Macroeconomics for the curious: money, interest and time
An understandable overview of the big forces — money supply, interest rates and time — that shape the value of what you save.
Macroeconomics sounds like something for central banks and news anchors. But a few ideas go a long way toward understanding why your savings behave the way they do.
Money supply: how much exists?
When more money is created in a system, there are more units chasing the same amount of goods. All else equal, that tends to raise prices over time. That's why the money supply is such a central piece of the puzzle.
Interest: the price of time
Interest is the price of borrowing, and the reward for waiting. Low rates make borrowing cheap and saving in cash less rewarding. High rates do the opposite.
Much of economics is about how we value today against tomorrow.
Time: the underrated force
Compounding (interest on interest, or inflation on inflation) seems small year by year, but becomes enormous over decades. Time amplifies both good and bad patterns.
How does this connect to Bitcoin?
Bitcoin is an attempt to take one of the variables — the money supply — and make it fully predictable. If you understand the macro picture, it's easier to see which problem Bitcoin is trying to solve. Read on about sound money.
This is not financial advice. The content is a simplified introduction for educational purposes.
This is not financial advice.
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