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Author Topic: The irony of the Bitcoin guinea pig.  (Read 1558 times)
jballs
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January 17, 2014, 12:23:24 AM
 #21

^ Infinite divisibility ^

deflationary currency or Inflationary ? which one would you hold?


The key word is "hold".

Half the population doesn't hold money. Most of the population has a negative net worth. Partially a side effect of the system as is, granted. But just because everyone switched to bitcoin wouldn't mean they could all suddenly afford a house, or a car, or whatever they need that they cannot presently afford. Most of the population holds debt, not money. That is a no brainer, I would much prefer to hold a debt in an inflationary currency. A deflationary currency only benefits the wealth holders, which tend to gravitate towards 1-10% of the population.

The point being, we had that system. We didn't just start with a planned inflationary system. We evolved into that because it fixed some of the problems of a deflationary system. You can go back to a deflationary system to fix the inflationary problems, but you are going to face the same problems they faced before the system that was implemented to fix them.

The majority if people will not want a deflationary currency for this reason. Only those with positive net worth and assets to save will want it. 

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Spendulus
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January 17, 2014, 02:55:33 AM
 #22



Are you aware of the disastrous effects that deflation had prior to the advent of designed inflation?

At the end of the 19th century there was a major political upheaval around the issue of bimetalism....

But wouldn't the analogy be if someone somehow tried to establish a similar fixed rate of exchange between the USD and bitcoin?  That was the problem with bimetalism, the governmnet ordering the ratio.

Hyack argues very convincingly in "A choice in currencies" that giving consumers freedom of choice in currency, outside of government mandates, solves virtually all these problems.

lunarboy (OP)
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January 18, 2014, 06:05:42 AM
 #23

^ Infinite divisibility ^

deflationary currency or Inflationary ? which one would you hold?


The key word is "hold".

Half the population doesn't hold money. Most of the population has a negative net worth. Partially a side effect of the system as is, granted. But just because everyone switched to bitcoin wouldn't mean they could all suddenly afford a house, or a car, or whatever they need that they cannot presently afford. Most of the population holds debt, not money. That is a no brainer, I would much prefer to hold a debt in an inflationary currency. A deflationary currency only benefits the wealth holders, which tend to gravitate towards 1-10% of the population.

The point being, we had that system. We didn't just start with a planned inflationary system. We evolved into that because it fixed some of the problems of a deflationary system. You can go back to a deflationary system to fix the inflationary problems, but you are going to face the same problems they faced before the system that was implemented to fix them.

The majority if people will not want a deflationary currency for this reason. Only those with positive net worth and assets to save will want it.  

The debt they hold is suddenly not such a burden, if it is linked to wealth measured in an increasingly worthless fiat denomination. Granted the poor population of the first country to 'forced' to adopt Bitcoin wholesale will not miraculously be able to afford houses where once the couldn't, but at least they won't have to pay off their first world debt before laying the foundations.

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January 18, 2014, 12:32:50 PM
 #24

Yes Bicoin will be adopted in those countries. No not by their governments.

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
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January 18, 2014, 09:43:50 PM
 #25

Yes Bicoin will be adopted in those countries. No not by their governments.

Governments are made up of individuals, and in the case of the most corrupt governments those individuals are sock puppets to the selfish rich of the land. Whilst I agree the government will probably be the last to 'officially' recognise a non state endorsed crypto currency, I can not see how the wealth structure will change significantly?

A broken government such as Argentina may fail if their fiat fails, but the key holders to the wealth of the nation will still be at the top and will regroup after the cards have been shuffled. Bitcoin is not the elixir many believe it to be. It will not cure all evil, but hopefully at least prevent the game from being rigged.
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