Can Bitcoin's Price Ever Be Stable?

NGDP for a country is merely a statistic compiled by the local government's statistical agency. Like other economic metrics it can be gamed (see Argentine inflation stats), or more commonly, "lite gaming" where people pick a definition of the statistic that is a good fit for their political goals.

Two examples spring to mind. The UK recently got hit with a large bill by the EU. The reason is that a new method of calculating GDP was introduced that tried to incorporate economic activity from the black market (drugs, prostitution etc). This raised the UK's overall GDP by enough to also raise its expected contribution to the EU budget. Is the new GDP statistic more accurate than the previous one? That's hard to say, almost by definition because the activity they're trying to include isn't being reported to any government. It boils down to a guessing game.

For another example, look at the the way house prices are incorporated (or not) into inflation calculations. Turns out countries around the world don't agree on the best way to do this, and use varying methods. Some ignoring housing entirely, others ignore house prices and try to guesstimate what the rent for a property would be (very hard if there are not many renters in the area), etc. It's all rather debatable - and debated.

> This makes trying to stabilize the price to some set of goods very difficult, because no matter what you pick, you'll have to cut supply somehow, and that just won't work without something akin to a central bank.

I'm interested to know which central bank you are thinking of that has recently cut the money supply (btw "money supply" in economics normally means the amount of all money in circulation, not the growth in it). All central banks I know of only ever create more money, they hardly ever (never?) bring down the monetary base long term.

Regardless, you're correct that many cryptocurrency proponents (like me) don't want to see some kind of Soviet style planning committee in charge of the money supply. Partly because there's little evidence it would work. The really sharp changes in Bitcoin's value occur due to press cycles, government actions and press cycles triggered by government actions. For example the huge spike last year was triggered by a combination of the first Silk Road shutdown, a favourable US Senate hearing, and huge activity in China being firstly pumped by that countries capital controls and then suddenly cut off due to enforcement of the same.

But eventually, it seems like these events will stop happening. Governments will have mostly taken an enforceable position on Bitcoin one way or another, so that source of unpredictability will go away. The press will lose interest. Everyone who cares will have heard about it and made a decision. Bitcoin will become boring. At that point I'd hope (and expect!) that it'd be rather stable indeed, or at least the value would slowly fall due to the inflationary pressure. During quiet periods when nobody is really paying attention to Bitcoin its value fluctuates much less.