Sound money effects on the economy

Elimination of Inflation Theft:

• Fiat Currencies and Inflation: Fiat currencies, like the US dollar or the euro, are subject to inflation. Central banks can print more money, leading to a decrease in the currency's purchasing power over time. This is often referred to as "inflation theft," as it erodes the value of savings and income, particularly affecting those who don't have access to inflation-hedging investments.
• Bitcoin's Limited Supply: Bitcoin has a capped supply of 21 million coins, and its issuance rate is predetermined and decreases over time (halving events). This scarcity mimics the properties of precious metals like gold and is in stark contrast to fiat currencies. The limited supply of Bitcoin means that, in theory, it should maintain its value over time, protecting against the inflationary policies often seen in fiat systems.

Lowering Time Preference and Focusing on Long-Term Growth:

• Time Preference: Time preference refers to the degree to which individuals value present goods over future goods. In an inflationary environment, high time preference is encouraged – people are incentivized to spend or invest their money quickly before it loses value.
• Bitcoin and Savings: With a Bitcoin standard, the expectation of a stable or increasing purchasing power over time encourages a lower time preference. People are more likely to save and invest for the long term, focusing on sustainable growth and accumulation of wealth.

Certainty and Predictability in Monetary Policy:

• Fiat Uncertainty: Fiat systems often suffer from unpredictable monetary policies, where central banks can unexpectedly change interest rates or engage in quantitative easing, affecting the economy and currency value.
• Bitcoin's Predictability: Bitcoin operates on a transparent, unchangeable protocol. The rate of new Bitcoin creation is predetermined, and the total supply is fixed. This predictability offers a stark contrast to the often reactive and opaque nature of fiat monetary policy.

Proper Market Incentives and Value Production:

• Fiat Systems and Market Distortions: In a fiat system, central banks and governments can influence the economy through monetary policy and fiscal spending, sometimes leading to misallocation of resources and favoring certain sectors over others.
• Bitcoin and Market Efficiency: A Bitcoin standard could theoretically lead to a more efficient allocation of resources. Without the ability to artificially manipulate the currency supply, investments and capital would flow towards sectors and businesses that are genuinely creating value, rather than being influenced by monetary policy or government intervention.

Reducing the Power of the State:

• State Control in Fiat Systems: In a fiat system, the state has significant control over the currency and can use this power to influence the economy, fund its expenditures, and redistribute wealth.
• Decentralization with Bitcoin: Bitcoin operates independently of any central authority. This decentralization could reduce the state's ability to exert control through monetary policy, potentially limiting what some view as a "parasitic" influence on the economy.