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> Deflation... leads to a slowdown in the real economy A fundamental, but slightly tangential question: is that a bad thing? What if modern societies are runn
by dalek_cannes 13y ago
> Deflation... leads to a slowdown in the real economy
A fundamental, but slightly tangential question: is that a bad thing?
What if modern societies are running too hot and need to cool down? 'Reduction', 'slowdown', 'productivity loss' -- these are negative in a purely economic context. But economics is a means to an end, not an end in itself. The end, I believe, (to borrow an American term) is the 'pursuit of happiness'. I don't think modern, developed societies are doing very well in that particular pursuit. It feels as if we're on a treadmill -- try to run faster and it turns faster, and you need to keep running faster just to stay on it.
This may not apply to developing societies, who are still grappling with the lower layers of Marslow's hierarchy like food, health and education, but doesn't it seem like we have overshot? When we can afford to obsess over the number of cores or dots per inch on a handheld device, I think we can afford to slow down a bit. Perhaps a deflationary economy is just what we need.
People shouldn't feel pressured to keep producing despite having ample savings just to keep up with the wealth erosion caused by inflation. /opinion
Also: if the Bitcoin unit had been redefined so that the maximum number was 21 quadrillion, we might not have this debate. Nothing's changed fundamentally, but it is a number that for a laymen is a lot closer to infinity than 21 million.
- diminoten 13y agoI mean you might be right but we have no clue whatsoever. In our great lab that is the world, we know that deflation leads to Bad Things (TM). I'm no economist, but I don't know of a time in modern history where people were saying, "Thank Christ we're experiencing deflation!"
- a_c_s 13y agoA growing economy increases standards of living. The fact that a t-shirt costs $10 now that used to cost $20 10 years ago means that people now have more options. Some people will choose to buy 2x as many t-shirts, making them (roughly) 2x happier. Or some people will buy the same number of t-shirts and have extra money to do other things they want. And most importantly, some people who couldn't afford t-shirts now can. But nobody is forced to chase material goods, they buy what they choose to. The fact that this process is replicated across virtually all products in the economy is what lifts people out of poverty. We still have plenty of people struggling to make ends meet in the USA, something like half of all people live paycheck-to-paycheck. The only people who benefit from deflation are those with large amounts of capital and no debt, which is an incredibly small portion of the population that isn't struggling under the current system of low inflation.
- darkFunction 13y agoWe consume too much and we work too hard to fill our lives with vacuous material goods. Look around you, it's pure madness. It's out of control, everybody is permanently dissatisfied and we continue to rape the planet to fill a hole in our lives that can never be filled. I used to worry about this aspect of bitcoin but now I just think, let it happen. Maybe a world in which we aren't forced to consume just to keep our net worth wouldn't be so bad. Maybe we don't need investment in yet another company selling more useless crap we don't need. Maybe we don't need to work five days a week to be happy. > Some people will choose to buy 2x as many t-shirts, making them (roughly) 2x happier More choice has been proven to lead to greater dissatisfaction. Aside from better healthcare I don't think our modern world makes us any more happy and fulfilled.
- tg3 13y agoIt's easy to be nostalgic about past times, but the fact is that quality of life, by many measures (including but not limited to healthcare) has been improved. Intentionally slowing economic growth is a cruel sentence for those less fortunate than yourself so that you can be "happy".
- dualogy 13y ago> A growing economy increases standards of living. The fact that a t-shirt costs $10 now that used to cost $20 10 years ago So what you're saying is that inflation leads to deflation -- did I get that right?
- andrewfong 13y agoI think the above was referring to dollar amounts in real terms, not inflation or deflation-adjusted -- i.e. deflation will result in both less nominal and less real growth.
- anonymoushn 13y agoIt's nothing that complex. a_c_s has just suggested that inflation (the rising price of goods relative to the dollar) is good because it allows one to buy more with the same money (the falling price of goods relative to the dollar, not to be confused with deflation, which would of course only benefit the rich).
- beat 13y agoCapitalism depends on the flow of capital. Incentivizing not moving the money (so money increases in value simply by stuffing it in a mattress) wrecks the risk/reward curve. Deflation is a terrible, terrible thing. Every investment has to be weighed against the increasing value of doing nothing, rather than the decreasing value of doing nothing. "Use it or lose it" is a powerful motivator.
- pikachu_is_cool 13y agoYou completely missed dalek_cannes' point.
- kaonashi 13y agoIs letting people starve among abundance a problem? I'd say so.
- saalweachter 13y agoWhat do you mean by "running too hot"?
- eli_gottlieb 13y agoThe problem is that most people in developed countries still owe some kind of rent/mortgage payment at the end of the month, national insurance payments for pension and healthcare, and then they have to actually buy food, clothing, and other actual material goods. They need a consistent income, and often a large one because it's the rentier-capitalist class to whom they owe all the money, and the rentier-capitalist class who are pushing up the price of necessities through asset bubbles in the first place.