Any quantity of money, within reasonable limits, is optimal. There is no benefit in changing the quantity of money. It just introduces distortions and makes economic calculation more difficult. The quantity of money should correspond to the volume of the economy (total goods/services produced) The move away from the gold standard had nothing to do with people starving to death because of an inelastic money supply. It was the result of the First World War and the resulting huge war debts. You made my day, really. What huge debts had USA after the First World War? United States was the biggest creditor to Europe and it had no debts. How comes? Inelastic money supply (because precious metal content in the currency is fixed) causes production to shrink (unless offset by factors such as technological advances) which in turn causes unemployment which causes consumer expenditures to fall and so we get into vicious circle
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Gold didn't fail, its still the preferred store of value for much of the world. It also didn't change in value, oil has been fairly consistent at 15 barrels an ounce for a long time. The whole concept of growth is debatable too, there was a time when it served a purpose but its gone beyond that and as we push it further and further it results in more and more wastage and inefficiency. Basically we have all we need for everyone to be comfortably well off and the only reason to chase growth is to repay interest.
Gold failed as a currency. As a store of value you can use pretty anything of lasting value (diamonds, whatever). Gold is just more convenient and universal If you still disagree, please name a few currencies which are either gold (or silver for that matter) or on gold. The countries on precious metals standard HAD to switch to fiat because they dragged through a number of real crises. And real here means REAL when people starved to death
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Some would argue its better as markets are entirely constrained by supply and demand and cant be untethered by things like QE. Imho simple economic foundations are clouded by economic technobabel, if a country spends more than it earns its going to go bust and no amount of creative accounting can prevent that. The Bitcoin markets are interesting because they're unregulated and manipulative actions are often obvious. The market it's self responds and frequently attempts to manipulate result in spectacular failures which goes some way towards proving that market regulation is unnecessary and can cause more problems than it solves.
This is another question, but this would hinder real economic growth. That is why gold failed (and currencies backed by it)
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Maybe you missed the bit where it's impossible for states to pay back central banks due to interest, the amount owed will always be higher than the amount in circulation.
But this in no case makes bitcoin meet the requirements of the economy (either shrinking or expanding). Its supply is totally inelastic, which is, in my opinion, even worse
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Fiat currencies contain a bug. Specifically, a race condition. The inflation rate is determined independently of the growth rate of the economy. These variables should be unified.
Bitcoin eliminates this bug.
Strange, I'd rather say that it is bitcoin which suffers from this bug. Do I miss something?
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Sign me up!
Current post count: 12
My BTC address is 1NBY6GbirSZuW7CaWQSgB6AwtHW2Fe1uqc
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But once you get into a deflationary spiral (which starts as you may well guess from ever small deflation) you have not much options available to break out (WWII as such a breakout)
Why would you want to break out? Having my savings continually gaining value doesn't sound so bad. Because you think only from a consumer's point of view. It's not bad for one person (may be even for two or two thousand) but it is very bad for the economy as a whole. Take the side of a producer and you will get a clue
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One example is the deflation we currently have on computer-based products. The argument that people do not spend their money in a deflation, because the money will be worth more in the future, is simply not true. If people thought that way, they would never buy a computer or a mobile phone, but they do. Your example confirms what I said before about technological progress. It is not "real" deflation Add to that the fact that human life is of limited length, so humans have to spend their money before they die. You cannot always wait for tomorrow You seem to not know people very well. Heaps of precious metals/coins are passed from generation to generation. There is even a term "old money"
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This is certainly true for hyper-deflation. It is not true for moderate deflation. It is true even for moderate deflation provided all other things being equal (or constant). In real life, yes, it can be offset by technological advances or scientific break-throughs. But once you get into a deflationary spiral (which starts as you may well guess from ever small deflation) you have not many options available to break out (WWII as such a breakout)
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Regarding the assertion that the amount of money in circulation should grow in proportion to the population, although on the surface that seems like a reasonable system, it actually steals wealth from individuals. The key point to realize is that, even if prices are holding absolutely steady over time, it can still be true that your wealth is being stolen from you. The natural tendency, given advancements in technology and improvements in efficiency of production, is for prices to decline. We see that natural tendency most exemplified in the high-tech sector. Computers are continually getting cheaper. This is only because the high-tech sector is advancing at such a rapid pace. The slower moving sectors of the economy do not demonstrate price deflation because monetary inflation is offsetting it. If we had a constant money supply, everything would be getting cheaper over time. The fact that we are seeing prices remaining relatively stable indicates that we are having our wealth stolen from us insidiously through monetary inflation. I opted out of that dishonest system by moving most of my savings into Bitcoin. I don't want to see Bitcoin fall into the same criminal pattern as the fiat currencies The fallacy of this logic is that it doesn't take into consideration the other part of the equation. You take just one side - the side of the Consumer and keep away from the side of the Producer
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Inflation and deflation are 2 sides of the same coin. Both are bad for participants in the economy, through no fault of their own. Either way, some sectors of the economy benefit unfairly and some suffer unfairly. You can't say that deflation is good and inflation is bad. It doesn't work like that. They're both bad No, deflation is flat out damaging for the economy (Great Depression as an obvious example). The same is not true for inflation The changing itself of the value of money up or down as the change works its way unevenly through the economy is what hurts people. Both inflation and deflation change the value of money.
Not quite so. The changing value of money may hurt some people, it may even hurt the majority of people, but at the same time it may be healthy for the economy as a whole, being a lesser evil. Actually it all depends
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By your calculations, 2030 could possibly be the year that bitcoin will be 100% the dominant currency, fiat will be completely obsolete, hopefully used as toilet paper. This would also be the point where those initial single 1 bitcoin pieces will be worth a small fortune.
Old post (still reading) but it seems that the utmost problem of bitcoin (the fatal depth of which people don't understand yet) lies in its deflationary nature, so its ultimate doom appears to be some marginal asset like gold (if it doesn't fade into non-existance entirely) - costs a lot but fails as a currency
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Bonus activated for those who posted Bonus obtained, keep on playing and waiting for 1BTC
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Asset backed currencies have been the ONLY succesful models tried. They stood for centuries, none ever "failed" they were all replaced by fiat systems. Fiat moneys have ALWAYS failed. The ability to "print your way out of trouble" is in fact "printing your way into trouble" and will always end bad for the users (good for the bankers). It's not that simple and straightforward. Actually there's not much difference between "asset backed currencies" and "fiat moneys" in respect to what makes them all money
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Have played ten times
1NBY6GbirSZuW7CaWQSgB6AwtHW2Fe1uqc
Grand merci!
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I've been using the site for almost three weeks now. Everything is ok, but it seems that I lost my underwear private key. So all my hard-earned coins went to bitcoin heaven...
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