If there was a global deflationary event.......

[MatTheCat]

If there was a global deflationary event, what effect do you think this would have on Bitcoin?

This is of course should be taken as a rhetorical question, as clearly, a deflationary event would destroy Bitcoin in terms of its price.

Question is, how likely is it that a deflationary event is on the horizon in the near/medium term? Obviously, if not for central bank action, it would have occured already or be in the midst of occuring. But what happens when the central banks decide to let their money printing activities slide for a little while? Or perhaps when the markets themselves no longer abide by the interest rates being artificially held at historical lows due to the money printing?

The answer to this question should be crucial to any long term investor of Bitcoin. But how many of you are even asking it?

[RenegadeMind]

Deflation? With our fiat system? It seems a bit ridiculous.

The Euro is on the verge of collapse, as is the EU.

Japan is debasing its currency.

The USD is being abandoned as the world reserve currency.

Gold/silver paper shorts have crashed the precious metals markets (deflation) so that large buyers can purchase physical. (Will lead to higher prices once the short manipulation has finished and prices return to their normally depressed levels.)

China and Australia have abandoned (or are planning to abandon) the USD.

etc. etc. etc.

No. I don't see fiat deflation as anything to worry about.

[drakahn]

China and Australia have abandoned (or are planning to abandon) the USD.

Source?

[Jobe7]

China, Russia and Iran (I didn't know Australia had also), and I think Japan?

Google it, its all there. They're sick of the US and being forced to trade in USD, they've signed agreements with each other to not trade in USD anymore.

[RenegadeMind]

China and Australia have abandoned (or are planning to abandon) the USD.

Source?

http://www.zerohedge.com/news/2013-03-31/thanks-world-reserve-currency-no-thanks-australia-and-china-enable-direct-currency-c

Tonnes more references out there as well. Just search for "australia china abandon USD".

[drakahn]

China, Russia and Iran (I didn't know Australia had also), and I think Japan?

Google it, its all there. They're sick of the US and being forced to trade in USD, they've signed agreements with each other to not trade in USD anymore.

thanks for the extra countries, found it this time

Australia and China are going to be trading directly with no USD inbetween
looks good, china has been good to us lately and the USD is getting pretty weaksauce

[myrkul]

Deflation? With our fiat system? It seems a bit ridiculous.

They call it a "contraction" and it has to happen some time. It's the inflation bubble popping. And yes, it fucks a lot of people, just like any bubble. If we're lucky, the US will simply repudiate it's debt and kick out the bankers. Of course, the last country to do that took it a little too far....

If we're not so lucky, we'll all end up fucked, a la the great depression. Bitcoin might be the only thing that saves the economy, at that point.

[MatTheCat]

They call it a "contraction" and it has to happen some time. It's the inflation bubble popping. And yes, it fucks a lot of people, just like any bubble. If we're lucky, the US will simply repudiate it's debt and kick out the bankers. Of course, the last country to do that took it a little too far....

If we're not so lucky, we'll all end up fucked, a la the great depression. Bitcoin might be the only thing that saves the economy, at that point.

Glad that there are some people on here who can see the wood from the trees and who has a lengthy enough attention span to recognise that there is a bit more to this game than simply Money Printing = Big/Hyper Inflation.

As I discussed in another thread, if all the money that has been printed since 2008, were to have resulted in the inflation that all the inflation nuts said it would, then commodity prices would have increased by 10 times, cos that is how much more M0 (USD) there is in the world than there was 5 years ago. (and actually, that information is at least a couple of years old). Reason that this hasn't happened is that the printed money , has mainly went towards propping up the balance sheets of the various Too Big Too Fails, thus allowing the multi billionaire class to claw back as much value from their otherwise toxic investments and derivative assets as is possible.

The printed M0, is simply attempting to replace the destroyed M4. If someone doesn't even understand what those terms are referring to then they really shouldnt be on forums pumping your gums about hyperinflation.

For the record, I do believe that in the long run, hyper inflation is where we are headed. But we are not there yet and next stop on the track to global financial meltdown, is Deflationary Falls.

[myrkul]

They call it a "contraction" and it has to happen some time. It's the inflation bubble popping. And yes, it fucks a lot of people, just like any bubble. If we're lucky, the US will simply repudiate it's debt and kick out the bankers. Of course, the last country to do that took it a little too far....

If we're not so lucky, we'll all end up fucked, a la the great depression. Bitcoin might be the only thing that saves the economy, at that point.

Glad that there are some people on here who can see the wood from the trees and who has a lengthy enough attention span to recognise that there is a bit more to this game than simply Money Printing = Big/Hyper Inflation.

Don't get me wrong, hyperinflation is a distinct possibility. It might even happen before the next crunch. It's probably 50/50, and all depends on how ballsy the FED chairman is. If he's got the guts to pull the trigger, then we'll see a crunch sooner than later. If not, then hyperinflation, followed by an even bigger crunch.

[MatTheCat]

Don't get me wrong, hyperinflation is a distinct possibility. It might even happen before the next crunch. It's probably 50/50, and all depends on how ballsy the FED chairman is. If he's got the guts to pull the trigger, then we'll see a crunch sooner than later. If not, then hyperinflation, followed by an even bigger crunch.

no need to clarify yourself m8, as I never had any doubt about what you meant. You stated that in between now and the financial day of reckoning, that a contraction(s) is/are very likely.

my position is that when one of these happens, a proper bad one, watch Bitcoin implode.

[myrkul]

Don't get me wrong, hyperinflation is a distinct possibility. It might even happen before the next crunch. It's probably 50/50, and all depends on how ballsy the FED chairman is. If he's got the guts to pull the trigger, then we'll see a crunch sooner than later. If not, then hyperinflation, followed by an even bigger crunch.

no need to clarify yourself m8, as I never had any doubt about what you meant. You stated that in between now and the financial day of reckoning, that a contraction(s) is/are very likely.

my position is that when one of these happens, a proper bad one, watch Bitcoin implode.

The cash price of a bitcoin might drop, but at the same time, I think demand will increase. We shall see.

[Spendulus]

If there was a global deflationary event, what effect do you think this would have on Bitcoin?

This is of course should be taken as a rhetorical question, as clearly, a deflationary event would destroy Bitcoin in terms of its price.

Question is, how likely is it that a deflationary event is on the horizon in the near/medium term? Obviously, if not for central bank action, it would have occured already or be in the midst of occuring. But what happens when the central banks decide to let their money printing activities slide for a little while? Or perhaps when the markets themselves no longer abide by the interest rates being artificially held at historical lows due to the money printing?

The answer to this question should be crucial to any long term investor of Bitcoin. But how many of you are even asking it?

Let their money printing activities slide? 

They'll do that when the addicts stop sticking needles into their veins.

[VincentX]

The Euro is on the verge of collapse, as is the EU.

Not sure why people keep repeating this. Are you European? I am and I don't see any signs for an impending collapse of the EU. Yeah, we have our difficulties, but most of us realize that breaking up would create even bigger difficulties. Few people in their right minds would suggest blowing up our carefully crafted ties.

[MatTheCat]

Not sure why people keep repeating this. Are you European? I am and I don't see any signs for an impending collapse of the EU. Yeah, we have our difficulties, but most of us realize that breaking up would create even bigger difficulties. Few people in their right minds would suggest blowing up our carefully crafted ties.

I am not sure on which planet that you are European, as most ordinary people that I meet (I meet lots of different nationalities through my work) view the EU in a very different and much more negative light than 'our carefully crafted ties'.

You obviously aren't from any of the southern European EU nations either.

[AlgoSwan]

Deflation would be BTC friendly:

* Cheaper energy + cheaper hardware = more mining rigs

Inflation would be BTC friendly:

* People seek safe-haven + less mining rigs = hoarding BTC

[VincentX]

Not sure why people keep repeating this. Are you European? I am and I don't see any signs for an impending collapse of the EU. Yeah, we have our difficulties, but most of us realize that breaking up would create even bigger difficulties. Few people in their right minds would suggest blowing up our carefully crafted ties.

I am not sure on which planet that you are European, as most ordinary people that I meet (I meet lots of different nationalities through my work) view the EU in a very different and much more negative light than 'our carefully crafted ties'.

You obviously aren't from any of the southern European EU nations either.

What I ment to say was this; as much as anyone might hate the EU, most people realize they would be worse off in regional and global politics if it didn't exist. Sure, they might hate they way it's run but that's not the same as being against the core idea.

I'm from Belgium. Where are you from?

[Hawker]

Deflation? With our fiat system? It seems a bit ridiculous.

They call it a "contraction" and it has to happen some time. It's the inflation bubble popping. And yes, it fucks a lot of people, just like any bubble. If we're lucky, the US will simply repudiate it's debt and kick out the bankers. Of course, the last country to do that took it a little too far....

If we're not so lucky, we'll all end up fucked, a la the great depression. Bitcoin might be the only thing that saves the economy, at that point.

By the "last country" I assume you mean Iceland.  Its worked out well for them.

I don't think the US would repudiate its debts though - most all of it is to US citizens and it would be a huge confiscation of savings.  Far more likely is that interest rates remain close to zero, inflation slightly above zero so over a generation or so the debt is erased.

[myrkul]

Deflation? With our fiat system? It seems a bit ridiculous.

They call it a "contraction" and it has to happen some time. It's the inflation bubble popping. And yes, it fucks a lot of people, just like any bubble. If we're lucky, the US will simply repudiate it's debt and kick out the bankers. Of course, the last country to do that took it a little too far....

If we're not so lucky, we'll all end up fucked, a la the great depression. Bitcoin might be the only thing that saves the economy, at that point.

By the "last country" I assume you mean Iceland.  Its worked out well for them.

Actually I wasn't aware of that. I was thinking a little further back in history.

I don't know what the best course from here is. I do know we've climbed waay out on a ledge, though, and all the fed seems to know how to do is keep climbing, or dive off.

[odolvlobo]

FYI. The financial crisis in 2008 was a global deflationary event.

[MatTheCat]

FYI. The financial crisis in 2008 was a global deflationary event.

and if it Bitcoin had existed back then, we could have expected 99% losses within a blink of an eye.