One of my biggest pet peeves is financial and economics commentators talking about "printing money" by the Fed. With only 1% of domestic US money being in the form of paper and 99% of it being in digital form and only existing on computers, they (the FED) can create mega-train loads worth of digital "money" with a key stroke. They can cause ever-increasing and rapid boom-bust cycles quicker than ever before. By their nature, each cycle comes quicker than previous ones.
But that is just the US situation. There are over a hundred sovereign nations with their own currencies and each having different ratios of paper to digital money in circulation. The nation of Zimbabwe is probably the best demonstration of the inflation that can be wreaked with paper fiat. They had to remove twelve zeroes from their currency. Obviously, there is no need to do this with digital money.
But there is, I believe, a global pressure building because of the difference in the speed at which digital economies can infuse inflation compared to paper economies. The huge and rapid inflation caused by digital currencies cannot be absorbed by paper economies and, so, they are at severe disadvantages when attacked by outside digital fiat monies.
I picture each sovereign nation as its own tectonic plate. As a digital economy inflates it builds pressures along the places where it intersects with other plates. The pressure caused on one side of that plate get's transmitted against the other side and that plate pushes against yet others and so on. Just like the plates of the Earth build up pressure until there is a break which results in an earthquake, I've come to look at the global economy in a similar way but looking at each economic plate based on the percentage of its paper fiat vs. the percentage of its digital fiat. That ratio determines the plates ability to react to inflation pressures of connected economies.
Just a theory, thought I'd throw it up here.
And Bitcoin would enter in as something of somewhat of an escape valve that can alleviate pressures in different parts of the world (maybe even preventing an earthquake type reaction on a plate).
What you're saying is very interesting and true.
In fact when we say that the banks are printing money out of nothing we're talking about this right that banks have to lend money they don't have. In EU (it's what I know the best) banks need to have only 5% of their value in real currency. It means that when on your bank account there is 1000$, in reality the bank only has to store 50$. The 950 other don't exist. They DON'T EXIST.
But that doesn't prevent you from spending them, and your emloyees, your shops and your attorney accept them. Even if they don't exist...
You're right about the inflation part but there is something even worse, even stronger. It's the lack of sense. Our money is worth nothing. It works simply we still all continue to accept it, to close our eyes on a system that is doomed to fail because every time 1$ is printed, 100$ of debts are created. It has no sense.
While bitcoin do have a meaning, you don't create btc out of nowhere, it is a very precised and controlled inflation, and that's what is important.
Also, it has a decreasing inflation! Which is important too because you can't keep a high inflation for long, our planet has limited ressources and your growth is limited by this reality!
