Bitcoin Forum
July 19, 2018, 02:00:35 PM *
News: Latest stable version of Bitcoin Core: 0.16.1  [Torrent]. (New!)
 
   Home   Help Search Donate Login Register  
Pages: « 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 [49] 50 51 52 53 54 55 56 57 58 »
  Print  
Author Topic: Inflation and Deflation of Price and Money Supply  (Read 523169 times)
amberlinni
Newbie
*
Offline Offline

Activity: 7
Merit: 0


View Profile
January 28, 2018, 07:57:13 PM
 #961

Far from inflation being the problem, the money supply has shrunk and we are in a deflationary bind. The money supply needs to be pumped back up to generate jobs and productivity; and in the system we have today, that is done by issuing bonds, or debt.
1532008835
Hero Member
*
Offline Offline

Posts: 1532008835

View Profile Personal Message (Offline)

Ignore
1532008835
Reply with quote  #2

1532008835
Report to moderator
1532008835
Hero Member
*
Offline Offline

Posts: 1532008835

View Profile Personal Message (Offline)

Ignore
1532008835
Reply with quote  #2

1532008835
Report to moderator
"Your bitcoin is secured in a way that is physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter a majority of miners, no matter what." -- gmaxwell
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1532008835
Hero Member
*
Offline Offline

Posts: 1532008835

View Profile Personal Message (Offline)

Ignore
1532008835
Reply with quote  #2

1532008835
Report to moderator
Celine Ariola
Jr. Member
*
Offline Offline

Activity: 43
Merit: 0


View Profile
January 29, 2018, 10:09:30 AM
 #962

Inflation occurs when the price of goods and services rise, while deflation occurs when those prices decrease. The balance between the two economic conditions, opposites of the same coin, is delicate, and an economy can quickly swing from one condition to the other.

Money supply is the quantity of money generating inside a country.

How does inflation and deflation relate to money supply?

As the discussion goes in the Law of Supply and demand. "The higher the demand, the lower the supply and vise versa" therefore if money supply goes up, its demand goes down. If the demand for money will go down, higher prices will be implemented. If the price of goods becomes higher, it is called inflation. But if the opposite happened, deflation will be the result.
Celine Castillo
Newbie
*
Offline Offline

Activity: 11
Merit: 2


View Profile
January 30, 2018, 02:51:47 PM
 #963

Inflation occurs when the price of goods and services rise, while deflation occurs when those prices decrease. The balance between the two economic conditions, opposites of the same coin, is delicate, and an economy can quickly swing from one condition to the other.

Inflation is caused when goods and services are in high demand, creating a drop in availability. Supplies can decrease for many reasons: A natural disaster can wipe out a food crop; a housing boom can exhaust building supplies, etc. Whatever the reason, consumers are willing to pay more for the items they want, causing manufacturers and service providers to charge more.


Deflation occurs when too many goods are available or when there is not enough money circulating to purchase those goods.



Read more: What is the difference between inflation and deflation? | Investopedia https://www.investopedia.com/ask/answers/111414/what-difference-between-inflation-and-deflation.asp#ixzz55g8TlgCw
Follow us: Investopedia on Facebook

As the law of demand and supply goes, money supply has the same effect. Money supply is the quantity or number of money produced and circulating inside a country. As the supply of money increases, the demand for money decreases which make prices of goods rise up resulting to inflation. But when the supply of money decreases, the demand for money increases making the price of goods decrease resulting to deflation.
STT
Legendary
*
Offline Offline

Activity: 1792
Merit: 1069



View Profile WWW
January 30, 2018, 03:06:43 PM
 #964

If you go back one hundred years before the start of the Federal Reserve then the entry for inflation definition was an expansion of the money supply.     With QE this is clearly apparent
Far from inflation being the problem, the money supply has shrunk and we are in a deflationary bind. The money supply needs to be pumped back up to generate jobs and productivity; and in the system we have today, that is done by issuing bonds, or debt.

Overall we have increased the production of money far above a normal rate.    Most new cash was used to buy government bonds which only distributes the cash gradually within the economy.
Only when government repays the debt will we see the return to a normal scenario and a nessecery higher interest rate on the Dollar, Euro or Yen.

Japan has been operating QE for 17 years so it is unlikely they will ever repay the debt or unwind QE programs.    In effect the bonds have defaulted but are being continually rebought by government itself to prevent that scenario.    Some clarity might appear if you look at Greece who are unable to rebuy their own bonds hence have neared a default scenario, this is the same for every country far past 100% GDP debt, Japan is 260% or so

.FORTUNE.JACK.
      ▄▄███████▄▄
   ▄████▀▀ ▄ ██████▄
  ████ ▄▄███ ████████
 █████▌▐███▌ ▀▄ ▀█████
███████▄██▀▀▀▀▄████████
█████▀▄▄▄▄█████████████
████▄▄▄▄ █████████████
 ██████▌ ███▀████████
  ███████▄▀▄████████
   ▀█████▀▀███████▀
      ▀▀██████▀▀
         
         █
...FortuneJack.com                                             
...THE BIGGEST BITCOIN GAMBLING SITE
       ▄▄█████████▄▄
    ▄█████████████████▄
  ▄█████████████████████▄
 ▄██
█████████▀███████████▄
██████████▀   ▀██████████
█████████▀       ▀█████████
████████           ████████
████████▄   ▄ ▄   ▄████████
██████████▀   ▀██████████
 ▀██
█████████████████████▀
  ▀██
███████████████████▀
    ▀█████████████████▀
       ▀▀█████████▀▀
#JACKMATE
WIN 1 BTC
▄█████████████████████████▄
███████████████████████████
███████████████████████████
██████████▀█████▀██████████
███████▀░░▀░░░░░▀░░▀███████
██████▌░░░░░░░░░░░░░▐██████
██████░░░░██░░░██░░░░██████
█████▌░░░░▀▀░░░▀▀░░░░▐█████
██████▄░░▄▄▄░░░▄▄▄░░▄██████
████████▄▄███████▄▄████████

███████████████████████████
███████████████████████████
▀█████████████████████████▀
sontoloyo177
Jr. Member
*
Offline Offline

Activity: 56
Merit: 1


View Profile
February 01, 2018, 12:51:34 PM
 #965

Generally it can be said that inflation is a measure of a general increase of the price level in an economy, as represented typically by an inclusive price index, such as the Consumer Price Index in a nation. The term indicates many individual prices rising together rather than one or two isolated prices, such as the price of gas in an otherwise calm price environment. The inflation rate is typically expressed as an annual growth rate in prices (again, as measured by an index) even if measured over a shorter period of time. For example, if a radi o report states that "consumer prices rose at an inflation rate of six percent last quarter," that would typically mean than the Consumer Price Index for All Urban Consumers (the most quoted index) rose over the last three months at an annualized rate of around four percent, and the press would generally refer to the current inflation rate as around four percent. The term deflation refers to a general decline  in prices or the price level as measured by an inclusive price index and, again, is not a reference to isolated price declines, like natural gas declining in price, in an otherwise stable price environment. 
flaviojr123
Newbie
*
Offline Offline

Activity: 5
Merit: 2


View Profile
February 05, 2018, 09:24:00 PM
 #966

Hello, this is my first post on this thread I couldn't read 50 pages of internet discussion so kindly correct me if anything I'm assuming is obviously wrong.

BTC main value proposition is to be a decentralized currency and/or value store.

I understand price inflation is considered bad because it unfairly damages savers vs consumers. On the other side, some people can handle inflation reasonably well by re-indexing contracts every so often. This is common behavior in countries with high inflation, and again I understand it still damages savers but the damage can be reasonably controlled. Additionally, some would argue that inflation is bad even for those prepared for it because it raises the cost of doing business.

The point that I want to discuss is, isn't bitcoin's price fluctuation equally bad to inflation in the fact it raises the cost of doing business?

If we all accept BTC as a volatile store of value, does it imply it can't be the decentralized currency most would use?

Now let me try to explain some of my assumptions: 1. BTC price will always be volatile.

The BTC supply increasing rate is positive, that rate is fixed looking in the short term (30-90 days). On the other side, demand is highly unpredictable. Fixed supply and highly unpredictable demands cause unpredictable prices.

Common counter arguments:
1 "BTC is volatile but it always rises in the long-term so it doesn't matter". Is it does, it increases the cost of business. I can't start a bakery with only BTC capital because in the first dip I will have to take loans to pay wages.
1.1 "Oh, but you can't see that happening because you can't see far enough." This sounds like a highly utopian view. Pragmatically, we need a path from here to there, I turn to you and ask, how can we get there?
1.2 "Okay, it doesn't matter for some people and that's all". Okay, then BTC will be a niche store of value.
2 "Demand will stabilize in the long term." How?
3 "Price stability is a myth, market demands always change them" Sure, it's a myth. Yet it is desirable. If we are designing the system, shouldn't we take that in account? "No, we shouldn't, if you want to do that go and create your own coin." Okay, then BTC will be a niche store of value.

Right now it looks to me that price instability prevents BTC wide adoption.

What incentives do savers have to buy-in on a inflationary money supply? The incentive of stability? That's one reason people agree being exposed to the USD. Am I defending inflation tax? No. I'm asking could there be benefits to having a transparent voluntary contract with varying money supply rate. And I'm leaning towards a yes to this question.

If the supply of a coin could be influenced by price then we would have a more stable coin, the cost we pay is inflation. The issue then becomes an optimization issue, on what would be a proper trade-off.

What are your thoughts?

ChefBoyardeez
Newbie
*
Offline Offline

Activity: 23
Merit: 1


View Profile
February 06, 2018, 06:18:43 AM
 #967


Since we're both very excited about this, and to restrain our words from moving too far from the point, I think we should address one issue at a time.

My interpretation from the above definition related to economics:

1. Price Inflation refers to the "general increase in prices" part of that definition
2. Money Supply Inflation refers to the "fall in the purchasing value of money" part of that definition

Therefore, I can not agree that inflation "means the same thing as increase", as it conflicts with the "fall in the purchasing value of money" part of that definition.

Note: this is not an argument of what the "general increase in prices" or "fall in the purchasing value of money" means. We can get to that once your interpretation of the word inflation is understood.

I wish I had half the skill you do answering questions...So poised and professional.
laevatein906
Jr. Member
*
Offline Offline

Activity: 210
Merit: 0


View Profile
February 07, 2018, 08:07:53 AM
 #968

Yes you could estimate future cash flows of you had contracts or sales data.

For example I worked for a bakery that made 20K per month.  Then I decided to model my business after theirs but in a different past of town that didn't have a good bakery.  I could estimate that within a few years my business could possibly genstate similar income

Or if I snuck behind their backs and offered the same baguette to a distributor for 20% less and stole their contract

█▐  CIBUS FOOD ECOSYSTEM  ▐ █FOOD BLOCKCHAIN
▬▬▬▬ TOKEN SALE 28 FEB 2018 ▬▬▬▬ (https://cibus.world)
corall
Jr. Member
*
Offline Offline

Activity: 42
Merit: 0


View Profile
February 07, 2018, 03:20:36 PM
 #969

To my mind BTC is very volatile, which means unpredictable risk of inflation/deflation. So mostly it is an investing and saving too. I.e. some alternative currencies should be used to run a business
cryptosantosh
Newbie
*
Offline Offline

Activity: 2
Merit: 0


View Profile
February 07, 2018, 03:45:19 PM
 #970

We can take the example of recession on america during 2008, collapse of layman brothers too....
cryptosantosh
Newbie
*
Offline Offline

Activity: 2
Merit: 0


View Profile
February 07, 2018, 03:54:43 PM
 #971

In simple and understanding words inflation just indicate the situation of buying 1 kg of sugar from market @ Rs.45/kg during 2016 and buying sugar from market @ Rs.55/kg during 2017 i.e in laymen language decreasing in purchasing power of money and the reverse case will be the example of deflation.
MoonHodler
Member
**
Offline Offline

Activity: 115
Merit: 10

Bitcoin: 1HrWs3tDzWr13zocV3qP9ENRLgiDuewtsu


View Profile WWW
February 07, 2018, 04:03:29 PM
 #972

future value of bitcoin will depend on the percentage of money being replaced by crypto, and on the bitcoin percentage of all crypto cap

Enjoy your life, one day at a time. Bitcoin Address: 1HrWs3tDzWr13zocV3qP9ENRLgiDuewtsu
flaviojr123
Newbie
*
Offline Offline

Activity: 5
Merit: 2


View Profile
February 07, 2018, 06:19:00 PM
 #973

To my mind BTC is very volatile, which means unpredictable risk of inflation/deflation. So mostly it is an investing and saving too. I.e. some alternative currencies should be used to run a business

Thanks for the answer corall. I really just want to know if that's a consensus because that means there's an unattended demand for stable crypto currency.
versaje
Newbie
*
Offline Offline

Activity: 1
Merit: 0


View Profile
February 07, 2018, 06:37:03 PM
 #974

nice team
corall
Jr. Member
*
Offline Offline

Activity: 42
Merit: 0


View Profile
February 07, 2018, 10:44:14 PM
 #975

To my mind BTC is very volatile, which means unpredictable risk of inflation/deflation. So mostly it is an investing and saving too. I.e. some alternative currencies should be used to run a business

Thanks for the answer corall. I really just want to know if that's a consensus because that means there's an unattended demand for stable crypto currency.

Crypto economy is a new way of economy so nobody can predict for sure the rules of demand if future. I would expect slight inflation of bitcoin in the future
sandarajasmine
Jr. Member
*
Offline Offline

Activity: 42
Merit: 0


View Profile WWW
February 08, 2018, 11:07:53 AM
 #976

An area dedicated to discussing the differences of these two terms and the theories supporting them.

I'm looking forward to an in-depth discussion on the subject! I've noticed that confusion between the two seems to come up quite a bit on the forum, and thought it may be reasonable to dedicate a thread on the matter.

Pulled from a discussion in Wall Observer



Price-Deflation is what you are used to hearing about in Bitcoin. That term is used to describe the prices of goods/services as they decrease, because the value of Bitcoin goes up.

Price-Inflation is the opposite. When prices of goods/services increase because the value of Bitcoin goes down.

So, when dealing with Price-Inflation or Deflation, there is an inverse relationship of price and value, in regard to goods/services and Bitcoin.

Example: As the Bitcoin price goes from $10 to $20, the prices of goods/services goes down from 20BTC to 10BTC. As the Bitcoin price goes from $20 to $10, the prices of goods/services goes from 10BTC to 20BTC!

Why does the price of Bitcoin go up and down? The price of BTC goes up and down based on the exchange rate, or market price, which is set by buyers and sellers, or traders. They directly trade the Bitcoin currency with all sorts of other currency, and even some with gold; the most popular being the USD (US dollar). They set the price when executing orders to buy or sell. I will get into the actual reason of why the price fluctuates in the last section.



Now that we've gone over PRICE Inflation and Deflation (which honestly, to me, is a term made popular by Keynesian's to hide the real facts, as price inflation/deflation is simply the market exchange rate, reflective of the money supply into a currency from itself and other currencies), let's go over the REAL inflation/deflation of a currency (otherwise known by many as Monetary Inflation).

MoneySupply-Inflation is when the value of Bitcoin decreases when the total supply of Bitcoin increases. In our current state, this is at a generation rate of 25 BTC every 10 minutes.

MoneySupply-Deflation will essentially never occur. It is when the value of Bitcoin increases when the total supply of Bitcoin decreases. This may happen, say, when someone loses their private key and all the BTC associated with it are lost. This effectively "makes the rest of us richer". That being said, there is a SET DECREASE in the generation rate of BTC, so you have sort of a "deflationary effect" in the value, as long as more exchange occurs for BTC at a rate which is faster than that set generation rate.

When all 21 million coins are produced, the MoneySupply will be neutral, and the value will continue to increase (prices will decrease, consequently), as long as people continue to exchange in BTC.

This leads me to the last section.



What determines the PRICE of Bitcoin? The VALUE of Bitcoin at a particular moment.

What determines the VALUE of Bitcoin? The SUPPLY and DEMAND of Bitcoin in the economy.

What determines the SUPPLY of Bitcoin? Currently, the MoneySupply-Inflation rate of 25 BTC every 10 minutes, and traders willing to SELL Bitcoin to BUYERS in exchange for other supplies of money (currencies).

What determines the DEMAND of Bitcoin? Traders willing to BUY Bitcoin from SELLERS in exchange for other currencies.


Therefore: BUYERS, SELLERS, and MONEYSUPPLY-INFLATION (miners) determine the VALUE of Bitcoin, which determines the PRICE of BTC as BUYERS and SELLERS trade based on that VALUE (or supply and demand) of Bitcoin.


We don't exactly know the totality of the supply and demand. Sure, we could try and aggregate data from all the exchanges, but we will never be accurate as there are exchanges which can not be accounted for (OTC). The cool thing is that we DO know the MoneySupply rate, and we DO know the exchange rate. From this, we can determine a real value of Bitcoin when simply multiplying the two factors; a sort of inflation-adjusted view of the currency.

Effectively, the quantitative analysis of supply and demand is really what the currency exchange traders attempt to accurately determine which is conveyed through buying and selling of Bitcoin, setting a VALUE via the PRICED exchange rate of the currency. On a side note, most of the big Market Makers (FX Traders) use this price movement as a way to make a profitable living, as well. Especially when price fluctuations are a consequence of hype or fear (bubbles, cliffs), not factual supply/demand data, and are wildly out of the real price range.

Thus, if you analyze the proper macroeconomic data in an attempt to forecast future DEMAND for more Bitcoin (price increase), you will realize some very interesting things, and have a more accurate picture of where the price is going...

Happy trading! Wink

Wow. Thank you. I gained my knowledge!

MEXC Support Team
Mary0K.am
Newbie
*
Offline Offline

Activity: 1
Merit: 0


View Profile
February 08, 2018, 02:49:13 PM
 #977

That's the thing though, you guys are getting trolled, by those damn neo-keynesians Cheesy
Argie021213
Jr. Member
*
Offline Offline

Activity: 49
Merit: 0


View Profile
February 09, 2018, 05:29:21 AM
 #978

Inflation and deflation are both economic situations that has been occurring in our time. Inflation occurs when demands are high and supply are low so the price tends to go up, while on the other hand deflation occurs when supply are many but not enough money is available to purchase. This topic is very timely since this is also one of the factors affecting bitcoins today.

⋈ ICO.EPIGENCARE.COM ⧫ Epigenetic Profiling. Personalized Skincare. Blockchain Privacy. ⋈
okalmus
Jr. Member
*
Offline Offline

Activity: 38
Merit: 0


View Profile
February 09, 2018, 11:33:20 AM
 #979

Hello, this is my first post on this thread I couldn't read 50 pages of internet discussion so kindly correct me if anything I'm assuming is obviously wrong.

BTC main value proposition is to be a decentralized currency and/or value store.

I understand price inflation is considered bad because it unfairly damages savers vs consumers. On the other side, some people can handle inflation reasonably well by re-indexing contracts every so often. This is common behavior in countries with high inflation, and again I understand it still damages savers but the damage can be reasonably controlled. Additionally, some would argue that inflation is bad even for those prepared for it because it raises the cost of doing business.

The point that I want to discuss is, isn't bitcoin's price fluctuation equally bad to inflation in the fact it raises the cost of doing business?

If we all accept BTC as a volatile store of value, does it imply it can't be the decentralized currency most would use?

Now let me try to explain some of my assumptions: 1. BTC price will always be volatile.

The BTC supply increasing rate is positive, that rate is fixed looking in the short term (30-90 days). On the other side, demand is highly unpredictable. Fixed supply and highly unpredictable demands cause unpredictable prices.

Common counter arguments:
1 "BTC is volatile but it always rises in the long-term so it doesn't matter". Is it does, it increases the cost of business. I can't start a bakery with only BTC capital because in the first dip I will have to take loans to pay wages.
1.1 "Oh, but you can't see that happening because you can't see far enough." This sounds like a highly utopian view. Pragmatically, we need a path from here to there, I turn to you and ask, how can we get there?
1.2 "Okay, it doesn't matter for some people and that's all". Okay, then BTC will be a niche store of value.
2 "Demand will stabilize in the long term." How?
3 "Price stability is a myth, market demands always change them" Sure, it's a myth. Yet it is desirable. If we are designing the system, shouldn't we take that in account? "No, we shouldn't, if you want to do that go and create your own coin." Okay, then BTC will be a niche store of value.

Right now it looks to me that price instability prevents BTC wide adoption.

What incentives do savers have to buy-in on a inflationary money supply? The incentive of stability? That's one reason people agree being exposed to the USD. Am I defending inflation tax? No. I'm asking could there be benefits to having a transparent voluntary contract with varying money supply rate. And I'm leaning towards a yes to this question.

If the supply of a coin could be influenced by price then we would have a more stable coin, the cost we pay is inflation. The issue then becomes an optimization issue, on what would be a proper trade-off.

What are your thoughts?


👍🏻
shikon_shard
Jr. Member
*
Offline Offline

Activity: 116
Merit: 0


View Profile
February 09, 2018, 01:03:37 PM
 #980

So do we advertise bitcoin so that all 21million btc Will be generated already? Was that it? Was that why more people=more money ?
Pages: « 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 [49] 50 51 52 53 54 55 56 57 58 »
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!