DEFLATION GETS A BAD NAME

[zachcope]

Stagflation is what happens when economic contraction and rebalancing would have occurred, but instead the Keynsians increased the money supply. So instead of everyone being hit by deflation, it is converted to stagflation which will save the rich and politicians, whilst making the poor and middle income groups suffer more.

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[Lethn]

Current economic theory has become a religion and like arguing with anybody religious it's pointless, the only thing you can do is prove them wrong with undeniable evidence, think about it, how long did it take for people to prove the world was round and that evolution isn't a theory? Even with all the evidence presented to them there are still people who have been pretty much brainwashed into believing in this stuff so there's no point in giving them the attention and trying to come to a consensus with them.

Yes, I think we've been socially engineered to think that deflation is a bad thing but when you look at the numbers this belief system just doesn't add up, especially if you take into account how much is being borrowed to pay for this inflationary economy we're in, deflation doesn't just get a bad name, it gets blatantly attacked.

[FenixRD]

first lol at stagflation dude. You always try to keep inflation up when UE is high.. that is the feds mission. and the theory of stagflation, is that the markets are responding to the feds measures and anything done to LOWER INFLATION.. would increase UE.


and both inflation or deflation in high degrees suck balls and we have seen it several times with BTC.. not sure why people cant grasp it.
society likes a stable currency.. with our capitalistic and growing population, a slight bit of inflation is preferred.


Inflation sucks, it makes people not want to sell. Why sell a car for 2,000 today, if you can get 4k tomorrow?


deflation sucks. Why buy a car for 2000 today, when you can get it for 1000 tomorrow.

BOTH CONCEPTS  HARM AN ECONOMY. as they slow down economic activity as people wait for stability before buying discretionary goods.

A slight bit of inflation might be good but share prices rising more than 20% in 2013 is not good. Property prices rising more than 10% is not good.  Yes, that is your purchasing power being devalued.

Deflation I can live with. I'd buy a car for 2000 even if I could have it for 1000 tomorrow. The Norwegian guy who bought an apartment by selling his btcs proves this point. He sold at around $886 per btc knowing full well that btcs could rise further. He retained 80% of his btcs and spent 20%.

I like Btc being deflationary. It will prove that deflationary systems can work.

I'm sorry, but I don't understand. Why would anyone pay more for something today when they know it will be more affordable tomorrow? Why would you ever buy a car for $2000 when you could have it for half that price the next day? That makes zero sense.

Also regarding the guy who bought an apartment. That's all well and good, but that's pure speculation. That's not confidence buying, it's speculative investing. He can't be sure the price of btc will rise over time, he can't be sure if the price will fall, neither can the seller.  and joulesbeef is correct. Deflation you most certainly cannot live with if it is sustained over time. Same with hyper inflation. 

And I can't understand why this is such a difficult concept! For the same reason that Bitcoin has any value at all, or why gold is worth more than just what can be made of it in electronics etc: Percieved value. Intrinsic value is actually nonexistent, because even it is based on our perception. It is meaningless without the human context. Gold connectors? That's not intrinsic. That's potential. And there is no potential without human perception. A cat certainly gives zero fucks about gold, or bitcoins.

Therefore people will buy a car today, despite it being assuredly less costly tomorrow, for the same reason. The percieved value of owning a car today is worth more than the value lost by buying it today.

Even in our economic system, where most things inflate, Moore's law provides a clear example of his occurring on a wide scale, regularly. Every 18 months, computing power has doubled while the price has halved. Not even the same for half: DOUBLE, for HALF. Why does anyone buy a computer, or a tablet, or an iPhone? Why don't you wait?

[zerodrama]

Deflation is just fine if you have lots of money and your job won't cut your pay rate, otherwise, it really sucks. It generally happens when you have no money floating around. What is worse is stagflation, which imo is what is going on in the US right now. Prices stay steady or slightly higher, but wages and ways to make money decrease... the worst of both worlds.

CEX.io supporter says it all.

Deflation is bad for low income earners because goods are getting cheaper? Ridiculous.

Income goes down as well. Cheap is as unstable as expensive is. Cheap is only cheap for people who can save. And people get railroaded on four fronts:
Food (includes water)
Rent
Fuel (includes electric)
Vehicle

You have to have them to have a job. You have to spend all your money on them. The system essentially gets your labor for free. You're not earning anything.

[Lethn]

Income does not go down if everything goes down, it means it's easier to earn money because you don't have to earn as much of the currency you're paying in, this is another bullshit statement perpetrated by pro-inflation economists that ignores basic mathematics which I am getting quite annoyed by nowadays.

Tell me, how exactly does it mean that people have to work more if things are cheaper? Are you actually going to use an example? Or are you just going to keep parroting that same bullshit again and again?

Let me give you an example:

If I wanted to get a Cintiq it would cost me:

$1000

In Bitcoin that's roughly 1.22 BTC - 1.22BTC is worth a tiny bit more than $1000 lol, I'd have to go into 8 decimals to calculate it properly but I'm not that good at maths

Now the problem here is you assume that deflation will carry on infinitely, that's just not the case because there is a hard limit of 21 million coins, so eventually if hyperinflation keeps going $1000 will be 0.00000012 BTC rather than 1.2 because of course a Bitcoin can be broken up into decimals. So in actual fact over time it will simply get cheaper and cheaper to buy a cintiq assuming you still want to value things in dollars but I suspect by the time 1 BTC reaches higher than $3000 people are going to think twice.

In inflationary money like the dollar it would be the opposite, because the federal reserve keeps printing so much you'd have $1000 at first but because they keep printing the money the overall money supply increases and the suppliers are FORCED to charge higher because everything else goes up to eventually you're going to end up with a Zimbabwe situation where you're going to have to pay $100,000,000 just to get something like a Cintiq. The thing you fail to realise is that in an inflationary economy everything goes up when you print money you can't just have it affecting 'the rich' or benefiting 'the poor' and that means that in order to get anything they need anyone would have to work longer hours for less pay because again suppliers and employers would be forced to put the prices up to cover their needs as well as the price for materials and tools etc. would have gone up along with anything else. These are just rough estimates I've done in my head but I think pretty realistic of the kind of problems we'll be facing in the next five or so years.

Yes, you can maybe remedy the situation by giving tax cuts and fixing prices like our leaders have been doing currently for their own ends now, but it's only a temporary fix and it doesn't get rid of the overall problem which is the fact that you're increasing the currency supply and forcing prices up thereby making it more difficult to get what they need never mind what they want.

If anybody still ignores this, you really are a moron.

[zerodrama]

Income does not go down if everything goes down, it means it's easier to earn money because you don't have to earn as much of the currency you're paying in, this is another bullshit statement perpetrated by pro-inflation economists that ignores basic mathematics which I am getting quite annoyed by nowadays.

If my small business makes less, my small business must pay employees less.

What part of second degree function do people not understand?

[Lethn]

Income does not go down if everything goes down, it means it's easier to earn money because you don't have to earn as much of the currency you're paying in, this is another bullshit statement perpetrated by pro-inflation economists that ignores basic mathematics which I am getting quite annoyed by nowadays.

If my small business makes less, my small business must pay employees less.

What part of second degree function do people not understand?

No it mustn't pay less, that doesn't make any sense, you're applying ultimatums to a situation that doesn't require it.

[zerodrama]

Income does not go down if everything goes down, it means it's easier to earn money because you don't have to earn as much of the currency you're paying in, this is another bullshit statement perpetrated by pro-inflation economists that ignores basic mathematics which I am getting quite annoyed by nowadays.

If my small business makes less, my small business must pay employees less.

What part of second degree function do people not understand?

No it mustn't pay less, that doesn't make any sense, you're applying ultimatums to a situation that doesn't require it.

I love how you're dodging the math with rhetorical declarations. So right, I could just fire people. Still less income. See there's this thing called investors. Some of them are top tier and some other are second tier. Top tier investors expect the value of the company to rise. If I make less and pay the same, that goes down. Second tier investors expect the short term opportunity value to go up. So they expect me to cut wages but keep production capacity. Yeah income goes down.

So I've shown two cases where income must go down.

Oh and that other thing: if I fire people production capacity goes down. Oops. That ends up causing a dive for both tiers.

Your entire position rests on projections from theory unbounded by time or speed of change. This is disturbing. Employee purchasing power increase does not manifest instantaneously. It lags. Hell, IT RESISTS. The vendor can always last longer in this staring contest.

[Xav]

C'mon gentlemen, let's be reasonable and use that common sense. Deflation is not a problem, and not the cause of any drama in any society. If we do our maths correctly then we'll realize that in a deflationary situation all prices shall go down. So economic growth can still be achieved even when the current GDP is less than the GDP in the previous year. Imagine this year's GDP is 10 million BTC and last year's was 10.1 million BTC. On first glance one would think growth is (10 - 10.1) X 100 / 10.1 = - 0.99 %. But, let's say the inflation rate (lost coins) is 2%, which changes the calculation into (10 - (10.1 X0.98)) X 100 /(10.1X0.98) = 1.03%.

See how that works?

[zerodrama]

C'mon gentlemen, let's be reasonable and use that common sense. Deflation is not a problem, and not the cause of any drama in any society. If we do our maths correctly then we'll realize that in a deflationary situation all prices shall go down. So economic growth can still be achieved even when the current GDP is less than the GDP in the previous year. Imagine this year's GDP is 10 million BTC and last year's was 10.1 million BTC. On first glance one would think growth is (10 - 10.1) X 100 / 10.1 = - 0.99 %. But, let's say the inflation rate (lost coins) is 2%, which changes the calculation into (10 - (10.1 X0.98)) X 100 /(10.1X0.98) = 1.03%.

See how that works?

Why do you pro-inflation/pro-deflation advocates ALWAYS leave time-to-effect out of the analysis? You have no credibility if you base all your analysis on 10-year scales where time-to-effect becomes negligible. The average person deals with week to week, month to month, maximum two year time scales.

So far I see how neither side has a clue.

Deflation is good for those who have fiat stashed and owe nothing on property.
Inflation is good for those who have nothing stashed and owe on property.

As for saying that people who have no savings spend too much. They spend nothing. They earn nothing. They simply move money for the rest of the economy and essentially work for free.

In order to spend, you need disposable income. They have none.

If any analysis is done without taking into account deliberate and easily demonstrated bankster warfare against municipal funds and communities (yes I can), then it is bullshit.

[Lloydie]

Income does not go down if everything goes down, it means it's easier to earn money because you don't have to earn as much of the currency you're paying in, this is another bullshit statement perpetrated by pro-inflation economists that ignores basic mathematics which I am getting quite annoyed by nowadays.

Tell me, how exactly does it mean that people have to work more if things are cheaper? Are you actually going to use an example? Or are you just going to keep parroting that same bullshit again and again?

Let me give you an example:

If I wanted to get a Cintiq it would cost me:

$1000

In Bitcoin that's roughly 1.22 BTC - 1.22BTC is worth a tiny bit more than $1000 lol, I'd have to go into 8 decimals to calculate it properly but I'm not that good at maths

Now the problem here is you assume that deflation will carry on infinitely, that's just not the case because there is a hard limit of 21 million coins, so eventually if hyperinflation keeps going $1000 will be 0.00000012 BTC rather than 1.2 because of course a Bitcoin can be broken up into decimals. So in actual fact over time it will simply get cheaper and cheaper to buy a cintiq assuming you still want to value things in dollars but I suspect by the time 1 BTC reaches higher than $3000 people are going to think twice.

In inflationary money like the dollar it would be the opposite, because the federal reserve keeps printing so much you'd have $1000 at first but because they keep printing the money the overall money supply increases and the suppliers are FORCED to charge higher because everything else goes up to eventually you're going to end up with a Zimbabwe situation where you're going to have to pay $100,000,000 just to get something like a Cintiq. The thing you fail to realise is that in an inflationary economy everything goes up when you print money you can't just have it affecting 'the rich' or benefiting 'the poor' and that means that in order to get anything they need anyone would have to work longer hours for less pay because again suppliers and employers would be forced to put the prices up to cover their needs as well as the price for materials and tools etc. would have gone up along with anything else. These are just rough estimates I've done in my head but I think pretty realistic of the kind of problems we'll be facing in the next five or so years.

Yes, you can maybe remedy the situation by giving tax cuts and fixing prices like our leaders have been doing currently for their own ends now, but it's only a temporary fix and it doesn't get rid of the overall problem which is the fact that you're increasing the currency supply and forcing prices up thereby making it more difficult to get what they need never mind what they want.

If anybody still ignores this, you really are a moron.

+999999999999999999999999999

[Lloydie]

C'mon gentlemen, let's be reasonable and use that common sense. Deflation is not a problem, and not the cause of any drama in any society. If we do our maths correctly then we'll realize that in a deflationary situation all prices shall go down. So economic growth can still be achieved even when the current GDP is less than the GDP in the previous year. Imagine this year's GDP is 10 million BTC and last year's was 10.1 million BTC. On first glance one would think growth is (10 - 10.1) X 100 / 10.1 = - 0.99 %. But, let's say the inflation rate (lost coins) is 2%, which changes the calculation into (10 - (10.1 X0.98)) X 100 /(10.1X0.98) = 1.03%.

See how that works?

Amen brother! Finally, some really excellent perspectives.

[Lloydie]

first lol at stagflation dude. You always try to keep inflation up when UE is high.. that is the feds mission. and the theory of stagflation, is that the markets are responding to the feds measures and anything done to LOWER INFLATION.. would increase UE.


and both inflation or deflation in high degrees suck balls and we have seen it several times with BTC.. not sure why people cant grasp it.
society likes a stable currency.. with our capitalistic and growing population, a slight bit of inflation is preferred.


Inflation sucks, it makes people not want to sell. Why sell a car for 2,000 today, if you can get 4k tomorrow?


deflation sucks. Why buy a car for 2000 today, when you can get it for 1000 tomorrow.

BOTH CONCEPTS  HARM AN ECONOMY. as they slow down economic activity as people wait for stability before buying discretionary goods.

A slight bit of inflation might be good but share prices rising more than 20% in 2013 is not good. Property prices rising more than 10% is not good.  Yes, that is your purchasing power being devalued.

Deflation I can live with. I'd buy a car for 2000 even if I could have it for 1000 tomorrow. The Norwegian guy who bought an apartment by selling his btcs proves this point. He sold at around $886 per btc knowing full well that btcs could rise further. He retained 80% of his btcs and spent 20%.

I like Btc being deflationary. It will prove that deflationary systems can work.

I'm sorry, but I don't understand. Why would anyone pay more for something today when they know it will be more affordable tomorrow? Why would you ever buy a car for $2000 when you could have it for half that price the next day? That makes zero sense.

Also regarding the guy who bought an apartment. That's all well and good, but that's pure speculation. That's not confidence buying, it's speculative investing. He can't be sure the price of btc will rise over time, he can't be sure if the price will fall, neither can the seller.  and joulesbeef is correct. Deflation you most certainly cannot live with if it is sustained over time. Same with hyper inflation. 

And I can't understand why this is such a difficult concept! For the same reason that Bitcoin has any value at all, or why gold is worth more than just what can be made of it in electronics etc: Percieved value. Intrinsic value is actually nonexistent, because even it is based on our perception. It is meaningless without the human context. Gold connectors? That's not intrinsic. That's potential. And there is no potential without human perception. A cat certainly gives zero fucks about gold, or bitcoins.

Therefore people will buy a car today, despite it being assuredly less costly tomorrow, for the same reason. The percieved value of owning a car today is worth more than the value lost by buying it today.

Even in our economic system, where most things inflate, Moore's law provides a clear example of his occurring on a wide scale, regularly. Every 18 months, computing power has doubled while the price has halved. Not even the same for half: DOUBLE, for HALF. Why does anyone buy a computer, or a tablet, or an iPhone? Why don't you wait?

You are a really smart dude. Thank you. Thank you. Thank you.

[Lloydie]

Income does not go down if everything goes down, it means it's easier to earn money because you don't have to earn as much of the currency you're paying in, this is another bullshit statement perpetrated by pro-inflation economists that ignores basic mathematics which I am getting quite annoyed by nowadays.

If my small business makes less, my small business must pay employees less.

What part of second degree function do people not understand?

No it mustn't pay less, that doesn't make any sense, you're applying ultimatums to a situation that doesn't require it.

I love how you're dodging the math with rhetorical declarations. So right, I could just fire people. Still less income. See there's this thing called investors. Some of them are top tier and some other are second tier. Top tier investors expect the value of the company to rise. If I make less and pay the same, that goes down. Second tier investors expect the short term opportunity value to go up. So they expect me to cut wages but keep production capacity. Yeah income goes down.

So I've shown two cases where income must go down.

Oh and that other thing: if I fire people production capacity goes down. Oops. That ends up causing a dive for both tiers.

Your entire position rests on projections from theory unbounded by time or speed of change. This is disturbing. Employee purchasing power increase does not manifest instantaneously. It lags. Hell, IT RESISTS. The vendor can always last longer in this staring contest.

Like I said before. The 1% owning shares doing fuck all for their capital gains potentially earning less income. I can live with that. The rentier class should be eliminated per original Keynesian economics.

The banking sector, shuffling paper to allocate resources. Them I can live without. Especially in a debt free world. We don't need debt funding and complex financing. It's all bullshit. Let's go with equity financing. Way more robust. No runs on debts. Elimination of debt crisis. End of story.

With real skin in the game, even dumbasses on Wall Street will make rational choices.

[zerodrama]

Like I said before. The 1% owning shares doing fuck all for their capital gains potentially earning less income. I can live with that. The rentier class should be eliminated per original Keynesian economics.

The banking sector, shuffling paper to allocate resources. Them I can live without. Especially in a debt free world. We don't need debt funding and complex financing. It's all bullshit. Let's go with equity financing. Way more robust. No runs on debts. Elimination of debt crisis. End of story.

With real skin in the game, even dumbasses on Wall Street will make rational choices.

I'm for as little financing a distance as possible. Money needs to be a tool. Your real savings should be your property and reputation in the community where people know they can depend on you when things break.

Look I'm for less employment and more person to person, community to community, trade and commerce. We have the means to set it up. Global economics is all bean counter fantasy. But the fact is, we're ALL paper pushers. Inflation and deflation benefit one side or the other, when that side is in the position to make itself more secure through that option. Pushing for deflation in the short term just makes the rentier class less able to pull themselves out. Pushing for inflation makes their costs go up. It's lose-lose unless the rentier class gets inflation in money in their pocket and deflation in cost. But this isn't happening.

Either way people get screwed. The they write manifestos based on the idea that they will always get screwed, which isn't an unreasonable premise.

[Lloydie]

Like I said before. The 1% owning shares doing fuck all for their capital gains potentially earning less income. I can live with that. The rentier class should be eliminated per original Keynesian economics.

The banking sector, shuffling paper to allocate resources. Them I can live without. Especially in a debt free world. We don't need debt funding and complex financing. It's all bullshit. Let's go with equity financing. Way more robust. No runs on debts. Elimination of debt crisis. End of story.

With real skin in the game, even dumbasses on Wall Street will make rational choices.

I'm for as little financing a distance as possible. Money needs to be a tool. Your real savings should be your property and reputation in the community where people know they can depend on you when things break.

Look I'm for less employment and more person to person, community to community, trade and commerce. We have the means to set it up. Global economics is all bean counter fantasy. But the fact is, we're ALL paper pushers. Inflation and deflation benefit one side or the other, when that side is in the position to make itself more secure through that option. Pushing for deflation in the short term just makes the rentier class less able to pull themselves out rape the 99%. Pushing for inflation makes their costs go up farks up the poor, especially the unemployed. It's lose-lose unless the rentier class gets inflation in money in their pocket and deflation in cost are told to get real jobs and are not allowed to sit on their bums reaping capital gains for doing fuck all. But this isn't happening.

Ftfy

[zerodrama]

Like I said before. The 1% owning shares doing fuck all for their capital gains potentially earning less income. I can live with that. The rentier class should be eliminated per original Keynesian economics.

The banking sector, shuffling paper to allocate resources. Them I can live without. Especially in a debt free world. We don't need debt funding and complex financing. It's all bullshit. Let's go with equity financing. Way more robust. No runs on debts. Elimination of debt crisis. End of story.

With real skin in the game, even dumbasses on Wall Street will make rational choices.

I'm for as little financing a distance as possible. Money needs to be a tool. Your real savings should be your property and reputation in the community where people know they can depend on you when things break.

Look I'm for less employment and more person to person, community to community, trade and commerce. We have the means to set it up. Global economics is all bean counter fantasy. But the fact is, we're ALL paper pushers. Inflation and deflation benefit one side or the other, when that side is in the position to make itself more secure through that option. Pushing for deflation in the short term just makes the rentier class less able to pull themselves out rape the 99%. Pushing for inflation makes their costs go up farks up the poor, especially the unemployed. It's lose-lose unless the rentier class gets inflation in money in their pocket and deflation in cost are told to get real jobs and are not allowed to sit on their bums reaping capital gains for doing fuck all. But this isn't happening.

Ftfy

Are we talking about the same thing?

LOL. MY BAD. I kept reading/writing rentier as renter.

Ok we're on the same page then. LOL.

[Impaler]

If the OP actually wanted a serious explanation of why Deflation is bad for the economy then he should not be asking the deepest darkest fever-swamp of inflation haters in the world for the answer, if on the other hand he was looking to get his biases confirmed (as I suspect) he has come to the right place.

That being said I'll give him the in depth answer

In a deflationary currency the rates of interest will be very high because few people wish to loan money and borrowers will be very rare because the rising value of the currency can make their debt burden huge.  BTC matches expectations with very little loan activity and very high rates, in this link you can see a 16.33% rate offered https://www.bitbond.net/buyer/listings?utf8=%E2%9C%93&q

The effect of high interest rates are that only business ventures that have a very high rate of return will be funded, either by outside investors or with savings, the motivation to invest is equal, the act of loaning money just connects money with entrepreneurs.  In BTC world this has generally meant ASIC miners, drugs, gambling, currency exchanges and financial processors are the only things funded.  We do not hear about normal 'main-street' businesses like a retail store or a restaurant taking out BTC loans, these things are just not profitable enough to pay that kind of cost.  Everything else gets neglected and the lack of investment will cause productivity to drop even as average return on investment goes up, the lower overall productivity will lower total consumption in the future.  And Consumption is the one and only goal of all economic systems, thus deflationary currency is a poor system.

[FenixRD]

Consumption is the one and only goal of all economic systems, thus deflationary currency is a poor system.

We're going to disagree there. Which is okay, I suppose, but just remember that not all advocates of  ---- actually, screw that too, I'm not a deflation advocate; I believe that there should be zero intervention into the effective interest rate. Fix supply, take Bitcoin-like system with "zero" friction of transfer and near-zero intertia of V, and there's no way that it will be less efficient, and will almost assuredly be more so. Less human labor involved in tampering with the money, let the machines do the work transferring and securing value, and we get more free time to either pursue hobbies, work on projects that benefit humanity, etc. Janitorial duties that can be left to machines, should. If a Roomba can vacuum just as well, that's not stealing jobs from anywhere, that's doing work that used to cost money, for much less money; freeing that labor for other things. It makes no sense that this wouldn't work for value transfer systems too.

Anyway, by my study, money is a token, and it is *itself* a proof of work. Work done in the past, by you, or someone who gave it to you. You trade it for someone else's work, and we come to mutual agreements in the open market about what a piece of work is worth. That changes with time and variables like supply and demand. But it eliminates trying to figure out whether the work involved in creating three oven-ready 12-lb chickens of a certain quality, is worth ten pounds of raspberries from this particular farm and reputation during a fantastic season for growing berries etc etc. We just trade proofs-of-work (this is why it's so intriguing that mining and the chained-hashes model is called performing proof-of-work to me) and call it a day; and it doesn't matter whether it was really my work or not. It is of course important that proofs-of-work cannot be faked. Work can't be faked, so it's troublesome if the proof can.

Likewise, if I sweep your floor for 3 hours, we come to an agreement on the value of that work, and you pay me in... a proof of it, a token, money.

Over time, the net amount of work is the sum of all previous work, and even more happily, its value is greater than just the sum of the raw parts. Knowledge on top of knowledge. The global GDP is going up as long as humans are learning and discovering and inventing and becoming more efficient. So, firstly, using Bitcoin therefore directly accelerates our rate of acquiring efficiency, thereby raising global "wealth".

There's a lot to write on this... I hope this makes sense. I have a massive paper on the grand unified economic theory tying together the reasons why time is money, and proofs of work, etc.

[Lloydie]

If the OP actually wanted a serious explanation of why Deflation is bad for the economy then he should not be asking the deepest darkest fever-swamp of inflation haters in the world for the answer, if on the other hand he was looking to get his biases confirmed (as I suspect) he has come to the right place.

That being said I'll give him the in depth answer

In a deflationary currency the rates of interest will be very high because few people wish to loan money and borrowers will be very rare because the rising value of the currency can make their debt burden huge.  BTC matches expectations with very little loan activity and very high rates, in this link you can see a 16.33% rate offered https://www.bitbond.net/buyer/listings?utf8=%E2%9C%93&q

The effect of high interest rates are that only business ventures that have a very high rate of return will be funded, either by outside investors or with savings, the motivation to invest is equal, the act of loaning money just connects money with entrepreneurs.  In BTC world this has generally meant ASIC miners, drugs, gambling, currency exchanges and financial processors are the only things funded.  We do not hear about normal 'main-street' businesses like a retail store or a restaurant taking out BTC loans, these things are just not profitable enough to pay that kind of cost.  Everything else gets neglected and the lack of investment will cause productivity to drop even as average return on investment goes up, the lower overall productivity will lower total consumption in the future.  And Consumption is the one and only goal of all economic systems, thus deflationary currency is a poor system.

You mean millions of empty apartments in china counting as GDP growth is good? Wow.

You mean property prices rising by more than 10% and out of average income families is a good thing? Wow again.

Are you saying that Coffee shops selling coffee for btcs are not real businesses? Gimme a break.

Just because businesses are not taking out loans does not mean that business is not happening. It is called equity financing and it works perfectly fine. Yes, it does require a thought adjustment but it works perfectly fine. There will be zero possibility of debt crises.

Consumption is not the goal of all economic systems. That is the biggest lie of the current monetary system.

See Bhutan. The economic system there is not based on consumption.

Economics is actually about the allocation of scarce resources for the benefit of all.  I see a deflationary system as being able to achieve this objective better than the current fiat money system.

Can we prove that a deflationary system is better? Well, we are sure going to give it a try. I for one am sick of the top down inflationary system that enriches the 1% at the expense of the rest of us.  

I hate debt with a passion. I think it is equivalent to slavery.