Can someone explain how deflation wouldn't negatively effect productivity?

[Inedible]

I can't remember the thread I read it in (it was very recent) but someone explained how deflation would reduce productivity because only businesses that could generate extremely large returns could ever afford a loan to get started.

The only way I could see a deflationary currency working is in the very long term.

Let's imagine Bitcoin is eventually the only currency in use and after some time, 1 yottaBitcoin is worth 1USD in today's money.

At this point I see deflation being close to 0% - people can now freely spend their Bitcoin because there's little value in hoarding and waiting for increased future spending potential.

Now people can take out affordable loans.

At what point in time can we see Bitcoin loans being affordable? 10 years? 100?

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[Lloydie]

I can't remember the thread I read it in (it was very recent) but someone explained how deflation would reduce productivity because only businesses that could generate extremely large returns could ever afford a loan to get started.

The only way I could see a deflationary currency working is in the very long term.

Let's imagine Bitcoin is eventually the only currency in use and after some time, 1 yottaBitcoin is worth 1USD in today's money.

At this point I see deflation being close to 0% - people can now freely spend their Bitcoin because there's little value in hoarding and waiting for increased future spending potential.

Now people can take out affordable loans.

At what point in time can we see Bitcoin loans being affordable? 10 years? 100?

It is unlikely there will ever be a large number of bitcoin loans as bitcoin is deflationary. The implied interest is likely over 12% (ok I pulled that figure out of thin air but it's an educated guess).

Instead we will have equity financing. If it works, you're good, if it doesn't you go down with the ship.

If there is no debt, there will be no debt crises. There will be no bank runs. All the bad stuff that has plagued other financial systems in the past can be ended by removing debt from the system.

The problem of inadequate liquidity will instead be handled by infinite divisibility. At the moment, Satoshis as the smallest monetary unit will cover our economic system for the rest of my lifetime.

Real productivity will rise because we won't have to contend with the destabilising forces of debt resulting in financial crises.

[Inedible]

It is unlikely there will ever be a large number of bitcoin loans as bitcoin is deflationary. The implied interest is likely over 12% (ok I pulled that figure out of thin air but it's an educated guess).

Instead we will have equity financing. If it works, you're good, if it doesn't you go down with the ship.

If there is no debt, there will be no debt crises. There will be no bank runs. All the bad stuff that has plagued other financial systems in the past can be ended by removing debt from the system.

The problem of inadequate liquidity will instead be handled by infinite divisibility. At the moment, Satoshis as the smallest monetary unit will cover our economic system for the rest of my lifetime.

Real productivity will rise because we won't have to contend with the destabilising forces of debt resulting in financial crises.

I think there will be large numbers of loans - just far off in the future, assuming Bitcoin stabilises.

I don't see divisibility solving the liquidity issue. Divisibility doesn't allow me to start my new business venture.

I'm not sure removing debt instability will improve productivity. Even if it does, I see not being able to start new business ventures as a bigger detriment to the economy than any possible improvements.

[Lloydie]

It is unlikely there will ever be a large number of bitcoin loans as bitcoin is deflationary. The implied interest is likely over 12% (ok I pulled that figure out of thin air but it's an educated guess).

Instead we will have equity financing. If it works, you're good, if it doesn't you go down with the ship.

If there is no debt, there will be no debt crises. There will be no bank runs. All the bad stuff that has plagued other financial systems in the past can be ended by removing debt from the system.

The problem of inadequate liquidity will instead be handled by infinite divisibility. At the moment, Satoshis as the smallest monetary unit will cover our economic system for the rest of my lifetime.

Real productivity will rise because we won't have to contend with the destabilising forces of debt resulting in financial crises.

I think there will be large numbers of loans - just far off in the future, assuming Bitcoin stabilises.

I don't see divisibility solving the liquidity issue. Divisibility doesn't allow me to start my new business venture.

I'm not sure removing debt instability will improve productivity. Even if it does, I see not being able to start new business ventures as a bigger detriment to the economy than any possible improvements.

This is because everything is expensive in the fiat money world because debt has already inflated up asset prices.  Best thing you can do is to buy some bitcoins and store it until it hits x value.

Then convert bitcoins to fiat to start your business.

Alternatively, do a business plan and see if anyone on havelock will invest into it.

[Inedible]

This is because everything is expensive in the fiat money world because debt has already inflated up asset prices.  Best thing you can do is to buy some bitcoins and store it until it hits x value.

Then convert bitcoins to fiat to start your business.

Alternatively, do a business plan and see if anyone on havelock will invest into it.

I'm not looking for a loan.

[Lloydie]

This is because everything is expensive in the fiat money world because debt has already inflated up asset prices.  Best thing you can do is to buy some bitcoins and store it until it hits x value.

Then convert bitcoins to fiat to start your business.

Alternatively, do a business plan and see if anyone on havelock will invest into it.

I'm not looking for a loan.

Therefore, you must want to provide loans. Instead, invest your equity.

[Ibian]

It's easy. Don't spend money you don't have and this whole problem goes poof. Assuming it is a problem, which I am still collecting data on.

[HairyMaclairy]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

[Ibian]

In a free market prices will adjust. Problem is we do not have a free market.

[Lloydie]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

[HairyMaclairy]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

[Ibian]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

So you have something to sell. Good to know how to interpret your posts.

[Lloydie]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

All trusts in the English speaking world have an end date. It is the law against perpetuity to stop assholes like you from ruining the world for the rest of us once you're dead as a door nail.

[HairyMaclairy]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

All trusts in the English speaking world have an end date. It is the law against perpetuity to stop assholes like you from ruining the world for the rest of us once you're dead as a door nail.

Correct it is called the Rule against Perpetuities.  Except that it no longer applies in most jurisdictions.

[Lloydie]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

All trusts in the English speaking world have an end date. It is the law against perpetuity to stop assholes like you from ruining the world for the rest of us once you're dead as a door nail.

Correct it is called the Rule against Perpetuities.  Except that it no longer applies in most jurisdictions.

It does where I live, which all I care about because it is not part of the hell hole wherever you call home if the rule against perpetuities has been revoked over there.

Anyway, most likely you misinterpreted the statutes repealing the common law rule against perpetuities. The statutes will set their own limits.

[HairyMaclairy]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

All trusts in the English speaking world have an end date. It is the law against perpetuity to stop assholes like you from ruining the world for the rest of us once you're dead as a door nail.

Correct it is called the Rule against Perpetuities.  Except that it no longer applies in most jurisdictions.

It does where I live, which all I care about because it is not part of the hell hole wherever you call home if the rule against perpetuities has been revoked over there.

Even if it does apply a trust is still good for up to 120 years. Which means assholes like me only need to come along every 4th generation or so.  

*edit* to be honest I might have been thinking of introduction of the wait and see rule. Anyway I'm not puttin them into a trust soon.

I am concerned though that a debt free society could actually be worse for those at the bottom who spend their wages on rent, can never get a loan and so can never get ahead. Bitcoin economics do worry me.

[Lloydie]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

All trusts in the English speaking world have an end date. It is the law against perpetuity to stop assholes like you from ruining the world for the rest of us once you're dead as a door nail.

Correct it is called the Rule against Perpetuities.  Except that it no longer applies in most jurisdictions.

It does where I live, which all I care about because it is not part of the hell hole wherever you call home if the rule against perpetuities has been revoked over there.

Even if it does apply a trust is still good for up to 120 years. Which means assholes like me only need to come along every 4th generation or so.  

*edit* to be honest I might have been thinking of introduction of the wait and see rule. Anyway I'm not puttin them into a trust soon.

I am concerned though that a debt free society could actually be worse for those at the bottom who spend their wages on rent, can never get a loan and so can never get ahead. Bitcoin economics do worry me.

That is not something we need to worry about. In a debt free society there will be less speculation, which is the activity which is lifting house prices out of the reach of ordinary people. Picture a flatter wealth society. Houses will be much more affordable under such a system because rich people can't afford to hold multiple assets using cheap debt. There will certainly be less empty houses, apartments and buildings in every city.

If no one can get a loan, houses will be cheap because it is debt that is driving up the price of houses. It's a sick system that we currently have.

[HairyMaclairy]

Maybe.

I can also remember my parents being unable to buy a house despite earning good money in the 1980s because home loans were very hard to get.  Houses were more affordable back then but few could pay cash

[Inedible]

Maybe.

I can also remember my parents being unable to buy a house despite earning good money in the 1980s because home loans were very hard to get.  Houses were more affordable back then but few could pay cash

And it's this sort of effect that will slow down the economy.

[Kungfucheez]

And in no debt land you cannot get a mortgage so don't expect to own a house unless you inherit it.

Unless no one else has debt also. In which case houses wouldn't be used as speculative assets. Imagine that, affordable houses.

In the medieval era landlords accumulated vast tracks of land.   Didn't make it any cheaper for the peasants.

I already own real estate and rent it out. I'm not intending on selling any of it anytime soon. In fact I might bury it in a trust so my children can't sell it either

All trusts in the English speaking world have an end date. It is the law against perpetuity to stop assholes like you from ruining the world for the rest of us once you're dead as a door nail.

Correct it is called the Rule against Perpetuities.  Except that it no longer applies in most jurisdictions.

It does where I live, which all I care about because it is not part of the hell hole wherever you call home if the rule against perpetuities has been revoked over there.

Even if it does apply a trust is still good for up to 120 years. Which means assholes like me only need to come along every 4th generation or so.  

*edit* to be honest I might have been thinking of introduction of the wait and see rule. Anyway I'm not puttin them into a trust soon.

I am concerned though that a debt free society could actually be worse for those at the bottom who spend their wages on rent, can never get a loan and so can never get ahead. Bitcoin economics do worry me.

That is not something we need to worry about. In a debt free society there will be less speculation, which is the activity which is lifting house prices out of the reach of ordinary people. Picture a flatter wealth society. Houses will be much more affordable under such a system because rich people can't afford to hold multiple assets using cheap debt. There will certainly be less empty houses, apartments and buildings in every city.

If no one can get a loan, houses will be cheap because it is debt that is driving up the price of houses. It's a sick system that we currently have.

But that's not economically feasible in a growing society.