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You're right, it is bombastic short-hand to concisely communicate how devastating deflation is and why central banks do everything they possibly can to avoid it

by lingben 13y ago

You're right, it is bombastic short-hand to concisely communicate how devastating deflation is and why central banks do everything they possibly can to avoid it. Here's just one recent example: http://www.marketwatch.com/story/draghi-faces-deflation-threat-as-ecb-boe-meet-2014-01-08 http://www.marketwatch.com/story/draghi-faces-deflation-thre... Everyone is free to access wealth of information out there about deflation, starting with wikipedia.

wyager 13y ago
>why central banks do everything they possibly can to avoid [deflation]. Right. It can't possibly be because inflation makes it easier for governments to repay debt obligations and increase their cash flow without overtly increasing taxes.
AndrewBissell 13y ago
It doesn't make sense to take a notion of deflation you've picked up from the recent histories of fiat, credit-driven currencies and apply it to Bitcoin. The "neutron bomb" kind of deflation you have in mind is the sort that gets touched off when a massive credit bubble bursts, and a huge volume of credit money disappears from the economy as bad debts are written off en masse. Since the issuance of credit is severely curtailed under Bitcoin (which may doom it as a currency for other reasons), I don't see how that kind of deflation can happen with it. The U.S. dollar was essentially a gradually deflationary currency throughout the latter half of the 19th Century. Despite modern attempts to paint the period as a horror show of volatility and panics, there was actually quite robust economic progress and growth. The trend toward lower prices was widely appreciated and seen as a sign of material progress (assuming you weren't, say, a farmer with a vested interest in higher prices). There were some hard times following the panic of 1893, but nothing like the sort of calamity that happened in the 1930s, long after inflationary forces had already wrested a significant amount of control over the dollar.
- lingben 13y ago
  Don't know where to begin since every single thing you write is false... sigh

by lingben 13y ago

wyager 13y ago

>why central banks do everything they possibly can to avoid [deflation]. Right. It can't possibly be because inflation makes it easier for governments to repay debt obligations and increase their cash flow without overtly increasing taxes.

AndrewBissell 13y ago

It doesn't make sense to take a notion of deflation you've picked up from the recent histories of fiat, credit-driven currencies and apply it to Bitcoin. The "neutron bomb" kind of deflation you have in mind is the sort that gets touched off when a massive credit bubble bursts, and a huge volume of credit money disappears from the economy as bad debts are written off en masse. Since the issuance of credit is severely curtailed under Bitcoin (which may doom it as a currency for other reasons), I don't see how that kind of deflation can happen with it. The U.S. dollar was essentially a gradually deflationary currency throughout the latter half of the 19th Century. Despite modern attempts to paint the period as a horror show of volatility and panics, there was actually quite robust economic progress and growth. The trend toward lower prices was widely appreciated and seen as a sign of material progress (assuming you weren't, say, a farmer with a vested interest in higher prices). There were some hard times following the panic of 1893, but nothing like the sort of calamity that happened in the 1930s, long after inflationary forces had already wrested a significant amount of control over the dollar.

lingben 13y ago
Don't know where to begin since every single thing you write is false... sigh