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Time Preference @TimePreference_

learning about human action

Joined November 2023
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Time Preference
@TimePreference_
Mar 8
the wealth gap isn't widening because of capitalism it's widening because asset owners benefit from monetary expansion while wage earners suffer from currency debasement the cantillon effect isn't a market failure, it's a policy feature
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the cantillon effect new money enters the economy at specific points early recipients spend at old prices prices rise as money circulates late recipients face higher prices with old wages inflation is not neutral it systematically redistributes wealth
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time preference determines civilization high time preference: consume now save nothing build nothing low time preference: defer consumption accumulate capital build for the future every great civilization was built by people who planted trees they would never sit under
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the calculation problem prices aggregate dispersed knowledge no central planner can access this knowledge without prices rational allocation is impossible mises proved this in 1920 socialists spent 70 years pretending he was wrong history proved he was right
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legal tender laws the government declares its paper is money it forces you to accept this paper for debts it punishes anyone who refuses it calls this freedom without legal coercion fiat currency would collapse in days
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sound money versus fiat sound money: limited supply market chosen stores value fiat money: unlimited supply government imposed loses value one enables civilization the other enables the state
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the business cycle central banks lower interest rates artificially entrepreneurs invest in long term projects these projects only appear profitable at fake rates rates eventually rise the malinvestments are revealed the boom creates the bust
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capital consumption a factory is built through years of saving inflation makes saving impossible the factory equipment wears out no one can afford to replace it the capital stock shrinks this is how civilizations collapse
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inflation is taxation without legislation the government prints money your savings lose purchasing power no vote was taken no law was passed no representation was given it is the perfect hidden tax
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the gold standard was not abandoned it was destroyed 1933: gold ownership criminalized 1944: bretton woods creates dollar standard 1971: nixon closes the gold window each step required force sound money does not die naturally
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central bank independence is a myth the fed was created by congress the fed chair is appointed by the president the fed enables government deficit spending the fed buys government debt independence would mean saying no they never say no
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gresham's law in action bad money drives out good money people spend depreciating currency people hoard appreciating currency bitcoin sits in cold storage dollars circulate rapidly the market already knows which is superior
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the productivity paradox technology increases output per worker prices should fall as productivity rises instead prices rise year after year the difference is monetary inflation it steals the gains from technological progress
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government debt is deferred taxation the government borrows today you pay interest tomorrow eventually the principal comes due three options: explicit tax raise default inflate they always choose inflation
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savings versus speculation sound money encourages saving for the future fiat money punishes saving through inflation people are forced into risky assets everyone becomes a speculator this is not financial sophistication this is monetary desperation
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comparative advantage one person is better at everything than another they should still specialize and trade each focuses on their relative strength both end up wealthier this is why protectionism impoverishes nations
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minimum wage laws government mandates wage floor above market rate employers cannot afford all workers at new price least productive workers lose jobs first unemployment rises among those the law claims to help compassion through legislation creates the opposite result
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monetary velocity collapse central bank prints trillions money sits in bank reserves velocity falls to historic lows the money never reaches the real economy they call this stimulus it is actually paralysis
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opportunity cost every choice means rejecting alternatives government spending means resources cannot go elsewhere the bridge built is seen the factories never built are unseen economics is the study of what was sacrificed
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regression theorem money must originate as commodity with non monetary value people accept it in trade because of past purchasing power purchasing power today depends on purchasing power yesterday fiat currency breaks this chain it has value only through legal force
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the housing crisis is a zoning crisis government restricts building permits government mandates minimum lot sizes government prohibits density increases supply cannot meet demand prices rise inevitably the affordability crisis is a regulatory crisis
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