@lucylin took issue with my "Inflation is good" post!
https://peakd.com/hive-174578/@lucylin/one-bean-plus-one-bean-does-not-make-a-casserole-wishful-thinking-does-not-change-this
Gotta love when you write a comment on an original post that's five times longer than the original post. Spent too many resources on countering the counter-argument and now I feel the need to rehash it here, just in case anyone else gets any funny ideas (like me being wrong).
First off
I like @lucylin. Don't ask me why. I like a lot of people here that don't make sense to me. In fact, one day I'm going to download the whole blockchain and find my first interactions with some of these people. I swear, they must have forgotten our first interactions, or simply enough time has passed and enough more positive interactions happened to nullify those first impressions.
I have "fond" memories of talking some major shit to people here. Usually politically motivated left vs right issues, as I often find myself on the far left in many situations (Except gun control, go guns! I don't even own one.)
I've been in quite a few scuffles with men's-rights activists here. Your sexism and entitlement is noted. Spoiler alert: straight white men are doing just fine. I checked. I'm living it.
I even have a memory of telling this super religious right-wing guy that he was basically Satan's little slave and he didn't even realize it. I made a good case on that front, even if it was horrifyingly dickish. A month later the same guy is talking to me like we're good friends. WTF? Did he forget he's talked to me before? Eh, whatever, let it ride!
I'm trying to ascend past partisan politics. They are "The Children's Table of Politics". I can't believe I haven't written that post yet... soon™
Oh yeah!
Let's also not forget my recent juvenile post regarding @baah and my #lastword technique. I'm just full of piss and vinegar, just like so many others here. Yet here we all stand, technically all on the same team. It's pretty weird when you actually think about it.
In any case
@lucylin seems to think my "Investors want inflation" argument can be countered with "simple math". Double the supply; half the value. Surely, more than one person must have this view (hundreds... thousands... millions), so now I feel the need to address it.
Simple math
Unfortunately, there is no such thing when one is discussing economy network effects. Simply printing money can not reduce it's value or increase it's supply.
Currency liquidity can be thought of as literal liquidity, like in a river or ocean. You can't even always see how or why the water is moving. It is ruled by Chaos Theory, and completely unpredictable emergent variables pop up all the time.
Printing money cannot increase its supply, just like rain can't raise the water levels of a river. The liquid has to get where it actually needs to go before it starts interacting in the way you expect it to. Even then, Chaos theory makes many of the predictions extremely flimsy.
If you get a couple inches of rain in a short time period, sure, you know the river is going to turn into a chaotic nightmare. You can even use math to accurately guess how high the water levels will raise and how fast the current will go. But can you guess if that rock is going to get pushed over? Can you guess if the dam is going to break? Not really. You can speculate... that's about it.
Unfortunately, in the OP, it seems that even my main point is being completely misunderstood. Didn't think I was going to have to lawyer up and explain every little nuance, but that's life for you.
The premise of the post was simple: investors love high inflation on DPOS because they control said inflation. I thought that much should be obvious, because the investors control the network so they would obviously change the system if it wasn't serving them.
Example
- I have 10000 Hive powered up.
- One Hive coin is worth $1.08.
- My investment is worth $10,800.
- One year goes by (~8% inflation).
- One Hive coin is worth $1.00
- I allocate 20.8% inflation to myself.
- I now have 12080 coins worth $12080.
- In one year I gained 12% ROI from inflation alone.
- More inflation nets me more ROI as an investor.
How are you allocating 20.8% APR?
As stated in the OP, investors (vest holders) get to control all the inflation generated by non vest holders. Liquid coins create inflation that get's sent to the reward pool that is in turn control by those who own vests.
The current ratio of powered up coins to total coins is 38%, with 137.5M powered up and 360M liquid. 1 / 0.38 = 2.6, meaning all vest holders get to allocate a multiplier of x2.6 more inflation than one may originally speculate.
Again, there is no argument to be made against my stance.
Inflation does nothing but line investor pockets with more money. End of story. You can try to make the argument that the liquid holders will get mad and exit, but that is also false, and it is also not these people making the argument for reduced inflation. The liquid holders are gamblers and bot traders, they don't care about a measly 8% loss per year when they are trying to make x10 gains.
Again, all this implies that inflation automatically is equivalent to devaluation.
Which it obviously isn't. What if the inflation is allocated into an investment fund? Maybe you'd call this fund something like the Decentralized Hive Fund. I know this is a stretch, but what if we used our inflation to invest in our own network? Crazy, I know. It could never work.
So to say that (Inflation == Devaluation) unconditionally in this context is to essentially say there is no such thing as a successful investment. If you believe that it is impossible for the inflation allocated to the Decentralized Hive Fund to generate more value than it dilutes... well I just don't even know what to say to that. You might as well say the stock market doesn't exist.
What gives a currency value?
This is another question we must look at. In the context of (Inflation == Devaluation) unconditionally, the ONLY thing that gives a currency value is scarcity.
False
A bigger community gives a currency value. A better community gives a currency value. A more efficient community give a currency value. Technological gains and abundance give a currency value. What you can buy with a currency gives it value.
To say that inflation can not be allocated into these factors that increase the value of a currency is just flat out incorrect. There's nothing else to be said really. Even the main point, the main underlying context of investors want high inflation, gives a currency value. Of course that's just speculative gains, so they are kinda lame gains, but whatever.
Unit-bias and mind-hacks
One really cool thing about Hive inflation is that it hacks the human brain. I have an upvote of $1, and let me tell you, it is much easier to upvote someone for $1 and create inflation "out of thin air" than it is to tip that same person $1 out of my own pocket (so to speak). When you add curation to the mix and know that a good chunk of that money is going to get kicked back to yourself, it becomes even easier to part with your money and increase decentralization on the platform. This is one aspect of inflation that I think a lot of people don't think about, and it's super important.
PERCEPTION IS REALITY.
It should not matter if you upvote someone or tip them an equivalent amount, but to our brains these things are registered completely differently. The same idea can be applied to UX (user experience). A bad user experience on the frontend can ruin everything, even if the way the backend works is exactly the same on 2 different platforms.
Fiat
What has fiat done for us recently? What kind of developments are they making? The big ones were checking accounts, credit/debit cards, and electronic money via the SWIFT system (created in the 1970s). I guess services like PayPal and Venmo are the recent up-and-comers.
Regardless
Fiat is a stagnant fetid corrupt cesspool that hasn't had any real development for DECADES. Healthy competition is purposefully crushed using heavy-handed regulation and big-money buyouts. Meanwhile, we now have crypto, a desperately needed technology that spawned in opposition to this. A technology that is extremely censorship/regulation resistant and full of potential that cannot be so easily squashed.
We've been under the fiat boot for so long, it's hard to imagine how inflation could be a good thing. Simply put, it's a good thing because we control it, and if we lose control we opt in to another competing system. Easy. Competition in the financial sector has returned with decentralization leading the way. Truth be told, this was the only path forward, and has been held back for decades now. We have a lot of ground to cover.
Conclusion
It kind of makes me look like a tool to respond this way, so reactionary to criticism. This is especially true when considering the account in question. It's not like my ideas are being tossed out by the people who could actually implement them.
Still, perception is reality, and I know my audience. If one person voices their opinion, 100+ others silently agree. It's all good though, they can be wrong, and I don't need to prove to anyone that I can admit to being wrong, as I have done countless times.
Question
Would you rather have 10000 coins worth $10800 or 12080 worth $12080?
I'll wait...
Simple math, indeed.
Return from Inflationary Economic Principals: No Such Thing As "Simple Math" to edicted's Web3 Blog
