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Author Topic: Economic FAQ  (Read 4307 times)
kiba
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July 30, 2010, 09:58:54 PM
 #21

The wise behavior in deflation stage is to hoard as much as you can. But it kills the economy.


Economic deflation mean that people are creating so much goods, that it effectively outstrip the demand. The price of computers has been deflating for a while, but it means bigger markets over time. People don't buy computers every year, but it become more attractive to do so every year.

Hoarding will means that you keep hoarding until you see an attractive price and buy. Effectively, hoarding is determined by your time preference. If you hoard more, you could get more at a later date, but then you won't buy anything to satisfy your needs, for now.

An extreme economic deflation will only mean our time preference will stretch, but it does not mean that our time preference can be stretch to infinity. We need food and we will buy food.

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FreeMoney
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July 30, 2010, 10:02:08 PM
 #22

The market had been growing and the value of coins is increasing. You didn't explain when this becomes bad.

I guess the people who sells their services or goods for BC do it just for fun. I do not think the role of BC in their busyness is serious.

BTW, if you'll check the statistic on https://www.bitcoinmarket.com/ you'll see the value of deals with BCs is permanently decreasing. It is too early to make any conclusions, but... I guess it would be nice if the people who do their business with BC publish here their statistic: how many deals they make in BCs in a month i.e. Just to analyse the activity. If there are no much deals with BCs (especially comparing to the deals using the real money) a service provider can ask any price in BCs, it would not affect  his busyness much.

Are you saying volume is decreasing?

The number of BTC traded on that exchange is decreasing. Assuming the $ is worth about what it was last month, the value of BTC traded is not really decreasing.

And there is another market with increasing numbers of BTC traded.

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falkenberg
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July 30, 2010, 10:20:44 PM
 #23


Hoarding will means that you keep hoarding until you see an attractive price and buy. Effectively, hoarding is determined by your time preference. If you hoard more, you could get more at a later date, but then you won't buy anything to satisfy your needs, for now.
....
 We need food and we will buy food.

Yep, I heard this argumentation already. Here, on the forum Smiley
Just explain me why anybody would buy something to produce something to get profit (a typical business scenario) if he can just keep the money in BCs and get the same or higher profit out of deflation?

PS. We'll see how it works. According to my view BC is an experimental currency, it will show it's potential in practice. I'm just passing the worries of others who know the economy better then me Smiley
kiba
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July 31, 2010, 12:46:30 AM
 #24


Yep, I heard this argumentation already. Here, on the forum Smiley
Just explain me why anybody would buy something to produce something to get profit (a typical business scenario) if he can just keep the money in BCs and get the same or higher profit out of deflation?


Than the economy will shrink until it become profitable to produce again.

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July 31, 2010, 01:43:36 AM
 #25

The market had been growing and the value of coins is increasing. You didn't explain when this becomes bad.

I guess the people who sells their services or goods for BC do it just for fun. I do not think the role of BC in their busyness is serious.

BTW, if you'll check the statistic on https://www.bitcoinmarket.com/ you'll see the value of deals with BCs is permanently decreasing. It is too early to make any conclusions, but... I guess it would be nice if the people who do their business with BC publish here their statistic: how many deals they make in BCs in a month i.e. Just to analyse the activity. If there are no much deals with BCs (especially comparing to the deals using the real money) a service provider can ask any price in BCs, it would not affect  his busyness much.

The main reason a merchant will not hoard is cash flow.It doesnt matter if you are exchanging bitcoins for bitcoins but if you need to purchase goods in other currencies you continually have to convert bitcoins back to your currency of choice unless you have an endless supply of cash on hand.  Smiley
falkenberg
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August 01, 2010, 06:35:23 PM
 #26

Quote
Than the economy will shrink until it become profitable to produce again.
Quote
if you need to purchase goods in other currencies you continually have to convert bitcoins back to your currency

That's exactly what I am talking about! I just put my opinion here that BCs need other currency in order to have the ability to shrink BC economy when needed Smiley
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