Bitcoin Forum
November 14, 2024, 08:42:03 AM *
News: Latest Bitcoin Core release: 28.0 [Torrent]
 
   Home   Help Search Login Register More  
Pages: [1] 2 »  All
  Print  
Author Topic: The fear of deflation  (Read 1397 times)
Laosai (OP)
Sr. Member
****
Offline Offline

Activity: 462
Merit: 250


View Profile
March 02, 2016, 03:24:13 PM
 #1

Hello everyone.

I'm not an economist. But I'd like to discuss on something difficult to understand in my opinion. It's the fear of deflation.

Why is deflation so bad for economy? I understand that deflation means less money to spend that's true, but deflation also means more value for each $ you spend so that shouldn't change anything!

Deflation also means more buy power for consumers so it's a good thing for the population.

And though everyone (especially in Europe) is shaking in fear of deflation... Why?

JavaLove
Sr. Member
****
Offline Offline

Activity: 434
Merit: 250


Streamity Decentralized cryptocurrency exchange


View Profile
March 02, 2016, 03:53:48 PM
 #2

The thing is that both inflation and deflation are GOOD but also necessary for an economy to grow.

Just as we all say, too much of anything is not good. The same applies here.

Think of it this way. Inflation increases purchases which is good for the overall economy. It basically makes us feel that we'd better spend NOW because in a week all our money is going to be worth a lot less. This will give government more revenue and ultimately grow the economy (support local businesses and everyone you'd expect with massive buying). However, inflation decreases consumer purchasing power. If you have $500 and the inflation rate of that currency sky rockets, it'll say $500 but will soon be worth a lot less thus decreasing your capabilities of buying anything.

Now, as you said, deflation is good too! When consumers have NO purchasing power and all their money is worth nothing, deflation will correct that. It'll give power right back to consumers and make us feel more comfortable. But, and this applies when trading commodities too, such as Bitcoin, why sell NOW (so buy something, say a house or a tv) when in a week it'll be worth a lot more? And that is what goes through someone's head when deflation occurs thus limiting purchases which decreases government revenue, decreasing spending and funding and ultimately killing businesses.

So each are good and bad in their own way. A solution? A little bit of both. Increase consumer spending while soon increase consumer purchasing power. Both of these things are vital. If inflation kept happening, with no deflation, our economy would go in the dump. Same applies for deflation.

Obviously no 100% cure for both, you're going to be stuck with them no matter what you use, but if you want to avoid government controlled inflation just use Bitcoin. The price is rising and you're a lot safer than in the realm of printing thousands of dollars everyday (which would always limit deflation, allowing infinite inflation KILLING the economy).

Hope this makes sense  Smiley

                ▄▄  ▄▄                 
            ██  ▀▀  ▀▀   ██           
        ██                   ██
       
                ██  ██  ▄▄             
     ██    ██           ▀▀  ▄▄        
                  ███       ▀▀         
   ██    ██   ███      ███     ██     
                          ███         
  ██   ██   ██    ███ ███    ▄▄   ██   
               ███           ▀▀       
  ██   ██  ███           ███  ██   ██ 
                     ███               
    ▄▄  ██    ███ ███     ▄▄  ██   ██ 
    ▀▀    ▄▄              ▀▀           
      ▄▄  ▀▀          ███    ██   ██   
      ▀▀      ██  ███                 
         ██              ███    ███   
             ██  ██  ███              
       ██                    ██       
           ███  ▄▄▄  ▄▄  ███           
                ▀▀▀  ▀▀               
 
STREAMITY
 

 

  Twitter
Facebook
Instagram
  Telegram
LinkedIn
Medium
Laosai (OP)
Sr. Member
****
Offline Offline

Activity: 462
Merit: 250


View Profile
March 02, 2016, 03:59:04 PM
 #3

The thing is that both inflation and deflation are GOOD but also necessary for an economy to grow.

Just as we all say, too much of anything is not good. The same applies here.

Think of it this way. Inflation increases purchases which is good for the overall economy. It basically makes us feel that we'd better spend NOW because in a week all our money is going to be worth a lot less. This will give government more revenue and ultimately grow the economy (support local businesses and everyone you'd expect with massive buying). However, inflation decreases consumer purchasing power. If you have $500 and the inflation rate of that currency sky rockets, it'll say $500 but will soon be worth a lot less thus decreasing your capabilities of buying anything.

Now, as you said, deflation is good too! When consumers have NO purchasing power and all their money is worth nothing, deflation will correct that. It'll give power right back to consumers and make us feel more comfortable. But, and this applies when trading commodities too, such as Bitcoin, why sell NOW (so buy something, say a house or a tv) when in a week it'll be worth a lot more? And that is what goes through someone's head when deflation occurs thus limiting purchases which decreases government revenue, decreasing spending and funding and ultimately killing businesses.

So each are good and bad in their own way. A solution? A little bit of both. Increase consumer spending while soon increase consumer purchasing power. Both of these things are vital. If inflation kept happening, with no deflation, our economy would go in the dump. Same applies for deflation.

Obviously no 100% cure for both, you're going to be stuck with them no matter what you use, but if you want to avoid government controlled inflation just use Bitcoin. The price is rising and you're a lot safer than in the realm of printing thousands of dollars everyday (which would always limit deflation, allowing infinite inflation KILLING the economy).

Hope this makes sense  Smiley

It makes a lot of sense thanks. It's interesting indeed.

But from my point of view, the bolded statement represents a nonsense to me.
Isn't it good to see people not spending too much?
Of course it's harder for companies! But it also means we consume less and waste less! that we consume only what we need!

If an economy needs people to consume over and over without stopping, if they need them to consume more and more... Well this economy is doomed from the very beginning!

SFR10
Legendary
*
Offline Offline

Activity: 3192
Merit: 3529


Crypto Swap Exchange


View Profile WWW
March 02, 2016, 06:44:06 PM
 #4

Actually I strongly believe deflation is good for economy alone (can't see why Europeans fear of this happening). To make it a lot easier, think of deflation as quality and inflation as quantity. Quality is always better than quantity (everybody knows this) therefor inflation only brings down economy and makes it worthless while on the other hand, deflation does the opposite and adds value to the economy and helps it grow furthermore.

█▀▀▀











█▄▄▄
▀▀▀▀▀▀▀▀▀▀▀
e
▄▄▄▄▄▄▄▄▄▄▄
█████████████
████████████▄███
██▐███████▄█████▀
█████████▄████▀
███▐████▄███▀
████▐██████▀
█████▀█████
███████████▄
████████████▄
██▄█████▀█████▄
▄█████████▀█████▀
███████████▀██▀
████▀█████████
▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀▀
c.h.
▄▄▄▄▄▄▄▄▄▄▄▄▄▄▄▄▄▄▄▄▄
▀▀▀█











▄▄▄█
▄██████▄▄▄
█████████████▄▄
███████████████
███████████████
███████████████
███████████████
███░░█████████
███▌▐█████████
█████████████
███████████▀
██████████▀
████████▀
▀██▀▀
tyz
Legendary
*
Offline Offline

Activity: 3360
Merit: 1533



View Profile
March 02, 2016, 07:08:29 PM
 #5

Short answer: Deflation is the enemy of debt. It appreciates debt. Inflation, however, devalues debt. And because the world (especially countries) is full of debt, deflation is called bad.
yugo23
Sr. Member
****
Offline Offline

Activity: 476
Merit: 252


View Profile
March 03, 2016, 11:55:24 AM
 #6

Short answer: Deflation is the enemy of debt. It appreciates debt. Inflation, however, devalues debt. And because the world (especially countries) is full of debt, deflation is called bad.

Word.

It's why the best solution for our Western countries right now would be something like 3 years of 100% inflation.
Of course that would be harsh, but after that we wouldn't have any debt left Grin
tobacco123
Sr. Member
****
Offline Offline

Activity: 552
Merit: 250


View Profile
March 03, 2016, 01:17:39 PM
 #7

Short answer: Deflation is the enemy of debt. It appreciates debt. Inflation, however, devalues debt. And because the world (especially countries) is full of debt, deflation is called bad.

Spot on! Besides, inflation will make the rich richer and the poor poorer... the greed greedier!

Both Deflation and inflation have pros and cons.

botany
Legendary
*
Offline Offline

Activity: 1582
Merit: 1064


View Profile
March 04, 2016, 04:48:06 PM
 #8

The big fear of deflation is that people will prefer holding on to cash, rather than spending it.
This will result in the overall economy contracting.
You can think of it as the opposite of quantitative easing.  Smiley
Barnabe
Hero Member
*****
Offline Offline

Activity: 616
Merit: 503


★Bitvest.io★ Play Plinko or Invest!


View Profile
March 04, 2016, 07:37:43 PM
 #9

Short answer: Deflation is the enemy of debt. It appreciates debt. Inflation, however, devalues debt. And because the world (especially countries) is full of debt, deflation is called bad.

Word.

It's why the best solution for our Western countries right now would be something like 3 years of 100% inflation.
Of course that would be harsh, but after that we wouldn't have any debt left Grin
And they would not be able to borrow money for the next few decades... Which could be a problem since they are used to get easily loans...
Everything has consequences.



.
.BIG WINNER!.
[15.00000000 BTC]


▄████████████████████▄
██████████████████████
██████████▀▀██████████
█████████░░░░█████████
██████████▄▄██████████
███████▀▀████▀▀███████
██████░░░░██░░░░██████
███████▄▄████▄▄███████
████▀▀████▀▀████▀▀████
███░░░░██░░░░██░░░░███
████▄▄████▄▄████▄▄████
██████████████████████

▀████████████████████▀
▄████████████████████▄
██████████████████████
█████▀▀█▀▀▀▀▀▀██▀▀████
█████░░░░░░░░░░░░░████
█████░░░░░░░░░░░░▄████
█████░░▄███▄░░░░██████
█████▄▄███▀░░░░▄██████
█████████░░░░░░███████
████████░░░░░░░███████
███████░░░░░░░░███████
███████▄▄▄▄▄▄▄▄███████

██████████████████████
▀████████████████████▀
▄████████████████████▄
███████████████▀▀▀▀▀▀▀
███████████▀▀▄▄█░░░░░█
█████████▀░░█████░░░░█
███████▀░░░░░████▀░░░▀
██████░░░░░░░░▀▄▄█████
█████░▄░░░░░▄██████▀▀█
████░████▄░███████░░░░
███░█████░█████████░░█
███░░░▀█░██████████░░█
███░░░░░░████▀▀██▀░░░░
███░░░░░░███░░░░░░░░░░

██░▄▄▄▄░████▄▄██▄░░░░
████████████▀▀▀▀▀▀▀██
█████████████░█▀▀▀█░███
██████████▀▀░█▀░░░▀█░▀▀
███████▀░▄▄█░█░░░░░█░█▄
████▀░▄▄████░▀█░░░█▀░██
███░▄████▀▀░▄░▀█░█▀░▄░▀
█▀░███▀▀▀░░███░▀█▀░███░
▀░███▀░░░░░████▄░▄████░
░███▀░░░░░░░█████████░░
░███░░░░░░░░░███████░░░
███▀░██░░░░░░▀░▄▄▄░▀░░░
███░██████▄▄░▄█████▄░▄▄

██░████████░███████░█
▄████████████████████▄
████████▀▀░░░▀▀███████
███▀▀░░░░░▄▄▄░░░░▀▀▀██
██░▀▀▄▄░░░▀▀▀░░░▄▄▀▀██
██░▄▄░░▀▀▄▄░▄▄▀▀░░░░██
██░▀▀░░░░░░█░░░░░██░██
██░░░▄▄░░░░█░██░░░░░██
██░░░▀▀░░░░█░░░░░░░░██
██░░░░░▄▄░░█░░░░░██░██
██▄░░░░▀▀░░█░██░░░░░██
█████▄▄░░░░█░░░░▄▄████
█████████▄▄█▄▄████████

▀████████████████████▀




Rainbot
Daily Quests
Faucet
coinzat
Sr. Member
****
Offline Offline

Activity: 434
Merit: 250


Young but I'm not that bold


View Profile
March 04, 2016, 07:53:04 PM
 #10

Can anyone tell me about a fiat currency that had a a deflation in the last few years ? As I believe that the value of fiat money is declining a year after year because it is not scarcy as central banks print it without being questioned
markj113
Legendary
*
Offline Offline

Activity: 2254
Merit: 1043



View Profile
March 04, 2016, 07:58:55 PM
 #11

maybe the powers at the top are concerned about that $18 trillion debt hanging over their heads.

Deflation = debt harder to service.

Inflation = debt shrinks
Barnabe
Hero Member
*****
Offline Offline

Activity: 616
Merit: 503


★Bitvest.io★ Play Plinko or Invest!


View Profile
March 04, 2016, 08:05:07 PM
 #12

Can anyone tell me about a fiat currency that had a a deflation in the last few years ? As I believe that the value of fiat money is declining a year after year because it is not scarcy as central banks print it without being questioned
Japan had deflation for a while. They have problems restarting their economy partially due to this (but they also have a lot of other problems including demographics).



.
.BIG WINNER!.
[15.00000000 BTC]


▄████████████████████▄
██████████████████████
██████████▀▀██████████
█████████░░░░█████████
██████████▄▄██████████
███████▀▀████▀▀███████
██████░░░░██░░░░██████
███████▄▄████▄▄███████
████▀▀████▀▀████▀▀████
███░░░░██░░░░██░░░░███
████▄▄████▄▄████▄▄████
██████████████████████

▀████████████████████▀
▄████████████████████▄
██████████████████████
█████▀▀█▀▀▀▀▀▀██▀▀████
█████░░░░░░░░░░░░░████
█████░░░░░░░░░░░░▄████
█████░░▄███▄░░░░██████
█████▄▄███▀░░░░▄██████
█████████░░░░░░███████
████████░░░░░░░███████
███████░░░░░░░░███████
███████▄▄▄▄▄▄▄▄███████

██████████████████████
▀████████████████████▀
▄████████████████████▄
███████████████▀▀▀▀▀▀▀
███████████▀▀▄▄█░░░░░█
█████████▀░░█████░░░░█
███████▀░░░░░████▀░░░▀
██████░░░░░░░░▀▄▄█████
█████░▄░░░░░▄██████▀▀█
████░████▄░███████░░░░
███░█████░█████████░░█
███░░░▀█░██████████░░█
███░░░░░░████▀▀██▀░░░░
███░░░░░░███░░░░░░░░░░

██░▄▄▄▄░████▄▄██▄░░░░
████████████▀▀▀▀▀▀▀██
█████████████░█▀▀▀█░███
██████████▀▀░█▀░░░▀█░▀▀
███████▀░▄▄█░█░░░░░█░█▄
████▀░▄▄████░▀█░░░█▀░██
███░▄████▀▀░▄░▀█░█▀░▄░▀
█▀░███▀▀▀░░███░▀█▀░███░
▀░███▀░░░░░████▄░▄████░
░███▀░░░░░░░█████████░░
░███░░░░░░░░░███████░░░
███▀░██░░░░░░▀░▄▄▄░▀░░░
███░██████▄▄░▄█████▄░▄▄

██░████████░███████░█
▄████████████████████▄
████████▀▀░░░▀▀███████
███▀▀░░░░░▄▄▄░░░░▀▀▀██
██░▀▀▄▄░░░▀▀▀░░░▄▄▀▀██
██░▄▄░░▀▀▄▄░▄▄▀▀░░░░██
██░▀▀░░░░░░█░░░░░██░██
██░░░▄▄░░░░█░██░░░░░██
██░░░▀▀░░░░█░░░░░░░░██
██░░░░░▄▄░░█░░░░░██░██
██▄░░░░▀▀░░█░██░░░░░██
█████▄▄░░░░█░░░░▄▄████
█████████▄▄█▄▄████████

▀████████████████████▀




Rainbot
Daily Quests
Faucet
tyz
Legendary
*
Offline Offline

Activity: 3360
Merit: 1533



View Profile
March 04, 2016, 08:16:46 PM
 #13

Yeap, then they decided to do massive quantitative easing to combat deflation. It has been called Abenomics named after the prime minister Shinzō Abe who started the massive QE program.
But it seems to fail. http://www.telegraph.co.uk/business/2016/02/12/bank-of-japan-loses-control-as-qe-hits-the-limits/

Can anyone tell me about a fiat currency that had a a deflation in the last few years ? As I believe that the value of fiat money is declining a year after year because it is not scarcy as central banks print it without being questioned
Japan had deflation for a while. They have problems restarting their economy partially due to this (but they also have a lot of other problems including demographics).
calkob
Hero Member
*****
Offline Offline

Activity: 1106
Merit: 521


View Profile
March 04, 2016, 10:33:42 PM
 #14

As far as i am aware money is debt, for every $ you have in your pocket basically someone else is in debt for it.  If the money supply deflates then there is less money around for those in debt to pay it off, which in turn causes arrears and bankruptcies which causes people to hoard money etc etc etc.  Its basically why we must live in an economy that is always growing, because there is never enough money to pay back the banks.  Undecided
Pab
Legendary
*
Offline Offline

Activity: 1862
Merit: 1012


View Profile
March 05, 2016, 02:26:22 AM
 #15

Last inflation data from Eurozone Energy prices decreased by 7% becouse of oil but food prices increased by
1% sevices prices inrceased by 0.7%
To produce food energy is needed services also use energy
So there s deflation or not
Whatever Draghi will increase QE and will be more negatives  rates
Practically Euro will be worthless

 
                                . ██████████.
                              .████████████████.
                           .██████████████████████.
                        -█████████████████████████████
                     .██████████████████████████████████.
                  -█████████████████████████████████████████
               -███████████████████████████████████████████████
           .-█████████████████████████████████████████████████████.
        .████████████████████████████████████████████████████████████
       .██████████████████████████████████████████████████████████████.
       .██████████████████████████████████████████████████████████████.
       ..████████████████████████████████████████████████████████████..
       .   .██████████████████████████████████████████████████████.
       .      .████████████████████████████████████████████████.

       .       .██████████████████████████████████████████████
       .    ██████████████████████████████████████████████████████
       .█████████████████████████████████████████████████████████████.
        .███████████████████████████████████████████████████████████
           .█████████████████████████████████████████████████████
              .████████████████████████████████████████████████
                   ████████████████████████████████████████
                      ██████████████████████████████████
                          ██████████████████████████
                             ████████████████████
                               ████████████████
                                   █████████
.CryptoTalk.org.|.MAKE POSTS AND EARN BTC!.🏆
botany
Legendary
*
Offline Offline

Activity: 1582
Merit: 1064


View Profile
March 05, 2016, 05:09:10 PM
 #16

As far as i am aware money is debt, for every $ you have in your pocket basically someone else is in debt for it.  If the money supply deflates then there is less money around for those in debt to pay it off, which in turn causes arrears and bankruptcies which causes people to hoard money etc etc etc.  Its basically why we must live in an economy that is always growing, because there is never enough money to pay back the banks.  Undecided

There are 2 references to deflation - monetary deflation and price deflation. Monetary deflation refers to the money supply decreasing, where as price deflation refers to decrease in prices. Decrease in prices over sustained periods is what worries economists.
Vaslime
Member
**
Offline Offline

Activity: 141
Merit: 10


Cryptotalk.org


View Profile
April 24, 2016, 07:32:34 PM
 #17

As far as i am aware money is debt, for every $ you have in your pocket basically someone else is in debt for it.  If the money supply deflates then there is less money around for those in debt to pay it off, which in turn causes arrears and bankruptcies which causes people to hoard money etc etc etc.  Its basically why we must live in an economy that is always growing, because there is never enough money to pay back the banks.  Undecided

There are 2 references to deflation - monetary deflation and price deflation. Monetary deflation refers to the money supply decreasing, where as price deflation refers to decrease in prices. Decrease in prices over sustained periods is what worries economists.

The computer price has deflated for long term. In 1999, a PC costs around $3000. Now it is only $500 and more powerful.

 
                                . ██████████.
                              .████████████████.
                           .██████████████████████.
                        -█████████████████████████████
                     .██████████████████████████████████.
                  -█████████████████████████████████████████
               -███████████████████████████████████████████████
           .-█████████████████████████████████████████████████████.
        .████████████████████████████████████████████████████████████
       .██████████████████████████████████████████████████████████████.
       .██████████████████████████████████████████████████████████████.
       ..████████████████████████████████████████████████████████████..
       .   .██████████████████████████████████████████████████████.
       .      .████████████████████████████████████████████████.
       .       .██████████████████████████████████████████████
       .    ██████████████████████████████████████████████████████
       .█████████████████████████████████████████████████████████████.
        .███████████████████████████████████████████████████████████
           .█████████████████████████████████████████████████████
              .████████████████████████████████████████████████
                   ████████████████████████████████████████
                      ██████████████████████████████████
                          ██████████████████████████
                             ████████████████████
                               ████████████████
                                   █████████
CryptoTalk.org| 
MAKE POSTS AND EARN BTC!
🏆
calkob
Hero Member
*****
Offline Offline

Activity: 1106
Merit: 521


View Profile
April 24, 2016, 08:14:08 PM
 #18

Deflation is seen as a good thing in some circles and not always the enemy, who said that things must always rise anyway... ?
7788bitcoin
Legendary
*
Offline Offline

Activity: 2282
Merit: 1023


View Profile
April 25, 2016, 02:07:05 AM
 #19

Short answer: Deflation is the enemy of debt. It appreciates debt. Inflation, however, devalues debt. And because the world (especially countries) is full of debt, deflation is called bad.

Great answer... but this is the reason why people keep on borrowing money and get deeper in debt- hoping that inflation will eventually save them! However, they should also look at the interest that is being charged...
naidray
Legendary
*
Offline Offline

Activity: 1232
Merit: 1029



View Profile
April 25, 2016, 06:29:47 PM
 #20

Short answer: Deflation is the enemy of debt. It appreciates debt. Inflation, however, devalues debt. And because the world (especially countries) is full of debt, deflation is called bad.
Thank you for that really short and accurate answer. After reading this it immediately reminded me of all the country's debt in the world bank. I mean, since every country (correct me if I'm wrong) has a debt in world bank, it means that deflation is bad.
Pages: [1] 2 »  All
  Print  
 
Jump to:  

Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!