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Author Topic: Inflation and Deflation of Price and Money Supply  (Read 509010 times)
Turan100
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September 30, 2017, 09:15:43 PM
 #801

the price inflation and deflation depends on peoples holding it in their wallets i mean not the fishes in the sea am talking about the big whales of bitcoin, and stays increasing by time that's the algorithm of bitcoin, but sometimes we see a small decreasing that because of the demand and such, anyway we can't predict bitcoin scam but make sure that bitcoin never goes down down.
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zzSunZZ
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October 02, 2017, 12:43:37 AM
 #802

Inflation occurs when there is a sustained increase in the general price level. Traditionally high inflation rates are considered to be damaging to an economy. High inflation creates uncertainty and can wipe away the value of savings.
Advantages of Inflation

Deflation is potentially very damaging to the economy and can lead to lower consumer spending and lower growth. For example, when prices are falling, consumers are encouraged to delay purchasing.
A moderate inflation rate reduces the real value of debt. If there is deflation, the real value of debt increases leading to a squeeze on disposable incomes.
Moderate rates of inflation allows prices to adjust.
Moderate rates of inflation is sign of a healthy economy. With economic growth, we usually get a degree of inflation.
Disadvantages of Inflation

High inflation rates tend to cause uncertainty and confusion leading to less investment. It is argued that countries with persistently higher inflation, tend to have lower rates of investment and economic growth.
Higher inflation leads to lower international competitiveness.
Menu costs. – Costs of changing price lists.
Inflation and stagnant wage growth leads to declining incomes.
Inflation can reduce the real value of savings, which might particularly affect old people who live on savings. However, it does depend on whether interest rates are higher than the inflation rate.
While deflation
Low prices for all
This means that low income earners will be able to afford essential items, so they'll be escaping the poverty bracket.
Also, because prices are low, workers may behave rationally and accept wage cuts, decreasing the costs of production for UK firms.
Thats all I can think of from the top of my head.
You guys can't really believe it works like this, can you? Deflation over 2 years vs. inflation over 100 years is not even close to a fair comparison, to start. Secondly, deflation of this scale discourages an active economy (as we've already seen with BTC) and makes it worse, especially with a limited currency like BTC. People sit on their BTC and don't spend it because it's an investment. Third, cost of goods/services and salaries are (though sometimes poorly) adjusted for inflation. If you got paid $10/hr in 1929 you were doing really, really well. If you get paid $10 in 2017 you can barely make ends meet. Finally, you can't honestly believe that deflation will continue at the rate it has been with BTC forever.
Nathan Dyer
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October 02, 2017, 10:18:59 AM
 #803

Does this price inflation and deflation depend fully on Bitcoin days destroyed? I guess it also plays an important role because one may send his own coins between different addresses trying to show the network that several transactions are being made?
blockman
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October 02, 2017, 11:36:20 PM
 #804


Hello there,

Can we ralete the price and money supply of BTC to the political movement of US with other countries?

Not that really, maybe yes or maybe know. Look on what recently happened to China, they banned ICOs and closed exchanges and it's obvious the effect of it. The price was affected and we have seen on how fast the price of bitcoin stumbled with a follow of Dimon's statement about bitcoin fraud. But now, it's a good thing that we are now pumping up.

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synthlock
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October 03, 2017, 02:04:40 AM
 #805

You guys can't really believe it works like this, can you? Deflation over 2 years vs. inflation over 100 years is not even close to a fair comparison, to start. Secondly, deflation of this scale discourages an active economy (as we've already seen with BTC) and makes it worse, especially with a limited currency like BTC. People sit on their BTC and don't spend it because it's an investment. Third, cost of goods/services and salaries are (though sometimes poorly) adjusted for inflation. If you got paid $10/hr in 1929 you were doing really, really well. If you get paid $10 in 2017 you can barely make ends meet. Finally, you can't honestly believe that deflation will continue at the rate it has been with BTC forever.

This, exactly. If people just sit on it, you're creating a stagnating economy with that currency. I just wish we had a better solution than the current tx fees.
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October 03, 2017, 04:32:22 AM
 #806

yes inflation and deflation of price and money supply is just always to happen every now and then..traders,investors are getting some ways to do to let there market still be on the top Smiley Wink Kiss

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October 04, 2017, 10:36:48 AM
 #807

Inflation is caused when goods and services are in high demand, creating a drop in availability while Inflation  occurs when too many goods are available or when there is not enough money circulating to purchase those goods,money supply includes safe assets, such as cash, coins, and balances held in checking and savings accounts that businesses and individuals can use to make payments or hold as short-term investments.
cryptojac17
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October 04, 2017, 12:46:41 PM
 #808

yes inflation and deflation of price and money supply is just always to happen every now and then..traders,investors are getting some ways to do to let there market still be on the top Smiley Wink Kiss

Yes deflation and inflation will always happen in a economy where business is fluid there are lot of activities done by traders, investors and even they will create a scenario that make their business on top and all of these will only follow the natural law of economy which is the law of supply and demand.

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October 06, 2017, 06:41:19 PM
 #809

Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.

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biskitop
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October 11, 2017, 10:39:49 AM
 #810

Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.
a very simple explanation, but easy to understand. thank you sir already share knowledge about inflation and deflation. because before, I only know that inflation is the value of a rising currency only, but not yet fully understand his description in detail.

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October 13, 2017, 12:11:11 PM
 #811

Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.

Very well said...the book when money dies does a fantastic job in showcasing a real life scenario in Weimar Germany on Hyperinflation etc etc

BitM4NIAC
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October 14, 2017, 12:29:08 PM
 #812

1) Increase in money supply >>>  2) Higher demand for goods and services >>> 3) Higher demand = price level increase in short term >>> 4) Price increase = Inflation
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October 14, 2017, 08:19:25 PM
 #813

1) Increase in money supply >>>  2) Higher demand for goods and services >>> 3) Higher demand = price level increase in short term >>> 4) Price increase = Inflation

Good summary. Essentially, any currency is only worth as much as you can get for it.

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October 14, 2017, 10:36:03 PM
 #814

1) Increase in money supply >>>  2) Higher demand for goods and services >>> 3) Higher demand = price level increase in short term >>> 4) Price increase = Inflation

Inflation  - by definition is related to increase in price and reduction in purchasing power
Deflation - by definition is related to decrease in price movement and increase in purchasing power

Factors

Money supply
Demand
Purchasing Power
Price

USD

money supply - increasing
demand - high
purchasing power  - reducing
price - increasing

Conclusion: USD is inflationary at current levels


Bitcoin

money supply - decreasing & limited supply
demand - high
purchasing power - increasing
price - decreasing

Conclusion: Bitcoin is deflationary at current levels

Why is price decreasing? Because 1 bitcoin today can buy more USD than it could 1 year ago. Don't convert BTC - USD to perform inflationary/deflationary evaluation, use its purchasing power and unit value.
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October 15, 2017, 11:21:31 AM
 #815

Is inflatory coin like Bitcoin better than for example NEM that has no inflation of coins?
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October 16, 2017, 12:08:36 PM
 #816

Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.
In the world of trading there are a lot of code words  just like inflammation and deflation are also used. Inflammation in trading means that the rate of your money is increased in the future for example you have 1usd dollar and you can buy 5 pencil now and after some time you can bought 7 pencil then it is called inflammation while deflation mean decrease the value of money in future.
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October 16, 2017, 02:20:58 PM
 #817

the price inflation and deflation depends on peoples holding it in their wallets i mean not the fishes in the sea am talking about the big whales of bitcoin, and stays increasing by time that's the algorithm of bitcoin, but sometimes we see a small decreasing that because of the demand and such, anyway we can't predict bitcoin scam but make sure that bitcoin never goes down down.
Deflamation and inflammation are the key words used for to increase and decrease. For example deflamation mean that you have 100$ in your wallet and after some time the value of $ down then automatically the price in your wallet is decreased that is called deflamation.

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October 16, 2017, 03:21:31 PM
 #818

I would expect a government controlled digital currency to remove "finality." The government will always want to be the final decision-maker on what transactions, between whoever, should be rescinded or reversed, both for the sake of laws it creates (good and bad) and for the sake of payments it doesn't want to make. That's what we already have. Just because it's digital doesn't mean it's better.
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October 16, 2017, 06:44:57 PM
 #819

I would expect a government controlled digital currency to remove "finality." The government will always want to be the final decision-maker on what transactions, between whoever, should be rescinded or reversed, both for the sake of laws it creates (good and bad) and for the sake of payments it doesn't want to make. That's what we already have. Just because it's digital doesn't mean it's better.

They have that in cash now though. It's infinite even though still subject to inflation and deflation. They aren't the final decision makers in Bitcoin. Bitcoin is  decentralized. Yes you have countries making it illegal and trying to tax it. But it would take too much coverage all over the world for any government to be the decision maker within the crypto world.
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October 18, 2017, 06:12:05 AM
 #820

There are definitely different type of smarts. I know a lot of people that are engineers, but they are still too stupid to see why bitcoin is important and why you must invest a considerable amount of your portfolio into it and hold it long term. They are intelligent, but not really smart.

Meanwhile I only got basic education but im smart enough to know that I must spend 24/7 making more BTC and storing it long term to get richer than all of my industrial engineers combined. In the long term I will laugh at everyone hating on me.
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