7 ms·

What you're saying here goes against any reasonable macroeconomic theory. Deflation causes spending to stop because people hoard money, as spending stops, econ

What you're saying here goes against any reasonable macroeconomic theory. Deflation causes spending to stop because people hoard money, as spending stops, economies dry up, and voila... economic stagnation at best. But no one without a formal education is Economics is likely to even be remotely aware of that. Inflation, and Keynesian economics, have empirically served the world quite well. The government's and social policies that go with them not so consistent BUT and this is the important part-- Economics doesn't give a fuck. Inflation is a tool to allow an economy to grow, deflation is a tool to shrink an economy. Economics is the science of resource management, it's not an opinion. Your opinion is as depressing to me as it is empirically wrong.

sparkie 8y ago
Spending does not stop. It may slow. Most arguments against deflation are largely strawmen, and the historical examples of it are usually a result of too much government intervention, or it following a period of high inflation. Here's an example of deflation: Moore's Law. If computing power is going to double in 18 months, then a computer I buy now will be worth much less in 18 months. If that's the case, best not buy that computer and wait 18 months right? Another example is a car. It loses 20% of its value on purchase and continues to lose value year on year and is eventually worth nothing. But nobody would buy a car if that were the case! Economic theorists are mostly employees or funded by the banks, the central banks and the governments. There's a "consensus" among them that inflation = good because it benefits the industries they work for. Anyway, it does not matter, because Bitcoin cannot be inflated, and if people now have the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice.
- rubyn00bie 8y ago
  > Spending does not stop. It may slow. Most arguments against deflation are largely strawmen, and the historical examples of it are usually a result of too much government intervention, or it following a period of high inflation. Ummm... You realize you just made this up out of thin air, and provided no proof. > Here's an example of deflation: Moore's Law. If computing power is going to double in 18 months, then a computer I buy now will be worth much less in 18 months. If that's the case, best not buy that computer and wait 18 months right? That happens all the time. People wait for refresh cycles but I don't see how this is relevant to currencies or macroeconomics. It certainly backs nothing you've said. > Another example is a car. It loses 20% of its value on purchase and continues to lose value year on year and is eventually worth nothing. sigh You're not accounting for the utility of using the car. At some point the marginal utility of new features will be less than the utility of something today... Microeconomics courses would help clear up this for you. > Economic theorists are mostly employees or funded by the banks, the central banks and the governments. There's a "consensus" among them that inflation = good because it benefits the industries they work for. Conspiracy theory, much? Also that's like saying because physicists are employed by someone they must all be maligned to say the same evil bullshit. Might as well tell me the earth is flat, mate. > Anyway, it does not matter, because Bitcoin cannot be inflated, and if people now have the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice. You're right, the ignorant and poor will be given the opportunity and "choice" to lose their money and savings because ignorant loud mouthed people who have done no actual research or learning are spouting shit which sounds compelling. It's a lot like people selling radioactive tonics to make you live longer at the beginning of the 1900s. People who are ignorant of the science, ramifications, and who don't are to not be are advising people as though they aren't... and people's lives will be ruined for it.
- XorNot 8y ago
  Try and be less literal - spending is suppressed. At every point there's an incentive to avoid spending as much as possible, and it's exponentially regressive - with enough wealth, and no investment - your wealth continues to increase beyond the amount you need to spend to survive. "No investment" being the core point - the rich may get richer currently, but they have to buy stocks, bonds, start companies in order to do so - take risks and temporarily at least hand their money to people with less. Under a deflationary model, they don't - the incentive is to avoid spending and investment, since the 100% safe investment is holding your money. The rich get richer - the poor are forced to part with any currency they have and can never join. Of course the system collapses if you don't have to buy in (i.e. no taxes) because why should anyone join such a regressive system? Which, incidentally, is very much the reason no one should be getting into Bitcoin - all the coins were mined by early adopters, and you getting into Bitcoin is just allowing everyone who has cheap coins to cash out. EDIT: And Moore's law is an ideal example of this problem really - at every point you shouldn't buy a new computer unless the present value you'll gain from one is outweighed by the depreciation in the future. Turns out computers are pretty amazing so this is a lot less of a problem - but computers actually do things. Bitcoins don't.
  - sparkie 8y ago
    > Try and be less literal - spending is suppressed. At every point there's an incentive to avoid spending as much as possible, and it's exponentially regressive - with enough wealth, and no investment - your wealth continues to increase beyond the amount you need to spend to survive. If you use the same argument in reverse for an inflationary economy it doesn't add up. The argument would be that everyone would avoid saving. This is only true if you have hyperinflation. Small amounts of inflation are manageable. The same is true for deflation. If deflation is low, the effects it has are manageable. If we have hyperdeflation, then sure, people will avoid spending as much as possible. If deflation is low, the amount which could be gained by holding the currency is tiny compared to the amount which could be gained by investing it in productive enterprises. The same is true in the inflationary model, because lenders must pay interest on borrowed money, their productive enterprises must earn at least the the amount lent plus the interest and the difference due to inflation, or they'd be making losses. > Of course the system collapses if you don't have to buy in (i.e. no taxes) because why should anyone join such a regressive system? This is why socialist types repeat the same mistakes over and fail to recognize them, or the value of free markets. The reason people would join such a system is because they want to get wealthy too!. People desire wealth. If they desire it enough, they will be productive and climb the ladder to get into the club. If they are unproductive, they will probably whine and complain that they should be entitled to other people's wealth. Socialism is a utopian ideal because it ignores human nature. Bitcoin is extremely risky at this point, and was even more so 9 years ago. The people who invested then took massive risks in doing so. People investing now are taking huge risks. It will be a risky investment until it becomes pervasive. There will probably many more cycles of inflation and deflation because adoption does not match the supply rate. If people earn money from taking this risk, good on them. If people don't take the risk, they're not going to be part of the club. You've got to be in it to win it. Bitcoin is not like land rights which are exclusively granted by rulers or taken by force. There is no restriction and anybody can be an equal party. The early adopters who have mined coins need to pay their electricity bills. It's not free money. They've had to sell the coins into a market. The distribution of coins is much more widespread than the mining process because of this. People hodl bitcoin even during inflationary periods because they believe it has a strong selling point which will give it leverage in the longer term. (They're low time preference people. Not necessarily the already wealthy.) > And Moore's law is an ideal example of this problem really - at every point you shouldn't buy a new computer unless the present value you'll gain from one is outweighed by the depreciation in the future. Turns out computers are pretty amazing so this is a lot less of a problem - but computers actually do things. Bitcoins don't. This is precisely my point. People still buy computers. The thing they spend their money on is more useful than the money itself. This is true of anything really. People need things to live, they need leisure and entertainment, and they're willing to spend a bit of money on it now, even though it will be cheaper later. It applies to most commodities: they lose value over time faster than the currency does. This is what makes the currency desirable to hold over those other commodities when people don't need to spend. Inflation has the perverse incentive that it encourages people to spend when they don't need to spend. People are trained to have high time preference lifestyles, which are extremely hard to escape from if you're a low earner. You see the behaviours of low earners often do not help their situations at all, which is why they often get stuck in their economic position. The argument that economies should encourage spending (particularly among low earners) obviously doesn't help them either. They should be encouraged to save. The idea of intentionally building things to only last a few years, so that they need to buy a new one every few years doesn't help them (or landfills) either, but is supposedly "good for the economy."
- kortilla 8y ago
  Cars and computers are not investments. They have direct utility. Money does not (unless you burn it for heat). >the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice. We have them already. They just aren’t called currencies because their price instability makes them somewhat useless as currencies. See: gold.
  - sparkie 8y ago
    > Cars and computers are not investments. They have direct utility. Money does not (unless you burn it for heat). Right. The deflationary argument is that people won't spend money because the money appreciates in value over time versus the things they would spend it on. Those examples, and there are many others tell a different story. People will buy things which have utility, even if they lose value relative to the currency over time. >We have them already. They just aren’t called currencies because their price instability makes them somewhat useless as currencies. See: gold. You say the price of gold is unstable, because you're taking a dollar as your reference point. Dollars are actually far more volatile than gold because they can be printed arbitrarily, where gold is only found in limited amounts. If you measure the value of the dollar in terms of gold, over time, you'll see which is really the useless one! The reason gold is not used much any more is largely due to the historical practices of confiscation and outlawing of possession. Admittedly, it is not the best commodity to use as currency due to its weight and difficulty to verify the authenticity of. Thankfully, Bitcoin can solve all of those problems. It can't necessarily be confiscated if you manage your keys correctly. Possession can be plausibly deniable. It doesn't have the problems of transport, and it is trivial to verify the authenticity of. As a bonus, it is well suited to our digital age where much of commerce is conducted remotely.
shan224 8y ago
Youre assuming that credit cannot be built on top of bitcoin. With bitcoin backed credit no bank/authority figure would be able to over-extend themselves to the same degree as we have today Kenysian and austrian concepts are not mutually exclusive

sparkie 8y ago

Spending does not stop. It may slow. Most arguments against deflation are largely strawmen, and the historical examples of it are usually a result of too much government intervention, or it following a period of high inflation. Here's an example of deflation: Moore's Law. If computing power is going to double in 18 months, then a computer I buy now will be worth much less in 18 months. If that's the case, best not buy that computer and wait 18 months right? Another example is a car. It loses 20% of its value on purchase and continues to lose value year on year and is eventually worth nothing. But nobody would buy a car if that were the case! Economic theorists are mostly employees or funded by the banks, the central banks and the governments. There's a "consensus" among them that inflation = good because it benefits the industries they work for. Anyway, it does not matter, because Bitcoin cannot be inflated, and if people now have the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice.

rubyn00bie 8y ago
> Spending does not stop. It may slow. Most arguments against deflation are largely strawmen, and the historical examples of it are usually a result of too much government intervention, or it following a period of high inflation. Ummm... You realize you just made this up out of thin air, and provided no proof. > Here's an example of deflation: Moore's Law. If computing power is going to double in 18 months, then a computer I buy now will be worth much less in 18 months. If that's the case, best not buy that computer and wait 18 months right? That happens all the time. People wait for refresh cycles but I don't see how this is relevant to currencies or macroeconomics. It certainly backs nothing you've said. > Another example is a car. It loses 20% of its value on purchase and continues to lose value year on year and is eventually worth nothing. sigh You're not accounting for the utility of using the car. At some point the marginal utility of new features will be less than the utility of something today... Microeconomics courses would help clear up this for you. > Economic theorists are mostly employees or funded by the banks, the central banks and the governments. There's a "consensus" among them that inflation = good because it benefits the industries they work for. Conspiracy theory, much? Also that's like saying because physicists are employed by someone they must all be maligned to say the same evil bullshit. Might as well tell me the earth is flat, mate. > Anyway, it does not matter, because Bitcoin cannot be inflated, and if people now have the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice. You're right, the ignorant and poor will be given the opportunity and "choice" to lose their money and savings because ignorant loud mouthed people who have done no actual research or learning are spouting shit which sounds compelling. It's a lot like people selling radioactive tonics to make you live longer at the beginning of the 1900s. People who are ignorant of the science, ramifications, and who don't are to not be are advising people as though they aren't... and people's lives will be ruined for it.
XorNot 8y ago
Try and be less literal - spending is suppressed. At every point there's an incentive to avoid spending as much as possible, and it's exponentially regressive - with enough wealth, and no investment - your wealth continues to increase beyond the amount you need to spend to survive. "No investment" being the core point - the rich may get richer currently, but they have to buy stocks, bonds, start companies in order to do so - take risks and temporarily at least hand their money to people with less. Under a deflationary model, they don't - the incentive is to avoid spending and investment, since the 100% safe investment is holding your money. The rich get richer - the poor are forced to part with any currency they have and can never join. Of course the system collapses if you don't have to buy in (i.e. no taxes) because why should anyone join such a regressive system? Which, incidentally, is very much the reason no one should be getting into Bitcoin - all the coins were mined by early adopters, and you getting into Bitcoin is just allowing everyone who has cheap coins to cash out. EDIT: And Moore's law is an ideal example of this problem really - at every point you shouldn't buy a new computer unless the present value you'll gain from one is outweighed by the depreciation in the future. Turns out computers are pretty amazing so this is a lot less of a problem - but computers actually do things. Bitcoins don't.
- sparkie 8y ago
  > Try and be less literal - spending is suppressed. At every point there's an incentive to avoid spending as much as possible, and it's exponentially regressive - with enough wealth, and no investment - your wealth continues to increase beyond the amount you need to spend to survive. If you use the same argument in reverse for an inflationary economy it doesn't add up. The argument would be that everyone would avoid saving. This is only true if you have hyperinflation. Small amounts of inflation are manageable. The same is true for deflation. If deflation is low, the effects it has are manageable. If we have hyperdeflation, then sure, people will avoid spending as much as possible. If deflation is low, the amount which could be gained by holding the currency is tiny compared to the amount which could be gained by investing it in productive enterprises. The same is true in the inflationary model, because lenders must pay interest on borrowed money, their productive enterprises must earn at least the the amount lent plus the interest and the difference due to inflation, or they'd be making losses. > Of course the system collapses if you don't have to buy in (i.e. no taxes) because why should anyone join such a regressive system? This is why socialist types repeat the same mistakes over and fail to recognize them, or the value of free markets. The reason people would join such a system is because they want to get wealthy too!. People desire wealth. If they desire it enough, they will be productive and climb the ladder to get into the club. If they are unproductive, they will probably whine and complain that they should be entitled to other people's wealth. Socialism is a utopian ideal because it ignores human nature. Bitcoin is extremely risky at this point, and was even more so 9 years ago. The people who invested then took massive risks in doing so. People investing now are taking huge risks. It will be a risky investment until it becomes pervasive. There will probably many more cycles of inflation and deflation because adoption does not match the supply rate. If people earn money from taking this risk, good on them. If people don't take the risk, they're not going to be part of the club. You've got to be in it to win it. Bitcoin is not like land rights which are exclusively granted by rulers or taken by force. There is no restriction and anybody can be an equal party. The early adopters who have mined coins need to pay their electricity bills. It's not free money. They've had to sell the coins into a market. The distribution of coins is much more widespread than the mining process because of this. People hodl bitcoin even during inflationary periods because they believe it has a strong selling point which will give it leverage in the longer term. (They're low time preference people. Not necessarily the already wealthy.) > And Moore's law is an ideal example of this problem really - at every point you shouldn't buy a new computer unless the present value you'll gain from one is outweighed by the depreciation in the future. Turns out computers are pretty amazing so this is a lot less of a problem - but computers actually do things. Bitcoins don't. This is precisely my point. People still buy computers. The thing they spend their money on is more useful than the money itself. This is true of anything really. People need things to live, they need leisure and entertainment, and they're willing to spend a bit of money on it now, even though it will be cheaper later. It applies to most commodities: they lose value over time faster than the currency does. This is what makes the currency desirable to hold over those other commodities when people don't need to spend. Inflation has the perverse incentive that it encourages people to spend when they don't need to spend. People are trained to have high time preference lifestyles, which are extremely hard to escape from if you're a low earner. You see the behaviours of low earners often do not help their situations at all, which is why they often get stuck in their economic position. The argument that economies should encourage spending (particularly among low earners) obviously doesn't help them either. They should be encouraged to save. The idea of intentionally building things to only last a few years, so that they need to buy a new one every few years doesn't help them (or landfills) either, but is supposedly "good for the economy."
kortilla 8y ago
Cars and computers are not investments. They have direct utility. Money does not (unless you burn it for heat). >the choice to hold a deflationary currency or an inflationary one, let them pick! We'll see if those economists were right after all when people actually have a choice. We have them already. They just aren’t called currencies because their price instability makes them somewhat useless as currencies. See: gold.
- sparkie 8y ago
  > Cars and computers are not investments. They have direct utility. Money does not (unless you burn it for heat). Right. The deflationary argument is that people won't spend money because the money appreciates in value over time versus the things they would spend it on. Those examples, and there are many others tell a different story. People will buy things which have utility, even if they lose value relative to the currency over time. >We have them already. They just aren’t called currencies because their price instability makes them somewhat useless as currencies. See: gold. You say the price of gold is unstable, because you're taking a dollar as your reference point. Dollars are actually far more volatile than gold because they can be printed arbitrarily, where gold is only found in limited amounts. If you measure the value of the dollar in terms of gold, over time, you'll see which is really the useless one! The reason gold is not used much any more is largely due to the historical practices of confiscation and outlawing of possession. Admittedly, it is not the best commodity to use as currency due to its weight and difficulty to verify the authenticity of. Thankfully, Bitcoin can solve all of those problems. It can't necessarily be confiscated if you manage your keys correctly. Possession can be plausibly deniable. It doesn't have the problems of transport, and it is trivial to verify the authenticity of. As a bonus, it is well suited to our digital age where much of commerce is conducted remotely.

shan224 8y ago

Youre assuming that credit cannot be built on top of bitcoin. With bitcoin backed credit no bank/authority figure would be able to over-extend themselves to the same degree as we have today Kenysian and austrian concepts are not mutually exclusive