KOL402 | Austrian Economics Discord Conference: Inflation: Its Causes, Effects, Parallels and Death in a Bitcoin World

Kinsella On Liberty

Kinsella on Liberty Podcast, Episode 402. This is my presentation (audio only) at the Austrian Economics Discord Conference: “Inflation, Money, and the State,” Austrian Economics Discord Server (Jan. 7–8, 2023); my talk was "Inflation: Its Causes, Effects, Parallels and Death in a Bitcoin World." Previous appearance: KOL371 | Austrian Economics Discord Conference: Law, Decentralized and Centralized. My talk below: https://youtu.be/Uvi05GJE5LM Final trailer: https://youtu.be/890corLQKFM Original trailer: https://youtu.be/AgsocsxhIws For last year's, see: “Law: Decentralized and Centralized,” Austrian Economics Discord Conference: “The Enduring Importance of the Austrian School,” Austrian Economics Discord Server (Jan. 8–9, 2022) [KOL371]. Related material: Paul Cantor, Hyperinflation and Hyperreality Theodore Dalrymple, "Inflation’s Moral Hazard" Guido Hülsmann, The Ethics of Money Production Adam Fergusson, When Money Dies Hoppe, Democracy: The God That Failed, ch. 1 and TSC, p. 27, on the negative effects of inflation on character Jeffrey Tucker, How the End of Negative Interest Rates Affects Your Life ((Generations over hundreds and thousands of years have been acculturated to believe that good things come to those who wait. Sacrifice some now and you earn greater rewards later. Study hard for the exam and you get an A. Study hard for all exams and you graduate with honors. Graduate with honors and you have a better chance of getting a good-paying job.So on it goes with the whole of life. The more you defer your consumption and indulgence in the here and now, and think about the future, the better off you will be. That presumption is naturally built into the financial system. The yield curve in normal times provides a higher payout in the future than it does in the present. It teaches us to defer consumption, forgoing whatever joy there is in the present, in favor of great reward down the line.Again, in normal times, that means that savers win in the long run. Keep socking money away in the bank rather than taking that extra vacation, give it a few years, and you have a solid nest egg.All of economics is supposed to work this way. The guy alone on the island who wants to catch more fish needs to spend a day or two making a net but in order to afford that time away from scooping up fish as he sees them, he needs to save up food to live on while he constructs his capital goods. )) Kinsella, “Legislation and Law in a Free Society,” Mises Daily (Feb. 25, 2010), (( Longer version: “Legislation and the Discovery of Law in a Free Society,” Journal of Libertarian Studies 11 (Summer 1995), p. 132 )) on negative effects of uncertainty (( Negative Effects of UncertaintyLegislation tends to interfere with agreements that courts would otherwise have enforced and thereby makes parties to contracts less certain that the contract will ultimately be enforced. Thus, individuals tend to rely less on contracts, leading them to develop costly alternatives such as structuring companies, transactions, or production processes differently than they otherwise would have."There is much more certainty in a decentralized legal system than in a centralized, legislation-based system."Another pernicious effect of the increased uncertainty in legislation-based systems is the increase of overall time preference. Individuals invariably demonstrate a preference for earlier goods over later goods, all things being equal. When time preferences are lower, individuals are more willing to forgo immediate benefits such as consumption, and invest their time and capital in more indirect (i.e., more roundabout, lengthier) production processes, which yield more or better goods for consumption or for further production. Any artificial raising of the general time-preference rate thus tends to impoverish society by pushing us away from production and long-term investments. Yet increased uncertainty,