Is bitcoin immune to inflation?

[DirtyWilly]

Alt cryptos are Bitcoin's inflation.

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[Erdogan]

I have read that one of the chief benefits of bitcoin is that due to it's fixed quantity it is immune to inflation as governments cannot "make" more of them.

Is this really true?  What is to stop say the American government making a bitdollar, pinning the price against the bitcoin and forcing is acceptance as legal tender?  Surely this would effectively deflate the value of a bitcoin?

The bitcoin money supply can be extended by debt. Currently, debt is may be 90 % of the dollar money supply, notes and coins 10%. Probably, debt will play a lesser role in a bitcoin only economy.

[Kaligulax]

bitcoins are immune to M0/MB inflation, meaning that the money supply itself does not inflate, except at the very beginning (which we're still in) while the original 21 million BTC get distributed via the mining process. Once 21 million coins exist, they become deflationary since no new coins are issued and, as naturally occurs, money falls out of circulation as wallets are lost.

Bitcoin could still suffer the kinds of inflation most currencies see in M1/M2/M3/MZM such as fractional-reserve banking, but the idea of a publicly published block chain is that at any moment it should be trivial to audit a bank and ensure their deposits are correctly recorded. Essentially, any institution practicing fractional reserve banking should be much easier to spot and those who dislike such practices can more easily walk away from them. There are complications to this model, but that's the ideal anyway.

[odolvlobo]

bitcoins are immune to M0/MB inflation, meaning that the money supply itself does not inflate, except at the very beginning (which we're still in) while the original 21 million BTC get distributed via the mining process. Once 21 million coins exist, they become deflationary since no new coins are issued and, as naturally occurs, money falls out of circulation as wallets are lost.

Luckily the amount of inflation due to fractional reserve is limited. Assuming the reserve ratio is 10%, we can expect the M1 to reach a limit of around 210 million BTC and go no higher.

[Carlton Banks]

Situation described in the OP would cause more problems for the dollar than it would for bitcoin.

It's not possible right now, too many other countries hold various dollar denominated assets. They'd be a pretty pissed off with the US if they did this suddenly without consulting, and if they did consult, it would turn into an ugly haggling situation (I think it's fair to say that everyone has something to lose from most of the possible deals that could be cut)