|
Deflation is simple math in a growing economy. Bitcoin says it is built to create a stable economy. Really it is built to create an extremely stagnant economy. It would be better if their were an algorithm for controlled growth over time. I am for Bitcoin. BUT As value and population increase in an economy and you don't grow the money supply, deflation is inevitable. Everyday central banks are attempting to not only protect against inflation but deflation as well. Here is an example......
Say there are 2 people in an economy. 1 guy grows corn and likes to have his shoes shined and on person shines shoes and needs corn to survive and there is only 1 BC to exchange. Each day they will exchange the 1 BC as value is rendered for it. But if the corn grower grows 10x and the Shoe shine boy grows by 10x and there is still 1 BC the average exchange will be 10 cents oh and some people may starve to death. This is a very simple example that can be expanded upon. Lets say I am a baker and I buy my inputs and I even stock up to have a months supply but when I go to sell my bread the price of bread has gone down to where it cost me more to buy the inputs than I could sell it for. Soon I would stop backing bread.
Bottom line as an economy grows from value being created with demand the BCs need to be there. Even gold grows..... or is "mined" and is added to the money supply. I love love to see smart industrious hard working people add value and keeping the currency stagnant will stop that. There will not be an incentive to do it and there will be wars. This is not a viable currency until this is taken into effect. Many on Wall Street have stated that the Fed should be replaced with an algorithm. There has been open discussion on this.
The value in BCs is:
-It can't be stopped.
-It can be very transparent.
Just make the growth transparent and allow the miners to continue to mine based on a very open algorithm. The algorithm would need to be perfected over time but it would be very transparent in doing this.
|
Show Posts
