Bitcoin Forum

to be honest after watching the poverty in Europe report, I feel more comfortable holding some bitcoins than having fiat, each time the price crash/correct than bounce back it makes me more confident about the whole concept of Bitcoin.

I think most of investors look to the quick profit bitcoin can offers, which is really impressive but not all of you here see what is going on around the world, the infinity of money printing (inflation) is killing the economy. and believe me, smart politicians knows that there is an issue and they also know that there is no way to fix it with the existing system, and they also doesn't know what to do, so they keep doing the same thing to give the illusion of fixing it which is temporary and they keep repeating the same thing.


I am sure most of you (older than 30) notice the loss in purchase power of your local currency, at least I do, I remember when I was 6-8 years old going to small store near my home buying milk and bread which cost at least 10 times less what it cost today, my father has been working all his life and could not save anything, my mother did work until her company did fire half of the workers than dramaticly shut down, she couldn't get another job so she stayed at home and took care of us, my father's duty was to offer a good  education to us (a brother and 3 sisters) and he did all he could and succeed.

if people take just a moment and think about how bad the economy is now, everyone would invest in bitcoin, not to talk about 20 years ago, just few years ago (2007-2008) I paid €2 for my cigarettes and less than €1  for gasoline , around €0.2 for bread (1 baguette) , today I pay €3.6 for cigarettes and €1.5 for gasoline and more than 0.3 for bread. the worst thing is my salary didn't almost change.

I did mention my parents for a reason, today when I think about the whole system, I am really thankful that my father couldn't save money, because even with the interest the bank would give him, that money would be worth nothing because of the high level of inflation. though he could buy some gold or some real estate and this would solve the problem, but to do so you have to have a good amount of money that you can invest, which he didn't have at the time.

but if bitcoin existed the whole situation would be different, now I feel that I am lucky and I think that all of you are lucky that you have been introduced to Bitcoin, and more people should know about it, this seems the only way out (solution).

take few minutes and watch this video, I am sure it is almost the same where you live http://www.youtube.com/watch?v=k_NxUFIRm9k&feature=youtu.be

The best I can say here is quit smoking :)

working on it

Excellent point.  People have said this about gold in almost any era as well, but I agree that bitcoin is actually easier to work with.

This is what I do to reassure that I will be fine!

http://www.youtube.com/watch?v=pID03RrmKow&noredirect=1

As long as you're working or earning money in some form, your salary should adjust for inflation so an annual rate of inflation of 3% or whatnot shouldn't be a problem. Of course, you also don't want to hold all your money in a savings account or your checking account, that's why it's a good idea to invest in a portfolio of stocks and bonds. Historical returns of these assets have outpaced inflation considerably, even if it misses the mark on the occasional year or two. If people are unable to save any money throughout a lifetime of working, then I'm sorry, but it's not the fault of inflation. It's a matter of personal saving.

After reading your post i still can't understand what is the huge problem that most people don't understand. Inflation?

inflation is not the problem it is the symptom of the problem

quick profit against the concept of bitcoin, and yes people do understand inflation but most of them doesn't take time and think about it, the story that I've wrote is to give a simple clear picture

that is the exact horse shit I am talking about, take time and think about it, they keep doing the same shit over and over and all over again, prices goes up 10% and they raise the minimum wage 3% to give you the illusion that they are fixing problems....

You're just making an emotional argument. I'm not sure where you live, but most developed nations strive to keep the rate of inflation at an annual rate of 2 or 3% year over year, and that's generally how it goes. It doesn't go up 10% in one year, unless you live in Zimbabwe, in which case I apologize.

The purchasing power of minimum wage does fluctuate up and down a bit year over year, but that's just because it isn't changed on any regular interval. The current purchasing power of $7.25 is approximately the same or perhaps even higher than it was 50 years ago. But nobody has ever been expected to live independently or raise a family on minimum wage in the first place, it's a worker's responsibility to develop their skills and the rest will follow. If you're 30 and still making minimum wage, something has gone wrong.

You're going to have to elaborate on why inflation is so evil, more than just calling it "horse shit" and telling me to think about it. Maybe you're the one who needs to think a little harder.

I am a noob, but also Bitcoins become more for the next like 100 years (well, after 2020 there is only a few Bitcoins left to mine https://en.bitcoin.it/wiki/File:Total_bitcoins_over_time_graph.png (https://en.bitcoin.it/wiki/File:Total_bitcoins_over_time_graph.png))  - right now 25 Bitcoins every 10 Minutes. That is 3600 Bitcoins per day. That is 3 600 000 (3 million, sixhoundredthousand) new dollars (when 1 BC = 1000 dollars) that have to flow into Bitcoins daily (buying orders) just to keep the current price of a Bitcoin.
How does this compare to how much more dollars are created?

BTW, I don't make minimum wage, I am an IT engineer and I think my salary is fair, but do you think that inflation rate really reflect  prices ? I don't know about US dollars but in 5 years time period €100 buy more less today than it did at the defined period.

when you say  " it's a worker's responsibility to develop their skills and the rest will follow" you mean now I have learn something else and work extra shift so I will have more money ? like slavery ?


Edit: and yes my "adjusted" salary buy more less today than my old salary at the time, and yet you want to sell me the "developed nations" thing, well does EU count as a developed nation or not ?  

My wife never really understood how much we lose to inflation until she started reading these forums.  She was always content to hold thousands of dollars in crappy savings accounts from the bank until recently.

My dad comes over and crows about how much interest he is getting locking his money up in a stupid bank CD.  (Ooh, 1 whole percent a year!  Wow!)  I don't have the heart to tell him I made that much in 4 hours yesterday.

I wasn't insinuating that you did work minimum wage, just that $7.25 an hour (US federal minimum wage) shouldn't be viewed as a benchmark for supporting a proper, independent lifestyle. It is intended more for students and other part-time workers whose living expenses are already supported by others.


It's a fact of life that people are only going to pay you for the value of the services you can provide them. If you need your car fixed, you need to pay a mechanic for his time and expertise. But you're probably not going to pay a guy to clean your windshield for you, right? Maybe $1 or something. So you need to develop your skills in order to advance in your career and earn more money.

How you read into this as "slavery" is bizarre, unless you consider working for someone else for a fixed salary as slavery. Do you not get an annual raise at your IT job? Do you not invest any of your money? If so, what are you so upset about?

What you describe is speculation and has nothing to do with inflation. Bitcoin flash crashed today. I guess you felt relieved that your dad wasn't around during the crash  :P

Inflation is evil because it takes purchasing power away from currency holders (and, in general, the poorer you are, the higher the percentage of your savings is based on currency), and gives it to the firsts to receive the newly printed money, namely governments, banks and those well connected to them. But even worse than that, inflation is evil because it creates capital destructive business cycles (http://wiki.mises.org/wiki/Austrian_Business_Cycle_Theory). All this crisis the world is living now would not have happened if central banks did not have the power to inflate their currencies in order to manipulate interest rates.

Oh, and BTW, the 2% rate you talk about, it's the official estimation on price inflation. The actual monetary inflation is much higher. What means that, if money supply was stable, average prices would decrease. It's not just 2% of purchasing power you lose per year, it's much more, since you'd have to consider how lower would prices be if there was no inflation.

first I will answer your question:


this is a very interesting question, it is called a minimum wage for a reason, there is the popular agreed on salary for a certain job, lets talk IT stuff, if I am a kick ass associate and I think I deserve X raise and my company is willing to pay less than that, I cant argue too much about it for a reason you know why ? the unemployment pecentage and I guess not only in EU but all around the world is really high, they would just tell me you don't like it, the doors are wide quit your job, and they will get someone unemployed who is in need and is willing to work for way less money than me, this is the minimum wage you are so proud of. and in fact they don't give a shit about my skills as long as the guy will be able to keep things running.



I did, just with Bitcoin, all other stuff I looked at before seemed as "horse shit", what I am upset at ? wow I dont know from where to start, just look at the world around you, you are giving me the impression that you live in different galaxy.



ok now I have a question for you, did you read satoshi white paper ? it is only few pages, go ahead read it come back read my OP and go back read the paper again and I will quote something from the OP to you to think about:


now when you do what I suggested, I think we can discuss this matter in a better way.

  

So in your world view, investing in anything other than bitcoin is horse shit.  ::) There are millions of people who have practiced disciplined investing for years and now have large portfolios to show for their effort, and many of them may have never even heard of bitcoin. You think investing in stocks and bonds is horse shit? If you're just going to easily dismiss sound investments so easily, I don't think you can be helped.

I actually don't support minimum wage at all, I think it should be abolished so that employers can pay a fair market wages for the work needed. But you're the one who was citing it as an example of the "huge problem". If you're a "kick ass" engineer, but there are millions of other "kick ass" engineers available with the same skill set as you, then of course you're not going to make as much money anymore. Again, that's why you need to constantly learn and improve your skills so you can stay competitive in your career. An IT engineer should know this stuff. If an employer offers you less money than what you feel you're worth given all these conditions, then it's your job to leave and find someone who will pay you what you think you deserve. I don't see why this is so hard to grasp for some people.

It's socialist thinking like this (ie. I deserve a high wage just because I'm here and I exist) that put the world into the financial crisis that it's in... not the controlled inflation that people here love to groan about. Governments going into massive debt to support the entitled lifestyles of worker who wanted to retire at age 50 with full benefits, etc.

Controlled inflation of 2 or 3% annually is perfectly healthy and the sign of a growing economy, it's actually a great thing, not bad. What would be bad is if inflation was sudden and occurred at a very high rate, but that is not what we're discussing.

I think you are here for the quick profit not for the concept of Bitcoin, but sure there is nothing wrong about it, just stop acting like you understand the whole thing and go do what I suggested before.

You shouldn't write stories in languages you don't master.

It's pocket change.  The Federal Reserve is creating new US dollars at a rate of $85 Billion per month, or about 2.25 billion per day.  And that is just what they will admit.

thank you for the kind advice.

OP mentions cigarettes and gasoline. Typical expenses for people who willingly refuse to be rich and throw their hard-earned money at the first thing that relieves them from the grind. A grind they insist on suffering through their irrational spending.

What most people don't really understand is that capitalism is about exploiting you for 8 hours a day and taking your money from you the following 8 hours in exchange for a quick shot of comfort.

The poor might want to invest a little, they could actually get rich!

Seriously, the more I read about this topic, the more I wish for a world where everyone were taught financial education in their infancy. I hope I can contribute to that goal along my life.

Just ignore people like that. I like this board because I get to hear the viewpoints of many different people. All should be welcome to share, whether English is their primary language or not.

choosing Cigarette and gasoline as first examples were not a coincidence, I also did mention bread but you seemed ignorant about that, however if you were as educated and talented as you pretend you would know why I choose these 3 examples, I will explain more: Sin taxes are a common trick governments use (google it I don't want to go out of subject by writing 10 pages about how that works) Gasoline is also a merit that you should know about right!  

I admit my bad habit of smoking, but how the price of gasoline does fall into the same box of people like me who "refuses" to be rich? care to explain more ...

I agree. That kind of elitism doesn't fit with the true nature of bitcoin.
Having said that, i wouldn't mind some grammar nazi's fixing my english. Sometimes they help you get better   :P

For me, I track local inflation using the Whopper Index. The price of a whopper at the local Burger King is going up faster than 11% per year.

In 1994, a whopper was exactly $1 here. It is currently $7.95 here.

7.95^(1/19)=1.1152 and most of the price increases have been in the last couple years.

That is over 11% inflation during the last 19 years.

The media is lying to us about inflation, for example: http://money.cnn.com/2013/10/29/news/economy/relative-prices/ (http://money.cnn.com/2013/10/29/news/economy/relative-prices/)

This is due to the hedonics adjustment in the CPI index. They are saying that a modern television is 50 times better than one from 1983, but the free market says otherwise. For example:

I can buy a new CRT television (old design like in the 70's) in the Philippines for about $100 vs. an LED television of the same size for about $250 there. I guess that the free market only sees the new ones as being 2.5 times better design.

Also, here in the USA, I work at an ewaste recycle center 3 days a week (no is allowed to work over 29 hours a week thanks to Obamacare). An old CRT television in good shape sells for about $20, while a plasma TV of about the same size sells for about $50, and LED of the same size for about $100. So even here in the USA, the new LED TVs are only worth 5 times more according to the free market.

In neither country does the free market consider a new LED television to be worth 50 times more than an old style CRT television. Those CPI numbers are a straight lie.

Most of my co-workers make minimum wage of $7.25 per hour, even the ones that have been here for years. Jobs are scarce and my boss has no problems hiring new ones to replace the old ones. And I have seen his books, he is barely surviving. Anyway, I was handed the wrong paycheck once and discovered that my co-workers are earning about $750 per month. I don't know how they survive after paying rent. Most of them get food stamps.

I fix the computers here that people (mostly schools & government offices) throw away or sell the chips out of them on Ebay. Since they are basically free for us, I also make sure that every employee gets a refurbished laptop for free. Most of them have never owned a computer before. A couple of the girls started crying when I gave them one. That is how poor they are.

Wages are NOT keeping up with inflation. People at the bottom are starting to hurt. I am lucky enough that I always saved some of my earnings in precious metals over the years, so I had savings to invest in bitcoin. I have good job skills and can show my boss each month how much money I made for him fixing and selling discarded ewaste, so I have job security. I also own a piece of land up in the jungle area with a cabin in the back, so I don't pay any rent. I get free computer stuff from work, but I still spend money on food and gas. As I see the prices constantly go up on those two things, I alway wonder, how do normal people survive?

I really hope bitcoin reverses this trend of falling real wages.

$7.95 for a Whopper?? You must be referring to the combo meal at least, right?

Whoppers must be really expensive where you live. I can order a junior whopper off the dollar menu... so that's $1 if I'm not mistaken (in 2013!).

I think the combo meal is almost $10 now. Yes, they are more expensive here in Hawaii than the mainland, but they were still only a $1 back in 1994.

Hope you haven't eaten Whoppers from 1994 till now :)

This is something that is completely true. Alot of things have been becoming more expensive than the official inflation level says. Then some things have become cheaper. But the things that have become cheaper are often unnecessary products like clothes that are cheaper and of lower quality and not essentials like bread and gasoline.

The items that have become cheaper are often the ones that are produced abroad in low cost countries whereas the products made domestically are becoming more expensive. This means that the reduced cost of some goods are not due to better technology and hence lower cost in one's own country but due the fact that other people elsewhere make less money working.

Hence the reality of situation is that inflation is understated, not according to economic theory, but in practice for people. The result is that you can say that inflation is low if you also accept the greater economical differences that a globalized economic system bring. I'm not saying this is a bad thing per se in the long run, I'm just saying that the goods that become cheaper and count towards lower inflation are not saying the whole truth about the domestic economy and hence cannot be counted as a true measure of inflation for the individual.

I hope this makes sense.

11 % inflation seems a lot closer to the true number than what is officially reported. Your post rings true to what OP was saying.

The problem with inflation is that they don't count quality together with price and that they mix the upper, middle and lower classes together in one pot. Statistically everyone seems better off, but in practice reality is showing something different.

Within the US, the deception goes much deeper than that.  For example, the official CPI (Consumer Price Index of inflation) deliberately excludes prices in food or energy; which just happen to be two of the most important things that people around the world really need.  Also, changes in real estate are not directly considered; instead a massaged number called "Owner's Equivilant Rent" is included. 

How about my Whopper Jr. inflation index? One burger cost 25 cents here in 1983, and now it is $1.

1 x (0.25/30) = 0.00833 ... so less than 1% inflation each year.

See, it's easy to come up with any bullshit number if you focus on only one arbitrary item.

The notion that the price index is rising 11% year over year is ridiculous. Most of these goods that shoot up in price such as tobacco and gasoline are the result of increasing global demand and taxation, rather than inflation.

Guys, a quick search online will show that minimum wage has NOT kept up with inflation in the US.  Minimum wage should be around $11+ atm, and that's before taking into account increases in the standard of living and productivity.

Yes, according to your sources in the Huffington Post. Thanks for sharing.

You gonna explain why I'm wrong or are you gonna let your fallacy spaghetti?

Since you're not going to present any sources, I'll take the first step. Here's one from CNN that shows the purchasing power of the minimum wage since 1938 to present.

http://economy.money.cnn.com/2013/02/14/minimum-wage-history/

This is CNN, a left wing source, mind you. It shows that purchasing power peaked at approximately $10 in the 1960s, but today it is still higher than in the '80s or '90s, in spite of all the sob stories from liberals. If even CNN admits this much, then it's case closed, I'm afraid.

You know, I thought bitcoin was championed by libertarians, but now that I've discovered bitcointalk, I've found that it's actually liberals who want to believe that they're libertarians for some reason.

Excellent post.
Another way to think of inflation is a stealth tax on savers, earners and spenders. Even if you never file a tax return you are still paying tax on every form of currency that you have in your possession (except gold and b_____n).

You're a little off the mark there, buddy. Yearly inflation in the USA would be 8-10% per year if it were calculated in the same way that it was when Carter was president. The ShadowStats guy has done a lot of work in that area. There are a lot fewer stocks and bonds* that will outpace inflation when you consider that not only is the figure itself jerry-rigged, but it affects different income levels in vastly different ways, which I shall explain:

Food and gas prices might be 50% of op's dad's income, but it might be 5% of Mitt Romney's income. So to say " 'inflation' is '3%' " means one thing to Mitt Romney and another thing to op's dad, whose purchasing power has declined a lot more than Mitt Romney's has - solely becuase more of his purchases are the things that aren't included in inflation calculations because they're "too volatile" (read between the lines there). One function of an official price inflation figure is to determine how the average consumer's purchasing power is affected, and in that regards, it absolutely fails. Real inflation in Venezuela earlier this year was estimated to be up to 35% YoY, but the government still *insisted* it was 10%. In the USSA, the government may insist that inflation is <2%, but the purchasing power of your average family is going down by a lot more than 1-2% every year, so we've already lost one of the most important functions of such a metric. Now it's just another excuse to say "Everything's OK, you get your 3% raise each year so stop whining about price increases."

Someone who's making $500,000 per year won't be affected so much by a tripling of food and energy prices over a long (or short) period. They might notice, and they might get mildly annoyed. But they aren't going to notice as much as the family that lives on $50,000/year or less. They might get a 3% raise each year too but it's not going to do diddley-squat if the things they spend 20, 30, 40% of their income on (higher % the lower the income is) are increasing by 25%, 50%, 100% or more over the space of a single decade.

Your response sounds like economic academia, i.e. "everything works the way it should be, don't worry, "inflation" is only <2%, so a 3% yearly raise should cover it, and if you can't save money there's something wrong with you, not the economy." 

*And finally, for lower income brackets, getting into traditional investing markets is sometimes not a financially viable option. The small amount that they'd be able to invest would hardly be worth the broker fees, the hassle, etc. Even platforms designed to lower the barrier of entry (e-trade, etc) still have a tiny barrier of entry, and the most impoverished families (the number of which are growing) can barely put food on the table, let along scrape off enough worth investing in a traditional market. Trying to buy one $13 stock each week, but there's a $4 fee for each trade? Not gonna help. This is another reason why Bitcoin is great. I started off dutifully investing $20 a week or so which was all I could afford at the time. Now I have lots, and lots, and lots, and lots, and lots, of money. Not that it will work this way for everyone, but at least I was able to put it somewhere where not only did it offset the <2% 'official inflation figure' (that doesn't apply to me since my purchases are heavily weighted towards food and gas,) but it offset the food and gas inflation, and quite a bit more. Even if it were only able to offset food and gas inflation in addition to the bullshit figures released by the likes of Bernanke, it would help a lot more people than traditional currencies and markets.
P.S. the dow jones hasn't hit an [INFLATION ADJUSTED] ATH, at least not last I checked. A lot of people forget this. And that's with official inflation figures. Considering real inflation, the markets are even more miserable.

I don't understand what you all propose for these problems? Yes, energy prices are rising, but that's not due to monetary policies so much as it is global demand and increases in federal and state taxation. You think a lot of families can't get into investing because they barely have enough money to make ends meet as it is, but what would happen if we switched to a 100% bitcoin economy? We'd have deflation, and nobody would want to spend any money aside from what they absolutely needed to survive. Companies would stop hiring workers and people would lose their jobs.

There's a whole lot of wrong with this post.  Please spend some time learning about economics and come back. 

You're actually proposing that a deflationary economy... would create jobs?  ::) OK, I've had my daily dose of comedy for the day. Thanks, guys.

I'm not proposing any such thing.  History is funny that way.

The 6000 years of a "gold standard" is funny history.  Gold is a deflationary currency unit; as it's availability during any given age is limited to that which has been mined out of the ground, but by comparison to population growth across recorded human history, gold is an increasingly scarce commodity.  At some point in human history, we moved from zero jobs to non-zero jobs.  Since this occured well before the rise of inflationary fiat currencies, then the obvious answer must be that the deflationary nature of currencies, at a minimum, does not prevent jobs from being created.  The realtively short history of infaltionary currencies asl tells us that the infaltionary nature of said currencies, at a minimum, doesn't prevent existing jobs from destruction either.

Perhaps, then, the evidence suggesting a relationship between the inflationary/deflationary nature of the common currency and that of the net creation/destruction of jobs is weak.

here you go http://rt.com/usa/fast-food-protest-usa-802/    everything is cool in USA.

IMO, this is just the begining, real inflation is to come.. The whole fiat system fail as been prevented for now 5 year, by big bluff printing tons of fiat around the world.. Prepare for the real problem to became reality, it's a matter of a few years.. I dont wish it, but imo, it's inevitable, and it will cause a lot of suffering.  Hope we'll be able to provide for our children, the generation to come is the one that will have to recover from the big historic worldwide monetary crash.

The real problem is, with a inflative monetary policy, people lose the possibility to save, they have to take risk and invest and join complex investment games until they lose most of their investment money in a financial bubble

Minimum wage is part of the problem.

Fixing the fast-food strike (http://esr.ibiblio.org/?p=5034)

Monetary debasement is both necessary and good.

You are clueless and I am not going to explain it (https://bitcointalk.org/index.php?topic=355212.msg3841686#msg3841686).

I just want to focus and comment on this part specifically, because it instantly reminds me of the book "Richest Man in Babylon" and specifically, the part about investing 10% of all you earn.

I personally believe pretty much anyone on the planet can invest a tiny % of their income, even if it's not 10%.

Even the poor Indian child who earns $2 per day sewing clothes... if she can survive on $2 a day, she can survive on $1.98 a day, and invest 1% of her income. That % put away builds exponentially, and always ends up significant if you only have the discipline to stick to the plan.

Bottom line, I believe anyone on any income can save if they choose to.

AnonyMint, you are a strange jumble of correct and false.  I wonder how both Austrian and Keynesian economic theories can co-exist in your head without your head exploding from the cognative dissonance.

When you start wondering about what AnonyMint really thinks , you're on the path to madness :)

The truth here scares me.

true, only if that girl had access to invest her $0.02, I am sure most of you guys who leave such comments had a good life where you didn't worry about allot of things, I am thankful that my father has worked that hard to raise us and put us on the right way so today we can be proud of what we became, and he wasn't able to save at the time but he at least he made sure that we will be able to.

you know I wont really forget when once I asked him about the opportunities he missed, and what could he do and whatnot, his answer was: I gived you something more valuable than money, I worked all my life so you can have the proper education, money is an asset that you can lose and knowledge is something that lives with you.






 

This is how the Fed works. They print 10 bucks and LOAN it out to the other banks. Now the other banks owe the Fed 10.5 bucks in all because of interest.

WHERE IS THE 0.5 bucks going to come from???? There is no extra 0.5 in the economy at all. And the interest keeps ticking and ticking and ticking....

Bitcoin gives a finger to financial institutions as well as governments which are influenced by the rich anyway. Its a huge finger at that too!  ;D

Did I miss something here? A quick google of "purchasing power over time" will bring up a nifty calculator that I use often. In 1964 $7.25 was the equivalent to roughly $54 today (2012 is close enough).
http://www.measuringworth.com/uscompare/result.php?year_source=1964&amount=7.25&year_result=2012

I think you can't even picture it to yourself what real poverty looks like...

I think I do

the worker is regulated out of the market by vested interests. Eg you want to work as 'x' you need this license issue by the state. It does not matter how hard you work or improve yourself, the quota system defines that you will miss out.

Eg i can learn to fish, but if I can't get a state license to fish my skills are useless.

Govt regulation + vested interests are the real problem

Would you nitwits at least ATTEMPT to distinguish between demand-pull inflation and cost-push inflation.  The recent rise in oil and food prices (as oil is the main input to create food) is an example of cost-push inflation and it is not caused by the expansion of the money supply.  Cost-push inflation is terrible for workers because wages will lag the prices of goods, a demand-pull inflation tends to produce full employment and higher wages, only later do these costs work into the price of goods.  The whole notion that inflation happens always and only because of a change in the money supply has been completely debunked.

People who stuff money under a mattress do NOT deserve to preserve their purchasing power, they are taking money out of circulation which is damaging to the wider economy.  IF they merely deposit that money in a savings account their purchasing power will be almost entirely preserved, and if they make an actual investment (with risk) they will on average see a good return.

Lastly the inflation rate is NOT picking the pocket of the average worker, the average worker spends 90% of their income within a month of receiving it and holds savings equal to only 3 months income if they are especially prudent, even at your ludicrous estimates of 11% inflation this would effectively cost 0.33 months on their savings (if they mattress stuffed thouse savings) and .099 months worth on their monthly spending, for a grand total of 2 weeks of income per year.  In reality inflation is not 11% and people lose on the order of days worth of income in spending power from inflation.  This is why economies routinely continue to function at double digit inflation rates, it is a painful cost but not an unbearable one.

But if ANY of you people have ever bought a home you should have an idea how much people actually spend on INTEREST which is the real means that the financial system uses to to pick your pocket.  A Typical home loan amount is 1/3 of income and over the course of the loan HALF the total payment is interest so your looking at 1/6 of income to pay interest on just your home, that 2 months of income a YEAR, 4 times the cost of the absurd inflation rate and probably ~20 times the real inflation cost.  And that's just one item, your paying interest indirectly in everything you buy because every business is paying interest and passing its costs on, by the time your done it's on the order of HALF of income.

Claiming to want a better economic order for the common man by bitching about inflation while ignoring interest has to be the most misplaced concern trolling ever.  The whole modern libertarian monetary obsession is perfectly crafted to fit the interests of the very banks you claim to be opposed too, hard money, low inflation or even deflation, high interest rates and deregulation on top.  How long is it going to take you to realize your whole ideology is being actively stoked by thouse elites for THEIR benefit?

Good comments.  I've heard Warren Buffet talk about the whether he is concerned about the value of the USD and he basically stated that if he has money invested in a business producing a service or good that is valuable it does not matter that much what the value of the currency is because he can sell that good/service for whatever currency is going around at the time. So yeah you're money under the mattrass is not worth much and is not going to be protected against inflation but investing in good business does protect you against inflation.  Money in the bank is not much better at present it seems.  This is one of the things that make me nervous when I hear that people have 90-100% of their savings in bitcoin.   This may make sense in the short/medium term but in the long term a good business producing something valuable is a pretty safe and good bet.

Why? Why do they not save for a rainy day?

It could just be the other way about. Shiny days all year round (well, almost), so no use saving too much (makes some reason, lol)...

I hoped to trigger this thought: Why not buy 5 beers today, in stead of saving to 4 next month.

NOBODY in the US saves.  We had a financial seminar at church (Dave Ramsey) and they did a show of hands for who has no debt except for their house.  My wife and I were the only ones in a roomful of over 100 people that raised our hands.  Then they said houses and cars and again it was only about 7-8 people.  Everyone else has credit card debt or student loans.

It is better to have negative dollars and save in things. Why? Because the dollar is bad money.

You didn't trigger it because 25%/month inflation is NOT what is happening, and therefore does not explain the tiny propension to save.

It is clear to me that people are sucked into consumerism, thus regarding their salary as their budget, thinking that spending always increases happiness, looking for that dopamine shot caused by buying something new and shiny.

What lies beneath is in my opinion a bad management of risk. They don't save for a rainy day because, in their state of helplessness, every other day is rainy and they get used to it, in the same way they get used to acquiring new consumer products. The human mind has a huge power to become accostumed to both suffering and joy.

Well, I had a rainy day fund that was over $30K only a few months ago.  One car smashed on a crowded, snowy freeway in November; another had an engine block freeze up and crack; a $5K furnace replacement; a $1500 refrigerator stolen off the back porch of my unsold house that has been on the market for nearly a year, because the workmen put it out there to fix the floor and didn't consider that it might be valuable enough to steal (that's what they told me, anyway; I'm still suspicious) and paying two mortgages for the last 8 months.  So I know that I've had more than my fair share of rainy days during 2013.

Saving 10% of monthly income and having 3 months income as cash on hand is what is considered Prudent for a middle class person.  I was trying to make a generous case for you inflation haters, using a high savings individual and a high inflation rate, a worst case scenario for losses incurred from inflation.  If I had modeled a person with no savings you would have legitimately accused me of having a biased model, but even a model which is savings heavy dose NOT lose significant purchasing power to inflation.

Obviously many many people do not save that much (And I'm certainly on the side that says we all SHOULD save like that), but that is irrelevant to my point.  No one is stepping up to challenge my numbers or my conclusion that inflation dose not cost real people squat, while interest robs them blind.

Speaking for myself, this point has never been relevant.  It doesn't matter that there are things that the average, or even anyone, could do to mitigate the effects upon personal buying power by artificial causes of inflation.  The only thing that matters is that they are artifical.  If some hacker (who knows superman, perhaps) steals only a penny from each of the paychecks of every person at the company that he works for, is it not theft?  Who does he steal it from, the company or the employees?  Is it okay, just because each victim is harmed very little; or may not even be aware of the theft?

If you have any significant amount of money uninvested, you are quite silly. I know investing requires trust, research and maturity, but it yields more than inflation, so please don't justify stupidity with morals. :P

Instead, learn to live with little and profit from the all-time-high labour income in order to profit from the even higher capital gains in this century. I recommend you start here:

http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

What is your view on having half your earnings taken by Interest?  And why dose it bother you sooooo much less then losing a pittance to inflation?  Is it all wrapped up in this 'artificial' label, artificial = evil while 'natural' = good?  Do you consider interest natural and their-for good no matter how much it takes from you?

Do you realize that MONEY and everything about it is purely artificial, every culture had to invent money just as they invented agriculture, language, roads, bronze tools etc.  Interest exists as a quality of a particular TYPE of money, hard money and their is nothing 'natural' about it's or it's equally artificial alternative soft-money.  So pick which Artificial socially created economic paradigm you want to live in, the one with or without interest. 

Get rid of interest and you can also do away with inflation at-least in the nominal sense of the monetary units purchasing power changing.  But your not going to ever have the ability to just hold money, enjoying it's liquidity without that costing you something, their is no free-lunch.  Give up liquidity and you can preserve purchasing power, take risk and your entitled to return, no risk no return.

I don't mind the interest, because I agreed to those terms when I bought the house.  I could have chosen to not buy a house, and then I wouldn't have a mortgage.  There is no negotiation with inflation.


By artificial inflation, I mean inflation that isn't the result of fluctuation in the market, nor changes in the business cycle, but due to the deliberate expansion of the money supply.  In any other context, that would be market manipulation, or even fraud.  It's just that we've been conditioned to believe that the market for money is special.  It's not, it responds to supply and demand like any other.


Getting rid of interest will not get rid of the kinds of inflation that I am concerned with, and I think that you know that already.  Some portion of the interest rate is a market response to the demand for credit, some of it is a response to the perception of loss due to inflation, some of it is due to other factors.  So you can't get rid of interest in a market economy, it arises naturally.  It might be called something different, but the cost & risk of credit will be paid somehow, or credit will not exist.  Without a working money market (credit industry) the economy becomes very inflexible in the sense that it's not quick to resond to changes in the market conditions.  Credit & interest have their place, so long as they don't become the majority of the marketplace, which is what we've seen occur to fiat currencies since WW2.

I agree, for average person it is true. However, there are exceptions.
For people who own things outright inflation is an issue.
I own my house, cars and all other things paying no interest on anything.
Granted, I pay some interest indirectly, for me inflation is a problem.
Keeping my cash in the savings account is plain stupid.
I would need to keep my wealth in "inflation-resistant assets".
What are those?

Additional requirement: these "inflation-resistant assets" must also be "manipulation/speculation-resistant"
Therefore, they will exclude housing/land, metals, diamonds, stocks, bonds.
What's left?

Tip: see Buffet comment above  ;D

Exactly, because money (the dollar) is bad money.

Is he god now? Or should I say she?

Saving money is like waiving you place in the queue for resources to consume or invest. You should be free to consume or invest at the time of your own choice.

If you let a socker team of five year olds with mums go before you in the queue to the pissoir, should you only be allowed to lighten yourself half way afterwards?

No, saving money is nothing like waiving your place (...).  Where did you hear such an absurd comparison?  Who told you that "You should be free to consume or invest at the time of your own choice"?  Rubbish.
What you call "saving money" is called hoarding.  It is called gluttony and greed.
Who/what are you saving this money from?
Don't let the words fool you, you are saving this money so you can have it later.
You, not anyone else.  That's hoarding.

It is saved by not consuming. They come from trade of course, for instance sale of your work hours.

So if I have five hundred cooked dinners, you would think it wise and prudent for me to eat one & shove the rest under my mattress?  I saved those dinners by not consuming them.
That's exactly what you are doing with money, expecting it to be just like you have left it when you finally decide to come back for it and use it.
The result is I have wasted 499 dinners, dinners which could have fed 499 people, as I "saved" those dinners.  You, apparently, have done something similar with your money, and are now wondering why you weren't rewarded for your brilliant strategy.

It's all about LIQUIDITY, in your 'in-line' analogy holding money is not like getting out of line because you the money holder expect to go to the front of the line at any time you wish.  Holding money is like lurking at the front of the line refusing to consummate the purchase because you can't decide between a hotdog or nachos.  You might be letting individuals pass you one by one while maintaining your position at the front.  That is bad line manners even when you let people pass and one jerk at a time doing it is annoying enough, imagine dozens of people at the front of a line who are just 'holding' thouse places and who you need to pass.  

Then imagine that they start demanding to be PAID in order to be passed, they say they EARNED that spot in line and they might buy something at any time if the whim strikes them so they should be compensated for giving that up.  Soon their are a bunch of people just camping the line and they have formed a kind of cartel, no one actually uses the line anymore, their are just a group of people who act as rent seekers at the front of the line and everyone must pay them to pass before buying their hotdog.  That's interest and the banking system, it arises from giving people unconditional rights to just sit on money.  We would never tolerate this in a line and we shouldn't tolerate it in money either.

If you want to keep your purchasing power then you need to actually go to the back of the line thus giving up liquidity, this is what any decent bank CD will do for you, protect you from inflation with no risk.  But as everyone has said investing is the smart thing to do which would be like opening up another hotdog stand so some of the line moves to you and everyone gets served faster.

What you describe is saving, but this is what money is for. You do not have to save the actual dinners, don't buy them, or if you made them, trade them for money,

The analogy begins to fall apart (as they always do), but when you want to consume, you bid the price up.

If you want to invest instead of save, you use your money to buy for instance another microwave to the shop owner for a share in his business. Or lend money to someone who will invest.

Resources are needed both for consumption and for investment, the money queue is for both. Saving is necessary to invest, either the investor or someone else by lending. Thinking that you can create investments or consumption by manipulation of the money supply or the interest rate, is a fallacy.

You can change the market by the manipulation, but that only means some other person is moved backwards or forwards in the queue. Ultimately, the investment must use resources otherwise used by someone else to invest or consume, the result is suboptimal.

You're mistaken, that's not "what money is for."  That's what you want it to be, but your wish has no basis in reality.
Money is not meant to be be hoarded any more than food is meant to be hoarded, and inflation is the mechanism through which money-hoarding is discouraged.  

Banks are Evils i would like to tell you same situation as yours far away from where you live! in Egypt, i think that we only should f*ck the system!! Appreciation For Parents :) 

Savings must come before consumption on the aggregate.  Nothing else is possible.  We've been eating through the accumulation of savings of our predecessors for 30+ years.  By definition, that which is not sustainable cannot continue forever.  The only difference between savings & hoarding is the perspectives of the observer.

Saving does not need to precede spending.  Buying on credit is not only possible, but commonplace.
We have not "been eating through the accumulation of savings of our predecessors for 30+ years."  Perhaps some of us have, I have not.
I agree with "that which is not sustainable cannot continue forever," though you have failed to show the relevance of that truism to this topic.

Could OP finally PLEASE correct the thread title to make it comply with basic grammar rules? Thanks. If I see this popping up every day in my Updated Topics list I am more likely to panic sell.

Credit cannot exist without someone first saving the capital to support the extension of said credit.  There is no way around the fact that savings, in some form, must exist.  However, savings isn't necessarily in any fomr normally associated with the concept.  Savings can be food storage or the like.  Take this example...

Before the industrial revolution, most economies were agriculturally based, the United States included.  The new colony in the wilderness needed to establish farms quickly, in order to produce food for the families.  If the farms did well overall, the community could commit resources towards other endeavors than food production, such as craftmanship, artistry or public works; but none of this can come before the surplus food production even if there was some rich dude with gobs of gold able to lend out for credit (lacking a greater society to trade resources with).  Gold or not, if the colony couldn't produce enough food for it's own population, the young people who might otherwise study blacksmithing, advanced carpentry, masonry or any form of art would have to spend their time hunting or gardening in order to make up the difference.  That would be what we call 'subsistance farming' today, where the methods used require all of the labor time of the community to maintain an even keel, and leave no surplus gain.  In this context, any surplus gain (for the individual farmer, or the community at large) is the savings.

If you really want to learn something about this, I recommend the Uncle Eric Series starting with Whatever Happened to Penny Candy?  They are great, short primers on economics and praxeology.

EDIT:  The above example should provide a hint as to why both gold and Bitcoin, while great forms of independent currencies, are not capital in the proper sense.  Both are an abstraction of capital, because so long as a trade market exists, both gold or Bitcoin could be traded fro true capital.  Capital is the means of production; i.e. to the farmer, the tractor is capital; to the ditchdigger, the shovel (and backhoe) are capital; and to the programmer the computer is capital; but to the recreational gamer, the computer is a toy.

EDIT2:  And when I say that we've been eating through our capital for decades, I mean this literally.  In our modern world, oil is the primary input commodity for just about everything, including industrial fertalizers.  In a world where such protrolem inputs become significantly more expensive, less valuable uses get priced out; while everything that currently utilize cheap oil as an input becomes more expensive, as production shifts to more expensive methods and inputs.  Industrial food production is no exception, and a greater number of the population must become involed in their own food production (via backyard gardens, hunting, fishing, etcetera) in order to provide enough cost-cutting|savings|production|whatever to support the entire family.  Youth unemployment might be very high for some time, but they better be reading gardening books from the library whether or not dear old dad still has a job or not.

We dont need to Go back to 2008 also for that
Fiat economy is worst we can see every week back

That is the problem Hera fault is not of OP fault is of yours, Why you only go on Thread Title Why dont you take a bit of Time to study and watch where you are Investing and where you are driving.
Good Luck to Hold your oins not to PANIC SELL

1. I wasn't talking about money. I was talking about "wealth".
2. Hoarded or not - it doesn't matter. I have "wealth", I don't want it to depreciate.

Basically, all I wanted to say is that: if you truly want to preserve your "wealth", you should invest into essential business.
You should not invest into currency or diamonds.
You may try to invest into housing/land, metals or stocks - if you have insides into how these markets are manipulated.

No matter what happens in this world, there are 3 things that people will always want: food, health and s_ex.
If you have the business dealing in those "essential" areas, you will be ok.
Investing into these type of businesses I would consider a true protection against inflation.

Hoarding implies there will be or already is a scarcity of whatever it is you're hoarding.

Saving money in your bank account is not the same thing. Not even close.

???
See TV show "Hoarders."  I suppose you could argue that old newspapers and broken combs are scarce, but most won't find your argument convincing.
+1 for creativity, nonetheless.

If you take money out of this argument, than what, exactly, are we talking about?  What do you mean by the word "inflation"?
As for your other points, I agree.

Well, A.) Don't cite a TV show as an example. Ever.

and  B.) None of those things are scarce. There's another term for what that is. But you already know that

Well, I think, the OP wanted to know the way to protect his money from inflation.
As many pointed out, keeping "wealth" in money is not a good idea.
Therefore, I've suggested converting money into something else.
In my opinion, investing into essential business is the best option.

Money is nothing more than a temporary storage of wealth.
One should not store his "wealth" in money because it will depreciate due to inflation.
All standard currencies will depreciate - process is unavoidable and unstoppable.
Best advice for OP is to save and then invest into something inflation-resistant.
That is assuming that there is no interest on debt to be paid.
If there is interest, need to pay that first.  

I agree with you that we have been eating through commodities like oil for centuries, but you can't possibly mean that these commodities are "savings"?  Sure, the oil economy can't continue indefinitely, but neither can the universe (which, according to the second law of thermodynamics, tends toward entropy).  I'm not trying to nit-pick but by savings, I mean not spending MONEY for a nontrivial amount of time.  I'm all for trying to cut down on unnecessary consumption.

That's exactly what I mean.  Money (and currency, not quite the same thing) is an abstraction of wealth, but not wealth itself.  As noted by others, thinking of cash/gold as wealth is a common error.  Think about what the "old money" of the North-Eastern US does.  They certainly don't sit on billions of dollars, or even billions of dollars worth of gold; they buy assets and/or commodities.  That's investing, but it's also savings.  They may simply be buying equities in corporations, but that is still an abstraction of what real savings is.  The corporate capital is the savings, and the stock certificate is simply a deed to a small part of that.  The monetary price to aquire said stock certificate is only relevant to when it's bought or sold, the rest of the time it's irrelevent.  In the novel Cryptocromicon, a wealthy character describes it like this, "Gold is not wealth, gold is the corpse of wealth; I can show you how to make  wealth."

A.) Absurd.  Dogma.  Why?
B.) Hoarding is both the correct and most commonly used term for it.  There may be other terms for it, but that's not relevant.  Your claim that a thing must be scarce to be hoarded is proven wrong.  Hoarders hoard - money, feces, old newspapers, what have you.  That type of non-life-affirming behavior is called "hoarding."

*If you're rich and brilliant like Howard Hughes, it's not called anything, at least not to your face.

I don't disagree with any of the above, but (in this particular context), investing and saving are two entirely different things.  If you look back through the thread, the user i was addressing was mistakenly assuming that his money should maintain its worth *without him investing it*.  In other words, he felt that he should be able to put his money in his mattress, and come back to it being worth just as much as when he left it there.  That's, if I am reading you right, the opposite of what you are saying.  I have nothing against investing - we'd be living off nuts and berries if it wasn't for that.

First, it doesn't matter if you "agree".  Your consent is not required.

Second, even in this context, savings in a monetary unit is still investing, in the sense that there is only one reason to 'horde' money, and that is for future consumption.  If saving surplusses in a monetary unitis the most efficient method, then that is the most efficient method.  Investing in other productive enterprises in teh internim may not be the wises path, as all investing comes with risk.  But for a central bank to inflate the currency unit, thus depreciating the small savings of individuals, is not a natural risk.  It's entirly an artifical one, and because that decision is made by men with theirown vested interests, it's theft and fraud no matter the scale.  You can justify it however you like, but it's still the transfer of spending power from the (monetary based) savings of all currency holders to those who directly benefit from the existance of the central bank, and without their consent.  (because consent is impossible)  If the value of the monetary unit flucuates for natural causes, beyond the direct control of a central bank, that's the risk of using that method to save.  Also, bear in mind that no matter how dilligent the individual investor may be about keeping as much of his savings in assets (instead of currency) there is always someone who owns those fiat units at any given time.  So whether or not it's wise to invest in other ways doensn't change the fact that, to a point, doing so completely is impossible.  Also, on a percentage basis, the largest holders of currencies are the middle class and the poor, so this method of buying-power-transfer is particularly harmful to the lower classes.

First off lets clarify a term,  "REAL CAPITOL FORMATION" is the process of stockpiling real things like a bag of corn so that some productive activity can be done with it in the future.  No one disputes that this is a necessary prerequisite for all productive activity, note that when the capitol is irrevocably committed to an activity (like planting the corn) THAT is investing.  But "SAVING" in this thread so far has been about the stockpiling of money which is very different, saving money dose NOT cause either real capitol formation or investing.  Saved money causes deflationary price changes in the market and deflation causes a drop in investment activity and a drop in future available capitol compared to a business as usual scenario.



MoonShadow:  You admit that money is  "an abstraction of wealth" and all man-made wealth and capitol be it a bag of corn, a tractor, or a shovel are going to decay even when not used.  We can not put these things under a mattress and expect to get the same utility from them at a later date.  Society must continually put it's capitol assets to work creating new capitol with them before they reach the end of their life-spans.  We could not walk away from these things and come back 30 years later and pick up where we were with no losses, we would be confronted with massive decay.

But you expect to do that with money, your 'abstraction' has a quality which the original lacks (timelessness), that makes it a poor abstraction dose it not?  You want money to be BETTER then real things.  Soft money (via inflation or demurrage) DOSE match the behavior of real capitol though.  Your desire for a magical time-capsule dose not make it a reality, or a morale imperative.  When money is made hard it comes at terrible costs to other people who actually need to labor and pay the hidden costs of running your time-capsule. 

When the operators of the central bank create modest inflation they are the ones acting correctly because they prevent a group of people (savers) from taking an unearned benefit at public expense.  If their is any flaw it is that they do not go far enough and completely eliminate interest largely due to limitations in the structure of our monetary system.

I specificly contested this claim, and provided examples of 'idle' resources that naturally maintain, or even improve, their economic usefulness over time.  I also specificly argued that, as money is an abstraction of such natural resources, no artificial (i.e. caused by the direct decisions of non-owning men) depreciation should be acceptable to any society, since (as such an abstraction) such artifical depreciation always has the net effect of transfering buying power from the owner|saver to someone else.  This is theft in any other context, there is no rational reason that it shouldn't be treated as such simply because the commodity being examined is regarded as 'money' by anyone.


Again, I have already provided examples of resources that for which we, quite literally, could "put under the matress" and expect equal or better utility at a later date.  While it may, or may not, be more efficient for a society to strive to employ all such capital "continually"; doing so doesn't lead to continuous economic growth, or even stability.  In fact, it's easily provable that resources kept in 'conservation', often as a direct result of the deflationary effects of hard monies prior to 1912, had a strong suppressive effect upon the magnitude (not the period) of the busniess cycle.  Put into a more modern context, speculative investing has a net effect of stablizing price changes in commodities and everything else over time.


The above two paragraphs are so far from reality as to not be worthy of response.

Your switching to Natural Capitol now when I specifically addressed man-made capitol, which is by far the greater portion of what we trade and transact on a daily basis.  Money is not used just to buy land, it is used to buy everything.  Your arguing that money should now have the qualities of the Earth itself, literally be a claim on finite portion of the earth that can not be diluted. 

Perhaps this is where you libertarians get the idea that a fixed supply currency is appropriate because you think every coin is like owning an acre of the Earth and you miners are like some kind of homesteading pioneer planting your flag on virgin territory so they can then resell it to the next wave of settlers?  Basically the same thing that happened when the white settlers landed in America and Australia?

You can't hoard money. There's no such thing as "hoarding" a currency, commodities are a separate matter all together.

Sure you can.
It's altogether common.
Freudians see it as a manifestation of the anal retentive complex, an infantilism related to the anal stage of human development.

You must of left planet earth long long ago my friend

I've done no such thing.


https://yourlogicalfallacyis.com/strawman

Then please state what kind of nature you believe money SHOULD have, you have said you feel that money should never be diluted, even in the face of economic expansion and an increase in purchasing power.  The only thing that matches that description is the Earth itself.  Their are only 3 choices

Hard money:  Gains in value, can never be diluted, like the Earth
Neutral money:  Neither increases or decreases in value, supply will need to expand with economy
Soft money:  Declines in value like all man-made things, also experiences supply expansion and or demurrage

Everything you've said leads me to believe your defending Hard money and calling Neutral and Soft money 'theft', but for what ever reason your rejecting my assertion that hard money is analogous to land.  This is very odd from a historical perspective hard money advocates have understood and acknowledged the 'hard money is like land' argument and even promoted this as a 'natural' thing and as a 'sound basis' for money.

I have said no such thing, again you are misrepresenting my position.  I have stated that inflation, due to 'artificial actions' by people other than the owner, should not occur.  Stated another way, expansion of the monetary base by a central issuing authority is theft whenever such actions devalue the currency already in circulation not because inflation is necessarily bad, but because it's (almost) always involves the transfer of buying power from the diverse holders of the present currency base to a small group of people with first access to those newly created funds.  For the most part, that actually means employees and contractors of the Federal Reserve itself; so such inflation can be honestly compared to a tax, because the effects are the same.  However, this tax is imposed upon all of the currency users, regardless of consent or even democratic representation, so it's particularly insidious.  Of course, I regard income taxes as legalized theft as well, so take that wherever you like.

BTW, Bitcoin isn't immune to this effect, since it's currently quite inflationary.  However, the big difference is that 1) I can choose not to use Bitcoins and 2) the degree that inflation will effect my own position is entirely predictable and not influenced by political forces nor human error.  I don't have to trust that said transfer of buying power goes to support the infrastructure of the network, I can know it to be so.

Basically you need to understand the simple concept of DIVISIBILITY.

Your little mind needs to be expanded to understand that digital currencies are infinitely DIVISIBLE.

Therefore, there is a fourth category. Hard money that is infinitely DIVISIBLE, which is not like earth at all.

Oh for crying out loud your bringing out the Divisibility Troupe, this is sad Lloydie, this is without a doubt the most ignorant thing said by BTC apologists.  A yard stick is infinitely divisible but it is still finite, just like the earth is finite, not expanding and infinity divisible.  Divisibility has no bearing on inflation or deflation and never has.  Gold and Silver coins have been highly divisible for ages and are still deflationary because deflation/inflation means a change in purchasing power and dividing a asset dose not change the owners purchasing power because they still have the same amount after division.

You should go back to your own thread, it's not like I was neglecting you.

It's okay. I like it here. Your explanation sucks and was inadequate so I helped it. Divisibility in bitcoin means that freicoin is a stillborn. Argue all you want but everyday the growth in bitcoin and the stagnation in freicoin will stare you in the face as a reminder that divisibility is better than demurrage.

Here, I'll help you a little more. The divisibility in bitcoin allows people to spend smaller units of bitcoin even as the value of one bitcoin rises. Hey presto, liquidity problem solved. All without inflation or demurrage.

I am getting tired of trying to interpret your position so I want you to state it clearly.
If it was not obvious enough from my last post you were supposed to pick one of the 3 options I presented, that of deflationary, neutral or inflationary money.  Which do you think is the FAIR kind of money.

Your now saying that 'inflation is not necessarily bad' but only bad when the central monetary authority dose it, well this is absurd, how else do you expect inflation to occur, massive counterfeiting?  A collapse in available goods with no commensurate reduction in money supply?  Thous would be 'good' inflation?

Lastly you seem to be under the assumption that the FED expands the money supply by paying it's employees dump-trucks of money.  This is absurd, the FED is a bank and it expands money supply by the loan process to commercial banks which make loans to normal people, and by buying bonds.  If you think it is unfair for normal borrowers or bond holders to be the first recipients of that expanded supply that is one thing (my preference would be distributing it to charities) but your describing a fantasy Zimbabwean scenario in which the mint just delivers money to political cronies who live like kings.  Is this the kind of nonsense Ron Paul tells people about the FED?

I have been for four years, you just seem to be either impaired or intentionally thick.


You're presenting a false choice.  What I, or you, think is a 'fair' anything is irrelevant.  Historicly, money has always been the most marketable commodity available to a culture.  The point is that government manipulated currency is a recent invention, and was never instiuted for the reasons offiically presented.  The only 'fair' money is one that can be freely chosen without political pressures.  Bitcoin is that money in our information age, or some alt-coin that come and take the crown away.


Not good, but not theft.  Inflationary periods did occur, mostly by regions, during the gold standard.  During gold rushes, and during local monetary upheavals, for reasons entirely unrelated to artifical expansion of the monetary base. (I'm considering mining of gold a natural cause of expansion of a gold stnadard monetary base)  In almost all cases, these periods of inflation (and deflation) were regional to local in scope, limited in duration or reversed by other forces; or any combination of all of those things.  Overall, the (naturally occuring) gold as money age saw deflationary trends so mild, they were only identifiable over generations.  For that matter, silver has been so stable over the past 2K years, that it's actually experienced very slight inflation during that time compared to the cost of Judas's betrayal (http://en.wikipedia.org/wiki/Thirty_pieces_of_silver#Types_of_coin).  As another example, during the Roman Republic, prices were so stable for so long, that the price of a handmade iron nail became the unit for it's size; and that is a unit that we use (in American Standard).  We call it the penny, the English called it the Pence, but the Romans called it the denarius; so to this day nail a size 16 "penny" nail is written 16d.  No one really noticed the descrepency until the Roman Empire began to debase the silver content of the denarius.  You would argue that the wealthy would prefer to hide nails (or gold) under the matress, and thus no investment were possible, but of course the history of the world contradicts sucha theory.  Yes, some people did exactly this, and still do; but on the net, investments wtill occurred.  Even the wealthy guy who saved in nails intended to use those nails for some project down the line anyway, or use them to pay his workmen.


The Federal Reserve bank itself does not loan out money of any real nature, but you're right that (historicly speaking) most of the expansion of the monetary base has been due to the leanding reserve ration of member banks.  But the result is exactly the same as if the central bank had printed the money first because the US $ is a credit based currency anyway.  The only difference of note is that some portion of that inflation actually goes into private banks, becaues businesses are paying real interest on not-yet-existant dollars in principal.  And while that is true, it only confuses the issue of conceptualizing the reality that the spending power of the fiat currency moves from the existing base to the first users of new funds, which is the banks doing the lending, not the borrowers of not-yet-existing funds.  The Fed then uses the resulting demand for cash (because interest on not-yet-existing dollars is drawing the real cash out of the market and into banks) as the offical cause for creating more currency, and the cycle repeats at whatever rate the Federal Reserve deams ideal.  But ideal for whom?  Not the public, the Federal Reserve is neither beholden to you (or even us as a nation) nor does it exist for your benefit.  The Federal Reseve exists for the same reason all central banks exist, for the benefit and protection of member banks.  Bitcoin does not have that problem.

I have not been reading your posts for 4 years, I've read what you posted in this thread and that is all I'm going to read, unless your going to provide links.

Your inability to put your finger on what you want is just mind-boggling, again you leave me in the lurch and I am forced to interpret your rantings as 'any money created by and managed by government is unfair' and 'any money created and managed privately is fair'.  Do you agree with that?  If so you seem to be abandoning all economic arguments which have occupied half of this thread.  You will accept ANY type of inflation or deflation in a currency from any cause so long as the big bad 'gobemint' isn't the causing of it?

You've ceased to make an economic argument (notice the forum we are in) and just reverting to the standard libertarian nonsense that private anything trumps public anything.

I find your belief the BTC doesn't exist for the benefit of 'Banks' to be either fantastically Dishonest or hopelessly naive (I'll give the the benefit of the doubt and go with Naive).  We all know BTC and every similar coin exist to enrich the Miners, early adopters and the first-mover core businesses like exchanges (which are functionally banks), they all OPENLY admit they promote it for exactly that reason (with libertarian ideological window dressings of course).  YOU simply want to be IN THAT CLUB with them rather then outside staring in.  BitCoin's money expansion system IS exactly the kind of banana-republic kleptocratic Zimbabwean printing press you imagine the FED to be with Satoshi standing the the place of the FED chairman, the projection level here is STAGGERING.



P.S.  To return to a little point that got dropped a page back, you claimed that you could avoid interest by renting rather then owning a home.  Wrong again, rents though not rigidly linked to home costs DO reflect home costs and will include substantial pass through of interest.  In fact EVERYTHING includes pass through interest as I stated earlier.  Things vary in their amount of embedded interest, the longer the life-span of a product the more interest is in it, housing and infrastructure are naturally the worst in this regard.  But everything has interest costs in it to some degree and all FAR in excess of what inflation costs us.  Your far more easily able to avoid losing purchasing power to inflation then you can to interest, and their is nothing voluntary about it if you ever expect to spend your money in our economy.  Have a look at the research.

http://userpage.fu-berlin.de/~roehrigw/kennedy/english/Interest-and-inflation-free-money.pdf

This is FUD. Bitcoin's money expansion encourages adoption away from the fiat based money system. This is true.  However, Satoshi isn't the Fed. Not even close. The big difference in bitcoin is that bitcoins must be spent to derive economic value.

In debt based fiat, people can borrow money which creates more money out of thin air which then inflates asset prices. They don't have to spend real money to derive economic value. They can simply manufacture more wealth out of the air, which widens the gap between rich and poor. For example, borrow a billion dollars to buy residential property to drive up house prices across the country. With increased asset values, the rich can draw out equity and capital gains to spend on their lavish lifestyles.

The debt based fiat system is sick and cruel. Bitcoin is not based on debt. The current wealth discrepancies in bitcoin is at least partially caused by the uneven wealth distribution in the fiat world in the first place. The rich can buy up more bitcoins because fiat made them rich in the first place.

However, over time bitcoin will be a much fairer monetary system compared to the debt based fiat system we currently have. Bitcoins have to be spent. You can't make more up out of thin air via money printing. It is also unlikely fractional reserve banking will work under bitcoin.

I believe that's very wrong for a several reasons:

* Income may be in food and shelter, non durable, not easily tradeable.
* Real cost of living and preserving health may already be higher than $2 for said child, spending any less would lead to sickness and costs far outweighing savings gains.
* Lack of access to safe keeping (banking) services and a hostile environment which does not respect your property.
* Even with access to banking, the % put away only builds exponentially if the saver has access to profit yielding invetments which beat inflation and investment risk. At the moment that's hard even in the "civilized" first world.

Likely there's more.

It would work (provided there is no limitation of another kind) only if lifespan were infinite (this is the crucial premise your assumption lacks)...

I have been reading posts on this thread I've created and I have been amazed!! I have to admit that I liked reading the different opinions  but I also have to admit that really few members here understood what I meant, or maybe I didn't express my thought the right way.

I was trying to find the right words and the right method to express what I think about saving in general and fiat money in this special case, but I failed until I saw a video of a guy with a close enough thoughts ( I really forgot what was the title I just came across it on the YouTube recommended videos.. 

so everything is based on trust, you have to trust the issuer to use it as a medium of exchange, Fiat and the paper it self has no value except that it was issued from your government and because of that you are somehow comfortable with exchanging it for goods because you trust your government, so think with me when you get a payment for a service/good/salary... you basically are not holding value but paper that supposedly have value based on your trust of the issuer, you hold value only when you exchange that Fiat (paper) into goods or services.

now people who work hard and save so little to be able to invest in companies/stocks/real estate and are forced to try to hold to that little cash that they still managed to save after spending on basic things, these people are the most effected, people who can not afford to buy houses and cars pay for high education .... and instead have to get a mortgage are effected even more.

what bitcoin solves Beside the technical side of it ( block chain solving the double spending) is instead of teaching your kids (the market) to get credits and mortgages to build their future is instead to save and spend later on important things first to less important things later, because that bitcoin that you are holding now will buy much more after 2 years than what that USD, EURO.... will buy you in 10 years

I still think that I didn't explain it in a good way , but I just hope that some of you there will get what I am trying to say here...