Topic: Bitcoin is a Zero-Sum Game - Long-term interest bearing instruments viable? - page 5. (Read 14623 times)

Oh dear. I think we have a slight problem here.

A number of people have argued that, by incentivising people to just sit on their money, deflation rewards people who abstain from consuming resources. That may be true; unfortunately it doesn't reward anyone for conserving the resources the eager savers haven't used. In fact, it's probably best for anyone holding them to do something with them quickly, before deflation eats into their value too much. So a few years down the line, when people start trying to exchange their paper profits from deflation for actual things, the resources simply won't be there to do it at any reasonable price. Suddenly we've got price inflation in a system designed to be deflationary, except that the size of the total money supply hasn't changed... I'm pretty sure that can't be good.

There are of course additional costs associated with building and operating a factory - if it didn't make sense with existing electricity prices, chances are it doesn't make sense at prices near zero. In practice, what actually happens in cases of oversupply is that some of the suppliers go bankrupt and lose their investors' money, reducing the overall profit from the industry.

If you can't see how bad your last counter arguments are I see no point in using more time on explaining how the real economy works.

Yes they can, that's my whole point. I will go over your arguements below.

No, not if westerners ate less meat and didn't feed their cars anyway, but it is a good example of how increased energy/resource supply leads directly to growth.
100 years ago I think world population was what 1 billion? Both that and the 7 billion today happened because of modern agriculture revolutions - any temporary over-supply was eaten up so to speak.

Yes, but the inflation is not neutral, it benefits some group which is almost ALWAYS a misallocation of human time and resources - there is absolutely no way to adapt to that. Wasted resources or their potential is gone.
This is because inflation usually occurs at one focal point - otherwise you are just moving commas and there's no point.

Deflation on the other hand happens system wide which is much much more neutral - whether its non-neutral effects are good or bad they are smaller!

Take the mining reward; if that continued forever and scaled up too there would be huge waste in computer cards doing unnecessary over-security at high cost.

People will adapt to any system, whether it has an inflationary or deflationary currency. If you want to call that being forced for one system it's hypocritical to say you are not being forced by the other one.

I would like to throw in a blood soaked rag from the bench.
The economy is a result of the efforts of the participants, the size and growth rate are a result of trade.  To force people to behave or trade in a certain way will harbor resentment and cause conflict, people choose to trade for mutual benefit. While we very much live in a world filled with Keynesian dogma, forced trade (or investment) to ensure economic growth does not ensure mutual benefit, just  more growth. I have seen no evidence to justify manipulation of market forces.

Bitcoin offers for the first time ever a paradigm shift that will prove the free  market is better than a centrally planned one.  
So emotional opinions fortunately don't count.

But the fact a free market Bitcoin economy may fail is not routed in any defects in Austrian principles, but largely I the  lack of basic goods and service originating from inside the Bitcoin economy.  

Yes, all. One wind turbine is not really a good example because you also need infrastructure so you may even earn more from the second turbine. On the other hand running a business like this on such a scale is not competitive. If it's a large company which for instance 25% of the market it can't just double the production to earn twice as much. Some reasons:

- Increase in power supply means lower prices
- The best spots will have been used for the first turbines, so the additional ones will need to be put in areas that are more expensive or generate less power
- It will need to hire more people, and the best ones will already have been hired, so the new employees will be less qualified or demand a higher salary
- Increased demand for wind turbines may mean higher prices

Food is not currently a limiting factor. It probably will be if the global population continues to increase, though.

I'm not sure what you want as evidence. A basic course in macroeconomics?

One thing we can see as non-economists is that economic takeoff associated with the industrialization never happened in any country that didn't have the financial structure in place to fuel it through loans. Growth in most countries takes off after liberalizing their financial sector. This is pretty basic.

Saying you don't need loans to succeed may be true for individual examples of companies but ignores the fact your overall growth rate will be very low if few people can find loans. You see recognition of this in all those schemes to foster growth in third world countries through micro-loans.

You've got a lot to say but none of it is logic or evidence. All you have to fall back on is angry insults and appeals to the credibility of a profession whose actual achievements, especially in the last four years, don't live up to its pretensions.

If you've something worth saying you can back it up with more than, "the people who I agree with also agree with me therefore we're right".

If you don't have anything worth saying you'll just fall back to more insults.

Whoa AbelsFire, be careful when you throw around more things you don't understand.

http://en.wikipedia.org/wiki/Argument_from_authority

"Although certain classes of argument from authority can constitute strong inductive arguments, the appeal to authority usually is applied fallaciously, either the Authority is not a subject-matter expert, or there is no consensus among experts in the subject matter, or both."

Precisely the opposite of the case.

http://en.wikipedia.org/wiki/Ad_hominem

"is an attempt to negate the truth of a claim by pointing out a negative characteristic or unrelated belief of the person supporting it."

Saying you don't know what you're talking about is not an ad hominem. It's pure fact.

But not all: If you have two wind turbines or two solar panels you will earn twice as much as if you only have one.

This is because A the potential is largely untapped and B more energy will not lower energy prices in the long run because more energy means more economy and more demand also.

(like more food means more people = same price for the additional food after a while)

That was cool. You managed to combine an appeal to authority fallacy with an ad hominem fallacy in the same (non) rebuttal.Don't argue with me - take it up with Denninger on his Monday BlogTalk show. Maybe you can trade stories about your vast experience in building businesses from the ground up and explain where he's wrong with evidence instead of name-calling. I'm very interested to hear how you explain the correlation between the increased credit emissions since 2008 and the flatlining employment rate of the population.

BTW, what's the "we allow" business? Surely you don't think you or anyone else is entitled to make those kinds of decisions for other people?

ATTENTION DEBATERS:  I know everyone is getting a little heated.  Let's all stop the name calling and start addressing real questions or opinions.    This discussion is really insightful and I want to continue reading the discourse.


What I would add to maybe get us back on track.   Realize we are dealing with a monetary system  that is fixed and not debt based other than the energy you put into it for the coins you acquire.  Just like mining any commodity.  What I see are a number of models being imposed that come from a fiat/debt perspective.  They are not wrong in the fact that applied to the right situation, they are actually correct.  


What are are trying to address ------- are these concepts fully comparable when operating in a Bitcoin economy?   This is the debate I put forth.



Please continue  

Your answer makes no sense in this context. Did you read the link?

That person/people with problems don't equal the economy. The stuff they don't get goes to someone else who on average can use it better.

The proof? Every economist who has ever lived! Austrian, Keynesian, or otherwise. You do NOT have any clue of what you're talking about.


LOL because lines of credit are anywhere near the same thing.

Stop trying to machinate bullshit to fit your view. It's wrong.

"Doing so on credit is a gamble and you're gambling with other people's money."

Whose money?

"That risk belonged properly to the shareholders"

Oh the shareholders? You mean, the people who invested in the business? As in, lending money to produce growth and ergo more money? And he says he's the majority shareholder, which is money he got one of two ways 1) a prior business that had profitable return on investment or 2) family wealth. If we only allow situation 2) we're at feudalism.

You are an economic dunce.

You think that someone who got into problems because they could no longer get credit would agree that lending is not necessary for the economy? I continue to be baffled by what some people thinks makes sense in this forum.

Unfortunately, it's not possible to know who it will be. To the degree that it is possible to know in advance which companies will earn more, that will already be priced into the shares.

Which is why index funds are so popular.

When you put money into a business the risk adjusted return is always about the same. When existing businesses print more shares there is competition to buy them. That means that if the average return of businesses are 3%, that's what you can expect from your investment, even if the current owners are earning 5% on the investments they have done earlier. If you insist on paying less for the shares, other people will outbid you because it would be a better investment than the 3% they can expect elsewhere.

No, it doesn't. The people buying it could put money in Apple just as easily as you could, so they would only buy it if they can get it at a price where they would end up with the same profit. That means you will not benefit from switching.

So why aren't they? Your theory implies they must be stupid to continue doing business when others are earning more.

Se above.

Except that services are potentially unlimited...
There will NOT be one currency to rule them all. Bitcoin has it's function and there will be other complementary currencies working in conjunction that will provide the abundance necessary. Scarcity is a myth (albeit a well embedded one in our society).

I assume you have proof for all that and we don't just have to take your word for it.

On the other hand there are successful businessmen, with records of running profitable companies, who emphatically disagree with you:

http://market-ticker.org/akcs-www?singlepost=2830302

Really? I'd say that by definition, about half the investors should expect to earn a higher profit than the average market, since the market is never in complete equilibrium. This is the reason the interest rate should be around the average expected return, since it allocates resourcers from below-average investors to above average investors.

If noone could get a higher than average share of profits, loans wouldn't even be neccessary. People could just invest the capital they own in whatever they want and recieve their average return. Why should I lend money to you if I can expect an average return on any investment I make?

Again, I'm talking risk-adjusted returns. An investment that often returns no profit and often loses means a negative expected return. I'm asking you how will investments of very small expected returns take place if the interest rate is above 0%? Your argument seem to imply that 0% is the optimal if you want as many investments as possible.

You seem to misunderstand me on purpose, which is often a sign of a losing position.

Resources are not homogenous no. And it takes time to reallocate them yes. But if Motorola sells its capital it certainly gets back the market worth of its capital. And all of its resources can be used by other companies. The energy, labor, competence, raw material and knowledge etc that Motorola currently posses could be used for other purposes. If other entities could use these resources in a more productive way then they are the ones who should optimally be in control of these resources, not Motorola. The interest rate is the price that helps market agents determine wether or not they employ their resources in a way that's productive enough.

Post #136.