Merged Bitcoin - Part 3

[Chanakya]

I don't know why so many people are saying that. Inflation, in moderation, is actually a good thing. It stimulates the economy.

I don't think that's always the case. I was thinking, in this case, of a global currency that would complement -- not supplant -- the currencies we already use. Kind of like bitcoin, but I was wondering if, at least in theory, we might have a concept without the glaring shortcomings bitcoin has.

Inflation is a tax on savings and acts as a disincentive to paying down debts (let inflation do that for you).

Indeed. Belz does has a point, in economies with an excess of savings, especially when concentrated in the hands of relatively few people, inflation can do good. But I don't think that's always true (that inflation necessarily spurs real growth, or that inflation, even in moderation, is necessarily a good thing).

But I'm no economist (although I'm not entirely unfamiliar with the basics), and I say this off the cuff, so I guess I'm open to correction.

Although a currency needs to expand to accommodate population/GDP growth

That can -- at least in theory -- be achieved without triggering inflation.

, it is better to use demurrage rather than inflation to stimulate spending.

Say what?

You're using demurrage in a sense I'm not familiar with. A quick and lazy google search does not point at your particular meaning. Perhaps you mean a charge on unused money, a negative interest rate? I guess inflation can be thought of as demurrage (as the term is commonly used) on money stashed under the mattress.

 

[Belz...]

That's the part that confuses you?

Are you taking it back?

 

[The_Animus]

For the vast majority of people inflation is not a good thing because it outpaces their wage growth effectively giving them less money over time. In that sense having it higher then like 1% isn't good. But if the ultra rich weren't insane and paid workers properly for the value they provide you could have higher inflation and still be fine

 

[psionl0]

You're using demurrage in a sense I'm not familiar with. A quick and lazy google search does not point at your particular meaning. Perhaps you mean a charge on unused money, a negative interest rate? I guess inflation can be thought of as demurrage (as the term is commonly used) on money stashed under the mattress.

There was a thread about demurrage a few years back (http://www.internationalskeptics.com/forums/showthread.php?t=277957). It is indeed a form of negative interest rate on bank accounts (not necessarily all of them). In the case of notes, holders have to buy stamps and affix them at regular intervals in order to keep them valid.

The main difference between demurrage and inflation is that with demurrage, you don't have the endless price/wage cycles and loans don't lose their value to inflation so excessive interest rates are not necessary.

Cryptos can easily be designed to implement demurrage on a continuous basis. In fact, one was actually designed - freicoin. It hasn't really taken off in the public imagination even though demurrage replaces transaction fees.

 

[psionl0]

Are you taking it back?

Why on earth would I do that? I still don't know what you don't understand.

 

[Belz...]

Why on earth would I do that? I still don't know what you don't understand.

What I don't understand is the bit I quoted.

Are you planning on explaing that, or are you just going to waste more bytes?

 

[Chanakya]

There was a thread about demurrage a few years back (http://www.internationalskeptics.com/forums/showthread.php?t=277957). It is indeed a form of negative interest rate on bank accounts (not necessarily all of them). In the case of notes, holders have to buy stamps and affix them at regular intervals in order to keep them valid.

The main difference between demurrage and inflation is that with demurrage, you don't have the endless price/wage cycles and loans don't lose their value to inflation so excessive interest rates are not necessary.

Cryptos can easily be designed to implement demurrage on a continuous basis. In fact, one was actually designed - freicoin. It hasn't really taken off in the public imagination even though demurrage replaces transaction fees.

Thanks. That's very interesting!

I guess it's kind of ... not unlikely, that some economist, some time, would have tried to think up some 'ideal' currency.

Crypto does seem to offer a way. Not bitcoin, but perhaps one of the others, perhaps one yet to be put out there, that, in theory, and if people took to it, might actually work as some kind of global currency that doesn't have the glaring shortcomings of the USD or gold or such other.

As for demurrage, surely in such a scenario, the mattress would be the rational place to park one's savings? If, that is, there were no inflation? Although I guess you'd still incur a cost in terms of physical risk, or of physical security to mitigate that risk.

But I haven't yet read that thread you've linked. I look forward to doing that, later on. No doubt these basics would've been addressed there.

 

[psionl0]

What I don't understand is the bit I quoted.

Are you planning on explaing that, or are you just going to waste more bytes?

Inflation reduces the value of your savings. It transfers wealth from savers to debtors. Is that not obvious to you?

Maybe you think that it is not like a tax unless you are physically handing dollars to another person. Or maybe it is that you have to fill out the necessary forms and submit them to the tax man.

This is reminiscent of those who say "it ain't money unless it is a federal reserve note . . . . ."

 

[Belz...]

Inflation reduces the value of your savings. It transfers wealth from savers to debtors. Is that not obvious to you?

What's obvious is that you're not describing a tax. If your savings don't have interests rates, it isn't the government's fault.

Maybe you think that it is not like a tax unless you are physically handing dollars to another person.

No, it's not a tax unless it's a tax. It's not a tax. Inflation is not a government program to fund its services. It's a normal function of a working economy.

 

[psionl0]

Inflation is not a government program to fund its services. It's a normal function of a working economy.

You think that a government with trillions in debt doesn't benefit from inflation? Er - OK.

 

[Samson]

This pyramid will stop at about 9200. However I am no longer confident the edifice is going to crumble, interesting, I may change my view. On the other hand if current price is best guide to future price, and bitcoin does as intended, it will flat line in price for a few centuries like standard currencies.

 

[psionl0]

This pyramid will stop at about 9200.

Yes but what about bitcoin?

 

[Samson]

Yes but what about bitcoin?

9188 stopped it.
However I consider it a great trader's market but for the wicked spread. I think it will all stabilise and flat line during the year, that is my current prediction. The crypto sphere will tend towards a conventional currency range model, and they can all get real jobs.

 

[psionl0]

9188 stopped it.
However I consider it a great trader's market but for the wicked spread. I think it will all stabilise and flat line during the year, that is my current prediction. The crypto sphere will tend towards a conventional currency range model, and they can all get real jobs.

That's an amazing coincidence. Bitcoin rose in price as well as your unnamed pyramid.

I hope your pyramid did better though. With a sell order at 9200, bitcoin just missed triggering the sell and plunged back down into the 8600s again. With all hope of a profit gone this time, this prediction would have to go into the "fail" category.

 

[Dr.Sid]

Nah, I'd give it to him this time. It's not over yet though. It's never over :-D

 

[psionl0]

Nah, I'd give it to him this time. It's not over yet though. It's never over :-D

You can say "near enough" if you like but your bank balance won't.

Of course, at some time in the future, bitcoin could top 9200 again and that would bring a revisionist analysis about how the prediction was right all along.

 

[The Don]

You can say "near enough" if you like but your bank balance won't.

Of course, at some time in the future, bitcoin could top 9200 again and that would bring a revisionist analysis about how the prediction was right all along.

Exactly, which is why Samson's "magic 8 ball" style predictions from his so-called technical analysis have a much greater than 50% chance of being right.

 

[Samson]

Exactly, which is why Samson's "magic 8 ball" style predictions from his so-called technical analysis have a much greater than 50% chance of being right.

Another disappointing offering.

 

[psionl0]

Bitcoin topped the 9200 barrier this morning (currently about 9360).

It's a pity that Samson chickened out at 9188 - or did the pyramid fail to rise also?

 

[Samson]

Bitcoin topped the 9200 barrier this morning (currently about 9360).

It's a pity that Samson chickened out at 9188 - or did the pyramid fail to rise also?

I saw the bull run inception in the algo and described regretfully to a friend.
As I have said I can’t bring myself to suggest buying the wretched thing.