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> If you call these currencies, then you need to recognize > that they are extremely deflationary and will never be used as > fiat currencies are. For me, on

by noddy1 9y ago

> If you call these currencies, then you need to recognize > that they are extremely deflationary and will never be used as > fiat currencies are. For me, one of the best things about bitcoin is that it is actually going allow a lot of arrogant economic dogma to finally be put to the test, including that: - currencies must be inflationary or the universe will explode and people will save so aggressively that they will die of hunger - printing free money and giving it to rich banks is a good thing and doesn't totally fuck the little guy - monetary stimulus smooths out economic cycles, and totally isn't part of the cause of the ridiculous boom-bust cycles we are having now

mathgenius 9y ago
> economic dogma Let's not forget this one: - regulating the exchanges aids in price discovery
notruthallowed 9y ago
Are you going to provide any reasoning for your 'woke' economic views? It's well understood that a deflationary currency decreases investment incentives.
aoeuasdf1 9y ago
Have you seen this graph? https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg
TACIXAT 9y ago
You need some semblance of stability though. No one is going to agree to pay me 1 BTC per week if they're implicitly giving me a 30% raise in week 2. Just the same, I would not be happy to get paid in an extremely inflationary currency that meant I was taking a pay cut week over week. It has not shattered any belief in traditional currencies or governments for me. In fact, it has made me realize their value. People are just using it for speculation which makes it feel a lot more like a multi-level marketing scheme than a currency.
- cgmg 9y ago
  How does speculation make something a "multi-level marketing scheme"?
  - TACIXAT 9y ago
    First, I should clear up some terms. I say speculation as a contrast to investing. Investing is when you have an understanding of something underlying value (or expected value) based on some financial fact (e.g. past profits). Speculation is when you purchase something and hope for it to go up in value. I see cryptocurrency prices largely driven by speculation. There is no underlying value that justifies the price. This means that the people purchasing cryptocurrencies today are relying on someone else purchasing it at a higher price tomorrow in order to make a profit. I might have used the term MLM incorrectly when what I meant was pyramid scheme.
    - sbenitoj 9y ago
      Isn't it possible that people are using cryptocurrencies as an alternative to restrictive fiat currencies and not just for speculative purposes? (Obviously people are also using them for speculation, but that doesn't mean that's the ONLY current use case.)
    - cgmg 9y ago
      > I might have used the term MLM incorrectly when what I meant was pyramid scheme. You are now using the term 'pyramid scheme' incorrectly. Out of curiosity, do you consider other objects of speculation, including stocks, bonds, futures, derivatives, commodities and real estate, to be 'pyramid schemes'?
- sbenitoj 9y ago
  People are using it for a lot more than speculation, including skirting capital controls imposed by crony bureacrats, buying goods and services that are "morally unacceptable" to puritanical politicians, and as a means of savings in countries where confiscating bank deposits is matter of course.
- 9y ago
pdkl95 9y ago
> currencies must be inflationary or the universe will explode and people will save so aggressively that they will die of hunger That's not the (primary) problem with deflationary currencies. Say you're a typical citizen with at most a median income ($56,516, according to [1]). With that level of income, important purchases such as a (used) car, a post-secondary education, an unfortunate medical emergency, or any other large expense is usually going to require taking more than a trivial amount of debt[2]. Debt denominated in a deflating currency is effectively has a rising interest rate. Ideas about "aggressive saving" only make sense if have the ability to save. Since 3/4 (75%) of workers live paycheck to paycheck and 71% of those workers are in debt[4], a deflationary would directly increase most people's debt and effectively be a type of institutionalized usury. > printing free money and giving it to rich banks is a good thing and doesn't totally fuck the little guy Of course that's bad. Giving money to banks is one of the worst ways to run a "bailout". If you simply handed the money to citizens, a vast majority (that live paycheck to paycheck[4]) would spend it as normal players in the economy. The money would at least get a trip through the economy doing useful things before it ended up back in usual places money accumulates. > monetary stimulus smooths out economic cycles ... As for why any bailout might be necessary, in a perfect world it shouldn't be. However, in our imperfect reality we occasionally run into the fallacy of composition. Austerity tactics are often rational at the individual level, but we all do it at the same time we call it a slowing economy and a smaller GDP. A bailout is a workaround to fix that deadlock; it's bad, but it's probably better than a crashing GDP and a failing economy. The real fix would be some sort of policy or regulation that prevented the deadlock. Good luck on that part; it's a particularly difficult problem with a a lot of noise, complexity, and it's full of occasionally-rational participants - some of which are malicious. > arrogant economic dogma The arrogant dogma in economics is the notion that it is reducible to math[5][6]. [1] https://en.wikipedia.org/w/index.php?title=Household_income_in_the_United_States&oldid=796331923 https://en.wikipedia.org/w/index.php?title=Household_income_... [2] The current gap between real incomes and productivity[3] - and the increased availability and use of debt to (poorly) make up the difference - has the dual effect of making the use of debt much more likely and the size of the debt larger. However, the need for debt will still be common for most people regardless of our current situation. [3] https://commons.wikimedia.org/w/index.php?title=File:Productivity_and_Real_Median_Family_Income_Growth_in_the_United_States.png&oldid=219692071 https://commons.wikimedia.org/w/index.php?title=File:Product... [4] https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html https://www.cnbc.com/2017/08/24/most-americans-live-paycheck... [5] https://www.youtube.com/watch?v=hmWbkPezgtU https://www.youtube.com/watch?v=hmWbkPezgtU [6] https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355 https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355
sbenitoj 9y ago
This, 1,000x this. From your comment I assume you're already familiar with the Mises Institute and the Austrian Business Cycle Theory?
eternalvision 9y ago
For the second point, I disagree. Rich banks are accumulating enough cryptocurrency to be a major player going forward.

by noddy1 9y ago

mathgenius 9y ago

> economic dogma Let's not forget this one: - regulating the exchanges aids in price discovery

notruthallowed 9y ago

Are you going to provide any reasoning for your 'woke' economic views? It's well understood that a deflationary currency decreases investment incentives.

aoeuasdf1 9y ago

Have you seen this graph? https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg https://pbs.twimg.com/media/C8H9i9IUwAEBo5s.jpg

TACIXAT 9y ago

You need some semblance of stability though. No one is going to agree to pay me 1 BTC per week if they're implicitly giving me a 30% raise in week 2. Just the same, I would not be happy to get paid in an extremely inflationary currency that meant I was taking a pay cut week over week. It has not shattered any belief in traditional currencies or governments for me. In fact, it has made me realize their value. People are just using it for speculation which makes it feel a lot more like a multi-level marketing scheme than a currency.

cgmg 9y ago
How does speculation make something a "multi-level marketing scheme"?
- TACIXAT 9y ago
  First, I should clear up some terms. I say speculation as a contrast to investing. Investing is when you have an understanding of something underlying value (or expected value) based on some financial fact (e.g. past profits). Speculation is when you purchase something and hope for it to go up in value. I see cryptocurrency prices largely driven by speculation. There is no underlying value that justifies the price. This means that the people purchasing cryptocurrencies today are relying on someone else purchasing it at a higher price tomorrow in order to make a profit. I might have used the term MLM incorrectly when what I meant was pyramid scheme.
  - sbenitoj 9y ago
    Isn't it possible that people are using cryptocurrencies as an alternative to restrictive fiat currencies and not just for speculative purposes? (Obviously people are also using them for speculation, but that doesn't mean that's the ONLY current use case.)
  - cgmg 9y ago
    > I might have used the term MLM incorrectly when what I meant was pyramid scheme. You are now using the term 'pyramid scheme' incorrectly. Out of curiosity, do you consider other objects of speculation, including stocks, bonds, futures, derivatives, commodities and real estate, to be 'pyramid schemes'?
sbenitoj 9y ago
People are using it for a lot more than speculation, including skirting capital controls imposed by crony bureacrats, buying goods and services that are "morally unacceptable" to puritanical politicians, and as a means of savings in countries where confiscating bank deposits is matter of course.
9y ago

pdkl95 9y ago

> currencies must be inflationary or the universe will explode and people will save so aggressively that they will die of hunger That's not the (primary) problem with deflationary currencies. Say you're a typical citizen with at most a median income ($56,516, according to [1]). With that level of income, important purchases such as a (used) car, a post-secondary education, an unfortunate medical emergency, or any other large expense is usually going to require taking more than a trivial amount of debt[2]. Debt denominated in a deflating currency is effectively has a rising interest rate. Ideas about "aggressive saving" only make sense if have the ability to save. Since 3/4 (75%) of workers live paycheck to paycheck and 71% of those workers are in debt[4], a deflationary would directly increase most people's debt and effectively be a type of institutionalized usury. > printing free money and giving it to rich banks is a good thing and doesn't totally fuck the little guy Of course that's bad. Giving money to banks is one of the worst ways to run a "bailout". If you simply handed the money to citizens, a vast majority (that live paycheck to paycheck[4]) would spend it as normal players in the economy. The money would at least get a trip through the economy doing useful things before it ended up back in usual places money accumulates. > monetary stimulus smooths out economic cycles ... As for why any bailout might be necessary, in a perfect world it shouldn't be. However, in our imperfect reality we occasionally run into the fallacy of composition. Austerity tactics are often rational at the individual level, but we all do it at the same time we call it a slowing economy and a smaller GDP. A bailout is a workaround to fix that deadlock; it's bad, but it's probably better than a crashing GDP and a failing economy. The real fix would be some sort of policy or regulation that prevented the deadlock. Good luck on that part; it's a particularly difficult problem with a a lot of noise, complexity, and it's full of occasionally-rational participants - some of which are malicious. > arrogant economic dogma The arrogant dogma in economics is the notion that it is reducible to math[5][6]. [1] https://en.wikipedia.org/w/index.php?title=Household_income_in_the_United_States&oldid=796331923 https://en.wikipedia.org/w/index.php?title=Household_income_... [2] The current gap between real incomes and productivity[3] - and the increased availability and use of debt to (poorly) make up the difference - has the dual effect of making the use of debt much more likely and the size of the debt larger. However, the need for debt will still be common for most people regardless of our current situation. [3] https://commons.wikimedia.org/w/index.php?title=File:Productivity_and_Real_Median_Family_Income_Growth_in_the_United_States.png&oldid=219692071 https://commons.wikimedia.org/w/index.php?title=File:Product... [4] https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html https://www.cnbc.com/2017/08/24/most-americans-live-paycheck... [5] https://www.youtube.com/watch?v=hmWbkPezgtU https://www.youtube.com/watch?v=hmWbkPezgtU [6] https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355 https://www.youtube.com/watch?v=L5AUAIzciLE#t=1355

sbenitoj 9y ago

This, 1,000x this. From your comment I assume you're already familiar with the Mises Institute and the Austrian Business Cycle Theory?

eternalvision 9y ago

For the second point, I disagree. Rich banks are accumulating enough cryptocurrency to be a major player going forward.