Why would Bitcoin deflationary philosophy good since 1929 was due to deflation?

[lepko]

The 1929 depression was due to deflation. So why would Bitcoin deflation philosophy be good for the global common ?
It would only be good for a few ones but wouldn't that be egoistic ?

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[justusranvier]

The 1929 depression was due to deflation.

The 1929 Depression was caused by Herbert Hoover bailing out his banking cronies, and was perpetuated by the New Deal.

Incidentally, Herbert Hoover tried to do the same thing a decade earlier but was overruled. That's why you've never heard of the Great Depression of 1920-1921.

[Peter Lambert]

The 1929 depression was due to deflation.

Reference? I seem to remember the deflation being caused by the depression: Many people lost jobs and investments soured, so nobody had any money, thus demand for products lowered which forced prices to go down. Maybe you could go into more detail on how they are linked?

[solex]

The 1929 depression was due to deflation.

Reference? I seem to remember the deflation being caused by the depression: Many people lost jobs and investments soured, so nobody had any money, thus demand for products lowered which forced prices to go down. Maybe you could go into more detail on how they are linked?

The 1929 depression and subsequent period of deflation was caused by the first major credit bubble bursting. The Federal Reserve was formed in 1913 and promptly backstopped retail banks with printed money, and controlled interest rates.

So lots of loans were created for house mortgages and buying stocks on margin and the price of money became distorted. The "Roaring Twenties" was an artificial boom similar to the one which preceded the 2007 crash. Deflation was the cleansing process afterwards needed to reset the system to where it should be. This time central banks have vowed to avoid deflation and simply print money instead. So ultimately, hyperinflation is on the cards.

[BitCoiner2012]

OP - you should study more about the depression. Some things to look in to - 15 years earlier, the establishment of the Federal Reserve, bubbles popping..  You may find that the reason our economy suffers from constant boom and bust is, perhaps, because of an entity doing market work. Forcing markets into certain conditions only lasts for so long. Eventually the market will correct. And it did. And has many times, but it is difficult for the market to function in non free market conditions.

Yes, I agree, Bitcoin's deflationary standard will appear much more in line with logic once you observe the massive failure of many fiat paper standards in the coming years.

[lepko]

The 1929 depression was due to deflation.

Reference? I seem to remember the deflation being caused by the depression: Many people lost jobs and investments soured, so nobody had any money, thus demand for products lowered which forced prices to go down. Maybe you could go into more detail on how they are linked?

I think many people here trustsmises.org so I take from there :

http://wiki.mises.org/wiki/Deflation

To Hülsmann, deflation is not inherently bad, so it does not follow that it should be avoided. True, it creates a great number of losers, many of them perfectly innocent people who have not anticipated the event. But it also creates many winners, and punishes many political entrepreneurs who had thrived on their intimate connections to those who control the production of fiat money.

[lepko]

OP - you should study more about the depression. Some things to look in to - 15 years earlier, the establishment of the Federal Reserve, bubbles popping..  You may find that the reason our economy suffers from constant boom and bust is, perhaps, because of an entity doing market work. Forcing markets into certain conditions only lasts for so long. Eventually the market will correct. And it did. And has many times, but it is difficult for the market to function in non free market conditions.

Yes, I agree, Bitcoin's deflationary standard will appear much more in line with logic once you observe the massive failure of many fiat paper standards in the coming years.

I've been a quality engineer in statistical process control [SPC] ( https://www.moresteam.com/toolbox/statistical-process-control-spc.cfm ) who specialized in system which fluctuates so indeed I was fascinated by this "constant boom and bust" as you name
So I agree from that viewpoint the process quality of our economy is very bad : the statistical variance doesn't follow Normal Law probably all the more that Economy is so tight to stock market.

Indeed switching constantly between inflation and deflation is just BAD QUALITY process but this switch benefits the few rich not the mass. Pretending that deflation is good because it would clean the bad entrepreneurs is to forget the massive amount of innocent people who will also suffer.

Currently the super rich elites after ripping off the economy through stock market (which serves to pump people's retirement fund like a sponge) for at least 50 years would now look for deflation so that they can keep the value of the money they have accumulated and buy at lowest all people's home who will lose all.
 
The problem is to stop this constant fluctuation that is to say stabilize the process (reduce the statistical variance) not about creating deflation with Gold or Bitcoin. Gold and Bitcoin for me are just participating into this End Game claiming they're the good and the other the evil whereas they are the 2 faces of the same coin.

So who will ever have the idea to create a real fair game ? Virtual Currency is a mean which could but for now I can't see Bitcoin can because there's no real goal to do so.

[BitCoiner2012]

OP - you should study more about the depression. Some things to look in to - 15 years earlier, the establishment of the Federal Reserve, bubbles popping..  You may find that the reason our economy suffers from constant boom and bust is, perhaps, because of an entity doing market work. Forcing markets into certain conditions only lasts for so long. Eventually the market will correct. And it did. And has many times, but it is difficult for the market to function in non free market conditions.

Yes, I agree, Bitcoin's deflationary standard will appear much more in line with logic once you observe the massive failure of many fiat paper standards in the coming years.

I've been a quality engineer in statistical process control [SPC] ( https://www.moresteam.com/toolbox/statistical-process-control-spc.cfm ) who specialized in system which fluctuates so indeed I was fascinated by this "constant boom and bust" as you name
So I agree from that viewpoint the process quality of our economy is very bad : the statistical variance doesn't follow Norma Law probably because it is so tight to stock market.

Indeed switching constantly between inflation and deflation is just BAD QUALITY process but this switch benefits the few rich not the mass. Pretending that deflation is good because it would clean the bad entrepreneurs is to forget the massive amount of innocent people who will also suffer.

Currently the super rich elites after ripping off the economy through stock market (which serves to pump people's retirement fund like a sponge) for at least 50 years would now look for deflation so that they can keep the value of the money they have accumulated and buy at lowest all people's home who will lose all.
 
The problem is to stop this constant fluctuation that is to say stabilize the process (reduce the statistical variance) not about creating deflation with Gold or Bitcoin. Gold and Bitcoin for me are just participating into this End Game claiming they're the good and the other the evil whereas they are the 2 faces of the same coin.

So who will ever have the idea to create a real fair game ? Virtual Currency is a mean which could but for now I can't see Bitcoin can because there's no real goal to do so.

I don't see how you draw that conclusion. Bitcoin is deflationary and in the sense that it temporarily mints it could be construed as "inflationary" during that time(?), yes, but that expires in short order relatively. In time there will be no more minted coins, in fact, long before that, the amount of minted coins will be irrelevant for the most part. In other words, the supply is fixed. There will be no "inflation" in Bitcoin. The most inflation you will ever experience has always passed, and the second most is 25% through passing, essentially.

Last year I could buy 4-5 loaves of bread with a BTC. One year later, I could buy up to 50, depending. I watch year after year as my fiat buys less and less and I am powerless to stop that. Artificially boosting circulating monetary units is of no value to my family. I will stick with the deflationary option that isn't history's most impressive ponzi that has yet to collapse.

[Etlase2]

I don't see how you draw that conclusion. Bitcoin is deflationary and in the sense that it temporarily mints it could be construed as "inflationary" during that time(?),

Lepko, it is important to know around here that the typical bitcoin-washed person refers to "deflation" as meaning prices, but then balks at inflation referring to prices when it can only mean an increase in the supply. He knows what you mean but is twisting what you say into definitions that defy how the average person or economist uses the terms, and then plays dumb--because there cannot possibly be monetary supply increases other than what's scheduled, and thus concluding that there is no inflation in (the) bitcoin (supply) while ignoring prices.

Last year I could buy 4-5 loaves of bread with a BTC. One year later, I could buy up to 50, depending. I watch year after year as my fiat buys less and less and I am powerless to stop that. Artificially boosting circulating monetary units is of no value to my family. I will stick with the deflationary option that isn't history's most impressive ponzi that has yet to collapse.

Throw in an anecdote of "this is how deflation works" and you're all set up with the pretense that there is no possibility that "one year later, I could buy 1/10th of a loaf", or "I could buy 50 but my 800 neighbors are destitute".

The indoctrination into the bitcoin school of economics is rather refined and effective. Tread lightly.

[notme]

Price inflation and price deflation are both bad.  But how do you propose prices be stabilized?  We have lots of strong evidence central banks can not do it without abusing the power.  The benefit of bitcoin is its supply can not be manipulated.  Decentralized banking and currency issuance may work (there is some historical evidence to support this claim, particularly in Canada in the 1800s), but currently such a system is outlawed in most of the world.

[EmperorBob]

The money supply deflation at the start of the great depression (M2 specifically) was extremely large (contraction by 1/3): http://en.wikipedia.org/wiki/Great_Depression#Monetarist. Which as others have noted, is mostly due to contraction of available credit, not currency itself.

Bitcoin's money-supply deflation is extremely low (only due to people losing their wallets, which is infrequent). So even if you believe that deflation is absolutely bad, Bitcoin's deflation is very low, and so is unlikely to cause harm. Besides, until 2025, we'll have > 1% monetary inflation every year. I don't think we'll be in trouble.

[inge]

Actually would be quite egoist keep using inflationary policies..Bitcoin cannot be unlimited printed. In a world with scarce resources Bitcoin can play a role in reflecting these boundaries. Better than never ending printable currencies. I expressed my point of you in the HappyCoins weblog: Bitcoin, a finite currency in a limited world.

[Lethn]

Deflation is a result of inflation, it isn't what causes a depression, you end up being able to buy more things when an economy is deflationary where as with inflation you only get a temporary boost and then things just become dramatically more expensive depending on how much a central bank prints their currency.