Inspirational song, Mind Games - John Lennon ( 1940-1980) and The Plastic U.F.Ono Band
Bitcoin replaces dollar, let's continue the thought experiment. As already written in star is born 7, in my opinion the result of mix (hard cap + rising demand + interest pressure) would be increasing value.
Bitcoin prices from december 2017 would look very tempting. Courses would only know one direction, upwards.
Bitcoin prices of 100K or million would not surprise me. (imaginary prices , there is no other currency)
Assumption 1, bitcoin would have an annual value increase of at least 20%. Result; people would hoard bitcoin, expenditure would be limited only to the most necessary. Household demand for goods and services would fall.
Falling demand also has negative effects on supply side, production is falling, it comes to layoffs, unemployment is rising.
The tax revenue of the state sink, declining tax revenues result in declining investments in infrastructure, education, social projects, state basic research. Lack of education, increasing social discards, civilization achievements are slowly being reduced, democracy depleting, barbaric power of the stronger one wins.
Assumption 2, there are no banks, financial institutes, yes bitcoin has made it. Let's say you have a great business idea, and do not have any bitcoin to start the business, it needs a decent sum. What are you going to do?
First, you have to find someone who will lend you bitcoin. Such a loan agreement certainly does not result in anonymity. How would we call bitcoin lenders? With natural value increase of 20%, interest rates would theoretically have to be above 20%, good luck with that and new business.
Who cares about payment defaults and delays? The manipulative "evil state" without tax revenues and which is not able to afford propper police? Or we would have a boom of repo mans/womans?
Well, maybe, maybe we would not think so much about the value of bitcoin, but about currency functioning in an economy. Does it make trade and investments easier or more complicated.
Live Forever - Oasis (1991-2009)
Peace
