Topic: Bitcoin is a Zero-Sum Game - Long-term interest bearing instruments viable? (Read 14626 times)

I do not understand how besides those people who are putting too much effort into studying crypto currencies and doing all they can via hypothesis that looks irrelevant.

It is a zero-sum game in the fact that it is a fixed asset.   A known and fixed quantity is known to participates in advance to any investment activity.  Yes people can assign a high value for a BTC in the open market by bidding up the price until someone accepts your offer but someone needs to sell BTC for anyone to get BTC.   That is also why I see Bitcoin as more of a "wealth reserve assets" ie real savings more than an actually currency even though it can act as both at the same time.

In short? Etlase is getting/got his head bashed in by people taking turn arguing with/getting tired of him.

I wonder if he ever gets tired of being wrong so much.

I mean "loans are not for consumption"... that's like the whole point of loans! To buy a machine, food or whatever, so you can be more productive the next day.

Stupidest thing I ever fucking heard.

no idea

I'm late the game, so I hope I'm not repeating something that has already been discussed to death...

Anyway, here's what I think: Bitcoin is a "zero sum game" only if you exclude everything else. The "zero sum game" scenario assumes that 100% of the BTC in the world is sitting in bank accounts collecting interest. That is not possible, of course. As the OP has probably pointed out, if all the BTC in the world is just being used to collect interest, then there is no way to pay interest. Also, in this scenario, BTC has no value since it is not being exchanged.

The real story is that BTC is used to exchange assets. If the total value of assets in the world increases, then there is no problem with interest -- interest effectively means that one asset is exchanged later for another asset of higher value.

Consumption growth is the eventual result of non-consumption (investment) growth. It's all about time-preference (according to Austrians). And realize "consumption" doesn't necessarily mean destroying something or using something up, so I'd like to keep any negative connotation with it out of the discussion--which I don't think you've done, but other people have and I just want to clarify that.

What money, lending, and interest should provide is a balance between consumption and investment, depending on what the free market desires. If, for example, in a perfect market, too many people are looking for non-consumption growth (their time preference is to the future), but the free market is not currently providing enough avenue for this growth (for whatever perfect market reason--likely because too many people have a low time preference), interest rates and prices will fall naturally. This is "good" deflation. This spurs people to consume, and in return restores a natural balance based on what the market needs.

By removing your currency from circulation, you are moving the force of money out of balance with lending and interest. With less money available to lend, the only thing interest rates can do is rise while almost paradoxically prices must still fall. While in the first scenario, lower interest rates means profit margins on lower prices are relatively unaffected. In the second scenario, borrowing money becomes much more difficult as banks get scared and a credit crisis will probably emerge. This is "bad" deflation. "Money" becomes more valuable than "capital". This can lead to the so-called deflationary spiral. While this is unlikely to ever happen in Bitcoin, the only reason is because it is a free market currency and the free market will switch to something else (inflation!!!), so the effect can't really spiral out of control.

So the question isn't about what provides more or less value to the economy. One scenario promotes a well-functioning free market while the other causes an imbalance in the economy. Money is the lubricant that allows economies to function. Remove some of that lubricant and things start to break down. This will be extremely exacerbated by the fact that bitcoin is attempting to bring existing value in from an exogenous economy.


But you are thinking in nominal terms which is not at all the whole story. Real returns are what matter. A real return is interest + deflation. If you can cause extra deflation by not loaning money so that it creates a better real return than the real return you would have gotten by loaning, you have created a very dangerous imbalance in the economy. You are not letting the free market do its job.

This is compounded in bitcoin by the fact that 1) a perfect market doesn't really exist, mistakes are always made because all information can not be known; 2) bitcoin has an absolutely fixed supply unlike gold, where at least the rising value of gold would cause more effort in producing more gold--in bitcoin more effort goes into producing the same amount of bitcoins; 3) bitcoin has to expand into a huge world economy and the distribution of currency will provide countless opportunities to make hoarding provide a much better real return than lending. This would be the case even with the gaussian distribution that Adrian-x thinks will be better.


Again in an almost paradoxic way, lending may actually cost you value (at least in opportunity cost) because you are lubricating the economy and keeping deflation low. If everyone truly cared about their fellow man this system might work. But we know that isn't the case, and we know financial minds will find any avenue to abuse a monetary system to their advantage. And causing extra deflation only to return it via future inflation does nothing but upset the economy. It would likely come and go in cycles, just like the business cycles observed in fiat. You can't really be sure that your money will retain its value let alone increase in value over any period of time.


But you can't really predict what people are going to do. Mises is quite famous for basing his economic theory around that. Bitcoin is a free market currency as well as an alternative. The economics will be far different than fiat on that case alone. No one has to consume with bitcoins at all. And there is no real advantage to do so. Want to send money over the internet? Buy some bitcoins with fiat and let the other person cash out. This isn't economic growth. Nor is speculation.


It's about the real interest you earn, not the nominal interest.

Ok, but are you saying that "hoarding" (saving without direct lending) provides NO value to society or only that it provides LESS value than saving + direct lending? Because I would tend to (sort of) agree with the latter position.  But that's also the reason that sticking your money in a safe earns a smaller return than lending it out.  Again, sticking money in a safe is a very low risk loan that gives you maximum flexibility.  The price for those features is the opportunity cost of foregoing a nominal return on top of the increased purchasing power resulting from deflation. If people willingly forgo "saving" in a bank (which is actually LENDING to a bank), it's because they place a higher subjective value on those features than they do on whatever additional return the bank is offering.  


I think that's basically right, but isn't the bank just a middleman for lending?  To make it simpler, imagine that instead of putting your $100 in the bank, you lend it directly to Bob.  You forgo $100 worth of consumption, and Bob gets to enjoy an additional $100 worth of purchasing power.  There's still the same amount of stuff in the world as there was before you made the loan.  And there's still the same amount of money in circulation.  So yeah, it seems like that shouldn't cause either inflation or deflation. In contrast, when you stick your money in a safe, that will tend to cause a drop in prices.  And when you later spend that money or otherwise put it in circulation, that should cause a rise in prices. But again, that's just a different mechanism for the transfer of purchasing power from one party to another.  In the example with Bob, you give 100 bucks of purchasing power to him when you make the loan, and he gives you a hundred bucks of purchasing power (plus interest) when he repays the loan.  In the "hoarding" example, you transfer a 100 units of purchasing power to everyone who holds that currency (and I'm assuming now that we're talking about a deflationary currency).  When you later spend the money (following deflation due to economic growth), everyone who holds  that currency gives you a 100+ units worth of purchasing power. Of course, the deflation and inflation caused by hoarding and then spending are occurring at the margins.  You're always going to have some people withdrawing money from circulation (to stick in the safe) and other people beginning to spend previously-saved money.



How could the profit from hoarding be MORE than the profit from lending? If you stick 100 units of a deflating currency in the safe for a year, at the end of the year you'll have... 100 units. Sure they'll be worth more than they were previously, but you'd still have been better off if you'd lent them out at interest.  As I pointed out in another thread, a deflationary "currency" already (sort of) exists.  Isn't that basically what gold represents? But most people don't just horde gold because traditionally that wasn't a great investment.  Of course, it's turned into a great investment in recent years but only because our fiat-based system has gotten so screwed up.

The POINT Roger, as I have been arguing, is that it does not make a difference. Society is not gaining anything from you hoarding than they would not have otherwise gained from you saving. On the contrary, hoarding will lead to a mix of non-consumption and consumption growth, whereas saving will primarily go to non-consumption growth. Non-consumption growth is about time preference--your deferred consumption acts to create the possibility of more, future consumption growth. Consuming may expand the economy here and now (debatable, in reality it likely just delays non-consumption growth which is what leads to a permanently bigger economy), whereas non-consumption expands it amortized over time in the future.


This I proved to be incorrect using a simple example with the equation of exchange. "Saving" in a bank causes neither deflation nor inflation because the money is still in circulation. "Hoarding" in a digital wallet causes deflation and then inflation. If the ratio your amount of money to the total supply of money does not change, there is no possible way that it can not have this effect. And you, the hoarder, benefit far more handsomely off of hoarding than you would off of saving even though the net gain over saving to the economy is zero. The net gain to your wealth is substantially greater than zero. The only possibility to explain this is that it comes at a cost from everyone else. There is no miraculous new value created via hoarding that will be created above and beyond saving. Instead, it is just a transfer of wealth created via economic upset.

Bank loans are almost universally for non-consumption growth? Really? So home mortgages and car loans are a trivial fraction of bank loans? And even if the real resources loaned by "hoarding" did go primarily to consumption, why is that a problem? Consumers and investors both have the opportunity to bid on your loan by spending their own money on consumption and investment, respectively. The balance that results will thus reflect the subjective preferences of market participants. And yes savings results in a future inflation. By saving, you've loaned purchasing power. When you eventually spend your money, society pays you back by giving up some of their purchasing power. And to the extent that non-consumption growth has occurred, the economy will be larger than it was previously. So the subsequent inflation caused by your spending will be smaller than the initial deflation caused by your saving.

Because saving money in a bank moves the currency through the economy via loans. Almost universally non-consumption growth.

Hoarding money leads to the same effective value being used throughout the economy, for consumption or non-consumption, depending on who is using it, but by acting via deflation instead of a lowering in the interest rate due to there being more money available.

Where is there any net gain here? How does more value magically appear in the economy just because you hoard?

I clearly illustrated in this response to you in the tomato soup thread about how by hoarding, one can earn a much better return than by saving in a fixed supply currency, but at a cost to everyone else. Any time someone defers consumption by hoarding, they are incurring a future inflation (or less deflation than there otherwise would have been). Both when you hoard and when you spend causes economic upset at the benefit to the hoarder and the detriment to the rest of the economy. Saving would incur no penalties in either situation. But it also won't make nearly as much value ("out of thin air").

How is a loan a net zero? Some of the people who "take you up on the loan" (by immediately spending their money) will do so for the purposes of present consumption.  But (as you seem to acknowledge) others will do so for the purposes of investment.  Even if the former group dominates, that's not a net zero.  Those consumers had the same opportunity that you did to defer their consumption.  The fact that they chose not to indicates that they placed a higher subjective value on present consumption.  So both parties gain.  And the saver should be compensated.

Even if newly-created money is distributed in proportion to current money holdings, wealth is transferred to those who spend it first (unless all prices rise in proportion to and at the instant of the money supply increase). Nit-picking perhaps, but it's important to isolate the addition of money itself from the rise in prices as this money starts moving through the economy.

As I mentioned in the tomato soup thread, the problem with this is the market doesn't know it's getting this "loan". In the mean time, debtors go bankrupt, creditors go bankrupt because debtors go bankrupt, people lose their jobs because no one can afford the products/services of their company any more, THEN the market adjusts to lower prices. This "deferred consumption" doesn't happen in a vacuum and it is only beneficial to the one(s) causing the problem. Everyone else suffers (except other hoarders). And then they suffer again when the hoarder calls in to collect and causes inflation and reduces the value of everyone else's savings.


Why would businesses use bitcoin if they can't run a business with it? What incentive to businessmen have at all to use a volatile, unforgiving currency?


Whatever you say, Karl.


But yet you argue that deferring consumption merely lends resources to the rest of the economy. That is a net zero, broseph. Your argument has been busted by your own admission. Hayek, on the other hand, says that saving in banks promotes non-consumption growth, exactly what you hope will happen by playing with deflation. If everyone's purchasing power is temporarily increased, you may get some non-consumption growth, but you will also get plenty of consumption. And it's also just a temporary illusion that ignores what happens when there is unexpected deflation. (bankruptcies, job loss, etc. ad nauseum)


Deflation is communicating the reality you think you've argued and you think is best but is really just the latest in a string of bitcoinomics rationalizations. Stable prices allow for an economy to actually figure that out for itself. If you ask my opinion, I think the reality of a stable price currency like Decrits would actually make the price of luxury consumption items be much higher. Without the wealth and productivity of the people being dragged up the economy as in fiat or bitcoin, wealth will be more evenly spread throughout the economy, and thus luxury goods must cost more in relation to things like food (supply and demand, of course). But this cost comes at reducing inconsequential things like poverty and hunger. I think I can live with that.

And oh I think people invested in bitcoin will hold on to it for as long as possible. But when something better comes along that actually supports a working economy, the viability of bitcoin will be greatly diminished. If new people aren't rushing to speculate on bitcoin (and it's bad for business), bitcoin's price will not increase. When bitcoin starts stalling, some people are going to rush to cash out. Then all that value goes up in a puff of smoke and the pyramid collapses.


God forbid bitcoin sees a little actual competition other than "i changed 4 lines of code join mah pyramid!!!11" It is folly to assume that the free market will universally choose bitcoin when even you think it sucks for business. Unless you want to fall back to the AbelsFire feudalism argument where "herp a derp nobody needs loans in an economy!!!11"

It's amusing how you didn't respond to my comment about how side currencies popped up all over the place during the great depression. The great thing about a free market is it gets to decide what's best, not what you think is best.


I'm glad you're impressed. But that does not counter the fact that it is flourishing because of the nature of a cryptocurrency and nothing specific to bitcoin. It's actually sad how even in that economy the volatility of bitcoin means that people have to waste money hedging bitcoin against USD. I don't know what Silk Road charges for the service, but it isn't free and it is another transaction cost that bitcoin imposes due to its poor design.

I guess I come back to my argument that it's impossible to save without lending, which I don't think you've addressed.  By deferring consumption to which you're entitled, you effectively lend those resources to the rest of the economy. Thus, in my view, deflation represents the market-determined interest rate on this extremely low risk loan. Attempting to get rid of this reward for savings seems like it can only introduce distortions into the market.  As far as whether we'll see Bitcoin "banks," I imagine we will eventually.  While you don't need a Bitcoin "bank" for safe storage of your money, "banks" could still act as a middleman between lenders and borrowers. But again, I don't expect many businesses to borrow in Bitcoin for the foreseeable future.  Why would you when the price of borrowing purchasing power in the form of fiat is being kept artificially cheap?


I tend to think that consumption should be "penalized." When you consume in the present, there's an opportunity cost.  Those resources are no longer available to be put toward enabling even greater consumption in the future.  I think deflation is just communicating that underlying reality. "Stable prices" mask it. And just so I understand your position, you expect people to voluntarily abandon Bitcoin in favor of an alternative currency that's designed to maintain "stable prices"? In that case,  I guess it's an empirical question, and we'll see what happens.


Yeah, I think it's safe to say that there will NOT be hundreds of videos on YouTube talking about Decrits. (Ok, that was a little obnoxious, but c'mon, you teed that one up for me.)

The black market is the free market. It's also a BIG market.  Personally, I think handling $2 million a month in sales for a single website is pretty good for an experimental currency that's less than 4 years old. Again, I'm not trying to be too much of a jerk here, but let me know when Decrits hits a similar milestone.

The value of an expanding currency has to go somewhere. In bitcoin, very little of it goes to miners as there is competition to spend more and more money to get a larger piece of the same pie and make the ROI as low as possible. This money that bitcoin mining wastes helps only the electric company, ATI (or ASIC manufs), and people previously holding bitcoin. So only two types of people using the network benefit: 1) miners (barely), 2) existing holders of currency. Under the decrits system, it is: 1) miners (who only mildly compete with each other, spending 5x the money on video cards will not bring 5x the return, it keeps the "hardware tax" low), 2) existing holders of currency (who also receive half of the "free" money based on their holdings), 3) people who trade. This opens up a whole new dimension of who benefits from using the currency while at the same time reducing the amount of hardware/electricity waste. There is no reason that people who do nothing productive in expanding the economy should see all the benefit of expanding the economy. Have you heard of Wall Street? Because that's exactly what they do.

The "meta" of rewarding trade with new currency (and unbounded mining) also counteracts Wall Street-like symptoms. If capital accumulation becomes the goal of the financial market rather than productivity and economic growth, the unbounded supply, a currency that "the people" can create, will devalue the power of that capital accumulation. It will stop greedy people in megacorp banks from causing the business cycle. Because of price stickiness it's very hard to see the effects of a recession, but in gasoline it was obvious in 2008. It dropped dramatically in half in price because the US dollar experienced a big slow in the velocity of money which caused deflation, even though it was not all that evident in most prices. It was certainly evident in unemployment, though. A fun and informative video: http://www.youtube.com/watch?v=qOP2V_np2c0 (note that this video is intentionally from a Marxist perspective on capitalism--I'm not promoting marxism, only stating the obvious that capitalism has no countermeasure for when it gets out of hand, and that this is a problem of the system of money, not so much capitalism itself)

You can call this devaluation theft, but it is the natural order of things when the greed of a few massively outweighs the benefit to society. Play too many games with the financial market, and people just create their own currency on the side anyway, effectively diminishing the power of the existing, forced currency. This happened in hundreds of communities during the great depression. What if the currency could have this property baked in?


As I told Realpra, the answer to this is simple in that the odds of getting free money are not outweighed by the transaction fee. Such as if the transaction fee is 0.01 and the award is 100x the tx fee or 1 coin, then the odds being awarded that coin are 1 in 101 (but really half that as either the sender or receiver may be rewarded, so it's 1 in 101 only if you're trying to game the system and send to yourself). I haven't come up with the exact solution of how to do that, but it will likely have to do with hash comparisons or hamming distances or the like. It's essentially just based on "refunding" tx fees with new money.


It does and I have. https://bitcointalksearch.org/topic/fascinating-information-on-saving-vs-consumption-110708. Keynes said "saving causes recession because of lack of growth" hayek says, "you stupid son, saving causes an increase in non-consumption growth because banks use the money to loan." Since nobody needs to put money in bitcoin banks, and indeed it would be silly as there is no way you are getting a return on savings in a deflationary economy, nobody will "save" in the sense that it is used for non-consumption growth. So rather the ONLY kind of bitcoin growth will be when people holding bitcoin fall to the pressures of consumption at reduced prices. That's right, bitcoin can only grow via consumption (or lololol via speculation). If you have a better idea of how the economy works than Hayek's excessively intuitive logic, I'm all ears. But know that I will call you out on any begging the question fallacies.


According to Hayek, there is a clear distinction we can make between saving and hoarding, and bitcoin is hoarding. Too much debt in fiat is the nature of a debt-based currency, one which Decrits would not be. "Overconsumption", if we could ever find a way of actually defining that, is probably more of a problem of government policy than the currency itself. Either way, you can't use what happens in fiat as an argument against an unbound free market currency. I can just as easily argue that bitcoin will forever be entrenched in a business cycle of slow recession with periodic economic booms as the deflationary pressure causes a rash of consumption. The money shouldn't be what encourages or discourages anything, it should be as neutral as possible. That's why price stability is important. If people want to consume and your free market currency penalizes consumption, then they will not use your currency.


So you say. But I could just as easily argue that bitcoin will always be irrelevant because few, in the grand scheme of things, will use it. Bitcoin doesn't offset anything if people still universally use fiat.


And it will probably never achieve the network effect because people will get wise to the fact that they're buying into a pyramid. Rant about whether or not it's a pyramid scheme all you want, the fact of it all is that 50% of all the currency to ever be distributed will have been distributed in the next few months, and this may be stunting growth much more than you realize. *I* could sleep soundly at night, in the future, after having released Decrits knowing that there won't be hundreds of videos on Youtube calling it a pyramid or ponzi scheme.


A black market being the only real source of growth in an economy is not exactly a ringing endorsement of that economy. It just means the benefits for the black market outweigh the downsides.

Sorry, but that doesn't seem to answer my question. Obviously, "rewarding people for trading incentivizes them to trade in it." But again, why isn't mutually beneficial trade its own reward?  Why do you NEED to add an extra incentive to encourage more trades? And won't the extra trades that occur as a result of your incentive be trades that would not otherwise have been considered mutually beneficial? (And doesn't that tell you that those trades were not in fact wealth-creating?) I would think you'd need to argue that "hoarding" creates some kind of negative externality.

It seems to me that the deflationary nature of Bitcoin IS encouraging people to save it, but I see that as a good thing.  Again, the larger fiat economy is still encouraging too much consumption and too much debt.  Bitcoin is thus helping to offset some of those destructive tendencies.  As I've argued before, Bitcoin is currently operating more as a gold-like store of value.  But unlike gold, Bitcoin has everything it needs to be a successful medium of exchange.  It's just that success as a (direct) medium of exchange is much more reliant on network effects and will thus take longer to achieve.  But I'd note that it's already succeeding as a medium of exchange for certain niche markets (e.g., Silk Road) where its advantages over fiat make it particularly compelling.  

Yeah that's the one. Being on the board of directors is not the same as ownership it only means some influence.
http://en.wikipedia.org/wiki/Board_of_directors

Bank officers could likely have been elected into those boards by stockholders to get better bank deals - but JP could own 0 shares.

Yeah I can tell:

The steel union controlled 60% of the steel industry, but to avoid a major collapse of TC&I and further panic the steel union had to acquire TC&I.

This went straight against Theodore Roosevelt's anti-monopoly regulation spree so JP had him convinced an exception was necessary - hence dereg.

The whole ordeal was still a house of cards as I see it so maybe THAT was what came apart during the great depression. Just speculation that last part though.



I'm putting you back on ignore etlase, you are annoying me, being overly obtuse and talking down to me for no reason.

It depends on the government's policy towards spending into existence more than they bring in in taxes. If they spend more than the increase in demand for new money due to growth, then real interest rates will fall. If they keep extra spending at around the rate of new growth, then interest rates should be mostly determined by the free market. But the goddamn genius part of governments spending new currency into existence is that THEY DON'T HAVE TO PAY INTEREST ON IT. Thus there is no incentive to create more than necessary as they don't need to worry about reducing the effective debt. Well, other than political corruption. But at least in a "democracy" we have some (little) choice in electing people to government, politicians who cause inflation or direct new money to poor causes can be voted out. We have no such choice in electing central bank chairmen.

Imagine how much lower the tax burden could be if, in the US at least, we didn't owe an entire year's worth of GDP in debt! The British empire did this for 700+ years with tally sticks. But then the Rothschilds got ahold of England. It makes so much more sense than the current system you have to wonder how fricken stupid or greedy people were to get us to where we are today.

Do you not absorb anything? Are you just going to keep going round and round?

DEBTORS does not equal CONSUMERS. Get it out of your head that this has anything to do with credit cards. This is about economic growth. Not only new growth, but also existing value brought over from fiat.


If you never try to make up a type of fallacious argument again, the world will be a better place. I also did not say that they should be treated equally, I said ONE IS NOT FAVORED OVER THE OTHER. See the difference? I explained further in the post why deflation is not good for debtors--it will cause them to go bankrupt. This will stunt economic growth as even viable industries will fail. I'm sorry if I don't spell out each and every argument within one sentence. Inflation isn't good for creditors because, presumably in a non-debt based currency/society, most people will be creditors via interest earned on savings. Inflation/central banking steals a good portion of that.


Sure sounds like the current situation on Wall Street today.


Where do you see this as a loss? Morgan purchased massive equity in banks and trusts and organized the deflated stock market buy up. Remember when Citigroup shares were $550 a piece and then suddenly $10 a piece a few years ago? These are the times when Morgan propped up the economy. If you're referring to the "$21 million loss" referenced in the wiki article, that is a reference to his existing stock holdings. Did you not read far enough to see this tidbit?

"The committee issued a scathing report on the banking trade, and found that the officers of J.P. Morgan & Co. also sat on the boards of directors of 112 corporations with a market capitalization of $22.5 billion (the total capitalization of the New York Stock Exchange was then estimated at $26.5 billion)."


It's unfortunate that you claim I have my facts backward when you don't get it.


I have no idea what the hell you're talking about.

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Now both credit holding manipulators actually lost money in your analogy here (the other being a botched copper cornering attempt starting the ordeal) so I don't see it as supporting your case for stable average prices in ANY way.

I hope you don't play chess. The whole crisis would have never happened if the supply of money was not illiquid. But it was, and people in New York buying food from the fall harvest caused drops in liquidity every year.

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This is a new premise to back the other one. Here you are making the premise that stable average prices lead to a perfect level of general investment.
A premise based on the first premise almost.

It is similar, yes. The interest rate will change in a free market to adjust to the need for money, and no other factors need come into play.

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Another counter is that if menu costs were a serious detriment to anything people would display prices in a third medium - like dollar prices today paid with BTC.

LOL because BTC is stable.

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If market competition reduce prices to their correct level there is also no illusion cost so I don't see it supporting your premise.

"You can lead a horse to water but you can't make it drink."

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So your answer is "I don't"? How is BTC crashing from $32 to $2 due to a localized bubble stable?

That's BTC's problem.

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So you didn't answer my question because bubble collapses are not going to ensure stable prices.

Make a currency ripe for bubbles and bubbles are what you get. In the Decrits proposal, the more people that mine the more money is created, so any upward pressure on the price will be quickly deflated. Since everybody knows this, it is in the best interests of people holding currency to sell while it is above its cost to produce, further reducing the possibility of a bubble.

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The only sustainable way to lower prices I see is to remove currency from circulation which will require theft, taxes or selling real assets (which central banks don't have enough of to manipulate prices down again).

Or you could actually read what I said about arbitration.

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Could it be that monetary inflationists only care about stable prices when it allows them to GET money and value aaaand... not so much when they theoretically should go out and spend it to lower prices?
That's not ad hominem btw that's occams razor - simplest explanation: "I want free stuff" - like ALL human beings.

No, it's not an ad hominem, it would be a strawman. Gotta work on that. Ad hominem - attacking the person in lieu of the argument; strawman - attacking an argument that the person did not make in lieu of the actual argument. Anyone who doesn't spend/receive money in an expanding Decrits economy suffers some opportunity cost--they won't receive any of the new money given to transaction activity.

But creditors are not spending real wealth because they are not buying anything while debtors in general ARE consuming something of value. It would make sense just fine that they are punished unless they are very careful not to waste stuff we all need.

(See my island example.)

This particular part of your counter is an appeal to the emotion of fairness. You are not substantiating it by also explaining why creditors and debtors should be treated equally. (feel free to do so though)

Now I spend a good deal of time reading about the 1907 situation and two things strike me:
1. The economy was in recession for other reasons already when there was a crisis of faith in NYC banks.
2. The whole ordeal sounds like a massive card house/gambling business that SHOULD have been allowed to fail.

It was saved by JP Morgan at A LOSS to him. Likely he did it anyway because the house of cards falling would have cost him MORE.
Now when used as an analogy for a very basic premise (stable = good) it is unfortunate that you have the facts somewhat backward.

The mess was saved due partly also to deregulation pushed by JP, basically a lowering of the bar for the gamblers. I personally speculate the mess came apart in the great depression.

Now both credit holding manipulators actually lost money in your analogy here (the other being a botched copper cornering attempt starting the ordeal) so I don't see it as supporting your case for stable average prices in ANY way.

This is a new premise to back the other one. Here you are making the premise that stable average prices lead to a perfect level of general investment.
A premise based on the first premise almost.

Now that's the first good argument I have heard.

However there is a problem. We both agree that changes to individual ware prices are necessary and unavoidable. This means that there will always be SOME menu costs.

The question then becomes, how great are they?
In a digital age I would say very small. Additionally super markets and in fact ALL salesmen will often change prices beyond need to confuse or attract customers into paying or buying more - this means the cost to doing so can not be all that great.

Another counter is that if menu costs were a serious detriment to anything people would display prices in a third medium - like dollar prices today paid with BTC.

The money illusion would arguably be made STRONGER if everything always cost the same. I guess what you mean is that the cost of falling under the money illusion would be smaller.

Under inflation you would be paying too little and under deflation too much if you went by "the usual price".

Again sales people will try to make you pay more in so many ways, this is a bargaining problem that the free market solves nicely through cutthroat competition.

If market competition reduce prices to their correct level there is also no illusion cost so I don't see it supporting your premise.


So your answer is "I don't"? How is BTC crashing from $32 to $2 due to a localized bubble stable?

So you didn't answer my question because bubble collapses are not going to ensure stable prices.

The only sustainable way to lower prices I see is to remove currency from circulation which will require theft, taxes or selling real assets (which central banks don't have enough of to manipulate prices down again).

Could it be that monetary inflationists only care about stable prices when it allows them to GET money and value aaaand... not so much when they theoretically should go out and spend it to lower prices?
That's not ad hominem btw that's occams razor - simplest explanation: "I want free stuff" - like ALL human beings.