Deflationary money is a Good Thing

Deflationary money is a Good Thing

Original Postby RubenSomsen

Posted on: August 27, 2022 21:06 UTC

The discussion revolves around the nature and implications of passive investments in comparison to active investments.

It is highlighted that passive investments do not reliably generate returns as they inherently rely on the principle that one cannot gain something from nothing. This contrasts with active investments, where direct involvement and decision-making can lead to tangible returns.

There's an observation concerning the utilization of passive investments as a strategy to counteract inflation. This approach leads to the allocation of capital into sectors like housing and stocks, which may not be ideal. The argument suggests that such allocation might not be the most efficient use of resources, hinting at potential distortions in market dynamics caused by the pursuit of inflation protection through passive investing.

Furthermore, the conversation introduces a nuanced perspective on dealing with inflation and investment strategies. It proposes a dual approach where pricing remains tied to fiat currencies, known for their inflationary tendencies, while savings and settlements are conducted using Bitcoin (BTC), recognized for its deflationary nature. This method aims to leverage the stability offered by fiat for everyday transactions and the value preservation characteristic of BTC for long-term financial health.

Despite the current trend of individuals allocating a significant portion of their savings into passive investments, there's speculation on whether such a mixed financial model would emerge naturally from free-market operations or require orchestration by central banking authorities. Additionally, it acknowledges the reality that not everyone might be inclined to convert all their savings into BTC due to its volatility. Instead, some may prefer to allocate only a portion of their savings in BTC as a hedge against this volatility, indicating a diverse range of strategies individuals might adopt based on their risk tolerance and financial goals.