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@ Milos
2025-05-06 18:55:40
"Price stability" translates this from the monetary pie to the economical pie of goods and services.
If a central bank achieves its goal of price stability - 2% CPI inflation - and we assume the inflation is weighed up for by a mix of stocks, bonds and interest on deposits, one's slice of the pie, or goods and services that can be afforded, stays the same.
This seems like a good thing, both to the central bankers and majority of the population, since we are used to inflation as a naturally occurring phenomenon. In fact, most people (and perhaps even many central bankers) believe that the central bank in this case has done a great job.
There are two main problems. Although people might not notice the pie growing in size (productivity gains) when looking at their own, unchanging slice. But they will notice that the contents of the pie changes. All necessities in their slice are slowly replaced by cheap consumer goods (the CPI does not include houses etc., and cheaper electronics and plastics will make up for more expensive food) - all the while the slice stays the same price on paper.
The second problem is that the ever-growing part of the pie ends up somewhere (ie. those closest to the money creation). This is the most dangerous, as when inequality gets out of hand, societal unrest risks getting out of hand as well.
The slice of the bitcoin pie remains constant as a proportion of both the bitcoin pie and the economical pie of goods and services. In nominal terms, while the slice of the bitcoin pie remains constant just like in the fiat pie, it translates to slice of the economical pie of goods and services that grows in proportion to the pie itself.