Bitcoin's Dystopian Future

[Adrian-x]

Maybe instead of trying to fix the economic mess, it's better to start with the political? Maybe  Instead of the Bitcoin revolution the world need the BitVote revolution... just saying

We have just that, if you think Bitcoin solves problems, vote for it, you can also buy votes, in this P2P system.  He who has the majority vote can have influence.

Don’t like the idea of Bitcoin, abstain from supporting the system. Let it shrivel and die on its own.

Fabricating and supporting stories of doom and gloom to stop people contributing the Bitcoin system is a political move, fortunately it carries no weight in the Bitcoin meme.

[Bitcoinpro]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

SPAM? no
TROLL? maybe
OP DYSTOPIAN? maybe
YOU SIR DYSOPIAN? Definetly

you forgot the T i think unless your making up a new word  

and just to reiterate my point the OP makes no sense at all~!

[thaaanos]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

SPAM? no
TROLL? maybe
OP DYSTOPIAN? maybe
YOU SIR DYSOPIAN? Definetly

you forgot the T i think unless your making up a new word  

and just to reiterate my point the OP makes no sense at all~!

beeing Greek I have it easy...
here you are http://www.medilexicon.com/medicaldictionary.php?t=27323

[Bitcoinpro]

SPAM THREAD THE ONLY THING DYSTOPIAN IS THE OP

SPAM? no
TROLL? maybe
OP DYSTOPIAN? maybe
YOU SIR DYSOPIAN? Definetly

you forgot the T i think unless your making up a new word  

and just to reiterate my point the OP makes no sense at all~!

beeing Greek I have it easy...
here you are http://www.medilexicon.com/medicaldictionary.php?t=27323

Bitcoin Is Utopioan 

[thaaanos]

Maybe instead of trying to fix the economic mess, it's better to start with the political? Maybe  Instead of the Bitcoin revolution the world need the BitVote revolution... just saying

We have just that, if you think Bitcoin solves problems, vote for it, you can also buy votes, in this P2P system.  He who has the majority vote can have influence.

Don’t like the idea of Bitcoin, abstain from supporting the system. Let it shrivel and die on its own.

Fabricating and supporting stories of doom and gloom to stop people contributing the Bitcoin system is a political move, fortunately it carries no weight in the Bitcoin meme.

So your counsel is Bystander apathy? because of strong Groupthink incited by a Cash cow that will eventually lead to Escalation of commitment?

[Rassah]

Intead we tried to deflate the economy and the result is that while assets lost value (and in the cypriot case even the savings), while the debts are not only stable but mounting as goverment increased taxation. So if we now magicaly switch to bitcoin even at a constant rate, situation will not revert only accelarate.

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

BTW Banks dont have reason/opportunity to exist in an deflationary economy anyway.

Banks can provide extra security, or can provide investment services. People will just have to specifically state their intent to invest money in a possibly risky venture, as opposed to being told that they are putting money into safe savings accounts, while banks gamble with them without telling anyone.

1) There can still be banks. Loans will just have to be short-term, and for things that are actually worth something...
2) Just In Time production is already almost a gospel in our economy...
3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation...

Nope forget about it can<>will, Banks are non entities in the Bitcoin economy.
Christ you cant fucking JIT FOOD, OIL, get out of IT Industry mindset, there are TIME contrains that work against you in that model, that will get populations freezing, starving waiting for philanthropy by the OT devs.

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks. With food, you also constantly have to adjust between growing too much, and letting it go to waste, or growing too little, and not having enough. Luckily, we've mostly had problems with the former.
What time constraints are you talking about exactly?

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Sorry, no idea what you are walking about. What cycles? (annual, buy/sell, borrow/repay?) What negative loops? Caused by what? Disconnected from what?

Right now within greece the functional problem is deflation. Borrowing is the kludge.

Deflation is a shrinking amount of currency, or the economy expanding faster than the money supply (depending on whom you ask). Euro is not shrinking in supply, and Greece's economy is not expanding at all, from what I know. So your problem is that Greece took on too many loans, became way too risky, and now no one wants to lend anyone any more.

we have shrinking amount of Euros within greece as we have
1. Savings flights (especialy after what happend in Cyprus)

Why are people taking their savings out of the country? Are they expecting that Greece will try to pay off government debt by seizing savings? If that's the case, I think bitcoin would be a HUGE benefit, since even though it's deflationary, it will keep the money in Greece

2. Investment flight (none is willing to invest with a negative outlook)

Isn't this also from excessive risk, both from concern that investments will be taken or nationalized, and from concern that too much was borrowed and it's risky to lend any more?

3. Increasing Taxation to cover external loans.

More debt-related issues...

4. No new internal loans by the banks as they are now zombies: no fractional reserve induced inflation (No savings, To many loans)

And again...

All those bailout money simply went to debt restructuring, nothing ended up inside Greek economy. Do the math

Math says your problem is 100% governmentdebt related, not deflation or inflation related. From what you describe, deflation is just a symptom of fear of future government policy. Get the government and the gov debt out, and outside investment will have no reason to stay out, and neither will savers have a reason to get their money out.

That's what thoughtfan was saying. Taking money from savings to pay for government's debt mistakes doesn't help anyone, especially not the savers.

No he was saying that inflating the economy alleviates the Debtors at the expense of the Savers, which is not what happened in Cyprus
as they got deflated and both were screwed

Inflating the economy (printing more money and making it worth less) DOES alleviate debtors (who's nominal loans are now worth less than before) at the expense of savers (who's nominal cash savings are nor worth less than before). That did not happen in Cyprus, as they didn't inflate. They simply took money from savers, and used it to pay their government debt's, not everyone's. I am sure if Greek government took money from savers, and used it to pay your debt instead of it's own, you are a debtor would feel alleviated, at the expense of the savers they took it from.

You were asking for anyone to say it, so I will: Deflation is good, inflation is bad:

In an inflationary economy, it is cheaper to borrow than to save....
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government...

Sure if you can withstand 80% UNEMPLOYMENT, Total collapse of the Middle class, Urban centers, Industry, and Return of the Feudal Landlords.

Why would there be 80% unemployment? If you can hire people at any wage you want, you will hire them. Everyone always needs something done. As for middle class, the opposite will happen. Right now poor class stays poor, because they can't save or do anything to get out. All they can do is work 8+ hours a day and buy everything on credit, and that's it. With deflation, their savings will start to actually add up to something, and they will be able to move to middle class much easier. When has economy collapsed from just deflation alone? (Great Depression was a debt spiral spurned on by deflation, just as your situation is a debt spiral spurned on by somewhat of a deflation).

[thaaanos]

Intead we tried to deflate the economy and the result is that while assets lost value (and in the cypriot case even the savings), while the debts are not only stable but mounting as goverment increased taxation. So if we now magicaly switch to bitcoin even at a constant rate, situation will not revert only accelarate.

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

Goverment tried to deflate  the economy, the technical term they used was "Internal devaluation", and got burned.

BTW Banks dont have reason/opportunity to exist in an deflationary economy anyway.

Banks can provide extra security, or can provide investment services. People will just have to specifically state their intent to invest money in a possibly risky venture, as opposed to being told that they are putting money into safe savings accounts, while banks gamble with them without telling anyone.

I recall the advice that if you dont have your bitcoins in your wallet, they are not your own. Why would anyone want to keep his bitcoins in a Bank?I thought the whole point of Bitcoin hype was to get rid of banks anyway.
So what we are only left is Investment Brokers : Investment Banks, Hedge Funds : The reason we are in this mess.

1) There can still be banks. Loans will just have to be short-term, and for things that are actually worth something...
2) Just In Time production is already almost a gospel in our economy...
3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation...

Nope forget about it can<>will, Banks are non entities in the Bitcoin economy.
Christ you cant fucking JIT FOOD, OIL, get out of IT Industry mindset, there are TIME contrains that work against you in that model, that will get populations freezing, starving waiting for philanthropy by the OT devs.

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks. With food, you also constantly have to adjust between growing too much, and letting it go to waste, or growing too little, and not having enough. Luckily, we've mostly had problems with the former.
What time constraints are you talking about exactly?

Ok you are obviously detached from the food industry...
Trees, Vines, Livestock. you know waiting things to grow... Unless your plan is to only eat bread and noodles...
Not to talk about efficiency even, JIT means that you constanly flush the pipelines, I guess you know what that means...
If not ask a fabric manufacturer this question "Do you shut down machines for repairs if your product has faults?" take a wild guess at the answer.

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

a lot of unbased Ifs in this statement,
You cant borrow money
You will not have already produced/stocked/procured/preordered/repayed the said components
You have a contract/advance they cant go to competitors

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Sorry, no idea what you are walking about. What cycles? (annual, buy/sell, borrow/repay?) What negative loops? Caused by what? Disconnected from what?

Your assumption is that goods flow from A -> B accross a chain right? so you can hedge amortize or whatever the risk, deflation etc
the problem with chains is you know "the strength of the chain ...."
What happens if nodes accross that chain start to fail on deliveries, how can that happen?

Lets just say that a Coal provider needs a constant supply of steel machinery, A Steel Provider needs a constant supply of coal, without stocking up resources, not mentioning workforce here, they will quickly be deadlocked waiting for some external energy (money) to kickstart them. So In order to get a just a single steel pin, you have everytime to pay upfront the cost of kickstarting the whole coal-steel industry.
In simple words economies of scale rely on full Buffers, which you have just made uneconomic to maintain.
What is left ? want to have a pin?, make it yourself. Self-Production aka Disconnected.

Right now within greece the functional problem is deflation. Borrowing is the kludge.

Deflation is a shrinking amount of currency, or the economy expanding faster than the money supply (depending on whom you ask). Euro is not shrinking in supply, and Greece's economy is not expanding at all, from what I know. So your problem is that Greece took on too many loans, became way too risky, and now no one wants to lend anyone any more.

we have shrinking amount of Euros within greece as we have
1. Savings flights (especialy after what happend in Cyprus)

Why are people taking their savings out of the country? Are they expecting that Greece will try to pay off government debt by seizing savings? If that's the case, I think bitcoin would be a HUGE benefit, since even though it's deflationary, it will keep the money in Greece

2. Investment flight (none is willing to invest with a negative outlook)

Isn't this also from excessive risk, both from concern that investments will be taken or nationalized, and from concern that too much was borrowed and it's risky to lend any more?

3. Increasing Taxation to cover external loans.

More debt-related issues...

4. No new internal loans by the banks as they are now zombies: no fractional reserve induced inflation (No savings, To many loans)

And again...

All those bailout money simply went to debt restructuring, nothing ended up inside Greek economy. Do the math

Math says your problem is 100% governmentdebt related, not deflation or inflation related. From what you describe, deflation is just a symptom of fear of future government policy. Get the government and the gov debt out, and outside investment will have no reason to stay out, and neither will savers have a reason to get their money out.

Debt related, Deflation inducing.
To sum up we agree that Greece is in Deflation ok?

That's what thoughtfan was saying. Taking money from savings to pay for government's debt mistakes doesn't help anyone, especially not the savers.

No he was saying that inflating the economy alleviates the Debtors at the expense of the Savers, which is not what happened in Cyprus
as they got deflated and both were screwed

Inflating the economy (printing more money and making it worth less) DOES alleviate debtors (who's nominal loans are now worth less than before) at the expense of savers (who's nominal cash savings are nor worth less than before). That did not happen in Cyprus, as they didn't inflate. They simply took money from savers, and used it to pay their government debt's, not everyone's. I am sure if Greek government took money from savers, and used it to pay your debt instead of it's own, you are a debtor would feel alleviated, at the expense of the savers they took it from.

We agree yes. So inflating would be a better option as at least Debtors would be alleviated, because savers are screwed anyway right?
No in greece they use more indirect ways Taxation (you see we opted for the slow Blues instead of Doom Metal, we are more romantic people)

You were asking for anyone to say it, so I will: Deflation is good, inflation is bad:

In an inflationary economy, it is cheaper to borrow than to save....
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government...

Sure if you can withstand 80% UNEMPLOYMENT, Total collapse of the Middle class, Urban centers, Industry, and Return of the Feudal Landlords.

Why would there be 80% unemployment? If you can hire people at any wage you want, you will hire them. Everyone always needs something done. As for middle class, the opposite will happen. Right now poor class stays poor, because they can't save or do anything to get out. All they can do is work 8+ hours a day and buy everything on credit, and that's it. With deflation, their savings will start to actually add up to something, and they will be able to move to middle class much easier. When has economy collapsed from just deflation alone? (Great Depression was a debt spiral spurned on by deflation, just as your situation is a debt spiral spurned on by somewhat of a deflation).

I just pulled that number out off my rear, at this point I am entitled to some magic, At least I am not stating that BTC will end up worthing millions...
With deflation everyone gets lazy and postpones to the future, ventures, investments, cunsumption. Do you find that healthy for the labour market?
Why hire personel NOW, when you can hire personel when you get an order even a preorder/advance, why consume now but when you get a job? shy even spend? just Hodl!
The poor... Ah the poor will start to mine bitcoins! oh wait they dont have asics bummer. They cant even afford power as power is now *based* on bitcoin's value, there is not enough anyway... BTC miners eat it all up....
So they will stay poor but now without credit, working by the minute, paid only after the customer had the good (regardless of advances), without welfare, power, sure maybe they can at least sleep warmly enough on  faveles near the Miners's Heat Vents. Dreaming Red Dreams.

[Rassah]

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

Goverment tried to deflate  the economy, the technical term they used was "Internal devaluation", and got burned.

Internal Devaluation is functionally the same thing as inflation. I.e. opposite of deflation.

I recall the advice that if you dont have your bitcoins in your wallet, they are not your own. Why would anyone want to keep his bitcoins in a Bank?

In case of investment, banks can manage inestments, including looking for good places to invest, and making sure what is owed is paid back to them, much better than individuals. Regarding security, having all your welath at home. if you have a lot of it, is not very safe, since it opens you up to robbery and torture to try to get you to reveal your password. Banks in the future may use a multi-signature system, where they only keep one of the signatures required to spend your bitcoin, and block any transactions that are over the daily limit or that they deem suspicious, without your consent. It's a lot harder to steal money from you when it requires taking you into a secured building with armed guards, just to get the second half of your password.

So what we are only left is Investment Brokers : Investment Banks, Hedge Funds : The reason we are in this mess.

The specific reason we are in this mess is because investment manbs and savings banks were one and the same. People were putting money into savings, thinking their money was safe and will not be used for extremely risky investments, but banks used it for that, anyway. This meant that people essentially gambled their money on high risk investments without being told about it, and had to be bailed out, otherwise they would have lost all their savings. With bitcoin we can decouple savings and investments, where investment banks and hedge funds will be specifically that, and anyone putting money into those will know that there are risks.

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks.

Ok you are obviously detached from the food industry...

Possibly. I admit I don't have much experience in those businesses...

Trees, Vines, Livestock. you know waiting things to grow... Unless your plan is to only eat bread and noodles...

What about them? They are goods that have a very strong demand, so you can ask for higher price when they have actually finished growing. (remember, if deflation is fairly constant, everyone can plan for it and adjust prices accordingly)

Not to talk about efficiency even, JIT means that you constanly flush the pipelines, I guess you know what that means...

It means you keep as little inventory as possible, and thus as less debt as possible. You only spend (or borrow) for the couple of items you were asked to produce, and pay back the loan in full almost right away, since you don't have anything sitting around.

If not ask a fabric manufacturer this question "Do you shut down machines for repairs if your product has faults?" take a wild guess at the answer.

Yes they do? What's your point? You don't take out loans on products that don't exist because you are not producing them.

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

a lot of unbased Ifs in this statement,
You cant borrow money

Why not? You can borrow, you just have to make sure whatever you are adding to the economy has greater value than the money deflation.

You will not have already produced/stocked/procured/preordered/repayed the said components

Why not?

You have a contract/advance they cant go to competitors

Your competitors don't have to go to you, they can use other producers. If you produce for WalMart, they have a contract with you, and they decide to sit and do nothing, Target and Amazon won't care about your contract, and will get products from their own producers, screwing both WalMart and you. It would be stupid to sign a contract that lets your business customer sit around and do nothing while preventing you from selling to someone else.

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Your assumption is that goods flow from A -> B accross a chain right? so you can hedge amortize or whatever the risk, deflation etc
the problem with chains is you know "the strength of the chain ...."
What happens if nodes accross that chain start to fail on deliveries, how can that happen?

Lets just say that a Coal provider needs a constant supply of steel machinery, A Steel Provider needs a constant supply of coal, without stocking up resources, not mentioning workforce here, they will quickly be deadlocked waiting for some external energy (money) to kickstart them. So In order to get a just a single steel pin, you have everytime to pay upfront the cost of kickstarting the whole coal-steel industry.
In simple words economies of scale rely on full Buffers, which you have just made uneconomic to maintain.

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Debt related, Deflation inducing.
To sum up we agree that Greece is in Deflation ok?

Sure. The big difference in the disagreement is that you seem to be saying that deflation is causing the economic woes, and I am saying that economic woes, which were due to government failures and debt, caused deflation.
If there was no deflation, if Greece was free to print their own money as much as they wanted to stave off their economic problems, you wouldn't have a better economy. You would, in fact, have the exact same issues that Argentina and Venezuela are having now, with severe inflation, wages becoming nearly worthless, and a more authoritarian government implementing severe capital controls that prevent you from taking out too much money, moving money across borders, and likely 25% import taxes on anything you buy online.

With deflation everyone gets lazy and postpones to the future, ventures, investments, cunsumption. Do you find that healthy for the labour market?

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. So if everyone was beng lazy and postponing the future, there would be no deflation, because there would be no growing economy to cause it. Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

Why hire personel NOW, when you can hire personel when you get an order even a preorder/advance, why consume now but when you get a job?

That's no different from how things are now. You don't hire people to sit around and do nothing, regardless of whethere there's inflation or deflation. So you hire someone now, if someone else needs your product now.

The poor... Ah the poor will start to mine bitcoins! oh wait they dont have asics bummer. They cant even afford power as power is now *based* on bitcoin's value, there is not enough anyway... BTC miners eat it all up....

Why would the poor mine bitcoin? The poor don't own cash printing presses, either. I think you misunderstood. I only implied that the poor will be able to save for the future, and actually have their savings add up to something. Inflation means the poor net worth will be continuously going negative, as they are incentivised to continue borrowing to live (especially if inflationary wages keep loosing value and they don't get raises), while deflation means the poor net worth will be continuously going positive, since they'll be incentivized to save before spending. Did you know that if your net worth is $1, you are richer than most people in 1st world?

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

[thaaanos]

So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?

Goverment tried to deflate  the economy, the technical term they used was "Internal devaluation", and got burned.

Internal Devaluation is functionally the same thing as inflation. I.e. opposite of deflation.

I don't see how halving wages is functionaly the same thing as inflation

I recall the advice that if you dont have your bitcoins in your wallet, they are not your own. Why would anyone want to keep his bitcoins in a Bank?

In case of investment, banks can manage inestments, including looking for good places to invest, and making sure what is owed is paid back to them, much better than individuals. Regarding security, having all your welath at home. if you have a lot of it, is not very safe, since it opens you up to robbery and torture to try to get you to reveal your password. Banks in the future may use a multi-signature system, where they only keep one of the signatures required to spend your bitcoin, and block any transactions that are over the daily limit or that they deem suspicious, without your consent. It's a lot harder to steal money from you when it requires taking you into a secured building with armed guards, just to get the second half of your password.

So what we are only left is Investment Brokers : Investment Banks, Hedge Funds : The reason we are in this mess.

The specific reason we are in this mess is because investment manbs and savings banks were one and the same. People were putting money into savings, thinking their money was safe and will not be used for extremely risky investments, but banks used it for that, anyway. This meant that people essentially gambled their money on high risk investments without being told about it, and had to be bailed out, otherwise they would have lost all their savings. With bitcoin we can decouple savings and investments, where investment banks and hedge funds will be specifically that, and anyone putting money into those will know that there are risks.

Ok here you run around in circles, ending up essentially in the same model as we have now?
Not that I disagree that the fusion of Savings Bank with Investment Banks is a root cause.
Paul Penfield on an MIT opencourse in is series about Entropy&Information discuses about it don't have a link right now.
But if people need security I am sure there will be services that provide just that. (Not a Bank)
People will only go to a Bank to collect Interest, no Interest no Savings Bank, but will Banks be able to provide that or will they have Negative interest rates as FED is planing to? No Fractional Reserve -> No loans -> No Interest
So in my mind Saving Bank is a Non Entity, and that will mean that a lot of people (and capital) will be out of investment options
in private stashes.
Now on Investment Banks, which will capture only a handfull of capital, it will be risky bussiness.
My guess is that there will be many high profile scandals that will discredit and scare people away from banks,
sepecially if it is so easy to just Hodl and gain value.

Is there any recorded case of anyone lending out bitcoins? even as we speak, with bitcoin being currently inflating?

Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks.

Ok you are obviously detached from the food industry...

Possibly. I admit I don't have much experience in those businesses...

Trees, Vines, Livestock. you know waiting things to grow... Unless your plan is to only eat bread and noodles...

What about them? They are goods that have a very strong demand, so you can ask for higher price when they have actually finished growing. (remember, if deflation is fairly constant, everyone can plan for it and adjust prices accordingly)

Regarding the Time constrains, for example Olive trees take decades to grow and start produce, so JITing food is easier said than done.
Farmers have a hard time even now, there are many risks that cannot be factored in the upfront investment to ensure timely returns, Oil and weather screw farmers systematicaly and increasingly, water is about to kick in (as real cost) as well as seeds. One would thought that Farmers beeing closer to the self-production model,positive "trade balance" making them winners in a deflative economy, but that would mean reverting to non-industrial farming, which cannot feed us all.

Not to talk about efficiency even, JIT means that you constanly flush the pipelines, I guess you know what that means...

It means you keep as little inventory as possible, and thus as less debt as possible. You only spend (or borrow) for the couple of items you were asked to produce, and pay back the loan in full almost right away, since you don't have anything sitting around.

Flushing the pipelines means lower clock rates,
 Production delays -> Cost,Risk -> Cost,Cost,
 Less efficiency -> Less machine utilization -> Less capital utilization -> Cost
To balance those costs you have to shrink.

If not ask a fabric manufacturer this question "Do you shut down machines for repairs if your product has faults?" take a wild guess at the answer.

Yes they do? What's your point? You don't take out loans on products that don't exist because you are not producing them.

It's counterintuitive but, No they don't shutdown, because ROI comes from uptimes and utilization, not product quality
So by introducing any kind of delay (say one provider failed to provide on time, without buffers) you push ROI away.

Having said that and going back to the stock problem, bussiness already keep the lowest stock possible (there are still costs to maintain a stock) Problem is that because of higher risk now, involved by a provider failing to provide on time, you need to stock *more* at higher cost.

What Incentive is there to JIT produce now rather than wait a day and screw the customers over?

A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.

a lot of unbased Ifs in this statement,
You cant borrow money

Why not? You can borrow, you just have to make sure whatever you are adding to the economy has greater value than the money deflation.

You will not have already produced/stocked/procured/preordered/repayed the said components

Why not?

You have a contract/advance they cant go to competitors

Your competitors don't have to go to you, they can use other producers. If you produce for WalMart, they have a contract with you, and they decide to sit and do nothing, Target and Amazon won't care about your contract, and will get products from their own producers, screwing both WalMart and you. It would be stupid to sign a contract that lets your business customer sit around and do nothing while preventing you from selling to someone else.

Ok so a root argument lies on whether a loan driven deflationary economy can exist. I don't think the backward looking dynamics allow that to happen. In deflation you are not been driven by Prospect, rather than Need, so you are bound to rush into bad calls here.
It will be an environvent with too much entropy, the players will start rely on increasingly fewer providers (insourcing production).
It well may end like Japan, with large Vertical "Corpotations" actually more like Feuds, btw is japan's economy in truth deflative? is Japan's Model stable in isolation?

The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue

Your assumption is that goods flow from A -> B accross a chain right? so you can hedge amortize or whatever the risk, deflation etc
the problem with chains is you know "the strength of the chain ...."
What happens if nodes accross that chain start to fail on deliveries, how can that happen?

Lets just say that a Coal provider needs a constant supply of steel machinery, A Steel Provider needs a constant supply of coal, without stocking up resources, not mentioning workforce here, they will quickly be deadlocked waiting for some external energy (money) to kickstart them. So In order to get a just a single steel pin, you have everytime to pay upfront the cost of kickstarting the whole coal-steel industry.
In simple words economies of scale rely on full Buffers, which you have just made uneconomic to maintain.

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Well contracts mean shit in bussiness, if a provider cant provide no contract can make him, you'll just swallow the delay and be wiser next time. And come on we just created freaking cryptocurrencies only to go back to barter economy? not arguing that it cannot work I can argue that it will be the way economy will respond. but that will reduce bitcoin to catch22.

Debt related, Deflation inducing.
To sum up we agree that Greece is in Deflation ok?

Sure. The big difference in the disagreement is that you seem to be saying that deflation is causing the economic woes, and I am saying that economic woes, which were due to government failures and debt, caused deflation.
If there was no deflation, if Greece was free to print their own money as much as they wanted to stave off their economic problems, you wouldn't have a better economy. You would, in fact, have the exact same issues that Argentina and Venezuela are having now, with severe inflation, wages becoming nearly worthless, and a more authoritarian government implementing severe capital controls that prevent you from taking out too much money, moving money across borders, and likely 25% import taxes on anything you buy online.

Just watching the news: unemployment this month 27,9%,
Nevermind it's a spiral... deflation -> lower GPD -> Higher Debt/GPD ratio -> More austerity -> deflation
It's seems that once you are in this hole you can't dig yourself up again, you need external help, you need a Marshal Plan...
If ECB printed greece out of trouble, it would had minimal effect on Euro inflation, but I guess it would set a dangerous precedence,
and protestant thinking would not accept it selfrighteous bastards they are , Fuck the citizens so they fuck their goverment
On the other hand if we were a State in US, I bet FED would had done just that, and fuck the goverment directly afterwards.
If we had our own currency I don't think we would be in this mess, we would had a more sustainable and consolidated growth.

Argentina and Venezuela were always under the shadow control of US, I tend to blame US policy (over the years) for that mess over there.

With deflation everyone gets lazy and postpones to the future, ventures, investments, cunsumption. Do you find that healthy for the labour market?

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. So if everyone was beng lazy and postponing the future, there would be no deflation, because there would be no growing economy to cause it. Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

I strongly disagree on growth, all dynamics lead to shrinking, If the economy has an any intend to grow it will hit the deflec(a)tory wall and bounce back, just as a recessing economy if inflated will bounce up.

Why hire personel NOW, when you can hire personel when you get an order even a preorder/advance, why consume now but when you get a job?

That's no different from how things are now. You don't hire people to sit around and do nothing, regardless of whethere there's inflation or deflation. So you hire someone now, if someone else needs your product now.

Healthy bussinesses have standing staff, producing products, before a customer even dreams he needs them.
in a deflation Bussinesses hire staff in time in order to produce what the customer asked them.

Also Staff is propably underqualified because who would invest in education?

The poor... Ah the poor will start to mine bitcoins! oh wait they dont have asics bummer. They cant even afford power as power is now *based* on bitcoin's value, there is not enough anyway... BTC miners eat it all up....

Why would the poor mine bitcoin? The poor don't own cash printing presses, either.
I think you misunderstood. I only implied that the poor will be able to save for the future, and actually have their savings add up to something.

I am being sarcastic, at the notion that the poor can ever get to survive much less save

Inflation means the poor net worth will be continuously going negative, as they are incentivised to continue borrowing to live (especially if inflationary wages keep loosing value and they don't get raises), while deflation means the poor net worth will be continuously going positive, since they'll be incentivized to save before spending. Did you know that if your net worth is $1, you are richer than most people in 1st world?

The poor will/need to raise their standard of living first, save second. Inflation/Deflation doesnot touch them, They don't give a fuck about bank accounts. All the poor care about is Jobs.

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

you know corruption takes 2 to tango, how many US firms have paid off officials in 3rd worlds countries? how many corrupt officials had CIA installed?
there is local corruption, there is imported corruption, and there is exported corruption,
Latin america suffered hard from US imported corruption, at first due to Cold war, later for economic reasons.
Africa likewise by Europe.
You know USD is not backed up by gold, or guns as Krugman says, it is backed up by Oil.


EDIT: apologies of quoting mayhem

[LightRider]

We will never solve the problems of money with money, even if it is a better money. Investigate a resource based economy.

[thaaanos]

We will never solve the problems of money with money, even if it is a better money. Investigate a resource based economy.

money is Trust, there is no better resource in a human society

[Adrian-x]

Maybe instead of trying to fix the economic mess, it's better to start with the political? Maybe  Instead of the Bitcoin revolution the world need the BitVote revolution... just saying

We have just that, if you think Bitcoin solves problems, vote for it, you can also buy votes, in this P2P system.  He who has the majority vote can have influence.

Don’t like the idea of Bitcoin, abstain from supporting the system. Let it shrivel and die on its own.

Fabricating and supporting stories of doom and gloom to stop people contributing the Bitcoin system is a political move, fortunately it carries no weight in the Bitcoin meme.

So your counsel is Bystander apathy? because of strong Groupthink incited by a Cash cow that will eventually lead to Escalation of commitment?

To the contrary, I only found this forum 18 months after I started mining, my go to for Bitcoin Groupthink was Slashdot. 
All I am saying is, if Bitcoin doesn’t offer any benefits don’t use it that is my advice to all. If you see value in the system, start by backing Bitcoin with wealth you can afford to lose. 

My values are very different from many here, but ultimately my prosperity is derived from the prosperity of all, so I seek solutions to maximise prosperity, a universal p2p triple enter accounting system (the encrypted blockchain) is the most viable solution I have come to understand.

The Rothschilds yielded a power more influential that the armies of Neapolitan and the land he plundered , and those backing Bitcoin yield a power superior to that of the Rothschilds. I buy Bitcoin for the good of humanity.

[Rassah]

Internal Devaluation is functionally the same thing as inflation. I.e. opposite of deflation.

I don't see how halving wages is functionaly the same thing as inflation

Cut wages by half = you earn half as much, things cost twice your wage to buy.
2x inflation = you earn half as much, things cost same as your wage

Crap, you're right, Internal Devaluation sucks way worse

But if people need security I am sure there will be services that provide just that. (Not a Bank)

The original purpose of a bank was to provide security. I just meant that we will have "banks" go back to doing their original function, which is to provide security.

People will only go to a Bank to collect Interest, no Interest no Savings Bank, but will Banks be able to provide that or will they have Negative interest rates as FED is planing to? No Fractional Reserve -> No loans -> No Interest
So in my mind Saving Bank is a Non Entity, and that will mean that a lot of people (and capital) will be out of investment options
in private stashes.

Since bitcoin is already deflationary, there is no need for a savings account that pays a little interest. Investment Banks will be the only reason to actually invest for an interest return. So, people themselves will be the private stashes, looking to invest money directly, or will have a large stash that they will give their investment bank authority to invest for them. We'll go from many people with small amounts of money funding "savings" accounts, to few people with large amounts. I haven't bothered to consider the implications yet.

Now on Investment Banks, which will capture only a handfull of capital, it will be risky bussiness.
My guess is that there will be many high profile scandals that will discredit and scare people away from banks,
sepecially if it is so easy to just Hodl and gain value.

I would hope that would be the case. Only people who know what they are doing, and have a personal vested interest in what's going on, should be investing. Imagine what the 2008 derivative market would have been if everyone actually questioned their bank about what it was doing with their money. Chances are such a market would have never materialized, or would at least have been properly insured.

Is there any recorded case of anyone lending out bitcoins? even as we speak, with bitcoin being currently inflating?

BTCJam has been doing it for over a year now. There were (and probably still are) tons of personal lending in this forum's lending section.

Regarding the Time constrains, for example Olive trees take decades to grow and start produce, so JITing food is easier said than done.
Farmers have a hard time even now, there are many risks that cannot be factored in the upfront investment to ensure timely returns, Oil and weather screw farmers systematicaly and increasingly, water is about to kick in (as real cost) as well as seeds. One would thought that Farmers beeing closer to the self-production model,positive "trade balance" making them winners in a deflative economy, but that would mean reverting to non-industrial farming, which cannot feed us all.

You're right, this may be a problem, but I think that it will actually push farming into more industrial rather than less. A large corporation will be able to track sales and demands, and handle risks, much better than small individual farmers. I guess things with long-term investment, like olives, will become way more expensive. At least for those newly planted. However, since we already have many things planted, and are transitioning from inflationary to deflationary economy, those olives, farms, and other produce is already there, and already producing every year. A new olive tree added to sustain the orchard will just be a cost of continuing to do business. (entrenched old money?)

going back to the stock problem, bussiness already keep the lowest stock possible (there are still costs to maintain a stock) Problem is that because of higher risk now, involved by a provider failing to provide on time, you need to stock *more* at higher cost.

That's one option. The other is to diversify the risk by having multiple contracts with multiple smaller producers. I think that will be a cheaper and better option than to stock more, especially in a deflationary economy. Makes me wonder if inflationary economy is what pushed for large stocking to begin with.

Ok so a root argument lies on whether a loan driven deflationary economy can exist. I don't think the backward looking dynamics allow that to happen. In deflation you are not been driven by Prospect, rather than Need, so you are bound to rush into bad calls here.

A loan assisted deflationary economy can exist, but a loan driven can not, you are right. I think we are living in the results of loan driven economies, with countries and everyone else all straining under enormous debt. I don't know if that's a better alternative than a smaller economy not entirely propped up by debt. You can still be driven by prospect, though. You just have to be sure that your prospects will provide a higher return than the deflation rate. So yes, there will be less people taking extreme risks on new ideas.

It will be an environvent with too much entropy, the players will start rely on increasingly fewer providers (insourcing production).
It well may end like Japan, with large Vertical "Corpotations" actually more like Feuds, btw is japan's economy in truth deflative? is Japan's Model stable in isolation?

I, unfortunatey, have not studied Japan's recent economic situation as much as I should have, so can't comment. With regards to entropy and insourcing, maybe. Maybe we will have a lot of diversification, too, with much more reliance on production being kept to higher standards. Then there's the whole 3D printing thing on the horizon that may change business dynamics entirely...

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Well contracts mean shit in bussiness, if a provider cant provide no contract can make him, you'll just swallow the delay and be wiser next time. And come on we just created freaking cryptocurrencies only to go back to barter economy? not arguing that it cannot work I can argue that it will be the way economy will respond. but that will reduce bitcoin to catch22.

Heh, good point. Another option is to add discounting to the future purchase at the rate of deflation (somewhat being done now already). I have a contract where you will provide me a ton of steel 30 days from now for $1,000. If you take 45 days, I will only pay you $900. Pretty much the opposite of I sent you $1,000 worth of steel, and you have 30 days to repay me, or will repay $1,100 if you pay in 45 days. Though I guess this will delay production considerably in a JIT system, and would mainly work with established production flow.

A lot of how our economy functions will have to change, though if the rate of deflation is only 1% to 3%, it may not have to be by much.

Just watching the news: unemployment this month 27,9%,
Nevermind it's a spiral... deflation -> lower GPD -> Higher Debt/GPD ratio -> More austerity -> deflation

I see it as the steps by which a debt-based economy inevitably unwinds itself as it finds itself no longer able to borrow. Greece should be a warning to all the other countries who are rapidly getting to the point where they can't print and borrow any more to sustain themselves.

It's seems that once you are in this hole you can't dig yourself up again, you need external help, you need a Marshal Plan...

Or you wait until you get to the actual economic rate of your country, not one propped up by debt, and start from there. Iceland had similar issues, and somewhat cut their suffering short by repudiating their debt, and starting over with much more strict limits on government borrowing and austerity. It has worked fairly well for them, even if a lot of people lost out on the debt. Countries with close knit communities and families will be able to survive this much better than countries with "rugged individualism" (looking at you, USA).

On the other hand if we were a State in US, I bet FED would had done just that, and fuck the goverment directly afterwards.

That's somewhat what has actually been happeming. The FED is inflating like crazy, and the cities and counties that ended up with too much debt are getting fucked directly by having their governments replaced with state appointed unelected "emergency" leaders, who's job is typically to sell off everything the towns had and GTFO before the locals get too restless.

If we had our own currency I don't think we would be in this mess, we would had a more sustainable and consolidated growth.

If Greece kept borrowing and paying out in austerity more than it received from taxes or generated economicaly, you would have a more sustainable growth right up to the point where your borrowing matched your interest payments, at which point no one would lend you any more, and you would either have to hyperinflate, or be in the same situation you are in now. You can't have economic growth without the actual underlying economy. If you are growing through inflation and debt, someone, somewhere, will have to pay for that everntually

Argentina and Venezuela were always under the shadow control of US, I tend to blame US policy (over the years) for that mess over there.

They are quite socialist, which is quite different from what US policy claims to promote. Maybe US meddling caused them to rebel and pushed them further into socialism?

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. ...Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

I strongly disagree on growth, all dynamics lead to shrinking, If the economy has an any intend to grow it will hit the deflec(a)tory wall and bounce back, just as a recessing economy if inflated will bounce up.

Yeah, that's kind of the point I was making. Growth in an economy, or more specifically investment growth, is limited by the highest interest return of the lowest risk asset. It doesn't really matter what it is. If bitcoin is not that asset, but, say, oil will give you the highest return for the lowest risk, then people would only invest in businesses that provide a higher return than oil does. Oil would end up being that deflectory wall that bounces the economy back. The problem with inflationary dollars is that they provide a very low wall, but at the expense of future debt. So the deflectory bounce back is basically being pushed further and further into the future, until it can't be sustained or paid for any more.
Honestly, I'm too distracted to juggle all the economic variables in my head right now, with regards to the effects of this on inflationary and deflationary economies, so I'll leave that up to you.

Healthy bussinesses have standing staff, producing products, before a customer even dreams he needs them.
in a deflation Bussinesses hire staff in time in order to produce what the customer asked them.

Not if the product has a chance of providing higher returns than the deflationary currency. Our tech sector operates under the threat of their investments becoming worthless due to competitors and obsolescence all the time.

Also Staff is propably underqualified because who would invest in education?

The staff themselves, I hope. Not through loans, but by paying their way through education.

I am being sarcastic, at the notion that the poor can ever get to survive much less save

If credit cards are not available to them, they won't have much of a choice.

The poor will/need to raise their standard of living first, save second. Inflation/Deflation doesnot touch them, They don't give a fuck about bank accounts. All the poor care about is Jobs.

I believe part of what keeps the poor poor is debt. Credit cards, dependence on social programs, etc. Inflation also makes their wages constantly depreciate. Under deflation, they would get an automatic slow growth in income. Plus, if they want anything like a TV, they would have to save for it, too. China has a lot of poor people, almost no social programs, and a huge culture of savings, even among the very poor, because they know there won't be anyone to come save them if they get in trouble. This also leads to more closely knit communities with interdependence. I think that is better than what we have now, with everyone being very individualistic, with little empathy for others.

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

you know corruption takes 2 to tango, how many US firms have paid off officials in 3rd worlds countries? how many corrupt officials had CIA installed?

Which, again, is why I'm an anarcho-capitalist. Remove the power of the state to give handouts, and there won't be a reasin for firms to bribe officials.

EDIT: apologies of quoting mayhem

Likewise

BTW, very impressed that you know so much at such a high level of understanding. It's refreshing to be so challanged and be forced to think so hard in a debate (especially on this forum )

[thaaanos]

People will only go to a Bank to collect Interest, no Interest no Savings Bank, but will Banks be able to provide that or will they have Negative interest rates as FED is planing to? No Fractional Reserve -> No loans -> No Interest
So in my mind Saving Bank is a Non Entity, and that will mean that a lot of people (and capital) will be out of investment options
in private stashes.

Since bitcoin is already deflationary, there is no need for a savings account that pays a little interest. Investment Banks will be the only reason to actually invest for an interest return. So, people themselves will be the private stashes, looking to invest money directly, or will have a large stash that they will give their investment bank authority to invest for them. We'll go from many people with small amounts of money funding "savings" accounts, to few people with large amounts. I haven't bothered to consider the implications yet.

That would lead to a lot of capital (savings Bank) to be inactive, and lets face it not everyone has investor soul/skills.
This is what a savings bank actually does: hedges the risk among many wannabe/ignorant/fearfull investors
I don't think an economy can afford not to have a saving bank for the above reason.

Now on Investment Banks, which will capture only a handfull of capital, it will be risky bussiness.
My guess is that there will be many high profile scandals that will discredit and scare people away from banks,
sepecially if it is so easy to just Hodl and gain value.

I would hope that would be the case. Only people who know what they are doing, and have a personal vested interest in what's going on, should be investing. Imagine what the 2008 derivative market would have been if everyone actually questioned their bank about what it was doing with their money. Chances are such a market would have never materialized, or would at least have been properly insured.

While it maybe true that enterprises that are led by own money. and by their founders are outperforming enterprises with boards and borrowed money,
but it takes unique circumstances to coexist for that to happen: capital, skillset, opportunity etc, its a gamble, but not something which economy can rely on to happen often, so enter investment banks that can at least take capital out of the equation. There will be always projects too big, or too risky for savings bank, and we would rather not have goverment do their job
So Investment banks is not something you can't cross out easily

I think the problem starts when savings bank are not isolated by investment banks, either by loans, or as a shared capital pool.
-did I mention Paul Penfield has in MIT opencourseware, a course in Information and Entropy series which he discuses this from Information Theory POV-

Is there any recorded case of anyone lending out bitcoins? even as we speak, with bitcoin being currently inflating?

BTCJam has been doing it for over a year now. There were (and probably still are) tons of personal lending in this forum's lending section.

intresting i didnt know (only a week toying with BTC) we will need to see how those transactions play out, any experience/lessons out of it?

Regarding the Time constrains, for example Olive trees take decades to grow and start produce, so JITing food is easier said than done.
Farmers have a hard time even now, there are many risks that cannot be factored in the upfront investment to ensure timely returns, Oil and weather screw farmers systematicaly and increasingly, water is about to kick in (as real cost) as well as seeds. One would thought that Farmers beeing closer to the self-production model,positive "trade balance" making them winners in a deflative economy, but that would mean reverting to non-industrial farming, which cannot feed us all.

You're right, this may be a problem, but I think that it will actually push farming into more industrial rather than less. A large corporation will be able to track sales and demands, and handle risks, much better than small individual farmers. I guess things with long-term investment, like olives, will become way more expensive. At least for those newly planted. However, since we already have many things planted, and are transitioning from inflationary to deflationary economy, those olives, farms, and other produce is already there, and already producing every year. A new olive tree added to sustain the orchard will just be a cost of continuing to do business. (entrenched old money?)

Yes that may well be, as "Verticalization" taking place, but that way lies cartelization, and well food is not something you want to see cartelizied... EU for example has a standing policy of hostility against agricartural co-ops for that reason, EU wants Farmers to work at cost.
True, infrastructure exists, but in this thought-game we have to assume they dont, you cant use products of inflation in your argument And what about future Industries?
In general though after bubbles rise and burst, and debts written off and a general mess, Infrastructure always grows and remains devalued yet, but a seed for future

going back to the stock problem, bussiness already keep the lowest stock possible (there are still costs to maintain a stock) Problem is that because of higher risk now, involved by a provider failing to provide on time, you need to stock *more* at higher cost.

That's one option. The other is to diversify the risk by having multiple contracts with multiple smaller producers. I think that will be a cheaper and better option than to stock more, especially in a deflationary economy. Makes me wonder if inflationary economy is what pushed for large stocking to begin with.

I don't think it will be a very competitive ecosystem with a multitude of providers, I think large vertical players will dominate, who will either try to sabotage/starve each other or cut the pie. I don't see healthy competition there...

Ok so a root argument lies on whether a loan driven deflationary economy can exist. I don't think the backward looking dynamics allow that to happen. In deflation you are not been driven by Prospect, rather than Need, so you are bound to rush into bad calls here.

A loan assisted deflationary economy can exist, but a loan driven can not, you are right. I think we are living in the results of loan driven economies, with countries and everyone else all straining under enormous debt. I don't know if that's a better alternative than a smaller economy not entirely propped up by debt. You can still be driven by prospect, though. You just have to be sure that your prospects will provide a higher return than the deflation rate. So yes, there will be less people taking extreme risks on new ideas.

Crazies will always be there driving the world forward I guess, I just fear for their leverage

It will be an environvent with too much entropy, the players will start rely on increasingly fewer providers (insourcing production).
It well may end like Japan, with large Vertical "Corpotations" actually more like Feuds, btw is japan's economy in truth deflative? is Japan's Model stable in isolation?

I, unfortunatey, have not studied Japan's recent economic situation as much as I should have, so can't comment. With regards to entropy and insourcing, maybe. Maybe we will have a lot of diversification, too, with much more reliance on production being kept to higher standards. Then there's the whole 3D printing thing on the horizon that may change business dynamics entirely...

Corporation organization/ownership is stuck in the middle ages, I believe there is much room there for improvement and democratization within.
3d printing will definetly help the Selfproducer paradigm but that can seriously disrupt capitalism also making our conversation irrelevant...
In a world where anyone can JIT create anything, too much sci-fi here propably, and people work for "hobby", yes a deflatory economy could work but i think by then even the notion money will be long forgoten

Contracts for delivery? Basically internal barter exchange, I give you so much steel, you give me so much coal. Besides, there will still be lending in a deflationary economy. It will just be shorter term, and for products that produce good economic value. So there will still be a buffer, but it will just be smaller.

Well contracts mean shit in bussiness, if a provider cant provide no contract can make him, you'll just swallow the delay and be wiser next time. And come on we just created freaking cryptocurrencies only to go back to barter economy? not arguing that it cannot work I can argue that it will be the way economy will respond. but that will reduce bitcoin to catch22.

Heh, good point. Another option is to add discounting to the future purchase at the rate of deflation (somewhat being done now already). I have a contract where you will provide me a ton of steel 30 days from now for $1,000. If you take 45 days, I will only pay you $900. Pretty much the opposite of I sent you $1,000 worth of steel, and you have 30 days to repay me, or will repay $1,100 if you pay in 45 days. Though I guess this will delay production considerably in a JIT system, and would mainly work with established production flow.

Sure clauses are an option they are used even now, but it adds too much communication, negotiations, predictions in short red tape, But we are assuming here that all parties will try their best, but a single accident down the chain can propagate aggregating costs along the chain (more like tree actually) and bring all parties to a halt, and the resulting blame game will not help much.

A lot of how our economy functions will have to change, though if the rate of deflation is only 1% to 3%, it may not have to be by much.

Habits are the ones you should fear most, it may take 2 generations to either begin stabilizing if at all. You will not have much tollerance either, at the first sign of bad news people will want the good old model that worked back, yesterday.

Just watching the news: unemployment this month 27,9%,
Nevermind it's a spiral... deflation -> lower GPD -> Higher Debt/GPD ratio -> More austerity -> deflation

I see it as the steps by which a debt-based economy inevitably unwinds itself as it finds itself no longer able to borrow. Greece should be a warning to all the other countries who are rapidly getting to the point where they can't print and borrow any more to sustain themselves.

this is how the unwind should be done inflation->GPD up -> lower Debt/GPD -> austerity -> deflation -> public investment -> inflation
with funds from austerity not diverted to debt repayment but to public investment aiming at restructuring and imbalances, easier said than done maybe

It's seems that once you are in this hole you can't dig yourself up again, you need external help, you need a Marshal Plan...

Or you wait until you get to the actual economic rate of your country, not one propped up by debt, and start from there. Iceland had similar issues, and somewhat cut their suffering short by repudiating their debt, and starting over with much more strict limits on government borrowing and austerity. It has worked fairly well for them, even if a lot of people lost out on the debt. Countries with close knit communities and families will be able to survive this much better than countries with "rugged individualism" (looking at you, USA).

In Iceland they are Gods, If I ever decide to skip Greece, thats the only place I would go, if only for the climate. but it was easier to repudiate their debt because it was privately owned, so they simply killed their bad banks and voila!, while in greece it is not easy to kill the state .

On the other hand if we were a State in US, I bet FED would had done just that, and fuck the goverment directly afterwards.

That's somewhat what has actually been happeming. The FED is inflating like crazy, and the cities and counties that ended up with too much debt are getting fucked directly by having their governments replaced with state appointed unelected "emergency" leaders, who's job is typically to sell off everything the towns had and GTFO before the locals get too restless.

If we had our own currency I don't think we would be in this mess, we would had a more sustainable and consolidated growth.

If Greece kept borrowing and paying out in austerity more than it received from taxes or generated economicaly, you would have a more sustainable growth right up to the point where your borrowing matched your interest payments, at which point no one would lend you any more, and you would either have to hyperinflate, or be in the same situation you are in now. You can't have economic growth without the actual underlying economy. If you are growing through inflation and debt, someone, somewhere, will have to pay for that everntually

The gamble here is that you hope that will never happen, as it really is the debt/gpd ratio that matters, as long as you have the denominator rising you can have it under control, (not that i am overenthousiastic about that notion). Still you will be left with the infrastructure in case you default - For example in 1893 Greece defaulted but was left with a railroad system and a ship canal- And inflation will let you change your trade balance.

Argentina and Venezuela were always under the shadow control of US, I tend to blame US policy (over the years) for that mess over there.

They are quite socialist, which is quite different from what US policy claims to promote. Maybe US meddling caused them to rebel and pushed them further into socialism?

Well Venezuela could well be a latin america Saudi Arabia, why has that not happen? seems that Oil is more than a curse than a blessing.

Deflation (price deflation) is economic growth being higher than the money supply. Less money to go around in a growing economy, more deflation. ...Deflation, or rather fixed money supply, at most pots a damper on economy, making it grow at a normal pace, instead of debt-inflated artificial pace.

I strongly disagree on growth, all dynamics lead to shrinking, If the economy has an any intend to grow it will hit the deflec(a)tory wall and bounce back, just as a recessing economy if inflated will bounce up.

Yeah, that's kind of the point I was making. Growth in an economy, or more specifically investment growth, is limited by the highest interest return of the lowest risk asset. It doesn't really matter what it is. If bitcoin is not that asset, but, say, oil will give you the highest return for the lowest risk, then people would only invest in businesses that provide a higher return than oil does. Oil would end up being that deflectory wall that bounces the economy back. The problem with inflationary dollars is that they provide a very low wall, but at the expense of future debt. So the deflectory bounce back is basically being pushed further and further into the future, until it can't be sustained or paid for any more.
Honestly, I'm too distracted to juggle all the economic variables in my head right now, with regards to the effects of this on inflationary and deflationary economies, so I'll leave that up to you.

Why I am thinking of Hausdorf metric now? Anyway why impose an artificial wall (bitcoin) and not let "true" assets determine where the economy goes, at least this way people will try looking for workarounds. Land is expensive -> Go up, Oil is short -> go green/nuclear, Food is low ->

Healthy bussinesses have standing staff, producing products, before a customer even dreams he needs them.
in a deflation Bussinesses hire staff in time in order to produce what the customer asked them.

Not if the product has a chance of providing higher returns than the deflationary currency. Our tech sector operates under the threat of their investments becoming worthless due to competitors and obsolescence all the time.

Still the IT industry is in a bad short sighted shape imho, all innovation lately is about another picture sharing service...
most ideas are at least a decade old. I still wait for my holodeck, my robotic AI maid, my flying car...

Also Staff is propably underqualified because who would invest in education?

The staff themselves, I hope. Not through loans, but by paying their way through education.

studends should only have one job: studying, anything else is a distraction.

I am being sarcastic, at the notion that the poor can ever get to survive much less save

If credit cards are not available to them, they won't have much of a choice.

The poor will/need to raise their standard of living first, save second. Inflation/Deflation doesnot touch them, They don't give a fuck about bank accounts. All the poor care about is Jobs.

I believe part of what keeps the poor poor is debt. Credit cards, dependence on social programs, etc. Inflation also makes their wages constantly depreciate. Under deflation, they would get an automatic slow growth in income. Plus, if they want anything like a TV, they would have to save for it, too. China has a lot of poor people, almost no social programs, and a huge culture of savings, even among the very poor, because they know there won't be anyone to come save them if they get in trouble. This also leads to more closely knit communities with interdependence. I think that is better than what we have now, with everyone being very individualistic, with little empathy for others.

Credit cards just help the poor survive waiting better days, hope is the greatest of all evils according to the myth of Pandora.
They wouldnt need the debt if they had an equal starting chance as others, bitcoin follows that meme too early/late adopters.
So purge sins through suffering? Agreed a strong ancient meme that works, but there must be a better way.

Also, FYI, favelas aren't the result of a free market or a deflationary economy. On the contrary, Brazil has both regulatory and corruption issues, AND money issues.

you know corruption takes 2 to tango, how many US firms have paid off officials in 3rd worlds countries? how many corrupt officials had CIA installed?

Which, again, is why I'm an anarcho-capitalist. Remove the power of the state to give handouts, and there won't be a reasin for firms to bribe officials.

anarcho-capitalism ? Hagbard Celine nailed it "It's the privilege", as long as there are privileged players you can never have free-market.

EDIT: apologies of quoting mayhem

Likewise

BTW, very impressed that you know so much at such a high level of understanding. It's refreshing to be so challanged and be forced to think so hard in a debate (especially on this forum )

Debates for me is the only way to test ones arguments, and move closer to the truth otherwise it's just autism, like many Hodling Parots here , thank you for indulging me
Lol sure after the crisis everyone in Greece focused on "WTF just happened" and all started to talk about economy, I wouldn be surprised if something similar with Japans  post-hiroshima tech-obsession happens here ok maybe wishfull thinking now.

[HappyScamp]

Great thread.. and only part way through it atm...

But: Is there any reason to suppose that governments won't start accepting BTC?  In fact it would be a reasonable forecast that some smaller country somewhere will start piling in and that will probably precipitate the first in several dramatic rises relative to fiat currencies.

Once accepted, they would simply attempt to tax the windfalls that people have.

The NSA and other outfits can already get direct copies of what is happening on your computer screen in real time, I believe.  If not yet, it soon will be that way, or made to become that way.

All just speculation, of course.

[zimmah]

The Bleak Future of Retirement

For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.

Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.

Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.

Well, your grandma may not be at fault here, but on the other hand their generation (or rather the government of their generation) has 'borrowed' money from our generation by putting up a scheme of massive debt, the same debt we now have to pay off, while a lot of us don't have jobs, and the ones who do have jobs are massively underpaid.

So we are pretty much just 'stealing' back what they 'borrowed' from us in the first place. No offense to your grandma, it's not her fault, solely at least.

The Bleak Future Wealth Disparities

All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.

We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.

If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!

Well, yes many will see it like this, and it is somewhat true. Every time someone gains wealth, another persons loses it. But by now pretty much everyone in the world has had the chance to hear about bitcoin, and it's their own responsibility to inform themselves of the scam they are living in.

Bitcoin will hurt a lot of people and it will hurt a lot, probably it will hurt more than it will help, (in the short term at least, things will even out in the long run, if we make it that far). But it's a necessity because the fiat scam will only make things worse in the long run. It's already almost impossible to life normally even in a first world country, let alone in third world countries. And this will only get worse the more the debt increases. Debt to whom? Debt to the 0.1% who have the sole 'right' to print money. Either directly or through loans.

The Bleak Future of Law Enforcement

This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.

For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.

As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.

Some people make me sick, but this might happen indeed and there's little i can think of we can do to prevent it.

The Government Strikes Back

Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.

I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.

I'm sure you're referring to the biblical prophecy in revelations. I'm not so sure the prophecy will be fulfilled this literally, especially because revelations in particular is a very symbolic book. But on the other hand, I wouldn't be too surprised if it happens. I would most likely resist such marks even if that means I will not be able to buy anything at all (even though at that point I'd be richer than most people on the earth). I'll just know that it's a sure sign that the prophecy is nearing fulfillment and the whole world as we know it will end soon by divine intervention. And the world will finally be cured from it's maddening sickness and corruption. It will be very tough, but it will only be tough for a short while.

What Should We Do?

We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.

We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.

The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.

I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/

tl;dr: Wildly successful distributed currencies could hurt a lot of people.

I agree that it is likely that in case of a major wealth transfer, possible a transfer the world has never seen in the entire history of mankind, things will not go smoothly.

We'll be rich alright, but the world will most likely be in great chaos and many of them will hate us even more than they hate the bankers now. We may even have to fear for our lives.

[CryptoClub]

I enjoyed reading this, and while there is some truth to what is written, I think the author is missing the forest through the trees.

Every. Single. One. of his fears are happening RIGHT NOW... ALL THE TIME... EVERYWHERE... at the hands of GOVERNMENTS.

There is going to be a total power shift from the criminal organization known as THE STATE, and all who cling to its coattails, to the producers of value and those who engage in voluntary commerce and interactions between and among individuals.

Exactly. Whatever the risks are of decentralization, the current situation has wealth backed by war and torture. Absolute mortal force. It may not seem that bad if you are not paying attention, but, it is that bad. When I first got involved in cryptos, and Bitcoin, I thought the Anarchists were all crazy, now, I realize they have some really good points.

Additionally, the problems with the centralization of wealth will also likely be far better with people able to distribute money and wealth themselves. Rather than the current situation we have now with hellfire missiles and prison states, making sure people, nations, groups, and even ideas, don't get out of line.

The wild notion that I do totally agree with the OP on, is that crypto currencies, Bitcoin, Alts, whatever, are the future of money. Those underestimating it are making a grave error. This will change everything, forever, I am certain. So if possible, the smoothest transition should be encouraged. I certainly would hate to see how bad it could get it power starts to lose control and what they would do to keep it. Anyway, hold on to your Bitcoins, and maybe some of those new anonymous Alts may end up pretty darn valuable over time too.

[serenitys]

I think the OP's wife has long since been fucking the pool boy... 

[jbreher]

Every time someone gains wealth, another persons loses it.

Only in a wealth transfer. But wealth is not a zero-sum game. One can create wealth by applying work to natural resources.

[wachtwoord]

Every time someone gains wealth, another persons loses it.

Only in a wealth transfer. But wealth is not a zero-sum game. One can create wealth by applying work to natural resources.

Yup. This is why the economy grows long term (yes in real terms, so after correcting for inflation).