As a deflationary currency, is Bitcoin the right answer?

[davedx]

I've been thinking more and more about the wealth gap in Bitcoin lately. I just now read this article: http://ouishare.net/2013/05/bitcoin-human-based-digital-currency/

The point I think is this:

...in a deflationary environment, no one spends money — because whatever you want to buy is sure to become cheaper in a few days or weeks. People hoard their cash, and spend it only begrudgingly, on absolute necessities.

Assuming Bitcoin did eventually replace fiat, would it be the right answer (I found it hard to phrase that) for a just society with a reasonable distribution of wealth (or purchasing power)?

Assuming the early adopters end up being future society's "wealthy elite" (to paraphrase from the discussion forum), what about all the people who only end up receiving BTC in wages that aren't large enough to let them save and accumulate wealth? Will social mobility be worse than it is today?

Nothing gets me thinking more about altcoins than these kind of questions. I'm much more of a socialist than a libertarian and personally I would like cryptocurrencies to help alleviate power and wealth inequality, not simply transfer it from one group to another.

[Hawker]

Thats like asking if a banana is good for fishing with.  A currency is not a tool to engineer equality. 

[bitlancr]

I think Bitcoin will help increase equality, as has the potential to cut out lots of cronyism and levels the playing field in financial services. Ask yourself this: why are bankers and financiers paid so much? Anything to do with the fact that they straight-up create money?

I'm much more of a socialist than a libertarian...

Welcome, hopefully you'll see that freedom is the right answer soon enough 

[bryant.coleman]

I think Bitcoin will help increase equality, as has the potential to cut out lots of cronyism and levels the playing field in financial services. Ask yourself this: why are bankers and financiers paid so much? Anything to do with the fact that they straight-up create money?

This issue has been dealt with great detail here, and it is established that Bitcoins will play no role in equal-wealth or even income redistribution. Let's leave that case as it is.

Your second question. Why are bankers and financiers paid so much? Because they are the ones who sponsors and finances our rulers and lawmakers. In a democracy, virtually every single parliamentarian is controlled by a lobby of bankers and financiers. So if the bankers think that the common people are not giving them enough money, they will just seize the money (as they did in Cyprus). And no one will question them.

Look at what happened in Cyprus. The entire EU establishment was solidly behind the robbery committed by the bankers. Even the iron man Putin couldn't confront them.

[davedx]

So what is the solution for creating a just society where the wealth gap isn't constantly increasing? Because progressive taxation hasn't worked, and if our current society switched to BTC, it would simply move the concentration of wealth to a different (arguably even smaller than now) group of people.

[Peter Lambert]

So what is the solution for creating a just society where the wealth gap isn't constantly increasing? Because progressive taxation hasn't worked, and if our current society switched to BTC, it would simply move the concentration of wealth to a different (arguably even smaller than now) group of people.

The government solution to equality: Create a society where nobody has anything, and then there will be no rich and nobody will feel poor.

Having a society with no rich and no poor cannot be forced by government. It will only be done by a community where everybody chooses to live that way, where the people who produce willingly support those who do not. In a family where everybody shares the income of one man, you would not say that the father is wealthy and the son is poor, they are equal.

I also reject the notion that you can control society by the tax code. Taxes should be there to fund the legitimate functions of the government, not to tell people how to live. And, try as hard as you want, people will exploit the tax code and/or find ways to work around it. A simple tax is a better tax, because it leaves less loopholes for the rich and well-connected.

[bryant.coleman]

So what is the solution for creating a just society where the wealth gap isn't constantly increasing? Because progressive taxation hasn't worked, and if our current society switched to BTC, it would simply move the concentration of wealth to a different (arguably even smaller than now) group of people.

The current society will not switch solely to BTC. Other assets, such as land and bullion will also be having their fair value. So we are creating a new subset of wealthy people, not replacing a group of millionaires with another.

[bitlancr]

This issue has been dealt with great detail here, and it is established that Bitcoins will play no role in equal-wealth or even income redistribution. Let's leave that case as it is.

Your second question. Why are bankers and financiers paid so much? Because they are the ones who sponsors and finances our rulers and lawmakers. In a democracy, virtually every single parliamentarian is controlled by a lobby of bankers and financiers. So if the bankers think that the common people are not giving them enough money, they will just seize the money (as they did in Cyprus). And no one will question them.

To follow your point to its logical conclusion: Bitcoin takes power away from bankers and financiers. It can't be seized, and its value can't be eroded via QE and rigged interest rates. All this wealth that was previously being sucked up into financial services becomes available to more productive members of society. I believe this will reduce income disparity.

So what is the solution for creating a just society where the wealth gap isn't constantly increasing? Because progressive taxation hasn't worked, and if our current society switched to BTC, it would simply move the concentration of wealth to a different (arguably even smaller than now) group of people.

The 'solution' is communism. History suggests that this will lead to reduced wealth in absolute terms, so which is more important?

In a free society there'll always be differences in wealth, becuase people are different.

[dank]

If we stop viewing wealth materially, the true wealth is found at the bottom.

[JoelKatz]

...in a deflationary environment, no one spends money — because whatever you want to buy is sure to become cheaper in a few days or weeks. People hoard their cash, and spend it only begrudgingly, on absolute necessities.

That's obviously silly. If you don't see why, consider this:

In an inflationary environment, nobody sells anything -- because whatever you want to sell is sure to sell for more in a few days or weeks.

If the inflation or deflation comes from the currency's characteristics, it doesn't make anything more expensive or cheaper except the currency.

[bryant.coleman]

To follow your point to its logical conclusion: Bitcoin takes power away from bankers and financiers. It can't be seized, and its value can't be eroded via QE and rigged interest rates. All this wealth that was previously being sucked up into financial services becomes available to more productive members of society. I believe this will reduce income disparity.

OK. I'd agree with that. The removal of the bankers and financiers will help us to reduce the income disparity. I can't predict the magnitude of this, but I hope it will be significant. 

[Lethn]

...in a deflationary environment, no one spends money — because whatever you want to buy is sure to become cheaper in a few days or weeks. People hoard their cash, and spend it only begrudgingly, on absolute necessities.

I want to see some actual proof behind these statements, while I understand the argument you see more and more businesses and fairly normal business now accepting Bitcoin and you've had Gold/Silver being used as money for centuries before paper ever was and paper money was originally used as receipts by bankers for Gold/Silver. So this argument about people not ever spending deflationary currencies is pretty ridiculous as there isn't really much historical or mathematical evidence to support that.

Adding to that Bitcoin is extremely early in it's stages and cryptocurrencies in general have a very short history compared to Gold/Silver so it's too early to say those kind of things.



Take note: "This note is legal tender for all debts, legal and private"



"I promise to pay the bearer on demand the sum of"

All this paper the government tells us is money is actually debt, they stole the real money from us ages ago.

[dancupid]

So what is the solution for creating a just society where the wealth gap isn't constantly increasing? Because progressive taxation hasn't worked, and if our current society switched to BTC, it would simply move the concentration of wealth to a different (arguably even smaller than now) group of people.

If your income doubles and my income doubles, then the gap also doubles. 2x-2y= 2(x-y)
(and we are both happy)

It's not the gap that matters, it's the basic standard of living of the people with the lowest income. They will be happy too if their income doubles - they don't care if the gap has doubled, as long as they can improve their own situation

The quality of life of the poorest is being improved all the time, simply by the impact of technology on the world.

[bryant.coleman]

If your income doubles and my income doubles, then the gap also doubles. 2x-2y= 2(x-y)
(and we are both happy)

It's not the gap that matters, it's the basic standard of living of the people with the lowest income. They will be happy too if their income doubles - they don't care if the gap has doubled, as long as they can improve their own situation

The quality of life of the poorest is being improved all the time, simply by the impact of technology on the world.

This is a very important point to be noted. People who want equal income for all actually destroys the livelihood of the poor. Poor will be much better in an open economy with lower taxes.

[davedx]

If your income doubles and my income doubles, then the gap also doubles. 2x-2y= 2(x-y)
(and we are both happy)

It's not the gap that matters, it's the basic standard of living of the people with the lowest income. They will be happy too if their income doubles - they don't care if the gap has doubled, as long as they can improve their own situation

The quality of life of the poorest is being improved all the time, simply by the impact of technology on the world.

This is a very important point to be noted. People who want equal income for all actually destroys the livelihood of the poor. Poor will be much better in an open economy with lower taxes.

You mean like the USA? http://en.wikipedia.org/wiki/File:Number_in_Poverty_and_Poverty_Rate_1959_to_2011._United_States..PNG

[Lethn]

You mean like the USA? http://en.wikipedia.org/wiki/File:Number_in_Poverty_and_Poverty_Rate_1959_to_2011._United_States..PNG

If you actually believe that the USA is an open economy with low taxes you seriously need to look at some history as well as stop watching television so much.

[dancupid]

If your income doubles and my income doubles, then the gap also doubles. 2x-2y= 2(x-y)
(and we are both happy)

It's not the gap that matters, it's the basic standard of living of the people with the lowest income. They will be happy too if their income doubles - they don't care if the gap has doubled, as long as they can improve their own situation

The quality of life of the poorest is being improved all the time, simply by the impact of technology on the world.

This is a very important point to be noted. People who want equal income for all actually destroys the livelihood of the poor. Poor will be much better in an open economy with lower taxes.

You mean like the USA? http://en.wikipedia.org/wiki/File:Number_in_Poverty_and_Poverty_Rate_1959_to_2011._United_States..PNG

This is a graph of relative poverty not absolute poverty.
If being one one the 42 million Americans who has to put up with a 42 inch tv instead of a 52 inch tv is the definition of poverty, then we have come a long way.
The poorest people in America are richer than 99% of all the people who have ever existed.

[Mike Christ]

So long as your money cannot be printed on a whim, nor is your money owned by any central organization, it doesn't matter if your money is limited in supply or steadily increasing.  However, it is your burden to ensure the former remains true, while getting this money into as many hands as possible; nothing is stopping you, so go for it.  Bitcoin will be inflationary until long after we're dead, so I don't see what difference it makes whether there's a hard limit or not.

None of this matters, however, so long as you make a distinction between "socialist" and "libertarian"; these terms aren't compatible in this way.  Many socialists are libertarian--the smarter ones, anyway.  The others still think all our problems can be solved at the barrel of a gun, and then wonder what I mean by that since they banned all the guns already.    So long as there is a strong presence of authority in any given society, you will see empire, you will see wealth disparities, you will see endless war, and you will not use any money but the one provided by your "benevolent, democratically elected leaders".  Inflationary money, deflationary money: it doesn't matter if your money is centrally issued.  This is the difference between the bitcoin protocol and fiat: no altcoin, no matter how inflationary you believe it to be, will solve this fundamental problem.  It's not that simple.

[peta4e]

All economists will say - what, deflationary currency, how stupid this can be? I am not economist so will like to disagree with them.
Yeah, I can imagine society when everyone take only what it needs and as much is needed. Recycle, repair and reuse it.
Yeah, all products like for example electronics will be engineered to last longer and not to just get broken right after the guarantee expires. There will be meaningful models of products and not just stupid marketing positioned products. For example high-end CPUs and low-end CPUs cost Intel exactly the same! Another trivial example is they put smaller in capacity capacitors than the formulas demand into my laptop power adapter just to ensure it will break and I will need to obtain new one. Not anyone can open it and replace the capacitors with proper ones in order to fix it and the adapter itself is made to not be opened easily.
When I was in the army there was some 50 years old portable radio equipment which worked without problem, never broke before and much likely will work as is after 50 years as well. I like to see such quality not only for the military products but for the consumer electronics too. Now if your phone last for a 2 years you can consider your self lucky.

[davedx]

If your income doubles and my income doubles, then the gap also doubles. 2x-2y= 2(x-y)
(and we are both happy)

It's not the gap that matters, it's the basic standard of living of the people with the lowest income. They will be happy too if their income doubles - they don't care if the gap has doubled, as long as they can improve their own situation

The quality of life of the poorest is being improved all the time, simply by the impact of technology on the world.

This is a very important point to be noted. People who want equal income for all actually destroys the livelihood of the poor. Poor will be much better in an open economy with lower taxes.

You mean like the USA? http://en.wikipedia.org/wiki/File:Number_in_Poverty_and_Poverty_Rate_1959_to_2011._United_States..PNG

This is a graph of relative poverty not absolute poverty.
If being one one the 42 million Americans who has to put up with a 42 inch tv instead of a 52 inch tv is the definition of poverty, then we have come a long way.
The poorest people in America are richer than 99% of all the people who have ever existed.

Jesus fucking Christ. Is this really how you believe people live in poverty in the USA?

1 in 7 American households were FOOD INSECURE last year. [1]

1.6 million children stayed in a shelter or emergency housing last year. [1]

Of course it's much easier to just subscribe to the populist views of the right wing media who try so desperately to paint all poor people as dead weight scroungers who sponge off the state to pay for their home entertainment systems, drugs, and alcohol, right?

Sure, the standard of living is higher due to technology: when you can afford that technology.

[1] http://www.povertyusa.org/