Economic Inequality

[bf4btc]

Nope, it's the corrupt politicians and bankers.  It's the monopoly on the ability to create money that is the problem, not capitalism.

It's this kind of useless logic that works against progress, not for it.

Progress will only occur when people choose to opt out of the current fiat, debt-based monetary system.  Anyone trying to improve society within the current monetary system is just spinning their wheels.

I am sure a deflationary currency (like bitcoin) is the worst for society in general, it's just a brake on economic growth. -snip-

This is true. However bitcoin is not deflationary (yet). It will also technically be neither inflationary nor deflationary once all the bitcoin are mined as the number of bitcoin in circulation will never decline (at least not as part of the protocol).

Deflation is bad for the economy as it delays necessary purchases which slows economic growth

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[vvv8]

Kid alert 2 posts above me ,

KID ALERT

[bitdraw]

Nope, it's the corrupt politicians and bankers.  It's the monopoly on the ability to create money that is the problem, not capitalism.

It's this kind of useless logic that works against progress, not for it.

Progress will only occur when people choose to opt out of the current fiat, debt-based monetary system.  Anyone trying to improve society within the current monetary system is just spinning their wheels.

I am sure a deflationary currency (like bitcoin) is the worst for society in general, it's just a brake on economic growth. -snip-

This is true. However bitcoin is not deflationary (yet). It will also technically be neither inflationary nor deflationary once all the bitcoin are mined as the number of bitcoin in circulation will never decline (at least not as part of the protocol).

Deflation is bad for the economy as it delays necessary purchases which slows economic growth

why is deflation delaying purchases?

[TaunSew]

We already have delaying of purchases. Student loans, mortgages and retirement funds are all dollars that could be going towards consumer purchases.

[shawshankinmate37927]

You're making two false assumptions:

 1. That wealth inequality is a problem
 2. That problems have only one source.

If we ignore #1 and just focus on #2, then according to your logic, wealth inequality existed before fiat currency, therefore fiat currency can't cause wealth inequality.  This is equivalent to saying, death existed before guns, therefore guns can't cause death.

Wouldn't it be more accurate to say that a gun is a modern tool that can cause death and that fiat currency is a modern tool that can cause wealth inequality?

It would be (well actually no, fiat currency doesn't do it but I will assume it for the sake of argument).  And following your logic to it's conclusion, saying bitcoin will solve income inequality is like saying getting rid of guns will stop people from dying.  

Just to be clear, I'm not trying to say that fiat currency causes wealth inequality or that Bitcoin will solve the problem of wealth inequality.  In fact, I'm saying that wealth inequality isn't a problem.  I was just pointing out that for those who do think that wealth inequality is a problem, it's illogical to conclude that a cause has to exist before an effect.  Saying that fiat currencies don't cause wealth inequality because wealth inequality existed before fiat currencies is like saying that guns don't cause death because death existed before guns.

Incidentally, yes wealth inequality is a problem, in that 99% of the people on the planet do 100% of the producing but only get to keep 40% of what they produce, while the other 1% that produce nothing, get to keep 60% based entirely on the luck of what family they were born into.

Wealth inequality, in a free market, not only isn't a problem, it's a good thing.  A person that lives below their means and saves and invests the difference between their income and expenses should have more wealth than someone who squanders their money or lives beyond their means and accumulates debt.  In a world without wealth inequality, there is no incentive to be responsible, productive, or save, invest, and work harder because your wealth would just be transferred to those that aren't/don't.  Saving should be rewarded, not punished.

[Erdogan]

In a free economy, saving in money,  investment and consumption will have a balance guided by prices, including the interest rate. Investments are also of different types. Some are in the production structure near the consumption, and some is far away.

Something like:

Surveying for metal -> building a mine -> produce from mine -> transport ore ->  smelt metal -> metal products -> produce metal parts -> produce metal things -> distribute by sea and land -> show off and sell to consumer.

Another one for energy

Seismic surveying -> build platforms -> drill -> produce -> transport -> refine -> transport -> produce electric power -> build distribution network -> consume

Normally, extended saving will reduce consumption and the interest rate, leading to investments in the early stages, which is smart, because the savings will be consumed later. If the public consumes more, investments will come in the shops and services, investments will increase because savers will have to protect their money from inflation.

A QE and ZIRP environment (which have to go together), will tend to prioritize investments in the early stages (because for example surveiling will end up at consumers after ten or twenty years or more, so the interest rate is absolutely critical), and the QE and ZIRP environment will at the same time prioritize consumption.

The result is that we invest too much in the early stages, and we get too low prices on ore and other raw commodities. And we invest too little in the latest stages, giving too high consumer prices.

Eventually, the imbalances will have to correct itself, with much suffering in the form of loan defaults and bankruptcies in the earlier stages, and reduced total output, meaning people have less stuff to consume. That is where we are now, or are about to find ourselves soon.

Take away point: You can not just invest, you have to invest at all times in the most profitable production, and ZIRP makes that impossible.

[odolvlobo]

Deflation is bad for the economy as it delays necessary purchases which slows economic growth

why is deflation delaying purchases?

The belief is that if the value of the money rises, people are less inclined to spend it. I feel that the ramifications of this effect are vastly overblown.

[bitdraw]

Deflation is bad for the economy as it delays necessary purchases which slows economic growth

why is deflation delaying purchases?

The belief is that if the value of the money rises, people are less inclined to spend it. I feel that the ramifications of this effect are vastly overblown.

yeh, i know this is "the belief". the reason why i was asking for an explanation is, that i somehow dont really agree with that belief.
i think its just a "theory" that justifies the use of inflationary currency

[NotLambchop]

...
yeh, i know this is "the belief". the reason why i was asking for an explanation is, that i somehow dont really agree with that belief.
i think its just a "theory" that justifies the use of inflationary currency

It's common sense.  To see if you agree, try it yourself:

1. You have 378 worthless paper dollars.  You can spend them today on a shiny new Bitcoin,* or wait until next year, when you could buy 1/2 of a Bitcoin with your 378 worthless paper dollars because inflation.
What would you do?

2. You have one shiny new Bitcoin, and, for reasons known only to statist pigs and other Keynesian, you wish to invest it in USD.  You can buy 378 dollars with it today, or wait until next year, when you could buy 756, because dollar inflation.
What would you do?

*This is a perfect, hypothetical Bitcoin, it's buying power will never go down.

[BootstrapCoinDev]

I think that even with wealth inequality, poor people now are still better off than poor people 100 years ago. the issue that I have is that wealth inequality shifts us away from a meritocracy. If you are born rich you have access to better schools, more money to invest, and a culture that encourages growth. Being born poor means lower-grade schools and less of a chance to really push forward. This, I believe (I could be wrong), leads to an inefficiency. Instead of say 100 people in the position to realize great ideas we would now only have 10. This leads to stagnancy.

[panju1]

It's common sense.  To see if you agree, try it yourself:

1. You have 378 worthless paper dollars.  You can spend them today on a shiny new Bitcoin,* or wait until next year, when you could buy 1/2 of a Bitcoin with your 378 worthless paper dollars because inflation.
What would you do?

2. You have one shiny new Bitcoin, and, for reasons known only to statist pigs and other Keynesian, you wish to invest it in USD.  You can buy 378 dollars with it today, or wait until next year, when you could buy 756, because dollar inflation.
What would you do?

*This is a perfect, hypothetical Bitcoin, it's buying power will never go down.

It is not applicable always.
You have 500 worthless paper dollars. You can spend them today on an i-Phone. Or you could wait till next year and buy it a lot cheaper.

People still choose to buy i-phones because there see utility value in the one year that they hold an i-Phone. Similarly, even in a deflationary environment people will continue to make purchases if they see value in what they buy.

[Atdhe]

I think that even with wealth inequality, poor people now are still better off than poor people 100 years ago. the issue that I have is that wealth inequality shifts us away from a meritocracy. If you are born rich you have access to better schools, more money to invest, and a culture that encourages growth. Being born poor means lower-grade schools and less of a chance to really push forward. This, I believe (I could be wrong), leads to an inefficiency. Instead of say 100 people in the position to realize great ideas we would now only have 10. This leads to stagnancy.

Poor ppl in 1st world yes. Poor people in ROW no. The difference is social net and public services that are on much higher level in rich and mid-income countries.

Alternative pow is that poor ppl today are worse off, because nobody gives a shit about them. In the past even the poorest had some space in society. Even slaves were at least tools that were needed by their owner. The truth about recent capitalism maybe is that it does not need majority of people.

[bf4btc]

Deflation is bad for the economy as it delays necessary purchases which slows economic growth

why is deflation delaying purchases?

The belief is that if the value of the money rises, people are less inclined to spend it. I feel that the ramifications of this effect are vastly overblown.

yeh, i know this is "the belief". the reason why i was asking for an explanation is, that i somehow dont really agree with that belief.
i think its just a "theory" that justifies the use of inflationary currency

It is not a theory, it is fact that overall deflation hurts the economy that experiences deflation. History has shown that modest amounts of inflation tend to result in higher overall economic growth then the inflation rate. Also the fewer examples of deflation that are available has also had economic negative growth (eg - recession/depression).

Why don't you think of it like this - If you might need to buy a new TV in the near future - you know your current one is going to fail in the near future - are you going to buy one today at current prices, or would you rather wait a few months when the price will be a few dollars more expensive? All else being equal, you will buy it today. If you were in the reverse situation in that the price will decline in a few months then you would delay your purchase which would result in less economic activity in the current month which means the retailer and the tv manufacturer is able to employ less workers (due to lower revenue/profits) which means each of them has less money to spend

[shawshankinmate37927]

It is not a theory, it is fact that overall deflation hurts the economy that experiences deflation. History has shown that modest amounts of inflation tend to result in higher overall economic growth then the inflation rate. Also the fewer examples of deflation that are available has also had economic negative growth (eg - recession/depression).

Why don't you think of it like this - If you might need to buy a new TV in the near future - you know your current one is going to fail in the near future - are you going to buy one today at current prices, or would you rather wait a few months when the price will be a few dollars more expensive? All else being equal, you will buy it today. If you were in the reverse situation in that the price will decline in a few months then you would delay your purchase which would result in less economic activity in the current month which means the retailer and the tv manufacturer is able to employ less workers (due to lower revenue/profits) which means each of them has less money to spend

Bullshit.  This nonsense is the sort of propaganda that comes from the money printers who are hoping to keep their fiat scam alive.  Fortunately for them, there are plenty of sheeple out there willing to fall for it, even when it's clearly contradicted by the facts.

[Atdhe]

Nope, it's the corrupt politicians and bankers.  It's the monopoly on the ability to create money that is the problem, not capitalism.

It's this kind of useless logic that works against progress, not for it.

Progress will only occur when people choose to opt out of the current fiat, debt-based monetary system.  Anyone trying to improve society within the current monetary system is just spinning their wheels.

I am sure a deflationary currency (like bitcoin) is the worst for society in general, it's just a brake on economic growth. But happily we don't need to wory about that, your dreams will never come true  I have some bitcoins (because I want to earn some money) but it would be disastrous to society if it would be the main global currency, surpassing the market cap of the dollar... But I'm sure that will never happen and we will not even get close to that =)

I agree BTC will be very rough for society, but I do not see why BTC should not go forward.

BTC, like capitalism, will not be good for people, but for market. And capitalism is the philosophy or system that won in the competition. And pure rough unhuman capitalism needs currency like bitcoin, where nobody can regulate it.

BTC as deflationary currency is overreacted. "Debt derived" money that will be based on Bitcoin monetary base can well be inflationary (as we can see deflation with pure fiat money).

[ObscureBean]

It's simple really. I'm surprised that nobody seems to be able to grasp the fact that money only works because of that gap, it is primordial that there be 2 extremities, the extremely rich and the extremely poor. If everyone were equal, the system would break down. Money would no longer 'flow' and society/the world would crumble because everything you see around you exists because of power.
Ironically, the wider the gap between the rich and poor, the more possibilities there exist. So unless you're willing to give up your way of life completely, your quest for equality amounts to pure hypocrisy because you always welcome all the new technology and cure for diseases that power brings to you.

[Atdhe]

Even more funny is that the hypocricy you are talking about is an opportunity for the people who spot it and sell to the majority of the people with hypocricy a dream they need to stay schizophrenic. So the more inconsistent people give away their money and the more consistent, who see a bit more, make the money and become rich.

[pereira4]

...
yeh, i know this is "the belief". the reason why i was asking for an explanation is, that i somehow dont really agree with that belief.
i think its just a "theory" that justifies the use of inflationary currency

It's common sense.  To see if you agree, try it yourself:

1. You have 378 worthless paper dollars.  You can spend them today on a shiny new Bitcoin,* or wait until next year, when you could buy 1/2 of a Bitcoin with your 378 worthless paper dollars because inflation.
What would you do?

2. You have one shiny new Bitcoin, and, for reasons known only to statist pigs and other Keynesian, you wish to invest it in USD.  You can buy 378 dollars with it today, or wait until next year, when you could buy 756, because dollar inflation.
What would you do?

*This is a perfect, hypothetical Bitcoin, it's buying power will never go down.

Yeah, dollar is so worthless that it gets accepted world wide and you can buy anything with it. If you bought a Bitcoin last year for nearly 1K, you would have lost 40% of it's buying power now.
Get some perspective.

[panju1]

Yeah, dollar is so worthless that it gets accepted world wide and you can buy anything with it. If you bought a Bitcoin last year for nearly 1K, you would have lost 40% of it's buying power now.
Get some perspective.

The questions is what time period are you looking at. Do you believe Bitcoin has long term potential? If you have to leave an inheritance in 30-40 years, would you rather bury some dollars today or save equivalent bitcoins?

A dollar in 1980's used to go a lot farther than a dollar today. Bitcoin has built in mechanisms to prevent this from happening. That is the beauty.

[Atdhe]

If you have to leave an inheritance in 30-40 years, would you rather bury some dollars today or save equivalent bitcoins?

That isnot the good way of thinking. If you want to leave inheritance and you want to maximize it, you should invest the money into real business and it does not matter which money. USD is now better than BTC exactly at this. You have much wider investment possibilities with USD than BTC.

The idea to sit on money and let their value rises, which is normal by bitcoin, probably made your thought unclear. Not everything is about money, it is just a proxy. It is about economy in the end.

If I were forced to sit on money for decades (which I am a bit), the way is of course to buy BTC. But the market opportunities are in USD. The fiat money maybe lose most if the value, but big businesses were created with them and such biz can produce money to owner in any currency.

So yes... people who are unable to create anything and gotsome money by accident and they have the only two opportunities - to leave money at bank or change them to BTC - those people should buy at least some BTC. The other people shouldconsider investing the money into economy and their work.

It is exactly my story here. I have registered myself at this forum in summer 2011. I was considering buying bitcoins fof few thousands. It seems to be like bad decision that I did not do it, but in fact, it was not.

- 100x appreciation by now seems to be like certaininty, but things might go wrong and appreciation could have been much smaller

- I would be forced to sell BTC's as price went up, so I would not make 100x profit, probably much less

- I would maybe not have enough money for my investment in IT. Maybe the extra few thousands caused that I actually made much more money during the 3.5 years with fiat money economy. Now I am buying BTC of course.

Writing off USD in 2014 is simply ridiculous idea.