A modest amount of inflation should be part of bitcoin

[BitterTea]

No it wouldn't. We'll just use nanobitcoins or something...

Jtimon claimed that if deflation happened to the USD (haha), the Fed would just print .000000001 dollar bills. I was refuting this claim.

[1713962381]

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[1713962381]

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[jtimon]

The entire system surrounding the dollar is set up for two decimal places of divisibility. Do you have any idea how much it would cost to add more decimal places? Every fucking thing would have to change.

You're right. The change would have a cost. But if the divisibility of the currency were the problem of deflation, the solution would be as easy (although as you say, costly) as that, increasing the divisibility of it.
During inflation, changing the denomination of the bills has also costs (although they may be lesser) and I don't see anybody arguing that high denomination bills is the reason why we don't want inflation. It leads to other and more serious problems.
I estimate the cost of changing the divisibility of the dolar to be lesser than the cost of moving from pesetas, escudos, marks, etc, to euros.
Most people in this forum believe that there's no problem with deflation at all, but I didn't see anyone arguing against it signaling the problem of divisibility.
Bitcoin won't have that problem, cool. But no one is saying that divisibility is the problem with deflation.

[AntiVigilante]

What you don't get is that motivating (rewarding, punishing) is not the only way to bring change.

In fact, were it not for the condescending (and yes it is) attitude, more people would do good without being rewarded. Because you see, aside from the initial 'who the hell is he to tell me what to do?' reaction a different sentiment creeps in. This is far more discouraging. What people start thinking after they get over the initial selfishness (lasts about 5 minutes) are thoughts like the following:

'is this guy ever going to be satisfied?'
'can I do something complex without his royal displeasure figuring into the equation?'
'will the king of moral manipulation say no to an idea that might interfere with his painstaking calculations of where the inflation should be?'
'will I not be able to help a friend using bitcoin because so many newbies hang around the blowhards instead of contributing?'

That's right I said it. The last one is the prime reason why people are more likely to complain about a problem than do something. You elitists got people to wait for you to give the signal with all your hot air. If there's any lack of charity it's your attitude that promotes it.

What you fail to understand is that not only are you not the first nor the only one, but that there's a whole army of elitists like yourself waiting for an opening.

Now as to your elitism. First, people evolve not society and they do it within their lifetime not over generations. Your conception of human progress is completely out of touch. Second, people have already come up with ideas so your characterization of society needing to evolve is as they say 'not even wrong'.

There's plenty of injustice in the world which is inspiring, not motivating, people to help each other. Check out the Middle East and North Africa. Copts and Muslims protected each other.

Last, but not least, there are ways to create subnetworks of bitcoin without imposing a one size fits all adjustment. Bitcoin doesn't need to change. You can create voluntary closed communities for the purpose of giving people a medium of exchange. But it never occurs to you elitists to create models and voluntary structures. Always trying to create the most clever idea that should be imposed on all based on merit alone. Ideas should not be based on merit alone. They should also be agreed to based on the humility of the one proposing.

You fail it.

Get thee behind me. Now watch this drive. See how real activism works.

[MoonShadow]

@antivigilantie, who are you complaining about?

[jtimon]

@creighto
I think it's against me

I don't want to bother any of you.
I've learned many things during the thread and I want to thank you for that. I'll follow Mashuri's advice of reading about austrian economics and maybe after that, I can explain my ideas in a less annoying way for all of you. Probably those ideas will change or at least order themselves a little bit. After that I may need to re-read Gesell too.
I still find the subject "potential problems of inflation and deflation in a free market economy with a stable monetary base" very interesting.
Don't get mad, I'm not that bad. I don't know who wrote that, but I'm sure we have more in common than he thinks.

[BitterTea]

@creighto
I think it's against me

I don't want to bother any of you.
I've learned many things during the thread and I want to thank you for that. I'll follow Mashuri's advice of reading about austrian economics and maybe after that, I can explain my ideas in a less annoying way for all of you. Probably those ideas will change or at least order themselves a little bit. After that I may need to re-read Gesell too.
I still find the subject "potential problems of inflation and deflation in a free market economy with a stable monetary base" very interesting.
Don't get mad, I'm not that bad. I don't know who wrote that, but I'm sure we have more in common than he thinks.

jtimon, I really appreciate your attitude in this discussion. I can be an asshole and/or blunt sometimes, but I try to have productive disagreements whenever possible. It makes it so much easier when the other person is at least willing to do some research on the issue at hand. Thanks for being a good sport!

[AntiVigilante]

@creighto
I think it's against me

I don't want to bother any of you.
I've learned many things during the thread and I want to thank you for that. I'll follow Mashuri's advice of reading about austrian economics and maybe after that, I can explain my ideas in a less annoying way for all of you. Probably those ideas will change or at least order themselves a little bit. After that I may need to re-read Gesell too.
I still find the subject "potential problems of inflation and deflation in a free market economy with a stable monetary base" very interesting.
Don't get mad, I'm not that bad. I don't know who wrote that, but I'm sure we have more in common than he thinks.

It's not you. It's the original poster, pusle. Really got under my skin with the rhetorical condescension, like it's accepted fact. People like that swing between professional melancholy and romanticizing collapse sometimes a few cycles a day. Attitude only gets someone so far, afterwards, trending toward major douche. There's a seething undercurrent that doesn't mesh with the turtleneck dictator mindset, which is why such people can't see it.

We're upset about manipulation of money, but we need to be incentivized? That's a living contradiction for people who are still alive, even if it technically isn't a contradiction. Sorry there's two problems: I have ideas of how to use bitcoin as it is and I don't trust any one who uses the word modest in the title of a post. Those two factors collide making it necessary to respond. Could I have been nicer about it? I honestly don't know how far this person wants to go or how many other Keynesian fanatics think they found a safe haven they can test their pet theories on.

[pusle]

I've learned a lot too and converging to a fixed amount does seem to be the best choice.

I will however defend my original argument about incentive motivates people.
For any animal it doesn't make sense to do something unless there is a reward of some kind.
There would be a strong evolutionary pressure for this trait in any species.
Sure this may not only be short term as some species have evolved cooperation, altruism, social interaction  etc. This increases chance of survival for all members of the group.

We have more or less recreated the jungle, in abstracted form.
This is the reason why our current system works so well,  and other more ideal systems has failed.
We don't have to go out to hunt, but we have to go to work and bring home the money.  Instead of storing  goods you really need, we buy crap we think we need. All the mechanisms are intact, it's just moved one level up on the abstraction ladder.

People are not driven by this alone. If I wanted to make maximum amount of money I'd go into the offshore/oil business, instead I earn half of what I could have. But if people like me ran Wall Street there would never be an economic crash and banks would be mandated to have a 50% reserve ratio.

I may not have the best contact with the world either, but from the stories other people tell me it's quite obvious selfishness and  "path of least resistance" is alive and well in the world. This is why incentives, real or imagined, increases productivity.

But yes, what kind of productivity?  Perhaps it would be better for all to slow down as one poster said.
I don't have the answers, but I'm happy to make people think and discuss even if some get angry and threaten me with violence 


(Yes, my mind is sometimes a convoluted mess )

[CoinOperated]

see here my proposal for controlled inflation : https://en.bitcoin.it/wiki/Controlled_inflation

34.x% is not enough in the 3rd year.  It might need to be 300 or 400% to keep up with demand as it takes off, maybe more.

It's a good concept but needs to be refined, into something self regulating and sustaining.

[abyssobenthonic]

see here my proposal for controlled inflation : https://en.bitcoin.it/wiki/Controlled_inflation

34.x% is not enough in the 3rd year.  It might need to be 300 or 400% to keep up with demand as it takes off, maybe more.

It's a good concept but needs to be refined, into something self regulating and sustaining.

AFAICT, the only way to keep up with demand that's self-regulating is to throw out difficulty adjustment and have blocks be solved faster as more nodes are working (thus faster money creation as more nodes participate).

[Anth0n]

Some people think that deflation is terrible since everyone will hoard the currency and hope that it increases in value. This is just as absurd as saying that with inflation, no goods will ever be sold since no one will want to trade them for a depreciating asset. Predictable levels of inflation and deflation are not very destructive (unlike unpredictable levels), since economies can adjust easily, but they are not necessary.

Also, if the money supply is constant, prices will fall not because of deflation, but because goods and services naturally fall in price in a free-market setting as competition and innovation persist. Here I'm using the Austrian School's definition of inflation and deflation: an increase or decrease in the money supply, respectively, NOT an increase or decrease in the prices of goods and services.

[CoinOperated]

Some people think that deflation is terrible since everyone will hoard the currency and hope that it increases in value. This is just as absurd as saying that with inflation, no goods will ever be sold since no one will want to trade them for a depreciating asset. Predictable levels of inflation and deflation are not very destructive (unlike unpredictable levels), since economies can adjust easily, but they are not necessary.

Also, if the money supply is constant, prices will fall not because of deflation, but because goods and services naturally fall in price in a free-market setting as competition and innovation persist. Here I'm using the Austrian School's definition of inflation and deflation: an increase or decrease in the money supply, respectively, NOT an increase or decrease in the prices of goods and services.

I am using the term deflation with the conventional definition: A decline in nominal aggregate prices.  I have not said that trade cannot take place in the presence of either inflation or deflation. The Austrian definition seeks to emphasize the role of changes in the money supply in inflation, which is not a problem since I am also saying that money supply is an important factor in recent BTC price changes.

While I agree that given a constant money supply prices will tend to fall with economic growth and technological innovation, clearly there has not been sufficient economic growth in the real bitcoin economy to account for the large increase in the price of BTC/USD in the last four weeks.  This price instability I believe is a threat to widespread adoption of bitcoin, as measured by the rapid changing of these prices in the first and second derivative.  The other complication is that like it or not bitcoin exists in the context of much more widely used fiat currencies, and the exchange rates with those currencies will directly influence BTC prices independent of growth or technology.

I think a much more likely cause is not the natural evolution of prices in the face of growth and constant money supply, but rather a drastic increase in external demand wishing to hold the currency because of the novelty of something easily purchased electronically that cannot be easily increased in quantity.  The recent publicity has also contributed. The very attribute making BTC desirable will also be its undoing unless a self-regulating peer-to-peer method of naturally regulating the money supply can be found.

[FreeMoney]

AFAICT, the only way to keep up with demand that's self-regulating is to throw out difficulty adjustment and have blocks be solved faster as more nodes are working (thus faster money creation as more nodes participate).

34.x% is not enough in the 3rd year.  It might need to be 300 or 400% to keep up with demand as it takes off, maybe more.

It's a good concept but needs to be refined, into something self regulating and sustaining.

Both of these are easy to implement. If you don't code someone will probably do it for you for 10-20BTC. They don't exist because no one wants them.

[CoinOperated]

I don't think either of us think it is an implementation issue. The difficulty is to come up with a distributed p2p algorithm that can allow some self-regulating elasticity in the money supply.  Nobody wants it because a good one has not been thought of.

Bitcoin is threatened by a bubble at the moment.  Prices (USD/BTC) are rising because it is perceived as a scarce resource that might have value in the future.  As soon as the underlying perception changes it will go the other direction just as fast because there is little underlying real economy to stabilize it.

[FreeMoney]

I don't think either of us think it is an implementation issue. The difficulty is to come up with a distributed p2p algorithm that can allow some self-regulating elasticity in the money supply.  Nobody wants it because a good one has not been thought of.
 

I know of a good one. It was implemented and thousands of people value it. Others have been thought of, none that anyone expects other people to value in the future or else they would be making them now. I fully admit that something else could catch on, but it's not going to be one where value is dissipated.

Bitcoin is threatened by a bubble at the moment.  Prices (USD/BTC) are rising because it is perceived as a scarce resource that might have value in the future.  As soon as the underlying perception changes it will go the other direction just as fast because there is little underlying real economy to stabilize it.

It's true that if people decide they don't want coins then the price will be low. Why do you think people are going to change their minds?

Why do you say "perceived as a scare resource"? Do you think it is not?

[FreeMoney]

Any one that thinks 'inflation' is a good idea ... no matter how small .. is a high treasonous traitor to their race.

Why simple:
- person X goes to work -> 40 hours per week
- person X's skills/labor/etc are worth  ... oh .. say $5 (I'm using Fiat as it is inflationary based) / hour ...
- person X can pay for housing and food for himself and his family with this amount
- inflation raises prices 5% because some Parasite decided to print UNENDING amounts of MONEY (inflation) devaluing it more
- person X -> working the same time and effort can no longer afford housing and food for himself and his family because the costs went up to do inflation.
- person X watches him family be HOMELESS or STAVE to death now.


 -  inflation just murdered his family .. because his labor/skill no longer have VALUE because YOUR inflation just took it away.
       and you wanted it intentionally ... this is what central bankers want and it's why you and them are evil ...

inflation steals labor, work and the RIGHT to make a living ... unconstitutional high treason  -> only one penalty by common law rule for this crime.

While I roughly agree with the sentiment, it's worth noting that killing people won't be nearly as effective as disengaging from the fraudulent system and using our own solution.

[jtimon]

Any one that thinks 'inflation' is a good idea ... no matter how small .. is a high treasonous traitor to their race.

Why simple:
- person X goes to work -> 40 hours per week
- person X's skills/labor/etc are worth  ... oh .. say $5 (I'm using Fiat as it is inflationary based) / hour ...
- person X can pay for housing and food for himself and his family with this amount
- inflation raises prices 5% because some Parasite decided to print UNENDING amounts of MONEY (inflation) devaluing it more
- person X -> working the same time and effort can no longer afford housing and food for himself and his family because the costs went up to do inflation.
- person X watches him family be HOMELESS or STAVE to death now.


 -  inflation just murdered his family .. because his labor/skill no longer have VALUE because YOUR inflation just took it away.
       and you wanted it intentionally ... this is what central bankers want and it's why you and them are evil ...

inflation steals labor, work and the RIGHT to make a living ... unconstitutional high treason  -> only one penalty by common law rule for this crime.

While I roughly agree with the sentiment, it's worth noting that killing people won't be nearly as effective as disengaging from the fraudulent system and using our own solution.

Deflation is "unfair" too.
-person Y starts a business paying their workers fro 40 hours a week.
-person Y make a building and will use their gains for housing himself and his family with this amount.
...
Deflation occurs and he has not gained enough to cover housing and food for him and his family. Maybe he can't even pay the loan ha asked for starting the business.

@CoinOperated

Do you think demurrage could prevent these bubbles?

http://bitcointalk.org/index.php?topic=6549.0

[BitterTea]

That makes no sense. Prices are falling dute to deflation, so food and shelter is no problem. The interest rate on the loan is 0 or negative, since the creditor will be repaid in BTC with more purchasing power, and is easier to repay. Also, person y probably has been saving money for a while (since deflation causes hoarding, right?) and has enough to get by.

[ShadowOfHarbringer]

@Topic author

This has been discussed many times over and over and over and over again.
This will simply not happen. If it would, I (and probably most of the people who have Bitcoin now) would simply not use Bitcoin.

Deflation is the most important reason why I am using Bitcoin - because i don't want governments or anybody else to steal from me.

Go make a fork, start your own version of Bitcoin and stop littering the forums uselessly.

[jtimon]

That makes no sense. Prices are falling due to deflation, so food and shelter is no problem.

Is no problem for money owners, it is a problem for debtors.

The interest rate on the loan is 0 or negative, since the creditor will be repaid in BTC with more purchasing power, and is easier to repay.

Without demurrage the interest rate on the loan will never go to zero or negative: the money owner would prefer to just hold it.

Also, person y probably has been saving money for a while (since deflation causes hoarding, right?) and has enough to get by.

What if the deflation appears after he starts the business?