"An improvement in the technology of mining gold or the discovery of new, more accessible sources of gold destroys this initial equilibrium by lowering the costs and, thereby, increasing the profitability of gold production, resulting in an increased annual supply of gold on the market. With an unchanged demand for money, the larger supply of the money-commodity exerts an upward pressure on prices which reduces the purchasing power of money, as each gold ounce now purchases fewer goods and services on the market. Happily, the dilution of the purchasing power of the monetary unit is not the only effect of the augmentation of the supply of gold. A fall in the monetary value of gold also reduces the opportunity costs of employing it in alternative nonmonetary uses like jewelry, dental filling, raw material in industrial processes, etc. As a result, a portion of the additional supply of gold is employed in expanding the supplies of producers’ and consumers’ goods on the market, thus facilitating an increased satisfaction of human wants." — Joseph Salerno ("Money, Sound and Unsound," page 343) Can the same be said of that "commodity" Bitcoin?
Posted on: Sun, 28 Jul 2013 03:07:45 +0000
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