Damus
Lyn Alden profile picture
Lyn Alden
@LynAlden
When money inflates in supply, employers have the benefit of the status quo, and wage earners have the burden of work to negotiate higher nominal wages to keep up.

The effect is subtle in developing countries, a few percentage points per year, but it's always there behind the scenes. People often have to switch jobs to get proper higher wages, and avoid the anchoring bias from their prior employer. This is all because of dilutive fiat money.

The problem becomes more obvious in developing countries.

For example, the IMF tells Egypt to cut its currency in half relative to the dollar, if it wants some loan relief. It does. Now, every Egyptian wage earner has to try to negotiate a raise to regain some portion of their prior wages in terms of global purchasing power. Virtually all of them will not be able to. And then seven years later they do it again.

But when money deflates in supply, and the unit of account therefore appreciates, wage earners gain the benefit of the status quo in negotiations. If their salaries merely remain the same as averages prices go down, they have gained a raise (which makes sense, with greater experience).

The burden of work shifts to the employer, who has to argue that wages should be cut in line with prices.

I think the magnitude of this effect is poorly understood. If it were more understood, I think a subset of labor-oriented political proponents would appreciate hard money a bit more.
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Artur…qywr · 138w
💯
Ray Ray · 138w
I’ve been trying to articulate to less libertarian friends that bitcoin shifts the power away from capital towards labor. Thanks for putting the fine point on what I’ve not been able to yet.
a source familiar with the matter · 138w
The ideal is commodity money (specie) - which being produced by the same industrial processes as everything else maintains stable value and so nobody has to renegotiate
Sourcenode · 138w
I have often wondered how this will work in practice as the price of goods and services of any business will trend lower continuously. Normalizing wage decreases will be a strange challange, but as you said, that provides more leverage for employees.
Grey · 138w
#[0] 🪬
Reed · 138w
On a bitcoin standard there will be no salary employees. Way more contract work, and it will become the norm to renegotiate regularly with hourly wage earners.
DSF · 138w
Is deflation absolute? Or just a way of talking about lower inflation?
NyamiDev · 138w
You are so good at explaining things. Thank you.
halfnull · 138w
3 years max is the game. keep that resume updated. loyalty to a single employer is dead.
halfnull · 138w
3 years max is the game. keep that resume updated. loyalty to a single employer is dead.
clavius · 138w
Keynesians know this and think it's bad - sticky wages
Vince Canger · 138w
Onboarding non-technical people to bitcoin is still a huge hurdle.
The Bitcoin Psychologist · 138w
Governments lie and steal. Inflation is theft.
Kybe Vox · 138w
Looking forward to reading you book, since your insight are priceless.
al11 · 138w
like your insights and explanation style - thank you for your great work. "pull request:" should be "average prices" instead of "averages prices" - can't help but to really read your stuff, Lyn :)
Sumbu Botol · 138w
Karl Marx approved it
Christian · 138w
Oh, I am very much aware of this effect. My kids negotiated a fixed rate of 6000 satoshis for emptying the dishwasher in dec 2022, with renegotiation agreed december 2023. Their labor is freakishly expensive these days!!
kyhd · 138w
Thanks for this insight - I had never thought of inflationary vs. deflationary money like that 🙏
Qa123 · 138w
facts
aaron · 138w
Such a great point Lyn and not discussed enough I think.
Laurens · 138w
Interesting. In Belgium wages are automatically indexed based on the consumer price index. Which creates another set of problems
BMD · 138w
Word is spreading. King USD has started a new multi-year bearish trend. https://m.primal.net/HHQI.png
Mark Puddleglum · 138w
Love your reflections, Lyn! Thank you.
Lorenzo Rey · 138w
Employers also suffer pain, higher prices shifts the demand curve downwards thus driving total revenue for employers down. Only cantillionares benefit from inflation
Lorenzo Rey · 138w
Employers also suffer pain, higher prices shifts the demand curve downwards thus driving total revenue for employers down. Only cantillionares benefit from inflation
Gui · 138w
Well said!
Gareth Adams · 138w
Im 37 and ive been getting paid pretty much the same wage since the age 18 as a middle class citizen.
Tom Samuel · 138w
Earth is a prison planet for humans. Whichever way you try to make a living, you have to suffer.
Fully Regarded · 138w
It is a messy and immoral business
Antero Törhönen · 138w
Yes, or what if with deflationary money, the whole job market becomes more gig/freelancing-based? Labor unions are a centralized option in any case. Also, workers have more freedom to choose between work and leisure, due to saving in deflationary money. So the solution kind of exists already, all of...