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Every fiat currency is inflationary. Bitcoin is designed to be deflationary, so every Bitcoin will be worth more and more forever. Using Bitcoin as a currency m

by foepys 9y ago

Every fiat currency is inflationary. Bitcoin is designed to be deflationary, so every Bitcoin will be worth more and more forever. Using Bitcoin as a currency makes no sense.

emodendroket 9y ago
It makes a lot of sense if you want to, say, have a mortgage that you keep paying, but your equity never increases in your home anyway.
Frogolocalypse 9y ago
Personally, I've grown quite accustomed to things becoming cheaper to buy. It allows me to buy more things.
- chii 9y ago
  yes, but when this happens enmass, the people making things are going to see that nobody is buying their widgets, and go out of business before it becomes cheap enough. Then their employees get fired, and now there's less things to buy, with less people who have money to buy.
  - Frogolocalypse 9y ago
    In that theoretical world that punishes savers by telling stories of deflation bogeymen, I'm sure. In the real world, I like beer, and when I want to buy a beer, I buy a beer. Except now I can buy more beer, because my savings haven't been debased.
    - emodendroket 9y ago
      A beer is one thing. Only a madman would take out a mortgage, auto loan, or large business loan denominated in a rapidly deflating currency.
      - Frogolocalypse 9y ago
        > Only a madman would take out a mortgage Oh that's the crux of it alright. And why should someone take on debt for a fixed asset? Why exactly should a fixed asset increase in cost? Without debt to fuel that fixed-asset price increase, prices will again align with income, not the amount of debt people are capable of servicing. People will no longer acquire housing, leaving it empty, simply for the capital gain. Bitcoin is the reckoning for that fixed-asset debt bubble. > large business loan If they have a business plan that allows them to create capital by having income greater than expenses, people will invest in their business. If they are just going to sit on assets and expect inflation to take care of it, they won't.
        emodendroket 9y ago
        Because a house I can live in now is worth more to me than a house I can maybe live in in 30 years? Even if you are unconcerned with mortgages, though, loans are the basis of most business operations; in a world where taking out loans doesn't make sense presumably we'd see a lot less economic activity and a lot more just sitting on money waiting for it to deflate. Unless you have some sort of alternate economy in mind (and I haven't met many Bitcoin guys who are planned-economy enthusiasts) switching to a deflationary model would be a complete economic disaster.
        Frogolocalypse 9y ago
        I think bitcoin will finally separate the good debt from the bad debt. It is my personal belief ( as in i don't know of any formal theory ) that debt should only be incurred for the use of building a productive asset. That covers completely your business loans argument. In a deflationary currency, this encourages businesses to ensure that productivity increases will have greater returns than savings. Instead, our financial system has encouraged the acquisition of debt for fixed assets. The only thing this has done is bid up the price of those fixed debts with debt, and handed over the money for supporting that system to banks and their owners. In order to stimulate growth in such a system, the only way that you can function is to tax savings. That's what inflation is. What it forces people to do is to invest in increasingly risky assets, because of the loss of their purchasing power. Hence bubble after bubble after bubble. Crisis after crisis after crisis. Bitcoin will eventually stabilize to an ever appreciating value asset. But what it will allow you to do is save for a house. If you have a business proposal that encourages people to pay you for a good or service, people will invest their savings in it and take on that risk. Banks will instead move back to providing capital to businesses, using savings from people that are willing to invest. Businesses will again focus on productivity increases, because that's how you get access to capital. I also don't think it is going to be resisted quite as much as people think it will be. People still need to pay their taxes, and that is not going to stop. The main thing it is going to do is prick the bubble of consumer debt, and remove the banking middle-men from that space. That alone is a multi-trillion dollar industry, let alone the annuities that banks own and graft from, from those assets. Removing these people (i.e. banking debt suppliers) from positions of power, by strangling their access to capital, is a justification for bitcoin in its own right. Imagine a world in which banks didn't control governments. That's the way it is supposed to work i think. It is pure genius.
wyager 9y ago
This argument is silly and people should feel silly for repeating it over and over. The same is true of almost any traditional investment, and yet people obviously liquidate such investments to purchase things. The only reason people don’t directly trade in appreciative assets all the time is that they’re bulky and infungible.

by foepys 9y ago

Every fiat currency is inflationary. Bitcoin is designed to be deflationary, so every Bitcoin will be worth more and more forever. Using Bitcoin as a currency makes no sense.

emodendroket 9y ago

It makes a lot of sense if you want to, say, have a mortgage that you keep paying, but your equity never increases in your home anyway.

Frogolocalypse 9y ago

Personally, I've grown quite accustomed to things becoming cheaper to buy. It allows me to buy more things.

chii 9y ago
yes, but when this happens enmass, the people making things are going to see that nobody is buying their widgets, and go out of business before it becomes cheap enough. Then their employees get fired, and now there's less things to buy, with less people who have money to buy.
- Frogolocalypse 9y ago
  In that theoretical world that punishes savers by telling stories of deflation bogeymen, I'm sure. In the real world, I like beer, and when I want to buy a beer, I buy a beer. Except now I can buy more beer, because my savings haven't been debased.
  - emodendroket 9y ago
    A beer is one thing. Only a madman would take out a mortgage, auto loan, or large business loan denominated in a rapidly deflating currency.
    - Frogolocalypse 9y ago
      > Only a madman would take out a mortgage Oh that's the crux of it alright. And why should someone take on debt for a fixed asset? Why exactly should a fixed asset increase in cost? Without debt to fuel that fixed-asset price increase, prices will again align with income, not the amount of debt people are capable of servicing. People will no longer acquire housing, leaving it empty, simply for the capital gain. Bitcoin is the reckoning for that fixed-asset debt bubble. > large business loan If they have a business plan that allows them to create capital by having income greater than expenses, people will invest in their business. If they are just going to sit on assets and expect inflation to take care of it, they won't.
      - emodendroket 9y ago
        Because a house I can live in now is worth more to me than a house I can maybe live in in 30 years? Even if you are unconcerned with mortgages, though, loans are the basis of most business operations; in a world where taking out loans doesn't make sense presumably we'd see a lot less economic activity and a lot more just sitting on money waiting for it to deflate. Unless you have some sort of alternate economy in mind (and I haven't met many Bitcoin guys who are planned-economy enthusiasts) switching to a deflationary model would be a complete economic disaster.
        Frogolocalypse 9y ago
        I think bitcoin will finally separate the good debt from the bad debt. It is my personal belief ( as in i don't know of any formal theory ) that debt should only be incurred for the use of building a productive asset. That covers completely your business loans argument. In a deflationary currency, this encourages businesses to ensure that productivity increases will have greater returns than savings. Instead, our financial system has encouraged the acquisition of debt for fixed assets. The only thing this has done is bid up the price of those fixed debts with debt, and handed over the money for supporting that system to banks and their owners. In order to stimulate growth in such a system, the only way that you can function is to tax savings. That's what inflation is. What it forces people to do is to invest in increasingly risky assets, because of the loss of their purchasing power. Hence bubble after bubble after bubble. Crisis after crisis after crisis. Bitcoin will eventually stabilize to an ever appreciating value asset. But what it will allow you to do is save for a house. If you have a business proposal that encourages people to pay you for a good or service, people will invest their savings in it and take on that risk. Banks will instead move back to providing capital to businesses, using savings from people that are willing to invest. Businesses will again focus on productivity increases, because that's how you get access to capital. I also don't think it is going to be resisted quite as much as people think it will be. People still need to pay their taxes, and that is not going to stop. The main thing it is going to do is prick the bubble of consumer debt, and remove the banking middle-men from that space. That alone is a multi-trillion dollar industry, let alone the annuities that banks own and graft from, from those assets. Removing these people (i.e. banking debt suppliers) from positions of power, by strangling their access to capital, is a justification for bitcoin in its own right. Imagine a world in which banks didn't control governments. That's the way it is supposed to work i think. It is pure genius.

wyager 9y ago

This argument is silly and people should feel silly for repeating it over and over. The same is true of almost any traditional investment, and yet people obviously liquidate such investments to purchase things. The only reason people don’t directly trade in appreciative assets all the time is that they’re bulky and infungible.