Drivechains? What do you think that's gonna fix this?
quotingAll volatility is relative. It’s just a product of liquidity. Therefore anything that becomes the most widely accepted and adopted store of value, will necessarily be the least volatile asset as well. This goes doubly so for something with a perfectly fixed supply.
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When people say “god the prices just keep going up all the time” they don’t think “man the dollar is volatile as shit this year,” even though that’s exactly what it means. That’s because the dollar IS the pricing system, thus it appears as if everything *except* the dollar is moving in price a lot, when really it isn’t.
As far as pricing in general, the point isn’t to have *stable* prices, it’s to have *accurate* prices. For example, if one year there is a huge disaster that suddenly makes food very scarce, we don’t want to arbitrarily force prices to be stable, what we want is the opposite, for the volatility to hit the markets as quickly and throughly as possible, because if the price of food doubles or triples after a huge shortage, it will cause an *enormous* amount of economic activity to shift toward food production. Hell doctors and lawyers might actually pause their practice to grow food in the backyard if the price is right. And that’s exactly what we want, a literally explosion in food supply so we can feed everyone. Stability for the sake of stability is economic suicide. It’s a rejection of the entire role that the pricing system plays, and causes economic imbalance, stagnation in genuine productivity and value, and wastes resources where they aren’t needed.
So to break it down:
• A fixed supply money would go up in value constantly if the economy was becoming more valuable
• A fixed supply money would *accurately* reflect changes in economic conditions, which is what is necessary to *respond* to those changing conditions.
• Volatility is relative. The most liquid and most valuable good (money), will always necessarily be the least volatile. Because it’s the thing we use to measure volatility to begin with. A fixed money supply would do this better and more accurately than anything else.