Lesson 3: WTF is Inflation?

— Inflation explained from first principles as the erosion of purchasing power when the same monetary units buy fewer goods over time.

— The mechanics of inflation: printing more monetary claims on a fixed or slowly-growing real resource base causes prices to rise and purchasing power to fall.

— Keynesian economics argues inflation is necessary to discourage saving and force spending; hard money advocates reject this as offensive paternalism and argue sound money should hold value.

— Inflation is uneven: those with access to newly created money (Wall Street, hedge funds) benefit first by buying assets at lower prices before price adjustment; ordinary wage-earners buy later at inflated prices.

— There is no single "inflation rate" because inflation affects different goods, services, and lifestyles at different rates depending on individual consumption choices.

— On a Bitcoin standard with fixed supply, human productivity and innovation would cause prices to fall in Bitcoin terms as more real resources compete for a fixed 21 million bitcoin supply.

— Ordinary people should own bitcoin immediately, even dollar-cost averaging small amounts weekly, because it is the most sensitive instrument to monetary liquidity changes and benefits from human innovation on a fixed-supply standard.

— Do not own bonds or hold currency denominated in dollars; the yield will not compensate for inflation, and lenders will lose as governments debase the currency to reduce real debt burdens.

— Understand that you benefit from human progress (AI, energy, medicine, housing breakthroughs) only if you own a non-printable money; on bitcoin, your purchasing power rises as real resources increase, making your life cheaper over time regardless of personal effort.