In this way, the stimulus money will have much better effect I hope they even buy my used car for 1 billion$, because I can guarantee I will spend all those income, not like those big corporations sitting on tons of cash and doing cost cutting which bring down the total demand of the whole society  |
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It's deflating by default, since everyone who mined coin will most likely hoard them, so actually there are only small amount of coin in circulation.
When the people doing business saw that bitcoin are so difficult to get (if they want to exchange more goods for bitcoin, the bitcoin value rise immediately due to small amount of supply), they will consider other coins which are easy to get
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more money has to be produced
OR the value (buying power) of that money must increase (This is what Bitcoin will be good at) Price decreasing of goods/services is already a norm in IT industry, that lead to chasing higher and higher efficiency and aggresive cost cutting, I think this is not sustainable in the longrun. Sooner or later the speed can not hold and investers will prefer to hold the cash and stop the business altogether. So does an economy with limited amount of money supply |
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Someone has to create the money and get the ownership, without this very first step, everthing afterwards won't happen
It is created AS A loan, when the loan is paid it is gone, it is not real money our money IS debt. It is punched into a computer on the bank ledger as a promise to pay from some entity, then that entity goes off and spends it on whatever putting it into circulation, there literally is not the Multi-Trillion dollars of paper money in existence, our money is Debt on top of Debt. http://www.youtube.com/watch?v=vVkFb26u9g8That video puts it in simple terms but explains it quite well. Simple fact is there is very little original money left. I have seen these videos years ago, at that time I was still confused about how money works. But after I have mined my first bitcoin, I can look from a money producer's point of view, suddenly everything is so clear. Loan is just a term to relate future and present, it moved the consumption to present and leave the labour in the future. It does not change the fact: With increasing amount of good/services in the society, more money has to be produced |
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You're a bit wrong on this... The central bank creates money through loans which today is the equivalent of typing up an I.O.U. in a computer system, no actual printing is done. It puts money into circulation by loaning to banks, foreign govs, U.S. gov, etc. Commercial banks further don't need but a portion of their money for their loaning so every time someone makes a mortgage, a car loan etc. that is more new money in circulation.
The treasury prints money, and the central bank buys some of this to back their loans but the amount of paper currency is dwarfed by the digi-dollars in circulation.
I also read this from economic books, these do not change the issentials, in this way of understanding, central bank works as final loan issuerer, and these loans are own created money Someone has to create the money and get the ownership, without this very first step, everthing afterwards won't happen |
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In the current system, banks provide credit and came to treat debt as money, but they do not increase the monetary base. Ironically, if the banks did print their own money, the ongoing financial crisis probably wouldn't be as pronounced although other issues would arise.
I would agree that speculation on expanding economic development can be categorized as demand. The question is whether we're talking about a hypothetical system such as one predominantly based on Alt/Bitcoin or the current system.
In the current system, speculation builds on itself because there are no consequences for being wrong if the speculator is a major player or otherwise in a position to be bailed out. In a Bitcoin-based system, there is no way to manipulate the monetary base, so a speculator who is wrong will have to take his losses.
I think this post better move to economics subcategory  In my understanding, only commercial banks treat debt as money, the central bank has to produce money to facilitate the trading In old time, it was gold production, and today printing paper money/digital money with the amount matching the GDP growth. Like gold belongs to gold miner, the printed money also belongs to central bank. Although the central bank create money supply to buy the government bond, but without having the ownership of those printed money, they can not do this through an accountable way Of course they do not need these money for private usage, but they are issentially like a bitcoin miner who provide the market with liquidity. They are more flexible than a bitcoin miner since the amount of money they can provide at any time (to keep price stable) will not be limited by difficulty/electricity/hashing power etc... So their effort is moved from creating money and more focused on watching the money flow in the whole society Anyway, the FED just feels like "the biggest end customer" in today's financial system. If he spend, everyone start to make money, if he save, everyone feel the pain. If he spend too fast(easing), that will cause inflation; if he spend too slow(tightening), there will be deflation and recession; it's really an art to be a FED chairman In the bitcoin world, same thing happens, but we all know this "biggest end customer" only have limited amount of bitcoin (he is not very rich), so we might not want to do big business with him  |
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Now it is not the same as 2008, at that time people are mostly holding assets and loans, now they hold cash. If price goes down, they now have the cash to buy, and as long as FED is producing more cash, this is not a big problem.
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Easy money is most closely represented by the 3rd item you listed. It's almost impossible to lose with a 0% rate, as you can use it for even highly conservative investments that might return 2% and be nearly guaranteed profit. Gov't takes all the risk and banks keep all the profit.
It's almost impossible to determine when there's excess in a modern economy of sufficient size. There are so many variables and changes take a long time to propagate through an economy. By the time the metrics used to observe an economy and decide how to manage it finally produce recognizable results, there are major distortions. That makes any actions taken more likely to cause harm and further disruption than correct any imbalances in the first place.
In order to truly be able to centrally manage an economy, massive amounts of data must be collected, increasing complexity and potential for errors. The task becomes herculean while allowing the system to manage itself would result in the distortions and imbalances resolving themselves over time.
There are many factors that influence growth rates. Yes, the human aspect among others. Raw resource availability, energy production, global competition, population growth, infrastructure development, etc...
From a macro level, it is difficult to see the truth because of many variabls and delays. Let's just look at a simple example: A sell a horse to B at 10$ B sell back to A at 20$ A sell back to B at 40$ . . . A sell the horse back to B at 1280$ . During this procedure, since A and B are both making money, they will get good incentive to continue this activity. And the bank is willing to provide extra loan to facilitate the transactions because A&B's income are increasing steadily We all know this is a bubble, but as long as banks are providing money to support the trading, this game could continue and the required money supply will increase exponentially So, could we define that profit from rising in good's value are easy money and bank should not provide money to support such kind of trading? But then how could you differentiate rising value caused by speculation or just by increase in demand? Isn't speculation itself some kind of demand? |
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Come on, just 1.5m BTC, that is really dirt cheap if you consider those bankers
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Each time an intervention occurs, it distorts demand. If the distortions aren't allowed to recede, further interventions that supply "easy money" will exacerbate the problem until it is no longer possible to compensate and the money supply is so far removed from real demand that bubbles form (demand that responds to the increases in money supply as opposed to real assets and productivity).
What I've described goes beyond simply making trade easier and crosses into the limitations of human perception on grand scales. Trade only gets so easy - the excess doesn't help. Because Alt/Bitcoin manage themselves internally, these distortions are virtually impossible. When distortions begin to occur, the system self-corrects. I'm sure there will eventually be certain specific situations where complications could arise, but for now they are two sides of an extremely sublime system
Although quite off-topic, it's a pleasure to read your post and get inspiration to think more This "easy money" concept, I'm still confusing. What is exactly "easy"? A cook in kitchen cooking hard to make 20$/hour A fund manager sitting in his office to make 400$/hour A banker get 400000000$ loan from FED with 0 interest An early bitcoin miner mined 25000 BTC Which is easier? How could you decide the money supply is excess? And, why economy can't expand at 10% or even 200% per year, what is the factor that limit it? It's decided by number of people? Technology? Human nature? |
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4. It has built-in trust rating system to secure the trading
Well, good luck with this one :p I think that "ripple" concept is also good Rating based system need first 10 or so trades to establish a good rating |
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If one currency has been widely adopted, then the money supply must follow the increase in total amount of traded goods/services in the whole economy, so a constant increase in money supply is required to maintain price stability
But what if this currency has not been widely adopted (like bitcoin) or maybe never will be? Then I think defaltion nature tends to keep it's economy scale limited, not the other way around (economy scale getting bigger and the currency get more valuable)
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Technology is so cheap thanks to open source culture, but I think some of todays economy problem actually caused by the open source culture, it twisted the traditional value system but still can't survive without it, just like those who mine the coins actually want to exchange it to USD to payback their power bill
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Ok, I removed ecash, actually the e* name is not that atractive |
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Now the framework
1. It is super easy to understand and use for average internet user
2. It is enough secure for normal transaction
3. The supply will grow/shrink with usage
4. It has built-in trust rating system to secure the trading
5. more to come
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I have to claim these names first, details come later webcoin, webcash, netcoin, netcash, internetcash are also reserved |
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When you'll already have the 21 million bitcoins, but the userbase is still growing or the mined coins are lost, happens deflation. The prices of the goods and services will drop, because each of us will have less coins to spend in the long run. The user base has nothing to do with inflation or deflation. The inflation or deflation is price of money measured in itself if the factor of time is included. The price of goods and services will drop, because labor productivity is increasing. Forcing inflation into the monetary system is equal to forcing people buy goods and services they don't actually need! This is not economic growth. This is economic disaster. Because such a monetary system gives wrong signals to the rest of the economy including investors, manufacturers and consumers. Good point Since the productivity is increasing, the labor contained in the product is decreasing. To keep the price stable, money supply should increase to counter this effect. If the money supply is constant, then deflation is unavoidable and will hinder the economy growth |
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I think "desire" is a better word, without desire the life ends
And "sympathy" limit the negative side of desire
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Don't you prefer freicoin over expocoin?
It also reduces interest rates and takes care of lost wallets.
I don't know much about freicoin, but I don't really believe fixed monetary base because that will limit the economy expansion, and deflation tendency will encourage hoarding of the currency. To avoid the demurrage, people can simply transfer money between their own accounts once a day |
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Individual are all different, especially today, there is no system that can represent majority of the people's interest. In this sense, current monetary system at least presented one common sense through all the people: Money=Value. If it is removed, then there is really no nothing that people can agreed upon when they exchange services/products, an auktion will be needed for almost everything  |
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