Grinonomics: Monetary Policy, Emissions = Inflation fallacy, and Lambo potential of early adopters.
It has come to my attention that many here believe (1) that grin is in fact not the future of internet money, and (2) that even if it were to become a highly transacted medium of exchange, the very property that makes grin ideal for high velocity transacting (it’s constant, infinite emissions and low block time) would come at the cost of early adopters purchasing power (in the form of inflation).
Rest assured, this is not the case.
In this post I will present a novel economic theory intended as a rebuttal to the (seemingly) daily posts on this forum (and elsewhere) regarding infinite emissions and the highly inflationary nature of grin whereby speculators call for a change toward a fixed supply of grin or bemoan that a fork/alternative mimblewible coin will “win” mass adoption based on its potential for price appreciation and its qualities as a store of value.
The thesis of this post, that grin’s infinite emissions and highly ‘inflationary’ early period does not pose a disadvantage to its ability to become the best/most used form of internet money nor to its ability to appreciate in purchasing power based on its increased utilization, will draw primarily from my understanding of cryptoeconomic theory and cryptodynamics pioneered by Eric Voskuil. Eric is the lead developer of a C++ bitcoin library and writes extensively on cryptoeconomics which can be read here.
TL;DR comes directly from his writing on the inflation principle, brackets are my own clarification: “Rising supply market money, such as Gold and early Bitcoin, consumes the same value in goods[capital destroyed in mining] as it creates in new units[block reward emitted] - including the opportunity cost of the capital invested in doing so. As such it produces no change in proportionality and therefore no price inflation.” 
Firstly, when people refer to inflation in the monetary sense they are generally referring to a reduction in purchasing power (price inflation). Under the purposed economic model, however, the inflation of the supply of grin does not equate to price inflation therefore I will refer to supply inflation as “emission” and the reduction of purchasing power as inflation (price inflation).
The money relation is the proportionality of money to goods, or the amount of goods represented by the money. Another way to understand this is “How many units of the money is there chasing how many goods tradable for that money”. Since the amount of goods tradable for (represented by) a money in a free market is a function of demand for those goods in the money we can say that the purchasing power changes in proportion to a change in demand for goods in the money.
Purchasing power is the proportionality of goods represented by a money.
This is simply supply and demand so an increase in the supply of the money for the same amount of goods tradable for the money would imply a decrease in purchasing power as more units of the money is chasing the same amount of goods thus each unit of the money represents less goods. Accordingly, more units of the money are required to represent the same amount of goods as before the increase of the supply of money. This is price inflation.
At this point, one may be saying, “Ok, no shit. this is basic conventional economic theory, so mining emissions would be an increase in supply of the money implying inflation, why am I wasting my time reading this?”
Glad you asked, hypothetical reader. No this is not the case. In order to understand why, you must first understand the economics of mining.
Gold, Grin and bitcoin are what is known as a market money which is to say that its creation is dictated by a free market process. This process is driven by market competition as opposed to a state money which is produced when a state grants a monopoly of production to a central bank. 
Market money is created only as a response to demand for that money. Thus it is produced only if sufficient demand makes its production profitable. This is evident in gold. It is only produced when its cost of production is justified by demand for it in the market. a lack of demand for it at a certain price implies no production if production requires a greater cost (including opportunity cost).
In the mining of crypto currencies this can be seen as profits are competed away. the equilibrium of mining a coin can be described by the following identity:
The price of the coin = the capital required to mine the coin + the opportunity cost of not deploying that capital otherwise
thus in a perfectly competitive market the only profit in mining is the opportunity cost sometimes called the global return on capital. 
Since the miner must destroy capital in the form of electricity and hardware in order to make a return in mining they are only willing to destroy as much capital as is offered by the market in return for the coins they are mining. Since if no demand for the coins at that price existed it would imply no production of the money and cost of mining those coins would decrease to meet the price at which those coins are demanded. In this way demand for the coins at a certain price proportionately drives demand for the goods (electricity/hardware) which must be destroyed to create the coins thereby preserving the money relation of goods demanded to units of money thus implying no change in purchasing power (i.e. no inflation).
This can be illustrated as follows:
The market demands 1 grin at price X
The miners are willing to invest [X - opportunity cost] in mining 1 grin
The miners demand electricity, hardware valued at [X - opportunity cost]
The miners destroy this electricity, hardware and opportunity in the mining process to create 1 grin
The miner sells 1 grin to the market in exchange for X
The demand for goods in the money has increased by 1 grins (valued at X)
The supply of grin as increase by 1 grin (valued at X)
The important take away here is that demand for the coin translates proportionately into demand for goods to create that coin which implies no change in the ratio of the amount of goods demanded to units of the money. Thus the creation of each unit of money through the market process of mining preserves the money relation and implies no inflation.
in this way, it can be said that Gold, Bitcoin, Grin and other market monies are not inflationary based on their emission curves since they are driven by a market process.
The decrease in the nominal price of a coin is simply due to a lack of demand for goods in the money. Since if one does not want to purchase goods using the money they have no demand for the money.
This explanation is based on my current understanding of the economics at play in these systems, I fully reserve the right to amend, disavow, or flip flop as I study and explore more new information. After all, I used to believe gold and early bitcoin were inflationary currencies until I fully came to understand these proofs offered by cryptoeconomics and had to change my view. New information will undoubtedly alter my views again so please let’s discuss more in the comments.
More Thoughts and theories coming soon. Follow on twitter @HayekCrypto