As a fraction of total world GDP it is true, relative to the efficient markets hypothesis, that expected inflation must always be 0 and there can never be expected appreciation (or depreciation) of any asset.
And measured in those terms, it is still true that “a world in which the market expects Bitcoins to steadily increase in value compared to the dollar” is impossible for the same reasons James_Miller cited.
Yes, there is a certain amount of appreciation that the world could expect; it could expect Bitcoin to keep up with inflation and the growth of market. But the expected growth of the market takes into account risk, and under a fairly weak analog of the EMH, actual expectations of better-than-market growth would make the price of Bitcoin jump until it reached the same price as other instruments that had that expectation.
As a fraction of total world GDP it is true, relative to the efficient markets hypothesis, that expected inflation must always be 0 and there can never be expected appreciation (or depreciation) of any asset.
No. Suppose we are in a zero-growth economy. If an asset is worth $98 today and is expected to be worth $100 in a year’s time, people will only bid it up to $100 today if they are indifferent between $100 of consumption today and $100 in a year’s time. But people are (rightly) not indifferent, they prefer to consume today—hence even in zero-growth economies, you see a positive real, risk-free rate of interest. And nothing about the liquidity cost depends on a growing economy either.
As a fraction of total world GDP it is true, relative to the efficient markets hypothesis, that expected inflation must always be 0 and there can never be expected appreciation (or depreciation) of any asset.
And measured in those terms, it is still true that “a world in which the market expects Bitcoins to steadily increase in value compared to the dollar” is impossible for the same reasons James_Miller cited.
Yes, there is a certain amount of appreciation that the world could expect; it could expect Bitcoin to keep up with inflation and the growth of market. But the expected growth of the market takes into account risk, and under a fairly weak analog of the EMH, actual expectations of better-than-market growth would make the price of Bitcoin jump until it reached the same price as other instruments that had that expectation.
No. Suppose we are in a zero-growth economy. If an asset is worth $98 today and is expected to be worth $100 in a year’s time, people will only bid it up to $100 today if they are indifferent between $100 of consumption today and $100 in a year’s time. But people are (rightly) not indifferent, they prefer to consume today—hence even in zero-growth economies, you see a positive real, risk-free rate of interest. And nothing about the liquidity cost depends on a growing economy either.