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Author Topic: Deflation once again  (Read 2680 times)
Vladimir
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May 29, 2011, 08:41:51 PM
 #21

Ohh not again... I am wondering how much central bankers spent on brainwashing and psy-ops during last 80 years or so...

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A boy, comes into a huge building full of grownups who use it as a marketplace and do their biz there for some time now. Boy shouts: "Hey, you are doing it all wrong! All the tables and the chairs and your nice mining machines should be bolted to the ceiling not to the floor! Than this would be really great marketplace".

Men glance at the boy with amusement and move on doing their usual biz. One man stops and gives the boy a carrot .... Than in  a few minutes another boy comes in and shouts the same noncence...

Go and build your own inflatacoin blockchain. Save the world! No carrot for you...

Somebody finally fork the blockchain to inflatocoins so that we can send all the inflation lovers there already...


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grondilu
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May 29, 2011, 09:17:20 PM
 #22

Somebody finally fork the blockchain to inflatocoins so that we can send all the inflation lovers there already...

How ironic it would be if we decide to make one for them, just to get over with this thing!
rezin777
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May 29, 2011, 09:21:31 PM
 #23

Somebody finally fork the blockchain to inflatocoins so that we can send all the inflation lovers there already...

How ironic it would be if we decide to make one for them, just to get over with this thing!

You just may be on to something here!
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May 29, 2011, 09:29:54 PM
 #24

there are two distinct possibilities for bitcoin inflation w/o messing with the algorithm:
1. increased velocity ( more trades per bitcoin)
2. Bitcoin fractional reserve lending

obviously FR banking risks a run on the bank, but conservative banking practices and a high reserve ratio with full disclosure should minimize the risk.

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hazek
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May 29, 2011, 09:33:42 PM
 #25

2. Bitcoin fractional reserve lending

obviously FR banking risks a run on the bank, but conservative banking practices and a high reserve ratio with full disclosure should minimize the risk.

I would quit using Bitcoin the second that or some form of monetary inflation is implemented.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
vlasta
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May 29, 2011, 10:00:02 PM
 #26

I would quit using Bitcoin the second that or some form of monetary inflation is implemented.

Out of curiosity, what are you using Bitcoins for right now?

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rezin777
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May 29, 2011, 10:13:56 PM
 #27

2. Bitcoin fractional reserve lending

obviously FR banking risks a run on the bank, but conservative banking practices and a high reserve ratio with full disclosure should minimize the risk.

I would quit using Bitcoin the second that or some form of monetary inflation is implemented.

I agree with the inflation part, but fractional reserve banking shouldn't be something that you have to worry about. And I'm sure it will happen eventually.

A bank can practice fractional reserve banking with Bitcoins easily. But it will either have to use actual Bitcoins (if the people taking the loan wanted to interact with the block chain) or use tokens that are only accepted at that bank and it's partners (which will have nothing to do with the block chain). If they give out actual Bitcoins, they will do so either fraudulently (not informing those who deposit Bitcoins there) or legitimately (in which case I would imagine they would have to pay interest to the depositors). If they do it fraudulently, I doubt that would last long once people caught on and they will go out of business. If the do it legitimately, there is really no concern, depositors will not be able to withdraw their full amount, and this would be part of the contract for initial deposit. Bitcoins can't be created by fractional reserve lending the way the current system allows dollars to be created (the bank can't report loans and reserves as assets that are considered money exchangeable at a central bank because Bitcoins can't be created this way, only Bitcoins are exchangeable in the block chain, pretend Bitcoins aren't). Bitcoins can only change hands, so there is no concern of inflation. If the bank wants to use tokens, this isn't a concern either, because again it doesn't lead to Bitcoin creation. Interest will have to be paid with actual Bitcoins as well, meaning the loans had better be worth it. And there will not be a lender of last resort to back them up on a bank run, so they have to be open about their policies or risk going out of business.

Basically they way fractional reserve banking "creates" money is through bookkeeping and the existence of a central bank. This is impossible with Bitcoins. You can try to pretend you have more Bitcoins than you do, but the block chain knows better.
Alex Thornton
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May 29, 2011, 10:16:08 PM
 #28

Economy cannot reasonably work when there is constant deflation. No one is motivated to invest and take risks.

How can we know without trying? We have never had an economy where the main currency is in constant deflation.

None of them are motivated right now to use Bitcoins.

Ironically, the constant deflation will convince them to sell things in BTC.

If the situation does not change soon, the bubble will burst and there will be a lot of upset users and Bitcoin 2.0 with different rules will appear...

This "Bitcoin 2.0" already exists. Its called Ven and trades $1 = 10 Ven. Despite being introduced to the masses thru Facebook in 2007, it does not have the stellar growth rates of Bitcoins.
cloud9
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May 29, 2011, 11:00:15 PM
 #29

Gold used as reserve by most central banks are in constant deflation over long periods of time.

Disclaimer:  Postings of Cloud9 are only individual views of opinion and/or musings and/or hypothesisses.  On a non-authoritative, peer-to-peer public forum, you do not need permission from Cloud9 to derive your own conclusions or opinions, so please do.  Calculations and assumptions to be verified.
Vladimir
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May 30, 2011, 01:20:42 AM
 #30

http://forum.bitcoin.org/index.php?topic=10552.0

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jib
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May 30, 2011, 08:59:52 AM
 #31

Economy cannot reasonably work when there is constant deflation. No one is motivated to invest and take risks.

How can we know without trying? We have never had an economy where the main currency is in constant deflation.

The reason people invest is that they benefit more from investing than from not investing.

With Bitcoin at the moment, this is not the case. As the value of Bitcoins keeps going up, there are very few things I could do with a Bitcoin that are better than holding it.

Looking forward to quantum computing so we can have qubitcoins.
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