As in title, there is a certain myth that i'm hearing often:
it goes: "rise in the currency value (aka deflation) triggers hoarding"
while the truth is: "raise in the currency value triggers SPENDING"
It's repeated often by Keynesians. I'll try to bust it here and now, with my limited intellectual and linguistic resources.
1. That myth is against rule of supply and demand.
It is pretty obvious, that if something suddenly gets expensive, there will be more people willing to sell it with interest.
it goes: "rise in the currency value (aka deflation) triggers hoarding"
while the truth is: "raise in the currency value triggers SPENDING"
It's repeated often by Keynesians. I'll try to bust it here and now, with my limited intellectual and linguistic resources.
1. That myth is against rule of supply and demand.
It is pretty obvious, that if something suddenly gets expensive, there will be more people willing to sell it with interest.
Supply and demand dynamics only work that way if there is a relative change of value somewhere in the economy.
But in your example EVERYTHING changes value by the same amount.
So you may think you win by selling your bike for 15% more but the next day you realize that all other things are 15% more expensive and the 15% you made on the bike was actually just fair given the current economical situation.
So the next bike you want to buy (so you can sell it for the 15% difference) will already cost you 15% more.
The profit you can get from this is a one time correction between your current stock and future rise in price.
And even then if you never bought the (cheap) bike in the first place you would get the 15% for free on the money you still had on your bank for not spending it on the bike.
So with less effort (not trading te bike but hoarding the money on the bank) you could have capitalized on that 15% just as well as by trading the bike.
Quote
2. If the myth was true, then it would rise currency value straight to infinity. There was no such event in history known to me.
While there were such occurrences with consumable goods (ie during food shortages), this doesn't apply to any modern currency, as neither BTC, nor USD can be consumed - only exchanged. Theoretically gold can be consumed by creating jewelry but it can be easily recycled.
For you to be able to take something from someone there needs to be someone to take it from.
In the end this process results in a monopoly-like situation and not infinite deflation.
You can only excert economical power if there is an economy.
If you are the economy (because you own all the moneys) then there is noone to excert power on.
So for there to be any value to the money it needs to be functioning as a means of value exchange.
If someone were to take their wealth beyond the borders of a monopoly they will find that they start to hurt the economy so much that the value goes down.
This monopoly situation is a kind of parasitic thing and parasites would be stupid to kill their host, right?
So in the end we will see some big players in bitcoinland taking control and becoming local monopolies and then controling the value down to ensure a stable value of their coins.
Quote
3. Market punishes hoarding for no reason.
During 2011 bitcoin bubble, the winners were guys who had bitcoins earlier - because they believed in that system, or for any other reason and exchanged them during bubble for goods, services or fiat. Every single person, who hoarded bitcoin during its peak price, either lost, or froze their funds for a very long time. This applies to every bubble.
This is not an argument against hoarding.
In fact, the biggest hoarders are the people who had the early bitcoins.
They hoarded them despite bitcoin being almost worthless.
And the people that started hoarding at the peak, they will propably be winners too, if they are willing to wait some more. Nothing about bitcoin prevents it from going higher than anything we've seen before.
And that peak was just one of the rare occasions where it was not an optimal time to start hoarding bitcoin.
