Lowered prices don't stop consumption, falling prices do.

Maybe the people who spend their bitcoins when their price in dollars rose were expecting the price to go down again.

You said yourself that falling prices promote saving.

On the other hand, as you say, lowered prices (or more valuable products) lead to consumption.
I don't understand how can growth lower interest rates.
It is really a complex topic.

That's not true - it's still PPS, which means it eliminates "luck" entirely for the miners. You always get paid what you'd expect in the given time from your hashing rate and current difficulty.
So the only variable for you as a miner is time and hashrate. "Long rounds" don't change your rewards, an neither are "new miners" rewarded more at any time. It's always fair.

SMPPS is like PPS in that we'd offer a price per share. Unlike PPS, we'd have to wait until the round is complete (and the block has 120 confirmations) before payouts are made for shares.

One of the major downsides to PPS is that a really long round could eat into a pool operators reserve funds, and could possibly bankrupt a pool if either it was extremely unlikely or if someone attracted PPS via block withholding.

SMPPS avoids this downside due to it being "Shared Maximum", or in other words, if the total price of all pending shares exceeds the block income the pool operator pays out proportional to the funds that are available.

luke-jr wrote some pesudo code for how the payout scheme works here: http://eligius.st/wiki/index.php/Shared_Maximum_PPS

For readability, what luke-jr said was:


During short rounds you will get paid less than proportional. In fact, during really short rounds the payout will be less than the block's 50 BTC. However, the excess is not something that the pool operator pockets. What the pool operator does, is move that into "available funds". Now, when a round goes long the pool operator will dip into the available funds to try and keep the per share price at the fixed and advertised price. If the available funds cannot suffice, total available funds are payout proportionally.

Now, since variance averages out over time, the available funds bucket will fluctuate up and down, but ultimately have a net of 0.

Remember our 8 million share round? In a proportional payout scheme, we all worked harder but got paid "less".

However, the two rounds before out 8 million share death round were very lucky. Had we been using SMPPS those two lucky rounds would have esthablished a reserve for us all, so that during out 8 million share round we can all get paid more proportionally to the time the block took to solve.

Indeed, that is why I'm very much inclined to like SMPPS....

But, I've yet to hear a direct yes or no from anyone regarding such a change.

5870's: 34-38°C

i guess 20% of the pool are the hoppers. do you think it is bad?
or good since we have the possibility to find a block during their "visit"?

Well, he is using an actual commodity, so no central bank control.  Also, you can trade them electronically.

Since bitcoins seem to be increasing in value, there seems little point in not just using them.

What it could be good for is to give a stable reference for bitcoins' actual value.  For example, you could hold bitcoins but agree to pay in beertokens.  This would eliminate the need to do the deflation calculation in your head.

As for the last sentence, even free market entrepreneur types prefer to partner up with people who have the paperwork to prove that they know what the heck they are talking about. Brilliant inventor types do happen, but they're very rare, and once they do invent, they usually look for people with good VCs to implement their ideas

We've certainly talked about it, but I'm not convinced yet We may end up there, though.

In those cases it actually is due to growth, simply because the growth is not due to politics repressing people, but certain people really outgrowing others in a "free" market. There are kids getting education and experience, starting up businesses and starting to earn a lot of money, while their parents are still basically middle-age farmers or random stuff (leather, kitch, etc) makers. I think the only "political" effect here is the distance: the new technology and business practices these wealthy people are learning and taking advantage of were just too far and unknown to them.
Even in a US economy, though, entrepreneurs who seized on the Internet opportunities are millionaires, and compared to their income, the rest of us are dirt poor Though the level of inequality is just not as blatantly obvious here as it is in BRIC countries.

If anybody notices their miners idling a lot or returning error messages, please let us know at the support email address; a few IPs out there are running up against our request rate limits, and we'd like to work with you to get you full access. Thanks!

pool.bitp.it:8334 13/07/2011 21:49:35, 15e344e4, accepted
pool.bitp.it:8334 13/07/2011 21:49:35, 6a9587b6, accepted
pool.bitp.it:8334 13/07/2011 21:49:38, 3fa0e6a4, accepted
pool.bitp.it:8334 13/07/2011 21:49:48, d228fc62, _rejected_
pool.bitp.it:8334 13/07/2011 21:49:53, 39d74dee, _rejected_
pool.bitp.it:8334 13/07/2011 21:49:56, 400c5ad2, _rejected_
pool.bitp.it:8334 13/07/2011 21:49:58, e044bf7e, _rejected_
pool.bitp.it:8334 13/07/2011 21:50:07, 658b753c, _rejected_
pool.bitp.it:8334 13/07/2011 21:50:17, 0608dbdc, accepted
pool.bitp.it:8334 13/07/2011 21:50:33, 957bcb54, accepted
pool.bitp.it:8334 13/07/2011 21:50:42, 67c6fe07, accepted

But if growth also leads (apart from an increase in demand for money to invest) to lower prices (or more valuable products) which promotes spending over saving.

Doesn't it also leads to high interest?

On the other hand, high interests and falling prices incentive saving.

What promotes falling prices? Saving, spending or both?

I hopped in around day 10 of the long round. I thought there would be some benefit to the pool to have what at the time was another ~5% of hashing power. I consider that the hours I spend mining * hash rate are paid the same to all.... I guess I am saying would someone explain the problem with pool hopping...I don't see it

thanks for your thoughts.

I assume a strong longterm relationship between growth and interest, since at a certain rate "r" of interest, only firms with higher growth expactation than "r" would borrow money to expand. Furthermore I assume, with more and more investments, the return of investments lessens. So despite other factors affecting interest, growth is the one, which determines an equilibrium around which the interest rates should theoretically fluctuate (fluctuation is probably mostly because of bernanke and his colleagues).

The next step I take is to assume, that human capital investment like other investments must follow the same trace along the growth path. Aquiring human capital must be profitable, else one would do 3 years of work instead of a bachelor degree and leave some of the money in stocks and bonds or something. In fact there are studies which claim the return of human capital investment to be around 6-7.5% per year of schooling. This is pretty much the average interest rates of the past decades plus some compensation for the years where no income could be obtained.


I will try to break down the invention thing to the micro level:

- some new invention is made (steam engine, railroad, car, electronics, pc, internet)
- from now on, the economy might grow by exploiting the new invention
- there are some entrepreneurs (e.g. a railroad company, ibm, volkswagen, google) who are able to generate tremendous profits (far more than rate "r")
- those will pay above average wages to people willing to enter this sector and if neccessary adopt new skills
- on the other hand some workers of the "old sector" might even get unemployed (the only potentially negative part)
- other sectors will also grow (but at a lower rate) and pay higher wages because the new high-paid workforce of ibm, volkswagen, google has more purchasing power

You wrote: "When unqualified workers have access to new machinery they produce more and can bargain for better wages."

This is exactly how I think inequality of wages arises. Workers of IBM, Google etc. can bargain for way higher wages. But I guess you are right if some invention can easily be exploited by untrained or former low-income workforce (railroad might be an example or three-field (crop) rotation) and not only by trained people (like in electronics or it). Actually, measured with the Gini-coefficient, inequality almost always drops when some random wages rise! not sure if the gini is a proper measurement then

But to come back to the original question for a moment: The relationship between growth and interest seems so trivial, that it must be mentioned by some austrian economist. Any idea in which book to look that up? Reason is I need some sources of quotes from where to start with my ideas. Furthermore it would be neat to have some austrian texts about human capital.

I'm not an Austrian economist, nor do I know any books where you can get quotes, but what you are saying is indeed fact, and is readily evident in our emerging economies, such as China, India, and Brasil, where rapid growth has created an ever widening wage inequality between those who are educated (either formally, or just with personal experience in management/business) and those who aren't.

TierNolan is correct with 100% backing you can hold the price of anything at any price.  The one fault in his statement is that we don't really plan to hold beer we just hold assets of USD or ERO or treasuries and bonds in many different currencies in many different countries and many different banks to keep the possibilities of any one country or bank or entity from being able to lock us out of any or all of our assets.  We just base the value on the commodity of beer to make it clear to the holders of "The Trust" the value of what they hold for each share.  so we don't have a problem with aging or storage.  what you may not even realize is that 90% or more of the world banks only hold 10% or less of the outstanding debt of there depositors.  We have no plan to be as unstable as any of the known banks.   Remember we have unlimited supply, we can sell as many shares as the market can bare and we can and will buy back any outstanding shares the market wishes to cash out to any degree needed to keep liquidity constant.

Interest is strongly determined by economic growth.

If there was no growth and no interest, the wage spread between trained and untrained workers would partly vanish