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Author Topic: Inflation and Deflation of Price and Money Supply  (Read 985587 times)
plemechton
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January 29, 2021, 02:13:17 AM
 #1281

In the end it is pretty simple the as the money supply has to be

large enough such there is a ready supply of capital in economy for the free efficient optimal exchange of economic goods and services
restricted enough such that the currency is not devalued as what happens when the supply of money exceeds the current demand, this fuels Inflation - Wikipedia which is bad
large enough such that the currency is not appreciating as what happens when the supply of money cannot satisfy the current demand, this fuels Deflation - Wikipedia which is bad
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February 11, 2021, 02:34:58 PM
 #1282

From my learning, in school about economics, I know that there is an inverse relationship between Price and Money Supply. Inflation also deals with an increase while deflation deals with a decrease in the price of goods and services. The topic really broaden my knowledge with the relationship with bitcoin.

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February 18, 2021, 12:41:58 PM
 #1283

you are hopelessly brainwashed by the economists that brought you the shitshow of current fiat currency. Deflationary money is desirable, and a cornerstone of a wealthy society. Inflation makes society spend on things that are not worth spending on. Not only does it waste purchasing power, it also is a primary driver of useless spending that is destroying the planet.
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February 18, 2021, 01:17:23 PM
 #1284

You shouldn't worry about inflation if you don't get paid in the past or forced to save cash instead of investing in stocks (for instance).
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February 20, 2021, 09:54:01 AM
 #1285

Deflation has a higher probably of occurring the higher the price rises with a near absolute certainty when it's equal to the GDP.
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June 11, 2021, 06:11:51 PM
 #1286

The crypto world and cryptocurrencies will most likely change the way economists see inflation or deflation. Inflation can be often linked to issues of FX as some countries see their fiat currency rising which has an impact on the exportation of goods and services. If you think about currencies that are transnational, the way we analyze inflation today will have to evolve to the new models.
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July 10, 2021, 09:46:16 PM
 #1287

Actually,Inflation and Deflation are two opposite terms used in referring to the level of how good or bad the economy of a Nation is ........Now, where you have Inflation as the increase in price of goods and services at a particular period of time...... Deflation is the opposite of that definition.
These two are usually being used by Economist and general evaluation of an Economy by either an Analyst or satistics giver to evaluate or interprete the level of an Economy in the world economy.
Jazzi Mahesh
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July 23, 2021, 06:11:59 PM
 #1288

Deflation would generally decline in the prices for goods as well as services that occur when the rate of inflation falls below 0%. Deflation would take place naturally, if as well as when the money supply of an economy is limited.
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July 29, 2021, 09:19:49 AM
 #1289

In the end it is pretty simple the as the money supply has to be

large enough such there is a ready supply of capital in economy for the free efficient optimal exchange of economic goods and services
restricted enough such that the currency is not devalued as what happens when the supply of money exceeds the current demand, this fuels Inflation - Wikipedia which is bad
large enough such that the currency is not appreciating as what happens when the supply of money cannot satisfy the current demand, this fuels Deflation - Wikipedia which is bad


There are many so called 'definitions' of inflation/deflation nowadays. Your quote gives a true statement but does not tell the whole story.

The velocity (flow) of money is always perceived as the way it can influence price levels. If we think of money as merely a ledger (which is all it is) , showing the balances of debtors and creditors, then price levels will be influenced both by transactions, and by the confidence levels engendered by stock of debt or credit. The confidence (or fear in the case of debt) gives rise to changes in quoted price levels, but the actual transactions can be different (compare with say, the stock market system).
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August 13, 2021, 02:56:01 PM
 #1290

these two concepts are closely related, but have completely different definitions. inflation is an economic phenomenon, and deflation is one of the measures taken to get out of a difficult economic situation such as inflation. inflation is the depreciation of paper money, and deflation is the removal of excess money from circulation in order to increase its purchasing power.

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sonicdx10
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August 17, 2021, 06:16:20 AM
 #1291

An area dedicated to discussing the differences of these two terms and the theories supporting them.

I'm looking forward to an in-depth discussion on the subject! I've noticed that confusion between the two seems to come up quite a bit on the forum, and thought it may be reasonable to dedicate a thread on the matter.

Pulled from a discussion in Wall Observer



Price-Deflation is what you are used to hearing about in Bitcoin. That term is used to describe the prices of goods/services as they decrease, because the value of Bitcoin goes up.

Price-Inflation is the opposite. When prices of goods/services increase because the value of Bitcoin goes down.

So, when dealing with Price-Inflation or Deflation, there is an inverse relationship of price and value, in regard to goods/services and Bitcoin.

Example: As the Bitcoin price goes from $10 to $20, the prices of goods/services goes down from 20BTC to 10BTC. As the Bitcoin price goes from $20 to $10, the prices of goods/services goes from 10BTC to 20BTC!

Why does the price of Bitcoin go up and down? The price of BTC goes up and down based on the exchange rate, or market price, which is set by buyers and sellers, or traders. They directly trade the Bitcoin currency with all sorts of other currency, and even some with gold; the most popular being the USD (US dollar). They set the price when executing orders to buy or sell. I will get into the actual reason of why the price fluctuates in the last section.



Now that we've gone over PRICE Inflation and Deflation (which honestly, to me, is a term made popular by Keynesian's to hide the real facts, as price inflation/deflation is simply the market exchange rate, reflective of the money supply into a currency from itself and other currencies), let's go over the REAL inflation/deflation of a currency (otherwise known by many as Monetary Inflation).

MoneySupply-Inflation is when the value of Bitcoin decreases when the total supply of Bitcoin increases. In our current state, this is at a generation rate of 25 BTC every 10 minutes.

MoneySupply-Deflation will essentially never occur. It is when the value of Bitcoin increases when the total supply of Bitcoin decreases. This may happen, say, when someone loses their private key and all the BTC associated with it are lost. This effectively "makes the rest of us richer". That being said, there is a SET DECREASE in the generation rate of BTC, so you have sort of a "deflationary effect" in the value, as long as more exchange occurs for BTC at a rate which is faster than that set generation rate.

When all 21 million coins are produced, the MoneySupply will be neutral, and the value will continue to increase (prices will decrease, consequently), as long as people continue to exchange in BTC.

This leads me to the last section.



What determines the PRICE of Bitcoin? The VALUE of Bitcoin at a particular moment.

What determines the VALUE of Bitcoin? The SUPPLY and DEMAND of Bitcoin in the economy.

What determines the SUPPLY of Bitcoin? Currently, the MoneySupply-Inflation rate of 25 BTC every 10 minutes, and traders willing to SELL Bitcoin to BUYERS in exchange for other supplies of money (currencies).

What determines the DEMAND of Bitcoin? Traders willing to BUY Bitcoin from SELLERS in exchange for other currencies.


Therefore: BUYERS, SELLERS, and MONEYSUPPLY-INFLATION (miners) determine the VALUE of Bitcoin, which determines the PRICE of BTC as BUYERS and SELLERS trade based on that VALUE (or supply and demand) of Bitcoin.


We don't exactly know the totality of the supply and demand. Sure, we could try and aggregate data from all the exchanges, but we will never be accurate as there are exchanges which can not be accounted for (OTC). The cool thing is that we DO know the MoneySupply rate, and we DO know the exchange rate. From this, we can determine a real value of Bitcoin when simply multiplying the two factors; a sort of inflation-adjusted view of the currency.

Effectively, the quantitative analysis of supply and demand is really what the currency exchange traders attempt to accurately determine which is conveyed through buying and selling of Bitcoin, setting a VALUE via the PRICED exchange rate of the currency. On a side note, most of the big Market Makers (FX Traders) use this price movement as a way to make a profitable living, as well. Especially when price fluctuations are a consequence of hype or fear (bubbles, cliffs), not factual supply/demand data, and are wildly out of the real price range.

Thus, if you analyze the proper macroeconomic data in an attempt to forecast future DEMAND for more Bitcoin (price increase), you will realize some very interesting things, and have a more accurate picture of where the price is going...

Happy trading! Wink

Maybe it is the normal way to see it, the economy/economics & GDP. But what about the equipment required to make Bitcoin possible? (asics) the demand is high and higher every day but prices still the same.
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September 15, 2021, 04:37:40 AM
 #1292


There 'used' to be more truth in forums than anywhere else.  Twitter:  @cryptobitchicks  Spock: "I am expressing multiple attitudes simultaneously. To which are you referring?"  INTJ-A
MNbag
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September 15, 2021, 06:08:05 PM
 #1293


https://www.reddit.com/r/Buttcoin/comments/poavuc/how_do_you_know_the_price_of_bitcoin_is_actually/?utm_source=share&utm_medium=web2x&context=3
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September 16, 2021, 12:34:23 AM
 #1294


You could have just been brave and posted that photo in this forum (no one's gonna downvote you here ;-))

Right click image---> copy image address  ----> choose the little picture button and paste in between the brackets.



"I can explain it to you but I can't understand it for you"

There 'used' to be more truth in forums than anywhere else.  Twitter:  @cryptobitchicks  Spock: "I am expressing multiple attitudes simultaneously. To which are you referring?"  INTJ-A
MNbag
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September 16, 2021, 06:21:40 PM
 #1295


You could have just been brave and posted that photo in this forum (no one's gonna downvote you here ;-))

Right click image---> copy image address  ----> choose the little picture button and paste in between the brackets.



"I can explain it to you but I can't understand it for you"

Can't, I don't have enough merit for images.

Still, the fact that people are talking in fiat doesn't exactly bode well for Bitcoin.
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September 16, 2021, 06:57:31 PM
 #1296



Can't, I don't have enough merit for images.

Still, the fact that people are talking in fiat doesn't exactly bode well for Bitcoin.

BTC is and has been abiding well, paper dollars on the other hand? Not so good.


There 'used' to be more truth in forums than anywhere else.  Twitter:  @cryptobitchicks  Spock: "I am expressing multiple attitudes simultaneously. To which are you referring?"  INTJ-A
MNbag
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September 17, 2021, 02:27:22 PM
 #1297



Can't, I don't have enough merit for images.

Still, the fact that people are talking in fiat doesn't exactly bode well for Bitcoin.

BTC is and has been abiding well, paper dollars on the other hand? Not so good.



Not really.

It is only good in a speculator's sense along with Beanie Babies and rare Pokemon Cards, not in a 'useful for exchange of goods and services' sense.

As a currency, there are more things to consider than how much inflation it gets like being useful for buying goods and services.
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