We can agree that both high rates of deflation and high rates of inflation increase the risk of long term contracts.  What is "bad" is a realtive perspective, in the context of economics.  Again, bad for whom?


Risk.  You're forgetting about risk.  That's why you shouldn't lend, if inflation is high.  It also matters why inflation is high.  High interest rates are often a reflection of a high systemic risk.  Often, not always.

I don't, and no economist worth listening to does either.  Inflation and deflation are best defined as the two most likely consequences of expansion and contraction of the monetary base, relative to the size of the economy that it represents, repectively.  Thus, Bitcoin is only deflationary in the contest that the rate of growth among the market exceeds the growth of the monetary base.


Again, worse for whom?  There are alwasy two parties to every trade, buck.

The voltility, relative to the exchange rate, will mute significantly as the economy grows.  The exchange rates of small nations' fiat currencies are (almost) always more volitile than the exchange rate between major nations such as teh US and the Euro.  And if the exchange rate of bitcoins continue to rise, it's a sign of economic growth; so if the volitility and deflationary nature does result in some breaking of that growth, so what?  That too will self-correct as the economy matures.  There is no such tihing as a deflationary spiral.  It's only an economic theory that has no real world examples.

Better for whom?  It's not better for everyone.  The owner of the currency should be able to choose the best method of saving.  If your method really is better, others will follow.

This is not a problem inherent to deflationary currencies.  It's also true within inflationary currency systems when the inflation rate is too high.  That's the real issue; not that Bitcoin is deflationary (it's not really, and won't be until at least 2100), the problem is that the rate of change of the exchange value is too high for such long term contracts to be sensible.  The current and past instablility is a consequence of Bitcoin's adoption rate, not any particular flaw in the system, and certainly not Bitcoin's "deflationary" nature.  It's simply not a mature economic system, yet.

There was also the germanic culture prior to the formation of a German state.  For hundreds of years a loosely cooperative culture existed that spread across nearly all of the northern half of the European landmass, that never formed anything remotely like a government or a state.  However, it's hard to use that one as an example of success, since they were also largely illiterate, so we don't really have any documation concerning their culture other than the records of encounters with other cultures; primarily the Roman Empire.  The Romans considered them to be barbarians, but the opinions of third parties (particularly those in a state of low level warfare) are not trustworthy.  We know that their economy was largely resource based, and mining was a major part of their trade and livelyhood.  What little trade that they did was usually in mined salt (as noted in the history book about the topic, simply called Salt) and they were also noted to have very colorful clothing.  The old germanic tales about dwarves were likely based upon their culture.

And then there was the long history of the Swiss culture, which was stable without a central government authority or structure for a thousand years.  But, of course, that's just one little example of a bunch of mountain hillbillies, right?

That is a nonsense comment.  First off, feudal lordships were functionally mini-governments, and thus the quality of life varied significantly; and the only practical difference today is that your lord is an elected political class and your lands are much larger.  The government still takes a portion of your earnings regardless of whether or not they let you think that you own the means of production or not.  The perception of practical differences are a matter of technicalogical progress and educational propaganda.

Second, the currency unit has little to do with this.  The rise of nation states (as opposed to fuedal lordships) occurred during a time period that there was literally no alternative to gold, silver, copper and barter.

Krugman knows exactly what he is doing.  It's in his own interest to make the arguments that he does, in the forums that he does so.  At least, he believes that it's in his own interest.  To some degree, he may have even convinced himself that he's generally correct.  It's very difficult to convince anyone to understand the truth when their income requires that they don't understand.

That said, Krugman is no fool.  Krugman is a con-artist performing a long con on half of America.

selling naked is extremely dangerous.

While this is generally true, land values do tend to rise over time simply because the population increases and thus there are more people competing for a finite resource.  It's a value change that can only be measured accurately over decades, however.

For my next question, how do I force Bitcoin-QT to rescan the blockchain without downloading it on an iMAC?

Multi-bit is not bitcoin.

How much for the Demoman's new cannon?

What has happened to my country?!  That over the course of my own lifetime the British, who remain loyal and avowed subjects to a monarch, are more free than I am!

I need to move, but I can't (legally) take my firearms with me.

Ain't that the truth.  I read it four or five times over the course of two weeks before it clicked for me.  The first three times I read it, I would have sworn that it's some kind of complicated scam, but something about it nagged at me.

I'd be selling if all of my bitcoins weren't already tied up into loans...

Crap.  I'll never be able to make this kind of profit from a short term loan.

I'd actually tried that, but apparently symlinks aren't acceptable to bitcoin-qt.

Thanks for pointing me in the best direction.

My problem with that theory is that much of the recent gains are due to a recent rash of good news.  What happens when there is bad news? Granted, the good news is real news, but it's been decidedly pro-Bitcoin for weeks.  We are due some bad news, like a major exchange hack.  We are, IMHO, beyond a price point that is justifiable with the current size of the actual bitcoin economic activity alone.  Hype leads to speculative bubbles.  We all know this.  What we don't know is how long we can ride it before sentiment turns sour.  What happens to the European banking panic when the asinine deposit tax proposal in Cyprus goes down in flames?  Or there is a compromise that doesn't spell the worst?  The sudden influx of Euro denominated wealth cannot be maintained.  Once the pool of risk adverse Europeans (an irony, I know) has all moved the greater part of their deposits into Bitcoin (or gold/silver/whatever) who is going to be left to support the bid wall?  Can that bid wall be supported by Argentines and Iranians evading capital controls?  I doubt it.  That's what Bitcoin is good for, but it doesn't really matter so much what the exchange price actually is if Bitcoin is only being used as a workaround for a bottleneck in the fiat currency system.

MtGox will never permit naked shorts, as that puts them as the naked long.  That's a real quick way to go bankrupt in this market.

Oh, that one. Sure.

Want to see something disturbing?

enter "Depends upon how much money that they were willing to lose" into the google search box.

Care to share? Cuz I wasn't quoting anyone on purpose.

Depends upon how much money that they were willing to lose.