Why not do this?

[Vector]

(this isn't about Bitcoin, but the general economy)

Why not just have inflation/deflation adjusted prices? Every week the rate is adjusted and tacked onto/off of the price of goods, services, wages, imports, and exports.

This just seems more dynamic and error-proof than controlling the money supply with the Fed buying/selling bonds.

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[Transisto]

Because "goods, serv .. . .... .. .... ... .... .... ect ect " is extremely vague.

[DeathAndTaxes]

Also it would be a massive amount of work.  Every price of everything in the economy would need to change dynamically and all the time.

[Vector]

Well I guess my point is that these days with computers, it really wouldn't be a massive amount of work. Just process the rate at the point of sale and maybe have a sign at storefronts that display that week's inflation/deflation rate.

I'm not pitching this, just floating the idea.

[Als Pawnshop]

Because the government wants to sell it's bonds to the Fed and monetize it's debt.  It has nothing to do with the good of the consumer.  The Fed's job isn't to stabilize prices.  It's just to steal from the consumer in a controlled gradual way so that most people don't notice and don't freak out.

And also because every good is priced according to supply/demand which varies for each good individually, not specifically according inflation/deflation although obviously the latter will have a long term effect across the economy not only on the price level.

[Vector]

What about for Bitcoin?

An automated service that allows a goods/services provider to set a fixed price for their product, and the service automatically adjusts that price according to the daily price fluctations. I'm sure this has been proposed before, right?

[322i0n]

Because the government wants to sell it's bonds to the Fed and monetize it's debt.  It has nothing to do with the good of the consumer.  The Fed's job isn't to stabilize prices.  It's just to steal from the consumer in a controlled gradual way so that most people don't notice and don't freak out.

And also because every good is priced according to supply/demand which varies for each good individually, not specifically according inflation/deflation although obviously the latter will have a long term effect across the economy not only on the price level.

+1

inflation is taxation.

[melvster]

Because the government wants to sell it's bonds to the Fed and monetize it's debt.  It has nothing to do with the good of the consumer.  The Fed's job isn't to stabilize prices.  It's just to steal from the consumer in a controlled gradual way so that most people don't notice and don't freak out.

And also because every good is priced according to supply/demand which varies for each good individually, not specifically according inflation/deflation although obviously the latter will have a long term effect across the economy not only on the price level.

+1

inflation is taxation.

But isnt it a tax where the richest pay more than the poorest?

Could inflation be used positively?

[Vector]

Inflation in it's natural form (supply/demand) isn't taxation at all.

But probably the worst reason for what I proposed originally is that it doesn't account for deflation spirals. If people see that deflation is occurring in the front of a supermarket, they will hold from buying for hopes of a future price decrease, furthering deflation. A situation where you probably want to have some type of 3rd party to stem that from happening.

[paraipan]

...If people see that deflation is occurring in the front of a supermarket, they will hold from buying for hopes of a future price decrease...

do you really believe what you're saying ?

[Als Pawnshop]

But isnt it a tax where the richest pay more than the poorest?

Could inflation be used positively?

I don't think that's even conceivably possible.  There can be no tax where the richest pay more than the poorest.

Since the rich generally own most of the factors of production, taxing them makes everyone poorer including the poor, since less production will occur.  The poor are much less poor than they would be otherwise due to the rich, at least due to the taxable productive rich.

Of course the really rich, the unproductive rich, are the tax collectors themselves.

Furthermore, inflation as a tax is the worse kind because it causes additional distortions in production that end up destroying wealth for everyone through malinvestments and capital consumption.

[Als Pawnshop]

Inflation in it's natural form (supply/demand) isn't taxation at all.

But probably the worst reason for what I proposed originally is that it doesn't account for deflation spirals. If people see that deflation is occurring in the front of a supermarket, they will hold from buying for hopes of a future price decrease, furthering deflation. A situation where you probably want to have some type of 3rd party to stem that from happening.

That's a misuse of the word inflation.  Inflation is only a change in the monetary supply.  Prices can change with or without inflation.

Of course to the extent that buyers withhold spending because they expect prices to decrease, this is a great thing for the economy.  Increased savings and decreased consumption results in capital accumulation and increased standards of living for all.  Why would you want to keep that from happening?  Of course they can't withhold spending altogether due to the inexorable fact of time preference and their own mortality.

[mobodick]

(this isn't about Bitcoin, but the general economy)

Why not just have inflation/deflation adjusted prices? Every week the rate is adjusted and tacked onto/off of the price of goods, services, wages, imports, and exports.

This just seems more dynamic and error-proof than controlling the money supply with the Fed buying/selling bonds.

And how do you plan to make sure that every merchant follows this rule?
And how much would it cost to society to have people running around markets checking if everyone adjusted their prices correctly?
And how much extra cost would this bring to the merchants and how much of that will be charged right back at the buying party?


Profit?

[Vector]

You simply start an IRS equivalent for enforcing the rates. 

Okay, so it's a bad idea. That's what forums are for though right? Criticizing ideas? That's why I posted at least.

[mobodick]

You simply start an IRS equivalent for enforcing the rates. 

Okay, so it's a bad idea. That's what forums are for though right? Criticizing ideas? That's why I posted at least.

Hehe, i like to think of it as a scientific process.
Someone makes a statement and others try to find problems with it.
If it survives then it is propably somewhat true.

Not a bad idea in theory, just very impractical. 

[jtimon]

Inflation in it's natural form (supply/demand) isn't taxation at all.

That's a misuse of the word inflation.  Inflation is only a change in the monetary supply.  Prices can change with or without inflation.

Just to save you misunderstandings. I think Vector means price inflation and Als Pawnshop means monetary inflation.
The original use for inflation was monetary inflation I think, but the most common one today is price inflation.
Specifying the type of inflation you mean is very useful in this forum.

[Steve]

Because the government wants to sell it's bonds to the Fed and monetize it's debt.  It has nothing to do with the good of the consumer.  The Fed's job isn't to stabilize prices.  It's just to steal from the consumer in a controlled gradual way so that most people don't notice and don't freak out.

And also because every good is priced according to supply/demand which varies for each good individually, not specifically according inflation/deflation although obviously the latter will have a long term effect across the economy not only on the price level.

That's not even half of the story...there's also a massive amount of theft that occurs by insiders (i.e. primary dealers) front-running the open market actions of the FED.  Consider that the FED doesn't buy Treasuries directly from the Treasury...it buys them from the primary dealers, who buy them from the Treasury, making a risk free cut in the process.  If you believe the FED, all of that massive buying and selling in the open market for various securities is to stabilize the value of the dollar (or more recently, to provide needed liquidity for the TBTF banks).  But I wonder whether the real purpose of frequent open market actions is simply to create an opportunity for those in the know to siphon off wealth.  The net result is not just inflation, but also those insiders taking advantage of the rest of the market (i.e. your retirement fund performing just a bit worse than it otherwise would).

[Als Pawnshop]

Just to save you misunderstandings. I think Vector means price inflation and Als Pawnshop means monetary inflation.
The original use for inflation was monetary inflation I think, but the most common one today is price inflation.
Specifying the type of inflation you mean is very useful in this forum.

Even if so called "price inflation" is the most common usage it's still a meaningless misuse invented by Keynsians who wanted to obfuscate the meaning of the word and distract us peasants from recognizing the true culprits of inflation who are obviously the people controlling the money supply.  Since prices are different and vary differently for every different good and goods themselves change over time there can be no "price inflation" generally speaking.  There is no metric to possibly compute it from the myriad of individual prices that exist in the economy.  Any metric such as CPI, PPI, etc is completely arbitrary and anyone can come up with any value they'd like since there's no particular computation that's any better than any another.  Prices are what they are and they can rise and they can fall for a particular commodity.  It's completely disingenuous to introduce a word that has a precise meaning in a totally meaningless context that's only meant to destroy the original meaning and cause confusion.   

[jtimon]

I'm not keynesian and I think price inflation/deflation is an important and useful economic concept.
But, yes, you're probably right when you say that the confusion that causes not distinguishing between price inflation and monetary inflation was intentional at the beginning.
Also, it is hard to measure price inflation/deflation and I don't trust central banks reports on CPI. For example, shadowstats gives us a notably different inflation rate using the way of calculating that used to be the official.
I would just monitor the prices of a great basket of commodities to get an idea of the inflation/deflation rate.
But yes, monetary inflation can be saw as a form of taxation and most people ignore that. When the inflation is created through cheap loans from the central bank (instead of the government directly printing and spending new money) , it also distorts the financial market attacking lenders in the short term. The inflation will rise the interest rates later.

EDIT: We can have the monopolies discussion here:
https://bitcointalk.org/index.php?topic=47806.0