Inflation and Deflation of Price and Money Supply

[franky1]

inflation is never good and its own number is highly manipulated

did you know they say "the food group of CPI is 3%"

what is not realised is certain food is used as an index
and some retailers keep those particular items low. while raising the rest

EG
01.1.1 Bread and cereals
01.1.2 Meat
01.1.3 Fish
01.1.4 Milk, cheese and eggs
01.1.5 Oils and fats
01.1.6 Fruit
01.1.7 Vegetables including potatoes and tubers
01.1.8 Sugar, jam, syrups, chocolate and confectionery
01.1.9 Food products [n.e.c.]

by keeping retailer own brand bread low
certain meats low
certain brands of milk low
certain fruits low

they can raise the rest higher

for instance
own brand baked beans stays (in UK) at £0.25/can
but branded heinz tomato soup, spaghetti increase by 50% £1.50 a can compared to £1 last year

cherry tomatos stay at $0.80
but fresh beef tomatos go up by 50%

this way by showing some items only move by 10% and other items by 0. they can fake a 3% inflation on food. even though an average persons grocery receipt has grown by 25-30%

yet their salary/wage has not increased by 20%-30%
even if inflation pretend food has only increased by 3%

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[Sayeds56]

inflation is never good and its own number is highly manipulated

did you know they say "the food group of CPI is 3%"

what is not realised is certain food is used as an index
and some retailers keep those particular items low. while raising the rest

EG
01.1.1 Bread and cereals
01.1.2 Meat
01.1.3 Fish
01.1.4 Milk, cheese and eggs
01.1.5 Oils and fats
01.1.6 Fruit
01.1.7 Vegetables including potatoes and tubers
01.1.8 Sugar, jam, syrups, chocolate and confectionery
01.1.9 Food products [n.e.c.]

by keeping retailer own brand bread low
certain meats low
certain brands of milk low
certain fruits low

they can raise the rest higher

for instance
own brand baked beans stays (in UK) at £0.25/can
but branded heinz tomato soup, spaghetti increase by 50% £1.50 a can compared to £1 last year

cherry tomatos stay at $0.80
but fresh beef tomatos go up by 50%

this way by showing some items only move by 10% and other items by 0. they can fake a 3% inflation on food. even though an average persons grocery receipt has grown by 25-30%

yet their salary/wage has not increased by 20%-30%
even if inflation pretend food has only increased by 3%

You are absolutely right that inflation is never good because it leads to increase in prices of goods, services & energy/fuel products & makes life of common men difficult.
High inflation also results in interest rate increase which pushes up cost of borrowing, hence cost of doing business goes up and leads to reduction in profit of corporate sector, as well as causes cost push-inflation, and adds to further increase in prices of goods  .
The bottom line is that, high inflation rate indicates that economy is not doing well and necessary measures are required to be taken to bring it down to reasonable level to boost economic growth.

[nathan_tek]

Inflation should be only 2%. In Italy we are about 12,9 %. A way to much.

[Bahadurmunir]

Inflation and Deflation Remain Major Concerns for Global Economy in 2023, Prompting Central Banks to Take Action"

 
Inflation and deflation are two important economic concepts that have significant impacts on the overall health of the economy. Inflation refers to a sustained increase in the general price level of goods and services in an economy, while deflation refers to a sustained decrease in the general price level. Both inflation and deflation can have significant impacts on consumers, businesses, and policymakers.


High Inflation Rates in 2023: Causes and Impact on Economies
As of 2023, inflation remains a major concern in many countries around the world. In the United States, for example, the consumer price index (CPI) increased by 7% in 2022, the largest increase since 1982. This has been driven by a number of factors, including supply chain disruptions, increased demand for goods and services as economies reopen, and government stimulus spending.

High Inflation Rates in 2023: Causes and Impact on Economies

Inflation can have a number of negative impacts on the economy. For one, it can reduce the purchasing power of consumers, meaning that their money buys less over time. This can lead to reduced consumption and lower economic growth. Inflation can also increase the cost of borrowing, which can make it more difficult for businesses and individuals to access credit.

Central Banks Take Action to Manage Rising Inflation

In response to rising inflation, central banks around the world are taking action to try to manage the situation. The U.S. Federal Reserve, for example, has begun to raise interest rates and reduce its bond-buying program. Other central banks, such as the European Central Bank, have also signaled that they may need to begin tightening monetary policy in response to inflationary pressures.

Deflation as a Potential Risk in Some Economies: Causes, Effects, and Strategies for Avoiding a Vicious Cycle of Falling Prices and Reduced Economic Activity

While inflation is currently a major concern, deflation remains a potential risk for some countries. Deflation occurs when the general price level decreases over time, which can lead to reduced demand for goods and services as consumers delay purchases in anticipation of even lower prices in the future. This can create a vicious cycle of falling prices and reduced economic activity.

Inflation Continues to Plague Economies in 2023: Causes and Effects of Rising Consumer Prices, with a Focus on the United States

One country that has been struggling with deflation for years is Japan. The Bank of Japan has implemented a range of measures to try to stimulate inflation, including negative interest rates and asset purchases. Despite these efforts, inflation in Japan has remained stubbornly low, hovering around 1% or less for much of the past decade.

Managing Inflation and Deflation in a Rapidly Changing Economic Environment: Challenges and Uncertainties Ahead

Overall, policymakers are still grappling with how to manage inflation and deflation in a rapidly changing economic environment. The ongoing COVID-19 pandemic, geopolitical tensions, and other factors continue to create uncertainty and pose challenges for economic stability. It remains to be seen how central banks and governments will continue to respond to these challenges in the years to come.

 

[kickea]

Finally, back to the original discussion, market cap may be an indicator which we can study to understand supply and demand. However, it is not a primary cause of supply and demand or BTC value. If market cap measured in USD was a primary cause of BTC value, then we should all view BTC as a bank to temporarily deposit USD and maybe collect some interest (making BTC a ponzi scheme).

The appeal of having some BTC is not at all the market cap measured in USD. Without speaking for everyone, I believe BTC's appeal and inherent value is secure storage of value coupled with convenient exchange of value. Looking at the market cap is still informative though.

The value of a USD $1 will decrease because USD suffers continuous inflation. The value of 1 BTC will increase for the time being because demand for BTC is increasing faster than supply. And after most of the BTC have been mined, the value of 1 BTC will increase because of the deflationary nature of BTC. But we should definitely have this discussion again at that point, to see what it means for the miners.

As mentioned in the original post, a large part of Bitcoin's positive value (which increases the exchange rate of BTC) is the DEMAND for Bitcoin, via the physical manifestation of that ideological value through trade (in this case, BUYING BTC). However, this is not the end of the story, and you bring up this great philosophical question which I am delighted to dive into! So now we must travel deeper into this rabbit hole, as we ask, what creates this demand!? Why do people find Bitcoin valuable enough to trade anything for it?!

Here is my response to this question in a related discussion at What is bitcoin backed by? My favorite answers

"What is Bitcoin backed by?"

It is backed by value.
Value is created by people, it is not intrinsic to anything except ideas (opinions).
Certain resources (gold, dollars, real estate, stocks, etc) have great monetary value in our society because we look for, or create, certain properties in them when following a particular - the most popular - economic theory at the time.
As an example, if we all started to adopt the theory of resource-based economics, widely promoted by Peter Joseph who created the Zeitgeist movie-series, we would value resources very differently.
So what makes Bitcoin valuable to people (adopters) in a capitalistic economy?
It can be a multitude of reasons:

• Deflation is better than inflation
• It is better to have a decentralized power
• Transactions in Bitcoin are cheaper, easier in a digital world
• The Blockchain: a PUBLIC record of every transaction
• I hate Ben Bernanke or the Federal Reserve System
• The security of Bitcoin's cryptography
• Irreversible transactions
• A new economy to start a bushiness in
• Anonymity (if done properly)
• Dude, I can buy drugs like I buy shit on Amazon... awesome
• I don't know, my friend uses it and I just follow whatever they does cause I think they're cool (majority of people)
• I like code
• I like turtle
• Miner: "Free money man!"
• we can win a major battle in the arms race and gain a new territory of freedom for several years
• Etc...

Therefore, we can certainly add to our list that "Mining increases the value of each BTC because it reinforces 'the way BTC works'" and its "secure storage of value coupled with convenient exchange of value."  Personally, I agree with you on both accounts and believe those to be some of the more important and valuable aspects of Bitcoin.

As for the comment regarding Market Capitalization: after this post, I think you have a better understanding of where I was coming from when I posted it, so certainly not arguing with you there!  

I am actually working on creating an inflation-adjusted BTC/USD chart at the moment, just to have a solid visual of that here. Though, honestly, you could just look at a Bitcoin chart priced in gold and you would have another somewhat-similar visual. Like the Market Cap chart, this is just another representation of Bitcoin's value, yes, but I do think they are important when attempting to predict market trends, as you know.

A chart of that can be found at a fellow Bitcoin users blog: http://pricedingold.com/

http://pricedingold.com/charts/BTC-2010.png

It's a cool blog. He charts pretty much everything in terms of gold. Lots of great data!!

I may be looking at it wrong, but I am very curious about what inflation does to the value of bitcoin - and I am deep in this rabbit hole. Lets say everyone in the world would accept bitcoin, and You wanted to buy 1 tonn of aluminium from me. We would both look at the value of bitcoin in for example dollars... yes? At this point in the future the price of 1 bitcoin would be 1M$, and that is what 1 tonn of aluminium would be worth at that time. So we trade 1 tonn aluminium for 1 bitcoin. Next year the government would have printed so much money so the market price of 1 tonn aluminium now would cost 1,5M$... For this example lets just say that 1 bitcoin would still be worth 1M$. Then I would want 1.5 bitcoin for the same amount of aluminium, therefore bitcoin has lost its value even when the price is the same.

Am I overthinking this? Is it so easy that if I would accept aluminum in bitcoin, then the price of aluminium would be in bitcoin instead of dollars? Or would it be better to have something else that would give a value of a product or service like for example energy?

Will we see an example of what will happen in real life soon if the BRICS start trading oil with other currency then the dollar?

[Vishnu.Reang]

Inflation is defined as the increase in the price levels of goods and services in an economy. Deflation is termed as the decrease in price levels of goods and services in an economy. Impact on demand. Demand for products and services decrease in deflation. Inflation is an invisible thief it keeps you under the illusion that your money is safe but actually keeps reducing money's value. To stay safe from this inflation we need to invest our money in right things like Gold ETF, Share market etc. Investment doesn't only save you from losing the real value of money of its purchasing power, at the same time its's also help economy to grow faster and stronger.

[YUriy1991]

To stay safe from this inflation we need to invest our money in right things like Gold ETF, Share market etc. Investment doesn't only save you from losing the real value of money of its purchasing power, at the same time its's also help economy to grow faster and stronger.

I personally prefer an approach of adjusting my personal financial preferences and needs, for example saving some of our wealth in physical property and this was also done by people before us (our parents before) and this can also be considered as one of the smart steps in mitigating this incident. The bottom line is that properties often increase in value over time.

[SpencerStroman]

The ongoing discourse around market capitalization and its relation to Bitcoin's value adds another dimension.

[Plikgnik]

Why do we keep expressing the value of bitcoin in dollarse and other fiat. It would be nice to express it in pure purchasingpower. In units of…?

[imamusma]

To stay safe from this inflation we need to invest our money in right things like Gold ETF, Share market etc. Investment doesn't only save you from losing the real value of money of its purchasing power, at the same time its's also help economy to grow faster and stronger.

I personally prefer an approach of adjusting my personal financial preferences and needs, for example saving some of our wealth in physical property and this was also done by people before us (our parents before) and this can also be considered as one of the smart steps in mitigating this incident. The bottom line is that properties often increase in value over time.

I like the way you do it, investing in property or gold can protect the value of the money we have, although this really depends on the area where we live. However, the trend in the value of profits that we can get from these two investments continues to increase every year, and the risk is also considered very low. In my opinion, these two forms of investment are still quite relevant to practice even though there are other forms of investment that are more immediately profitable. A country is not always precise in controlling deflation and inflation, in the economy these two words are very complex and the problem is very complex.

Personally, I tend to choose to invest in property and gold, because there is very minimal risk. Moreover, the ease of selling it is my other reason, we won't be too bothered if we want to sell the asset. If at any time we need a certain amount of money, we can also use it as collateral to take out productive credit without having to give up our ownership of these assets, as well as gold which can be used as collateral at a pawn shop.

[icebar]

Absolutely right,The rise in the prices of goods and services within an economy is known as inflation. The term "deflation" refers to a decline in the average price of goods and services within an economy. influence on the market. Deflation results in a decline in the demand for goods and services. The unseen robber known as inflation gives you the impression that your money is secure while continuously depreciating its worth. Investing our money wisely in gold exchange-traded funds (ETFs), stocks, and other investments will help shield us from inflation.