I decided to ask Google AI: Search Labs | AI Overview Inflation in an economy is primarily created when there is an excessive increase in the money supply relative to the available goods and services, often caused by factors like loose monetary policy, high consumer demand exceeding supply ("demand-pull inflation"), or significant rises in production costs ("cost-push inflation") due to factors like labor costs or raw material prices. Key points about inflation: Quantity Theory of Money: This economic principle states that if the money supply increases faster than the economy's ability to produce goods and services, inflation will occur. Demand-Pull Inflation: When consumer demand for goods and services outpaces the available supply, businesses can raise prices due to the high demand. Cost-Push Inflation: If the cost of production inputs like labor or raw materials significantly rise, businesses may pass these costs on to consumers in the form of higher prices. Factors that can contribute to inflation: Government spending: Excessive government spending can inject too much money into the economy, leading to inflation. Low interest rates: When central banks set low interest rates, it can encourage borrowing and spending, boosting demand and potentially causing inflation. Supply chain disruptions: Disruptions in supply chains can lead to shortages of goods, pushing prices up. Wage increases: If wages rise significantly without a corresponding increase in productivity, it can contribute to cost-push inflation. Natural disasters: Natural disasters can disrupt production and lead to price increases for affected goods. Oil price shocks: Fluctuations in oil prices can significantly impact inflation levels, especially when oil is a major input cost for many industries. Setting aside natural disasters for which there's isn't much that can be controlled, I see 2 clear paths to inflation 1. The one many like to focus on is wage increases. Pay $20/hr to flip burgers or $150k base salary to a key industry union worker and soon enough wages across the board increase accordingly because no one wants to work for $20/hr if the burger flipper sets the low standard, unless they have no choice. As I've often argued, key industries union labor is another outrageous example of inflationary pay packages than can reach well above $300k/year, although they justifiably can point to senior management multi million dollars pay packages as justification for theirs. The victims of these salary inflationary pressures are the white collar engines of enterprise, small businesses and blue collar non union labor, not a small percentage of the working economy. But what interests me at this time is QTM (Quantity Theory of Money) and how BTC (and other cryptos) fits in it. For example, if I had bought 1k BTC 10 years ago (I wish) at $111, today I'd almost be a billionaire doing nothing more than bet 100k on an idea. Also, many of the content creators on the various platforms make hundreds of thousands of dollars a year (fewer make millions), money paid by the platforms based on viewership. This segment of the economy created many millionaires over the past 15-20 years. Don't these 2 examples create massive inflation and produce (at least in my first case) insignificant contributions to the economy?
I think Bitcoin is like Gold or people investing their retirement account. Of course if you made a lot of money it acts more like people who made a lot of money in an IPO. The upcoming IPOs from the AI companies in the next few years will be inflationary at least in the SF bay area housing market. But people outbidding each other for a shack in Saratoga or Palo Alto doesn't really affect the inflation for regular people, I don't think. It seems inflationary but only at the high end.
imo, Not massive inflation, but some inflation depending on how fast and how high btc price goes, the longer it takes, the more distributed the impact of the wealth effect, the less price inflation as a result in the same way local inflation, especially in Seattle, more pronounced in the real estate and trickled up and down, from all the millionaires created by Microsoft and Starbucks , similar also in the Silicon Valley, San Francisco, from all the tech startups and very high salaries and stock options similar also in Singapore, where you're from, from an impoverished nation, to a global financial center, where owning cars and real estate have very high costs but btc is global asset, and how many are able to benefit from the wealth effect, but if btc goes to $1M next year, the tide will lift all boats, doge, pepe, eth, sol, and all the other coins, crypto assets industry as a whole currently a little less than $4T market cap, may go to $15-20T I do not know how to quantify it, I just bought a Tesla a couple of weeks ago, and the price is much cheaper than I paid for in 2021, and that's a favorite car of the crypto bros, somehow btc bull market did not inflate the price of Tesla EV's Let's wait and see
2% of wallet addresses (over 1 million) hold more than 90% BTC and 46 million wallets hold at least $1. So 10% of remaining BTC are shared among 45 million people or so. Of course everyone coulda woulda shoulda bought a BTC 15 years ago. At the same time, close to 20 million BTC have been produced to date (18 million held by 1 million people, avg 18 BTC per wallet; 2 million held by 45 million people which avg 0.04 BTC per wallet). Perhaps BTC is representative of general wealth distribution after all... https://river.com/learn/who-owns-th...account for,top 100 richest bitcoin addresses.
Because Tesla isn't catering to the crypto bros. They prefer lambos and those are definitely going up in price to cater to the ever wealthier bros. This leads to the question, how many exotic cars/yachts/mansions ought to be built to satisfy the ever increasing number of crypto/tech/cc multi millionaires?! I get that everyone ought to be free to do as they please with their money, but the new rich bling bling opulence displayed incessantly and indecently in our media feeds has a feel of end of empire orgasm.
It wasn't really underground by then which is why it made the olympics...in the 90's you had the X-games.
It does for fiat. (Oct 02, 2020) https://cointelegraph.com/news/fiat-inflation-has-cost-bitcoin-hodlers-20-over-the-past-decade
BTC has been fluctuating but staying above $90K and nearing $100K. January could be pivotal as Trump’s second term starting. I’m watching closely to see if it remains above $100K for stronger momentum.
simple ... "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced. only by a more rapid increase in the quantity of money than in output." - milton friedman