At some point (arbitrarily soon after the reward for solving a block drops to zero), the money supply will start to monotonically drop to zero (barring private keys being rediscovered... as time approaches infinity, it may be more profitable for miners to hunt for private keys (which have hopefully been lost...) than to solve blocks) as private keys are lost.
Sure that will happen in a certain amount but it isn't what the OP had in mind when he's talking about deflation. |
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The bitcoin economy did not contracted, but expanded. More goods and services are being sold than ever before, but there is quite severe deflation.
Let us be careful with all these term we throw around here and lets call things by their proper names. There is no deflation, there is only a built in monetary inflation of on avg. 50BTC per 10min. There is however a growing demand for Bitcoins which is a cause of price deflation. I mean it's also one of the reasons why this whole thread is silly. The OP is confusing monetary deflationary spiral with a price deflationary spiral where the former isn't even possible with Bitcoins. |
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Also although I think markets are a remarkable mechanism I do not think that the market always makes perfect decisions either. For example take fishing. Fishing depletes fish stocks, this makes it harder to find fish. This means less fish are found. This raises the price of fish. This creates further incentive to fish more heavily, further depleting fish stocks and so on. The end result without intervention: fish stocks totally depleted, virtually all fishermen unemployed.
I see you have an open mind and are using it which is good but your world view is flawed. You're logic is also flawed. Take your fish example for instance: Fishermen don't fish because the fish have a certain price, they fish specific fish because other merchants pay them a certain price for them. Those merchants are usually supplying businesses which transform the fish into some form of edible good. It is the market demand for these edible goods that gives the fish a market in the first place. So lets say like in your example some specie of fish that the market really enjoys starts dying out. Since there are less fish of that kind, less are being caught and if the demand of the market for the edible goods stays the same the prices start to rise. But only to a point. And that point is as much as the market meaning people sitting in restaurants and ordering the food are willing to pay for those fish. As soon as the fish become too expensive to eat the market demand for those fish collapses and so does it's price rendering further fishing unprofitable. And the fish don't get extinct. Not to mention all the ideas the market would try to implement in order to artificially breed those fish. It would be really cool if you went over to mises.org and studied Austrian economics and learn how the world really works. |
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However, where we disagree is that I think a currency system should be designed to prevent unnecessary economic shocks due to quirks of the monetary system. Whereas, I get the impression you're more of the view that this is the market rebalancing itself and that it is a necessary thing. This is perhaps simply a difference in value judgement  Have you seen http://www.youtube.com/watch?v=GTQnarzmTOc yet? I especially like when "Hayek" says: the lesson I’ve learned? It’s how little we know,
the world is complex, not some circular flow
the economy’s not a class you can master in college
to think otherwise is the pretense of knowledge I mean if there is one single person somewhere on the planet smart enough to design an economy of almost 7 billion people better than they collectively through market forces could then by all means lets have that person run the world! But there is no such genius out there and any other person trying to "run" the economy will subject it to his flaws. That's why central planing doesn't work and always, ALWAYS leads to mass starvation and unimaginable hardship. I tend to believe that sometimes governments help, sometimes they make things worse. Just the same as any other actor in the economy. I would neither argue that "all government intervention is bad" nor that "government intervention is never harmful".
Government intervention is always bad precisely because of that reason. Politicians simply do not poses any extraordinary powers whereby they could make all the perfect decisions and so every idea how ever well intentioned will usually have some bad unintended consequences which politicians will want to "fix" with further intervention all of which then spirals down to more government caused problems and more government control. So it's not only a practical issue of politicians not being smarter then the market place but also a philosophical one. And I'm sorry but I want to be in charge of my own life and live free. |
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I would say any term is better than supreme property rights. I haven't the slightest idea how that differs from regular property rights.
Do you have a property right in your car/truck/motorcycle/boat (assuming USA)? Of course you do. Is it a supreme property right? Absolutely not (IMO). If you had a supreme (maybe superior is better word) property right in those items you would not be paying a registration fee. Superior/supreme/sovereign property rights owes no due to another. This is likely to be debatable, but in California (I'm pretty sure all other states also) look at the title of a vehicle you believe to "own" (the pink slip) and see if you have the possession of title to your vehicle. I am pretty sure you don't have possession of title to your vehicle and if you don't you don't own it. It makes no difference whether you are paying for it to a loan company or whether it is completely paid off, I believe you still don't own it. I have only known of a small handful of folks who actually own their vehicle and possess title. That is the difference I was meaning when I referred to supreme property rights. What you're talking about is called Allodial title. also anyone confused on rights, privileges and property rights should watch this: http://www.youtube.com/watch?v=t26ENNxHiPg |
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I just today noticed that there even are ratings of forum users and that somehow I'm at -1.
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I think a deflationary spiral is a good thing if caused by the general public being afraid of something and wants to save their money to spend it in the future in case of an emergency. Sure businesses would fail, but not all. Essential goods would still get bought since we can't live on air and without heat or a roof over our heads but the resources for the rest of things would get saved and used to produce later when people decide to spend more.
The least efficient companies will fail, leaving the more efficient companies alive. Maybe not even efficient but those who actually produce goods and services that the market actually needs and wants. |
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I think a deflationary spiral is a good thing if caused by the general public being afraid of something and wants to save their money to spend it in the future in case of an emergency. Sure businesses would fail, but not all. Essential goods would still get bought since we can't live on air and without heat or a roof over our heads but the resources for the rest of things would get saved and used to produce later when people decide to spend more.
Well the Great Depression was a well known deflationary spiral and most people thought it was a pretty big problem at the time Lots of people were unemployed and many starved during the Great Depression (about 7 million in the US I believe). During a deflationary spiral some people are sacrificing their consumption, the question is who? One one possibility is the lenders, they are the ones hoarding so one possibility is that they are the ones sacrificing? I don't believe this is the case. Those with enough money to lend already had all the money they needed to meet their spending requirements, in fact they had so much money that they started lending some of it out. They will still be able to meet their needs and buy the things they want. So what about the borrowers? And those employed by businesses that borrowed? These people become unemployed whilst often being heavily indebted. They have plenty of desire for material things, but no currency to pay for them. They "sacrifice" their consumption because they have no choice. So the economy contracts so as to fulfil the needs of those that do have money, and no longer meet the needs of those that do not have money. If money available dictates goods and services available then don't you think it's a good way to know how we as a society should figure out when to to save vital resources and when to overproduce?
It would be fine for a society as a whole to decide that they wanted to save some resources and deliberately produce less. However, when a quirk of the money system forces it upon people, to the degree that many of them starve ... well then that's a problem. Oh buddy! Did you just really try to tie a deflationary bust caused by governments centrally planed boom and severely prolonged and worsened by government medling not letting the bubble to quickly and completely deflate to a free market driven deflationary spiral? Buddy, you better brush up on your history lessons. And don't do it by reading government issued textbooks either, but rather try mises.org. The biggest lesson I'd like you to learn while you're at it is the deflationary recession in 1921 which was over in a flash and almost no suffering because the government stayed out of the way and how many resources the government destroyed in the great depression while trying to prop up prices causing the people to starve. |
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I think a deflationary spiral is a good thing if caused by the general public being afraid of something and wants to save their money to spend it in the future in case of an emergency. Sure businesses would fail, but not all. Essential goods would still get bought since we can't live on air and without heat or a roof over our heads but the resources for the rest of things would get saved and used to produce later when people decide to spend more.
If money available dictates goods and services available then don't you think it's a good way to know how we as a society should figure out when to to save vital resources and when to overproduce?
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When did Apple representatives say anything about bitcoin?
read this |
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Btw I wasn't trying to imply anything bad about deepbit.net. I realize it's not in their interest to start performing fraudulent and harmful actions if they want to keep their customers. I just wanted to point out the facts and hear peoples opinions.
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Careful there. You are using the current system (central bank based) as an example of why bitcoin will not have the same problem (different).
Erm no? It's not like there's always been a central bank regulating currency in the entire history and yet we had stable prices. Particularly in USA between 1836 and 1913. |
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Taxes aren't theft because you aren't forced to stay in the country. If you don't like it leave!
(Opinions express above are not the opinions of the poster.)
Again a question of private property. If you believe in private property you can't possibly believe in a government owned continent where any land you'd live on and work with was owned by a small minority representing the state. I suggest you watch: http://www.youtube.com/watch?v=UD_1nbahAts particularly 46:30 mark |
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FFS please read this: http://mises.org/money/2s9.aspWhat Has Government Done to Our Money? Murray N. Rothbard II. Money in a Free Society 9. The Problem of "Hoarding" The critic of monetary freedom is not so easily silenced, however. There is, in particular, the ancient bugbear of "hoarding." The image is conjured up of the selfish old miser who, perhaps irrationally, perhaps from evil motives, hoards up gold unused in his cellar or treasure trove--thereby stopping the flow of circulation and trade, causing depressions and other problems. Is hoarding really a menace? In the first place, what has simply happened is an increased demand for money on the part of the miser. As a result, prices of goods fall, and the purchasing power of the gold-ounce rises. There has been no loss to society, which simply carries on with a lower active supply of more "powerful" gold ounces. Even in the worst possible view of the matter, then, nothing has gone wrong, and monetary freedom creates no difficulties. But there is more to the problem than that. For it is by no means irrational for people to desire more or less money in their cash balances. Let us, at this point, study cash balances further... (continue at http://mises.org/money/2s9.asp)
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It's a question of private property. If we believe in it then taxes are theft since you were forced to pay even though you didn't want to. The guy you were debating obviously doesn't believe in private property.
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I for one am not in favor of this "virtual central bank" idea. However I am curious to hear some ideas about how you'd go about "achieving stability without a central authority"
Oh gawd, how the fk do you think? How does any price stabilize? People bid and eventually the market discovers the appropriate price.. You don't see the price of milk jumping up and down by a huge margin even though there is no milk central bank, you don't see the price of houses jumping up or down by a huge margin even though there is no house central bank nor do you see the price jump up or down by a huge margin for any other established good or service and none of them have a central bank besides fiat money. Sure the market place constantly reevaluates the price and changes it if necessary but that's how it's suppose to be. Once the market for Bitcoins gets deep enough there will be no problem in always knowing the approx exchange rates even for the future with futures contracts. |
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EDIT: I'm not trying to imply deepbit.net has any such intentions! Looking at http://bitcoinwatch.com/ we can clearly see that deebit.net mining pool has acquired the biggest minority share of the total hashing speed of the entire network. It's almost 50%. So I was wondering if this isn't a dangerous situation since who ever has control of a client with half or more of the total hashing speed could with a good chance start attacking the Bitcoin system with fraudulent double spending? |
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Oops, yeah wasn't aware of that! Well then, problem solved! |
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It's a moot question...
It's like asking if for example BWM can produce cars that wont malfunction while driving at a high speed for a short distance.
It's in banks best interest to be prudent, provide security and remain trustworthy at all times in order to maintain their customer base. The only reason why this isn't the case with fiat money banks is because of the "too big to fail" and FDIC protection that produces a moral hazard where savers, account holders and shareholders don't care what the bank does because their money is protected.
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Yes, no one is lending, yet. Bitcoin is still super young and we don't yet have all the needed mechanism in place in order to facilitate proper lending. But that's something I'm 100% confident will eventually happen if Bitcoin can maintain it's appeal.
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