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 · 142w
💯
Ray Ray · 142w
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 · 142w
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 · 142w
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 · 142w
#[0] 🪬
Reed · 142w
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 · 142w
Is deflation absolute? Or just a way of talking about lower inflation?
NyamiDev · 142w
You are so good at explaining things. Thank you.
halfnull · 142w
3 years max is the game. keep that resume updated. loyalty to a single employer is dead.
halfnull · 142w
3 years max is the game. keep that resume updated. loyalty to a single employer is dead.
clavius · 141w
Keynesians know this and think it's bad - sticky wages
Vince Canger · 141w
Onboarding non-technical people to bitcoin is still a huge hurdle.
The Bitcoin Psychologist · 141w
Governments lie and steal. Inflation is theft.
Kybe Vox · 141w
Looking forward to reading you book, since your insight are priceless.
al11 · 141w
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 · 141w
Karl Marx approved it
Christian · 141w
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 · 141w
Thanks for this insight - I had never thought of inflationary vs. deflationary money like that 🙏
Qa123 · 141w
facts
aaron · 141w
Such a great point Lyn and not discussed enough I think.
Laurens · 141w
Interesting. In Belgium wages are automatically indexed based on the consumer price index. Which creates another set of problems
BMD · 141w
Word is spreading. King USD has started a new multi-year bearish trend. https://m.primal.net/HHQI.png
Mark Puddleglum · 141w
Love your reflections, Lyn! Thank you.
Lorenzo Rey · 141w
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 · 141w
Employers also suffer pain, higher prices shifts the demand curve downwards thus driving total revenue for employers down. Only cantillionares benefit from inflation
Gui · 141w
Well said!
Gareth Adams · 141w
Im 37 and ive been getting paid pretty much the same wage since the age 18 as a middle class citizen.
Tom Samuel · 141w
Earth is a prison planet for humans. Whichever way you try to make a living, you have to suffer.
Fully Regarded · 141w
It is a messy and immoral business
Antero Törhönen · 141w
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...