This is a guest post by Chris Pardo and the opinions expressed are those of the author and don’t represent the views of Bitcoin Magazine or BTC Media.
Inflation is one of those read-the-small-print kind of taxes that people don’t often think about even though it can have a major impact on their finances and, thereby, on their lives.
Rising long-term inflation is more insidious than you might think because it can steadily and most assuredly decrease the value of your earnings/savings – especially, if your taxes aren’t indexed to compensate you for the cost of inflation. Inflation has always been the bane of many businesses and individuals alike.
One thing is clear: something needs to be done.
If cryptocurrency, perhaps Bitcoin, was globally accepted as the world’s reserve currency, how well could it manage inflation and provide transparency compared to the U.S. dollar, arguably the world’s primary reserve currency ?
The world of fiat currency seems straightforward enough: Delegate monetary policy to those elected officials most capable of keeping a standardized and stable medium of exchange going.
In practice, however, things get complicated, and often the policies and the mechanisms to carry out the policies are convoluted and not as transparent as they could be.
For example, the Federal Reserve System (the Fed) attempts to manage inflation by using open market operations , the discount rate , and reserve requirements , but this monetary system has not been able to reduce long-term inflation.Much of this instability in the money supply is due largely to the practice of fractional-reserve banking/lending by commercial banks and lenders and the Fed’s imprecise, volatile way of increasing and decreasing the money supply by using bond transactions, discount rates and reserve requirements, which ultimately swings the economy and the money supply exponentially upwards or downwards.With the current monetary system, regardless […]
