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inflation is an absolutely necessary force in an economy; without inflation there is little incentive to spend money and as a result there is no real liquidity.

by bigdubs 14y ago

inflation is an absolutely necessary force in an economy; without inflation there is little incentive to spend money and as a result there is no real liquidity. tl;dr; money is useless if no one spends it, that's the whole point. another way to think about it is a stock. if a stock is priced, and no one is buying or selling at that price, is that price really valid? whats to keep another actor in the economy from pricing a stock totally different if there is a 'dumb' actor wiling to buy at that price.

nas 14y ago
> inflation is an absolutely necessary force in an economy I don't think there is good evidence of this "fact". Economics is not a hard science. A few points, one, you can't argue that bitcoin deflates and therefore is worthless. The is an obvious inconsistency there. Second, imagine if bitcoin had built-in inflation. What would happen if someone would release bitcoin+ with inflation equal to zero (i.e. current bitcoin)? Obviously the "good money" would drive out the bad and everyone would save bitcoin+. It's not related to your comment, but I'd also like to comment on the Ponzi scheme arguments. My question is, how would you design a cypto-currency to avoid to problem of early adopters getting wealthy (the new ripple has a different scheme, a terrible one, IMHO)? You have to introduce the currency somehow. If you are an early adopter of bitcoin, should you sell now at $100? Maybe you should have sold out when it got to $1.
- bigdubs 14y ago
  there are no real facts in economics, but there are some pretty easy concepts to grasp. here is another explanation: "Inflation is bad, but deflation is worse. The reason is that in a deflationary environment, no one spends money — because whatever you want to buy is sure to become cheaper in a few days or weeks. People hoard their cash, and spend it only begrudgingly, on absolute necessities" from https://medium.com/money-banking/2b5ef79482cb https://medium.com/money-banking/2b5ef79482cb

by bigdubs 14y ago

nas 14y ago

> inflation is an absolutely necessary force in an economy I don't think there is good evidence of this "fact". Economics is not a hard science. A few points, one, you can't argue that bitcoin deflates and therefore is worthless. The is an obvious inconsistency there. Second, imagine if bitcoin had built-in inflation. What would happen if someone would release bitcoin+ with inflation equal to zero (i.e. current bitcoin)? Obviously the "good money" would drive out the bad and everyone would save bitcoin+. It's not related to your comment, but I'd also like to comment on the Ponzi scheme arguments. My question is, how would you design a cypto-currency to avoid to problem of early adopters getting wealthy (the new ripple has a different scheme, a terrible one, IMHO)? You have to introduce the currency somehow. If you are an early adopter of bitcoin, should you sell now at $100? Maybe you should have sold out when it got to $1.

bigdubs 14y ago
there are no real facts in economics, but there are some pretty easy concepts to grasp. here is another explanation: "Inflation is bad, but deflation is worse. The reason is that in a deflationary environment, no one spends money — because whatever you want to buy is sure to become cheaper in a few days or weeks. People hoard their cash, and spend it only begrudgingly, on absolute necessities" from https://medium.com/money-banking/2b5ef79482cb https://medium.com/money-banking/2b5ef79482cb