cryptocurrencies
would be usable as real money, one should be careful what one wishes for.

R's,
John