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Nobody understands economics well enough to predict what Bitcoin will become. For a start, both of those pieces hinge on the dangers of a deflationary spiral. B
by jl6 15y ago
Nobody understands economics well enough to predict what Bitcoin will become. For a start, both of those pieces hinge on the dangers of a deflationary spiral. But it is far from clear or agreed how such a spiral would work, or whether it would encounter a natural limiting factor. To the extent that deflation might cause a decrease in demand, it's not even clear that that's a bad thing - because we live in such a consumption-oriented economy it's hard for economists to even conceive of - let alone analyze - the idea that people might only spend money when they need to.
- nirvana 15y ago[It was a mistake to make an economics argument on hacker news. I'm outnumbered and know I won't get a fair hearing.]
- mikedouglas 15y agoThe issue at hand is the return on investments, not the value of goods and services. I still purchase technology because the value of having access to that technology exceeds the current cost - the resell value. No one is buying warehouses of Galaxy Tabs, expecting for a positive return a year from now, and if normal investments (for example, the capital required to build the Galaxy Tab) which normally have a positive return assuming 2% inflation suddenly become outstripped by deflation, then no one will invest.