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Author Topic: Does bitcoin foster economic growth or stagnation?  (Read 2946 times)
oprahwindfury (OP)
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January 08, 2014, 09:39:07 AM
Last edit: January 08, 2014, 10:26:20 AM by oprahwindfury
 #1

Could someone explain to me how bitcoin, a deflationary currency, is supposed to be successful when it rewards those who hang on it it? A currency like that would inherently lead me to believe that no inroads would be made in the future in regards to it's development because who wants to build bitcoin ATMs when not enough people are spending btc or accept bitcoin as a payment if there aren't enough spenders? While fiat currency has many many flaws, it spurs spending. You wouldn't want to keep your fiat in cold storage somewhere under that mattress of yours when you know it would be worth less next year!

You'd go out and spend it on something hoping to retain that value! By my understanding, this is the opposite for bitcoin. We've all heard the phrase "BUY AND HOLD"--is this literally what people will constantly do in the future with bitcoin? How will anything develop if there's no demand to spend in the short term?

Xav
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January 08, 2014, 09:51:08 AM
 #2

Inflation (resulting in higher prices) encourages debt, for they will be 'less of a burden' in the future. Deflation does the opposite, which is a great thing; the sooner you pay your debts the better. See how that works?
Mark Stazzo
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January 08, 2014, 10:28:22 AM
 #3

Yes, this is how bubbles form, and it's also how they pop. Just try not to put all eggs in one basket.
Bono
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January 08, 2014, 12:25:29 PM
 #4

You are treating Bitcoin like it's a standalone economy/currency. If anything it's there to compliment the dollar, euro, yn, or whatever. It's never going to replace these currencies worldwide, like some of the paranoid libertarians here like to preach. But it's a great alternative.

So yes, BTC's value compared to other currencies rises, but you could also say that about the value of a nice house in a growing part of town, or any other investment. The difference is you can't trade 0.3 of your house for an Xbox.

Lethn
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January 08, 2014, 12:38:53 PM
 #5

This statement has been repeated a million times and a million times it's been wrong, more and more businesses are springing up that accept Bitcoin and the idea of hoarding or buy and hold only realistically applies to speculators who are holding the currency long term either as a store of value or in order to make some profit. In the end the rest of us are saving and there's absolutely nothing wrong with that, eventually people will need to sell in order to make money and then they'll spend it on whatever they like.

I'm begging you spammers now, please go and read previous posts because this has been argued to death and people who attack deflationary currencies have clearly shown to me they have absolutely no knowledge of how they work.
thaaanos
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January 08, 2014, 03:26:37 PM
 #6

Inflation (resulting in higher prices) encourages debt, for they will be 'less of a burden' in the future. Deflation does the opposite, which is a great thing; the sooner you pay your debts the better. See how that works?
Yes I see it every day in GREECE, youth unemployment over 50% *great* system!
thaaanos
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January 08, 2014, 03:29:37 PM
 #7

I'm begging you spammers now, please go and read previous posts because this has been argued to death and people who attack deflationary currencies have clearly shown to me they have absolutely no knowledge of how they work.
Experience counts as Knowledge? or just your Flights of Fancy, Wishfull Thinking Models?
Tell me have YOU *any* EXPERIENCE in a deflative economy?
Tirapon
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January 08, 2014, 03:46:19 PM
 #8

Inflation (resulting in higher prices) encourages debt, for they will be 'less of a burden' in the future. Deflation does the opposite, which is a great thing; the sooner you pay your debts the better. See how that works?
Yes I see it every day in GREECE, youth unemployment over 50% *great* system!

Are you suggesting that youth unemployment of over 50% in Greece is caused by deflationary currency?
Ibian
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January 08, 2014, 08:21:56 PM
 #9

It's only deflationary in the short term. Once saturation is reached, it will be neither deflationary nor inflationary. It will be stable.

But we won't have to wait that long. People are already buying cars and houses with bitcoin. I personally plan to start spendling once it hits 10k. The great thing about a (currently) deflationary currency is that you can spend it and still increase your net value. It really is a new paradigm.

*edit* also, why does the economy need to grow? nobody has answered that part of the equation yet

Look inside yourself, and you will see that you are the bubble.
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January 08, 2014, 08:32:18 PM
 #10

I'm begging you spammers now, please go and read previous posts because this has been argued to death and people who attack deflationary currencies have clearly shown to me they have absolutely no knowledge of how they work.
Experience counts as Knowledge? or just your Flights of Fancy, Wishfull Thinking Models?
Tell me have YOU *any* EXPERIENCE in a deflative economy?

You do realise Gold and Silver have been used for centuries before paper money ever came into existence right? Also that paper money was originally receipts/IOU's for a *gasp* deflationary currency known as Gold/Silver? Your argument is pretty stupid, unfortunately for you I have historical facts and mathematics on my side so it doesn't matter how much people trash talk deflationary currencies it still isn't going to make the slightest bit of difference to how well any deflationary economy does.

Go and peddle your religion elsewhere.
thaaanos
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January 08, 2014, 09:03:19 PM
 #11


Inflation (resulting in higher prices) encourages debt, for they will be 'less of a burden' in the future. Deflation does the opposite, which is a great thing; the sooner you pay your debts the better. See how that works?
Yes I see it every day in GREECE, youth unemployment over 50% *great* system!

Are you suggesting that youth unemployment of over 50% in Greece is caused by deflationary currency?
that and single currency.

It's only deflationary in the short term. Once saturation is reached, it will be neither deflationary nor inflationary. It will be stable.

But we won't have to wait that long. People are already buying cars and houses with bitcoin. I personally plan to start spendling once it hits 10k. The great thing about a (currently) deflationary currency is that you can spend it and still increase your net value. It really is a new paradigm.

*edit* also, why does the economy need to grow? nobody has answered that part of the equation yet
No because the economy will/must grow, unless your plan is to straightjack the global economy at something less that 21M BTC capitalization forever.
A new paradigm of lazy lords living off diminishing fractions of their stash, sure nobody thought it before. So I guess your paradigm is only for the few chosen then, the new Bitcoin Aristocracy, or for everyone? because food will not grow itself.
Why grow? Look at Nature what doesnt grow dies, Population will grow, if economy doesn't grow in pace people will be worse off, you want your children to have the same or better standard of living right?
If things turn your way, the Bitcoin generation will be the most hated of all.

I'm begging you spammers now, please go and read previous posts because this has been argued to death and people who attack deflationary currencies have clearly shown to me they have absolutely no knowledge of how they work.
Experience counts as Knowledge? or just your Flights of Fancy, Wishfull Thinking Models?
Tell me have YOU *any* EXPERIENCE in a deflative economy?

You do realise Gold and Silver have been used for centuries before paper money ever came into existence right? Also that paper money was originally receipts/IOU's for a *gasp* deflationary currency known as Gold/Silver? Your argument is pretty stupid, unfortunately for you I have historical facts and mathematics on my side so it doesn't matter how much people trash talk deflationary currencies it still isn't going to make the slightest bit of difference to how well any deflationary economy does.

Go and peddle your religion elsewhere.

You do realise that the metalic coins have been systematicaly debased right? So there was actually *gasp* Inflation even then.
So please present those facts and mathematical models.
The most perfect economy and deflationary mind you that I heard of in History were the Feuds, I wonder why that word carries such a negative meaning hmmm?

Ibian
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January 08, 2014, 09:06:12 PM
 #12

Essentially yes. We are the 0.1%. It's our reward for getting in early and helping to spread bitcoin to the rest of the world.

And, again, why does the economy need to grow? For how long? At what point is it enough?

Look inside yourself, and you will see that you are the bubble.
Kungfucheez
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January 08, 2014, 09:49:13 PM
 #13

BTC has no impact whatsoever on economic growth or stagnation at the current stage it is in. The market just isn't large enough.

In a few years? Maybe, we'll see
Xav
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January 08, 2014, 09:55:58 PM
 #14

Inflation (resulting in higher prices) encourages debt, for they will be 'less of a burden' in the future. Deflation does the opposite, which is a great thing; the sooner you pay your debts the better. See how that works?
Yes I see it every day in GREECE, youth unemployment over 50% *great* system!

Facts:
1. Greece uses the Euro, which is (almost by definition) an inflationary currency, just like the Dollar.
2. Greece made more debts than any other country in the EU.
3. Greece financial tragedy got worse because of the world wide financial crisis, which started in the USA.
4. Greece's bankruptcy was caused by governmental corruption in combination with 2 and 3.

IOW your claim that Greece suffered from a deflationary currency causing over 50% youth unemployment, is ridiculous.
thaaanos
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January 08, 2014, 09:56:16 PM
 #15

Essentially yes. We are the 0.1%. It's our reward for getting in early and helping to spread bitcoin to the rest of the world.
And you lash at the current economic status? So all the plebs got to do is switch masters, I don't see why they should, for the Promise of a Deflationary economy?
And, again, why does the economy need to grow? For how long? At what point is it enough?
Because population grows, maybe if we drop a few nukes here and there, there will not be a need for growth for a while...
thaaanos
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January 08, 2014, 10:07:56 PM
 #16

Inflation (resulting in higher prices) encourages debt, for they will be 'less of a burden' in the future. Deflation does the opposite, which is a great thing; the sooner you pay your debts the better. See how that works?
Yes I see it every day in GREECE, youth unemployment over 50% *great* system!

Facts:
1. Greece uses the Euro, which is (almost by definition) an inflationary currency, just like the Dollar.
*On Average*, local variations apply
2. Greece made more debts than any other country in the EU.
untrue, had just the weakest economy, and got in the crosshair of speculators, sure kill by the way.
3. Greece financial tragedy got worse because of the world wide financial crisis, which started in the USA.
"The avalanche has begun, it's to late for the pebbles to vote" - Kosh
4. Greece's bankruptcy was caused by governmental corruption in combination with 2 and 3.
Greece doesnot hold the excellence in corruption as most would like to believe, and sleep well at night.
If so what's the problem in Spain,Italy,Ireland and Cyprus?
IOW your claim that Greece suffered from a deflationary currency causing over 50% youth unemployment, is ridiculous.
Unemployment rose After the crisis while greece was traped in a deflationary spiral, much like Bitcoin is bound to induce
Xav
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January 08, 2014, 10:37:42 PM
Last edit: January 08, 2014, 11:08:05 PM by Xav
 #17

Unemployment rose After the crisis while greece was traped in a deflationary spiral, much like Bitcoin is bound to induce

"A deflationary spiral?" Really? Aren't you confusing rising prices with deflation here?

Edit: BTW I don't think it is fruitful to deny facts, of which this is just one example:
http://abehnisch.com/wp-content/uploads/2011/04/eu-public-debt-gdp-2010.png
thaaanos
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January 09, 2014, 07:21:20 AM
 #18

Unemployment rose After the crisis while greece was traped in a deflationary spiral, much like Bitcoin is bound to induce

"A deflationary spiral?" Really? Aren't you confusing rising prices with deflation here?

Edit: BTW I don't think it is fruitful to deny facts, of which this is just one example:
http://abehnisch.com/wp-content/uploads/2011/04/eu-public-debt-gdp-2010.png

Its not about prices, they rise mainly because of increasing Taxation,

BTW Tried to find an aggregate but here it is
http://rwer.files.wordpress.com/2012/10/private-debt-x-countries-linear5.png
And I place the The crisis start at 2008
Xav
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January 09, 2014, 08:41:47 AM
 #19

Unemployment rose After the crisis while greece was traped in a deflationary spiral, much like Bitcoin is bound to induce

"A deflationary spiral?" Really? Aren't you confusing rising prices with deflation here?

Edit: BTW I don't think it is fruitful to deny facts, of which this is just one example:
http://abehnisch.com/wp-content/uploads/2011/04/eu-public-debt-gdp-2010.png

Its not about prices, they rise mainly because of increasing Taxation,

BTW Tried to find an aggregate but here it is
http://rwer.files.wordpress.com/2012/10/private-debt-x-countries-linear5.png
And I place the The crisis start at 2008

Maybe some day you will understand that it takes time for the financial world to unravel very complex worthless financial products. Furthermore, I consider the continuation of this discussion as pointless, because you keep throwing in all kinds of historic financial situations, which have nothing to do with the deflationary nature of Bitcoin.
thaaanos
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January 09, 2014, 11:13:22 AM
 #20

Unemployment rose After the crisis while greece was traped in a deflationary spiral, much like Bitcoin is bound to induce

"A deflationary spiral?" Really? Aren't you confusing rising prices with deflation here?

Edit: BTW I don't think it is fruitful to deny facts, of which this is just one example:
http://abehnisch.com/wp-content/uploads/2011/04/eu-public-debt-gdp-2010.png

Its not about prices, they rise mainly because of increasing Taxation,

BTW Tried to find an aggregate but here it is
http://rwer.files.wordpress.com/2012/10/private-debt-x-countries-linear5.png
And I place the The crisis start at 2008

Maybe some day you will understand that it takes time for the financial world to unravel very complex worthless financial products. Furthermore, I consider the continuation of this discussion as pointless, because you keep throwing in all kinds of historic financial situations, which have nothing to do with the deflationary nature of Bitcoin.

Why there is a very easy way to unravel them: Bankrupcy? and start over?
I agree the conversation is derailed but people cherry pick my arguments instead of answering the real question:
Is there any experience of an actually deflatory economy, that prospered? other that hypothetical estimations of how it would work?
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