So I've been thinking a lot about inflation recently. This is just some of my meandering.
Fiat money has involuntary inflation created by autocrats and then pyramided up with fractional reserve banking practices.
Crypto has voluntary inflation created originally as an incentive to keep the network going.
Whether it's voluntary or involuntary, inflation reduces purchasing power from those that hold money created previously. In the fiat case, it's especially immoral as that stolen purchasing power is used to fund wars, distort the economy, and generally make the world a worse place. Nobody would willingly pay for all this evil through taxes, so the go-to move is to steal the value through inflation.
And then I was reading the LEO burn report: https://email@example.com/steemleo-burn-report-4-approaching-1-million-leo-burned which got me thinking. LEO has done fairly well and one of the big reasons for that is that the available money supply has actually decreased over time. There has been more burned than created. Less to go around, more purchasing power... sort of.
That's only part of the story because when you look at it by account, what is really happening is that the dead money held in the official sell wall accounts is being destroyed and the amounts held by users is going up. So in terms of usable float, the supply is still increasing. Fortunately, under the competent leadership of @khaleelkazi, utility is increasing faster than the usable float so people are staking in anticipation of the token being worth even more in the future. It's a better situation than most cryptos find themselves in.
Still though, we know that there is no optimal quantity of money. Prices will adjust to any given quantity in time. Crypto inflation is created in the hope that the marginal incentive to do whatever actions are required (maintain a node, produce blocks, upvote content, etc) is more supporting of total network value than the damage done by inflation. In a few cases that has worked out. In most other cases, it has not. And that's OK. Many experiments need to be performed before we can find what works.
What would a static supply crypto look like?
Ideally, the quantity of money would remain constant and people would increase or decrease their holdings through the sale and consumption of goods and services. But how do we get to such a state?