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> bitcoin is deflationary and will die as a currency for the same reason that precious metals died: They are deflationary. Precious metals are no longer used a

by keen 15y ago

> bitcoin is deflationary and will die as a currency for the same reason that precious metals died: They are deflationary. Precious metals are no longer used as money because of deflation? Care to justify that? Are you sure it wasn't due to the numerous benefits of fiat money? (Not to say that fiat is perfect.)

ars 15y ago
I assume he means paper money backed by precious metals. And yes, being deflationary is why that is no longer done. The amount of paper money in the world should equal the amount of resources. If it doesn't you have deflation and all sort of trouble.
- ithought 15y ago
  This is highly inaccurate. You guys are referring to Gresham's Law which is only applicable due to legal tender laws. Without legal tender laws, the "good money" wouldn't be driven out by the "bad money" (i.e. US currency). Also, the reason the US government went completely off the gold standard in 71 was to increase deficit spending without having to pay our debts in gold or something of real value. The Fed has a policy of steady inflation, only through debt liquidation can we ever expect to pay off the huge amounts we owe. That is, we borrow 10 trillion and inflate 50% over a certain time, now we only owe 5 trillion. End the legal tender laws, allow alternative commodity-based currencies and end the central planning of interest rates. This is the solution. It has nothing to do with gold (or Bitcoins) being a deflationary currency. It has everything to do with big corrupt government. edit- I don't want that last sentence to color my whole statement. I'm an Austrian, not a Republican. I worked for Obama last time and will vote for him again. For a better perspective on this, check out (future Fed Chairman!) James Grant's Interest Rate Observer http://www.grantspub.com http://www.grantspub.com.

by keen 15y ago

ars 15y ago

I assume he means paper money backed by precious metals. And yes, being deflationary is why that is no longer done. The amount of paper money in the world should equal the amount of resources. If it doesn't you have deflation and all sort of trouble.

ithought 15y ago
This is highly inaccurate. You guys are referring to Gresham's Law which is only applicable due to legal tender laws. Without legal tender laws, the "good money" wouldn't be driven out by the "bad money" (i.e. US currency). Also, the reason the US government went completely off the gold standard in 71 was to increase deficit spending without having to pay our debts in gold or something of real value. The Fed has a policy of steady inflation, only through debt liquidation can we ever expect to pay off the huge amounts we owe. That is, we borrow 10 trillion and inflate 50% over a certain time, now we only owe 5 trillion. End the legal tender laws, allow alternative commodity-based currencies and end the central planning of interest rates. This is the solution. It has nothing to do with gold (or Bitcoins) being a deflationary currency. It has everything to do with big corrupt government. edit- I don't want that last sentence to color my whole statement. I'm an Austrian, not a Republican. I worked for Obama last time and will vote for him again. For a better perspective on this, check out (future Fed Chairman!) James Grant's Interest Rate Observer http://www.grantspub.com http://www.grantspub.com.