Were the Keynesians wrong?

[Elwar]

As the price was rising, all of the Keynesians kept harping about how nobody would spend bitcoins because they would want to wait to spend later when the price is higher, never spending their money.

And yet, for the past year the price has been going down, high inflation, a Keynesian dream. And yet, the spending did not skyrocket.

Why are Keynesians always wrong about economics?

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[Foxpup]

Why are Keynesians always wrong about economics?

The same reason flat-Earthers are always wrong about geography: because the theory is so thoroughly contradicted by the facts that only a fool or madman could believe it.

[nmhh]

lol no, bitcoin just failed.

[twiifm]

I think Krugman said that and he's talking about macro.  So he's not wrong but you don't understand economics

[username18333]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

[twiifm]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

The theory applies to monetary systems (macro) not some small gambling party.

Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary.  I.e.  People would hoard instead of spend

[username18333]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

The theory applies to monetary systems (macro) not some small gambling party.

Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary.  I.e.  People would hoard instead of spend

It inflates initially; however, that inflation decreases to nothing over time (and, in fact, “becomes” deflation as the rate whereat coins are lost or made “unspendable” overtakes their production).

[dinofelis]

Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary.  I.e.  People would hoard instead of spend

This is why gold never worked as a monetary system either  
Great insight !

Keynesians are wrong in many respects, but they are a great theory if you are a state: it gives you the excuse to get more and more your hands on everything, and to spend more than you can.  Who wouldn't be seduced by the prospect that spending like crazy is a good thing ?

[username18333]

Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary.  I.e.  People would hoard instead of spend

This is why gold never worked as a monetary system either  
Great insight !

. . .

It inflates initially; however, that inflation decreases to nothing over time (and, in fact, “becomes” deflation as the rate whereat coins are lost or made “unspendable” overtakes their production).

[dinofelis]

Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary.  I.e.  People would hoard instead of spend

This is why gold never worked as a monetary system either  
Great insight !

. . .

It inflates initially; however, that inflation decreases to nothing over time (and, in fact, “becomes” deflation as the rate whereat coins are lost or made “unspendable” overtakes their production).

Yes, exactly like gold.

My comment was ironic, because gold was the universal money for about 5000 years, until it was taken over by fiat, which was initially a gold scam.

[twiifm]

Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary.  I.e.  People would hoard instead of spend

This is why gold never worked as a monetary system either  
Great insight !

Keynesians are wrong in many respects, but they are a great theory if you are a state: it gives you the excuse to get more and more your hands on everything, and to spend more than you can.  Who wouldn't be seduced by the prospect that spending like crazy is a good thing ?

Gold hasn't been a monetary system for a long time.  Certainly not in Keynes time.

Besides gold is not deflationary so what does it have to do with this statement?

[twiifm]

Krugman was saying Bitcoin could NEVER work as a monetary system because it's designed to be deflationary.  I.e.  People would hoard instead of spend

This is why gold never worked as a monetary system either  
Great insight !

. . .

It inflates initially; however, that inflation decreases to nothing over time (and, in fact, “becomes” deflation as the rate whereat coins are lost or made “unspendable” overtakes their production).

Yes, exactly like gold.

My comment was ironic, because gold was the universal money for about 5000 years, until it was taken over by fiat, which was initially a gold scam.

This is wrong.  You Need to read Graebers History of Money

In modern times gold was reserve money and mainly used for international trade but inside the nation, money was largely credit money.  Credit money and metal money have always coexisted.  Gold itself wasn't the money it's the coins with stamp of the king on it.  In essence money has always been a creature of law whenever there is a state

[Elwar]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

But it is currently inflating more than the dollar and yet spending has not increased.

Can Keynesians ever be right or has there been any instance throughout history where they have been right? Other than 600 years ago when tulips happened. Once.

[twiifm]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

But it is currently inflating more than the dollar and yet spending has not increased.

Can Keynesians ever be right or has there been any instance throughout history where they have been right? Other than 600 years ago when tulips happened. Once.

It's you who don't understand the concept.  It applies to macro level not some little private speculators plaything.


Spending hasn't increased because it's used to speculate.  The holder are treating it as a commodity not a currency.  Also it's a private outside money.

[Elwar]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

But it is currently inflating more than the dollar and yet spending has not increased.

Can Keynesians ever be right or has there been any instance throughout history where they have been right? Other than 600 years ago when tulips happened. Once.

It's you who don't understand the concept.  It applies to macro level not some little private speculators plaything.


Spending hasn't increased because it's used to speculate.  The holder are treating it as a commodity not a currency.  Also it's a private outside money.

I see, so it is a concept that is useful for talking among college professors and politicians but not useful in the real world. Understood.

[username18333]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

But it is currently inflating more than the dollar and yet spending has not increased.

Can Keynesians ever be right or has there been any instance throughout history where they have been right? Other than 600 years ago when tulips happened. Once.

Code:

⅟ₙ > ⅟ₙ₊ₘ ⇔ 𝑛 + 𝑚 > 𝑛

Generally speaking, Bitcoin spending has not increased because its inflation rate has only decreased.

[twiifm]

The Bitcoin supply has only been inflating at consistently lower rates (e.g., ⅟ₙ₊₁ after 𝑛 blocks when the Bitcoin block reward was fifty bitcoins), so a progressive reduction in spending would seem to be expected under the economic theory.

But it is currently inflating more than the dollar and yet spending has not increased.

Can Keynesians ever be right or has there been any instance throughout history where they have been right? Other than 600 years ago when tulips happened. Once.

It's you who don't understand the concept.  It applies to macro level not some little private speculators plaything.


Spending hasn't increased because it's used to speculate.  The holder are treating it as a commodity not a currency.  Also it's a private outside money.

I see, so it is a concept that is useful for talking among college professors and politicians but not useful in the real world. Understood.

No you are just applying the concept to the wrong context.

[Lethn]

Spending and inflation/deflation aren't really related to each other, the only reason spending would increase because of inflation would be if people are being forced to spend because their wealth is being destroyed which is what inflation actually does, especially hyperiflation and that is exactly what is happening to paper currency.

Whenever I get any paper money of my own I can tell you I immediately dump mine for Bitcoin just because I know every second I hold the stuff it's getting devalued and if I want to have some kind of long term purchasing power I need to get rid of it. The only time I use paper is in order to pay someone else who only takes that or for bills etc. that need to be paid.

[username18333]

Spending and inflation/deflation aren't really related to each other, the only reason spending would increase because of inflation would be if people are being forced to spend because their wealth is being destroyed which is what inflation actually does, especially hyperiflation and that is exactly what is happening to paper currency.

Whenever I get any paper money of my own I can tell you I immediately dump mine for Bitcoin just because I know every second I hold the stuff it's getting devalued and if I want to have some kind of long term purchasing power I need to get rid of it. The only time I use paper is in order to pay someone else who only takes that or for bills etc. that need to be paid.

In a world where the things we need and use go bad, sharing comes naturally. The hoarder ends up sitting alone atop a pile of stale bread, rusty tools, and spoiled fruit, and no one wants to help him, for he has helped no one. Money today, however, is not like bread, fruit, or indeed any natural object. It is the lone exception to nature’s law of return, the law of life, death, and rebirth, which says that all things ultimately return to their source. Money does not decay over time, but in its abstraction from physicality, it remains changeless or even grows with time, exponentially, thanks to the power of interest.

(See my forum signature.)

[Lethn]

Yeah, making a hypothetical statement doesn't mean it's correct, we've heard this argument a thousand times, you're also forgetting the fact that inflation is simply going to force people to work for longer and for less pay because everything becomes so expensive. Also, if deflationary currencies are so horrible and bad, why were they used for so long? Why is it that inflationary currencies have only recently come into existence and been used widely?

Hmmm doesn't seem to me like you're really going to bother answering the question but what the hell I'll ask anyway.