Inflation supports economic growth. Prove otherwise in this thread!

[tee-rex]

The fiat system is forced upon us through law, which means that issuing a competing currency to your nation's currency is illegal. Therefore nobody can compete with the gov./central bank. Normally everyone knows that that competition in the market is a good thing, but why is money the exception? Why can the gov. issue more currency, but if the average person does it's called counterfeiting (which of course is theft)?

Actually, money is no exception. We have dollars, euros, pounds, pesos or whatever, and they are all competing with each other at an international scale (or, rather, economics are). You can hold your savings in whatever currency you see most appropriate (or profitable). Also, If I'm not mistaken, bitcoin is not considered illegal in the USA, though it is obviously not a legal tender there.

[herzmeister]

It results in misallocation of capital that will correct at some point and in addition distorts price signals, making the economy less efficient.

Not "less efficient" (in fact, too much efficiency would be a problem: http://www.scribd.com/doc/26248658/Is-Our-Monetary-Structure-a-Systemic-Cause-for-Financial-Instability-Bernard-Lietaer ), but (apart from the hamster wheel bullshit jobs) we get a major collapse or a giant "economic discharge" (i.e. war) every couple of decades.

[btcbug]

The fiat system is forced upon us through law, which means that issuing a competing currency to your nation's currency is illegal. Therefore nobody can compete with the gov./central bank. Normally everyone knows that that competition in the market is a good thing, but why is money the exception? Why can the gov. issue more currency, but if the average person does it's called counterfeiting (which of course is theft)?

Actually, money is no exception. We have dollars, euros, pounds, pesos or whatever, and they are all competing with each other at an international scale (or, rather, economics are). You can hold your savings in whatever currency you see most appropriate (or profitable). Also, If I'm not mistaken, bitcoin is not considered illegal in the USA, though it is obviously not a legal tender there.

Crypto currencies are the solution to fiat! BTC was built with a limit of 21M units because Sastoshi knew the evils of inflation. The distributed nature of the system means that it essentially cannot be shutdown. Governments accepting Bitcoin is not because they wish for competition, but more because they don't have a choice. Of course most of them at this point are ignorant of the technology and will be pressured in due to demand as well.

Sorry but your argument for national currencies being an example of competition is a huge stretch. Up until recently most people in the world could not open up an account in any currency of their choosing. Nowadays it's possible, but sill extremely limited. If these currencies were truly competing then we'd all able to hold a basket of them and even be able to spend them anywhere. Argentina for example has made it illegal for their citizens to save in USD, meanwhile they are inflating the currency at 20% a year and headed for a collapse that will devastate many peoples savings. Gold has been confiscated in the past as well.

[Harley997]

In my opinion, spending just for the sake of spending is not a formula for wealth creation. Savings, investment and wise spending are what makes everyone wealthier.

Inflation is a terrible hidden tax for those on a fixed income and punishes savers. The ones who benefit are the ones who get to spend the newly created money first before the general increase in prices.

Well said, man.

If you invest well then your investments should outpace the rate of inflation, giving you a smaller gain on your investment but still a net gain, the same is generally true for interest on savings accounts and CDs as the interest paid is usually slightly obove the inflation rate, although this is not the case now.

[tee-rex]

The fiat system is forced upon us through law, which means that issuing a competing currency to your nation's currency is illegal. Therefore nobody can compete with the gov./central bank. Normally everyone knows that that competition in the market is a good thing, but why is money the exception? Why can the gov. issue more currency, but if the average person does it's called counterfeiting (which of course is theft)?

Actually, money is no exception. We have dollars, euros, pounds, pesos or whatever, and they are all competing with each other at an international scale (or, rather, economics are). You can hold your savings in whatever currency you see most appropriate (or profitable). Also, If I'm not mistaken, bitcoin is not considered illegal in the USA, though it is obviously not a legal tender there.

Crypto currencies are the solution to fiat! BTC was built with a limit of 21M units because Sastoshi knew the evils of inflation. The distributed nature of the system means that it essentially cannot be shutdown. Governments accepting Bitcoin is not because they wish for competition, but more because they don't have a choice. Of course most of them at this point are ignorant of the technology and will be pressured in due to demand as well.

Actually, cryptocurrencies are not very far from fiat. Both bitcoin and fiat are money since they are called so and accepted as such (no utility besides being a currency). Regarding the limit of 21M coins, it is not really an advantage since, in the first place, it won't be reached any time soon, and it can be changed afterwards if such a necessity should arise, in the second.

As to Bitcoin's generation rate, it is also a double-edged sword (there are pros and cons to this).

[btcbug]

The fiat system is forced upon us through law, which means that issuing a competing currency to your nation's currency is illegal. Therefore nobody can compete with the gov./central bank. Normally everyone knows that that competition in the market is a good thing, but why is money the exception? Why can the gov. issue more currency, but if the average person does it's called counterfeiting (which of course is theft)?

Actually, money is no exception. We have dollars, euros, pounds, pesos or whatever, and they are all competing with each other at an international scale (or, rather, economics are). You can hold your savings in whatever currency you see most appropriate (or profitable). Also, If I'm not mistaken, bitcoin is not considered illegal in the USA, though it is obviously not a legal tender there.

Crypto currencies are the solution to fiat! BTC was built with a limit of 21M units because Sastoshi knew the evils of inflation. The distributed nature of the system means that it essentially cannot be shutdown. Governments accepting Bitcoin is not because they wish for competition, but more because they don't have a choice. Of course most of them at this point are ignorant of the technology and will be pressured in due to demand as well.

Actually, cryptocurrencies are not very far from fiat. Both bitcoin and fiat are money since they are called so and accepted as such (no utility besides being a currency). Regarding the limit of 21M coins, it is not really an advantage since, in the first place, it won't be reached any time soon, and it can be changed afterwards if such a necessity should arise, in the second.

As to Bitcoin's generation rate, it is also a double-edged sword (there are pros and cons to this).

Fiat has nothing to do with its utility. Fiat literally means "by government decree". http://www.merriam-webster.com/dictionary/fiat. So by definition BTC it is a long ways from fiat!

As for the technical side, may the best crypto currency win! I don't use Bitcoin because I like the name. I use it because it is based on sound Austrian principals and at this point in time no other competitor has anything better to offer in my opinion. So far the market is favoring Bitcoin so you're arguing against a lot of people. If you want to understand where I'm coming from check out the links I provided earlier.

I think the bottom line is that whatever YOU think about inflation and technical stuff is fine. There is or will be a currency tailored to your exact desires and you'll be free to use it.

If you think it's use should be mandatory and made law (aka forced upon everyone else!), then I highly disagree because that would be fiat again.

[tee-rex]

The fiat system is forced upon us through law, which means that issuing a competing currency to your nation's currency is illegal. Therefore nobody can compete with the gov./central bank. Normally everyone knows that that competition in the market is a good thing, but why is money the exception? Why can the gov. issue more currency, but if the average person does it's called counterfeiting (which of course is theft)?

Actually, money is no exception. We have dollars, euros, pounds, pesos or whatever, and they are all competing with each other at an international scale (or, rather, economics are). You can hold your savings in whatever currency you see most appropriate (or profitable). Also, If I'm not mistaken, bitcoin is not considered illegal in the USA, though it is obviously not a legal tender there.

Crypto currencies are the solution to fiat! BTC was built with a limit of 21M units because Sastoshi knew the evils of inflation. The distributed nature of the system means that it essentially cannot be shutdown. Governments accepting Bitcoin is not because they wish for competition, but more because they don't have a choice. Of course most of them at this point are ignorant of the technology and will be pressured in due to demand as well.

Actually, cryptocurrencies are not very far from fiat. Both bitcoin and fiat are money since they are called so and accepted as such (no utility besides being a currency). Regarding the limit of 21M coins, it is not really an advantage since, in the first place, it won't be reached any time soon, and it can be changed afterwards if such a necessity should arise, in the second.

As to Bitcoin's generation rate, it is also a double-edged sword (there are pros and cons to this).

Fiat has nothing to do with its utility. Fiat literally means "by government decree". http://www.merriam-webster.com/dictionary/fiat. So by definition BTC it is a long ways from fiat!

I'm talking about the essence of bitcoin, not about formal definitions (sorry if it wasn't evident from the start). To keep things simple, think that Satoshi Nakamoto issued an edict that made bitcoin into a money.

And I didn't understand what you meant by "fiat has nothing to do with its utility".

[btcbug]

The fiat system is forced upon us through law, which means that issuing a competing currency to your nation's currency is illegal. Therefore nobody can compete with the gov./central bank. Normally everyone knows that that competition in the market is a good thing, but why is money the exception? Why can the gov. issue more currency, but if the average person does it's called counterfeiting (which of course is theft)?

Actually, money is no exception. We have dollars, euros, pounds, pesos or whatever, and they are all competing with each other at an international scale (or, rather, economics are). You can hold your savings in whatever currency you see most appropriate (or profitable). Also, If I'm not mistaken, bitcoin is not considered illegal in the USA, though it is obviously not a legal tender there.

Crypto currencies are the solution to fiat! BTC was built with a limit of 21M units because Sastoshi knew the evils of inflation. The distributed nature of the system means that it essentially cannot be shutdown. Governments accepting Bitcoin is not because they wish for competition, but more because they don't have a choice. Of course most of them at this point are ignorant of the technology and will be pressured in due to demand as well.

Actually, cryptocurrencies are not very far from fiat. Both bitcoin and fiat are money since they are called so and accepted as such (no utility besides being a currency). Regarding the limit of 21M coins, it is not really an advantage since, in the first place, it won't be reached any time soon, and it can be changed afterwards if such a necessity should arise, in the second.

As to Bitcoin's generation rate, it is also a double-edged sword (there are pros and cons to this).

Fiat has nothing to do with its utility. Fiat literally means "by government decree". http://www.merriam-webster.com/dictionary/fiat. So by definition BTC it is a long ways from fiat!

I'm talking about the essence of bitcoin, not about formal definitions (sorry if it wasn't evident from the start). To make things simple, think that Satoshi Nakamoto issued an official decree that made bitcoin into a money.

And I didn't understand what you meant by "fiat has nothing to do with its utility".

You said, "Actually, cryptocurrencies are not very far from fiat. Both bitcoin and fiat are money since they are called so and accepted as such (no utility besides being a currency)." So all I meant was that their utility aside from being a currency is irrelevant because that has nothing do with what is defined as fiat.

Ok, so if Satoshi declares it to be a currency that's fine. Do you think Satoshi can legally compel you to use and accept it like the state can?

[CoinDiver]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

[twiifm]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

You got it backwards.  Inflation & deflation don't drive anything they are symptoms of the economy.  Booms & busts happen as business cycles.

The question is how do you deal w inflation & deflation?

[Erdogan]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

You got it backwards.  Inflation & deflation don't drive anything they are symptoms of the economy.  Booms & busts happen as business cycles.

The question is how do you deal w inflation & deflation?

With sound money the value of the money, which is the inverse of the prices of other goods, and the interest rate, signals to the actors what is the correct level of saving in money, the correct level of consumption and the correct level of investments.

With unsound money the signals are distorted and there is no guidance. Calculation is impossible and investments become random, the search for value is done in stead via asslicking the rulers.

[CoinDiver]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

You got it backwards.  Inflation & deflation don't drive anything they are symptoms of the economy.  Booms & busts happen as business cycles.

The question is how do you deal w inflation & deflation?

... you're playing at semantics. You reiterated what I said. One "deals with" inflation by going in to debt. You "deal with" deflation by saving. When any entity holds the keys to the printing press of a fiat currency, inflation is the cause. Inflation is the increase in the monetary base. Devaluation of the unit of currency is the symptom.

[twiifm]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

You got it backwards.  Inflation & deflation don't drive anything they are symptoms of the economy.  Booms & busts happen as business cycles.

The question is how do you deal w inflation & deflation?

... you're playing at semantics. You reiterated what I said. One "deals with" inflation by going in to debt. You "deal with" deflation by saving. When any entity holds the keys to the printing press of a fiat currency, inflation is the cause. Inflation is the increase in the monetary base. Devaluation of the unit of currency is the symptom.

Its not semantics.   Market forces are very difficult to manipulate.   Inflation/ deflation are measurements.   They are symptoms not causes.

Saving or spending can be reactive.  But how do you mandate that?   Can't force people to save or spend if they don't want to.   The only thing the Fed can do is raise/lower interest rates.  Govt can save or spend if Congress approves budget

[molecular]

It results in misallocation of capital that will correct at some point and in addition distorts price signals, making the economy less efficient.

Not "less efficient" (in fact, too much efficiency would be a problem: http://www.scribd.com/doc/26248658/Is-Our-Monetary-Structure-a-Systemic-Cause-for-Financial-Instability-Bernard-Lietaer ), but (apart from the hamster wheel bullshit jobs) we get a major collapse or a giant "economic discharge" (i.e. war) every couple of decades.

If you view the purpose of an economy as producing prosperity and well-being for the people by using resources (natural ones, energy and labour), I wouldn't call what we currently have "efficient": many people are forced to work in slave-like conditions, we're using up natural resources at an increasing pace, polluting the life on this planet and the lives of many cannot be called prosperous or even good.

I argue that this inefficiency and other negative implications of the way our economy currently functions are largely a result of the type of money we use and propose the use of Bitcoin as a solution. I believe widespread use of cryptocurrency as a store of wealth and for payments can have very positive effects for our well-being, both for the people individually and as a whole, including non-human life. Might be a naive dream, but I'm willing to try it out.

[herzmeister]

i didn't say we have too much efficiency today  

i believe it's not even possible to have 100% efficiency (we require failure to learn), but what we do today is try to strive for it anyway (by force, hierarchy and authority), and we're wasting resources and (literally) our time (see again, bullshit jobs) in doing so.

[tee-rex]

The fiat system is forced upon us through law, which means that issuing a competing currency to your nation's currency is illegal. Therefore nobody can compete with the gov./central bank. Normally everyone knows that that competition in the market is a good thing, but why is money the exception? Why can the gov. issue more currency, but if the average person does it's called counterfeiting (which of course is theft)?

Actually, money is no exception. We have dollars, euros, pounds, pesos or whatever, and they are all competing with each other at an international scale (or, rather, economics are). You can hold your savings in whatever currency you see most appropriate (or profitable). Also, If I'm not mistaken, bitcoin is not considered illegal in the USA, though it is obviously not a legal tender there.

Crypto currencies are the solution to fiat! BTC was built with a limit of 21M units because Sastoshi knew the evils of inflation. The distributed nature of the system means that it essentially cannot be shutdown. Governments accepting Bitcoin is not because they wish for competition, but more because they don't have a choice. Of course most of them at this point are ignorant of the technology and will be pressured in due to demand as well.

Actually, cryptocurrencies are not very far from fiat. Both bitcoin and fiat are money since they are called so and accepted as such (no utility besides being a currency). Regarding the limit of 21M coins, it is not really an advantage since, in the first place, it won't be reached any time soon, and it can be changed afterwards if such a necessity should arise, in the second.

As to Bitcoin's generation rate, it is also a double-edged sword (there are pros and cons to this).

Fiat has nothing to do with its utility. Fiat literally means "by government decree". http://www.merriam-webster.com/dictionary/fiat. So by definition BTC it is a long ways from fiat!

I'm talking about the essence of bitcoin, not about formal definitions (sorry if it wasn't evident from the start). To make things simple, think that Satoshi Nakamoto issued an official decree that made bitcoin into a money.

And I didn't understand what you meant by "fiat has nothing to do with its utility".

You said, "Actually, cryptocurrencies are not very far from fiat. Both bitcoin and fiat are money since they are called so and accepted as such (no utility besides being a currency)." So all I meant was that their utility aside from being a currency is irrelevant because that has nothing do with what is defined as fiat.

I still don't understand why you said that, since you just repeated in other words what I had said ("no utility" vs "irrelevant utility"). Actually, there is no utility besides that of being a money for both bitcoin and fiat (in its digital form indeed). But never mind!

[tee-rex]

Ok, so if Satoshi declares it to be a currency that's fine. Do you think Satoshi can legally compel you to use and accept it like the state can?

You are not the first here who tries to explain to me what "fiat" really means, but you don't know that in case of the dollar, the U.S. can't legally compel you to use and accept it (the same is true in many other jurisdictions). In fact, it is the U.S. that takes onto itself an obligation to accept the U.S. dollar as a means of payment for all debts, public charges, taxes and dues.

[CoinDiver]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

You got it backwards.  Inflation & deflation don't drive anything they are symptoms of the economy.  Booms & busts happen as business cycles.

The question is how do you deal w inflation & deflation?

... you're playing at semantics. You reiterated what I said. One "deals with" inflation by going in to debt. You "deal with" deflation by saving. When any entity holds the keys to the printing press of a fiat currency, inflation is the cause. Inflation is the increase in the monetary base. Devaluation of the unit of currency is the symptom.

Its not semantics.   Market forces are very difficult to manipulate.   Inflation/ deflation are measurements.   They are symptoms not causes.

Saving or spending can be reactive.  But how do you mandate that?   Can't force people to save or spend if they don't want to.   The only thing the Fed can do is raise/lower interest rates.  Govt can save or spend if Congress approves budget

Look up "semantics".

I didn't say anything about forcing behavior. I said individuals deal with inflation by taking on debt. Look how many people take out long term debt in bitcoin? No one that expects to pay it back!

The Fed does more than just manipulate interest rates. They buy debt that no one would, for prices that no one would pay. That's equivalent to printing money and distributing it to banks. That is direct inflation of the monetary base. The devaluation of currency is the symptom. The inflation is the cause. The last audit also showed huge loans to many well connected banks without repayment. More direct inflation. Even if there ever is a repayment, any loan the Fed creates is inflation. The deflation comes when it's repaid.

[twiifm]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

You got it backwards.  Inflation & deflation don't drive anything they are symptoms of the economy.  Booms & busts happen as business cycles.

The question is how do you deal w inflation & deflation?

... you're playing at semantics. You reiterated what I said. One "deals with" inflation by going in to debt. You "deal with" deflation by saving. When any entity holds the keys to the printing press of a fiat currency, inflation is the cause. Inflation is the increase in the monetary base. Devaluation of the unit of currency is the symptom.

Its not semantics.   Market forces are very difficult to manipulate.   Inflation/ deflation are measurements.   They are symptoms not causes.

Saving or spending can be reactive.  But how do you mandate that?   Can't force people to save or spend if they don't want to.   The only thing the Fed can do is raise/lower interest rates.  Govt can save or spend if Congress approves budget

Look up "semantics".

I didn't say anything about forcing behavior. I said individuals deal with inflation by taking on debt. Look how many people take out long term debt in bitcoin? No one that expects to pay it back!

The Fed does more than just manipulate interest rates. They buy debt that no one would, for prices that no one would pay. That's equivalent to printing money and distributing it to banks. That is direct inflation of the monetary base. The devaluation of currency is the symptom. The inflation is the cause. The last audit also showed huge loans to many well connected banks without repayment. More direct inflation. Even if there ever is a repayment, any loan the Fed creates is inflation. The deflation comes when it's repaid.

Buying bitcoin =/= taking out long term debt.  Taking on debt means borrowing

The Fed has been doing QE for a while.  Last time I check no inflation.  They want inflation but its just not happening

You have so little understanding of economics.  Your theoretical basis is wrong and you ignore what is actually happening in reality.  They can print as money as they want but if the money is stuck in the financial sector and never reaches the real economy then no inflation is going to happen.

[wenben]

Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.

You got it backwards.  Inflation & deflation don't drive anything they are symptoms of the economy.  Booms & busts happen as business cycles.

The question is how do you deal w inflation & deflation?

... you're playing at semantics. You reiterated what I said. One "deals with" inflation by going in to debt. You "deal with" deflation by saving. When any entity holds the keys to the printing press of a fiat currency, inflation is the cause. Inflation is the increase in the monetary base. Devaluation of the unit of currency is the symptom.

Its not semantics.   Market forces are very difficult to manipulate.   Inflation/ deflation are measurements.   They are symptoms not causes.

Saving or spending can be reactive.  But how do you mandate that?   Can't force people to save or spend if they don't want to.   The only thing the Fed can do is raise/lower interest rates.  Govt can save or spend if Congress approves budget

Look up "semantics".

I didn't say anything about forcing behavior. I said individuals deal with inflation by taking on debt. Look how many people take out long term debt in bitcoin? No one that expects to pay it back!

The Fed does more than just manipulate interest rates. They buy debt that no one would, for prices that no one would pay. That's equivalent to printing money and distributing it to banks. That is direct inflation of the monetary base. The devaluation of currency is the symptom. The inflation is the cause. The last audit also showed huge loans to many well connected banks without repayment. More direct inflation. Even if there ever is a repayment, any loan the Fed creates is inflation. The deflation comes when it's repaid.

Buying bitcoin =/= taking out long term debt.  Taking on debt means borrowing

The Fed has been doing QE for a while.  Last time I check no inflation.  They want inflation but its just not happening

You have so little understanding of economics.  Your theoretical basis is wrong and you ignore what is actually happening in reality.  They can print as money as they want but if the money is stuck in the financial sector and never reaches the real economy then no inflation is going to happen.

Inflation is not stucked in the financial sector. It is exported out to export counties where food and housing price has gone off the roof in the last 2-3 years.