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To explain: The fear that often is associated with deflationary currency (like bitcoin) is that no one will spend it, because waiting always gets you a slightly

by ericb 13y ago

To explain: The fear that often is associated with deflationary currency (like bitcoin) is that no one will spend it, because waiting always gets you a slightly better deal. And if that happens the economy will grind to a halt with everyone waiting to spend. The point of my second statement is that we have examples of cases where even though every month your money buys more, people still do buy things.

fiesycal 13y ago
There may be specific examples (HDTV) where waiting means your money buys more, but overall the more you wait the less your money is worth in the economy due to inflation. Technology making products cheaper is not an example of deflation. Inflation and deflation pertain only to currency not products. If however you hold your currency and everyday its worth more, besides the bare essentials there is barely an incentive to spend it. Also there is no guarantee that the HDTV will become cheaper, however it is guaranteed that a deflationary currency will gain value the more you hold on to it.
- cbr 13y ago
  Inflation and deflation pertain only to currency not products. Inflation is when your currency buys you less stuff tomorrow than today. Deflation is when it buys you more. Falling prices due to efficiency gains caused some deflation during the industrial revolution, and technology making products cheaper is definitely a kind of deflation. From Wikipedia: Growth deflation: an enduring decrease in the real cost of goods and services as the result of technological progress, accompanied by competitive price cuts, resulting in an increase in aggregate demand. A structural deflation existed from 1870s until the cycle upswing that started in 1895. The deflation was caused by the decrease in the production and distribution costs of goods. It resulted in competitive price cuts when markets were oversupplied. The mild inflation after 1895 was attributed to the increase in gold supply that had been occurring for decades.
dasil003 13y ago
Ah I see, that makes more sense. Yes, I think fears of deflationary currency are probably quite a bit less rational than fears of environmental cataclysm as long as society doesn't come to term with the fact that there are in fact physical limits to growth on some time scale.
psionski 13y ago
That's a pretty irrational fear... If my money grows all the time, why wouldn't I buy stuff? I'm buying most of my Humble Bundles with Bitcoin and it's great - every time you pay less and less and by the time the next Humble Bundle is available my money has recovered itself to more than what I had before... I may have had doubts to buy some of them with another currency, but with Bitcoin it's just a no-brainer. You'll get it all back and more.

by ericb 13y ago

fiesycal 13y ago

There may be specific examples (HDTV) where waiting means your money buys more, but overall the more you wait the less your money is worth in the economy due to inflation. Technology making products cheaper is not an example of deflation. Inflation and deflation pertain only to currency not products. If however you hold your currency and everyday its worth more, besides the bare essentials there is barely an incentive to spend it. Also there is no guarantee that the HDTV will become cheaper, however it is guaranteed that a deflationary currency will gain value the more you hold on to it.

cbr 13y ago
Inflation and deflation pertain only to currency not products. Inflation is when your currency buys you less stuff tomorrow than today. Deflation is when it buys you more. Falling prices due to efficiency gains caused some deflation during the industrial revolution, and technology making products cheaper is definitely a kind of deflation. From Wikipedia: Growth deflation: an enduring decrease in the real cost of goods and services as the result of technological progress, accompanied by competitive price cuts, resulting in an increase in aggregate demand. A structural deflation existed from 1870s until the cycle upswing that started in 1895. The deflation was caused by the decrease in the production and distribution costs of goods. It resulted in competitive price cuts when markets were oversupplied. The mild inflation after 1895 was attributed to the increase in gold supply that had been occurring for decades.

dasil003 13y ago

Ah I see, that makes more sense. Yes, I think fears of deflationary currency are probably quite a bit less rational than fears of environmental cataclysm as long as society doesn't come to term with the fact that there are in fact physical limits to growth on some time scale.

psionski 13y ago

That's a pretty irrational fear... If my money grows all the time, why wouldn't I buy stuff? I'm buying most of my Humble Bundles with Bitcoin and it's great - every time you pay less and less and by the time the next Humble Bundle is available my money has recovered itself to more than what I had before... I may have had doubts to buy some of them with another currency, but with Bitcoin it's just a no-brainer. You'll get it all back and more.