Topic: Deflationary Currencies are bad for Inflationary currencies, but that's it (Read 1097 times)

What most people tend to miss is that all relative nominal prices are arbitrary. In other words, the fact that commodities today cost more nominal currency that they did 30 years ago doesn't scare people as much as bitcoin is currently rising. But if bitcoins are expensive, people will demand more work for bitcoin or less bitcoin for work.


True, the market is growing, and hasn't reached it's highest potential saturation yet apparently. I, among many here believe that it will blow way further. The one advantage fiat has over bitcoin is that it is a smoother transition because it is enforced in one go on an entire population. Bitcoin can't offer that luxury. However, when the bitcoin economy saturates, it's prices will be inherently more stable than recklessly minted fiat. Fiat money has a tendency to overshoot inflation (and many times even hyper inflate). Except with bitcoin the tendency is more stable, and reversed, which clearly the better direction (unless you are a proponent of systematic theft). When saturated, the bitcoin monetary base will represent more or less the value of all goods traded with it, which is exactly what minting fiat is supposed to achieve and fails. Considering how people today have to adjust prices to a constantly devalued currency, I don't see why we couldn't deal with it when bitcoin stabilizes.

Besides, if changing prices worry us, lets think of new-age methods for measuring inflation/deflation rates that can be applied to bitcoin. So far most people/systems get these measured for their fiat from extremely biased sources (those who print the money) with stuff like the CPI.

Edit: it's worth looking at this related topic:
https://bitcointalk.org/index.php?topic=142877.0;all

lol It'll be back up again, trust me I'm talking about long term though, after the crash there was a massive sell off.

Whatchu talkin' bout, Willis?

Considering how Gold and Silver has risen lately I'd disagree but of course there are other factors besides inflation that causes prices to rise like speculation but they can only do so much depending on how much they have to speculate with and it's scarcity. I just find it interesting, particularly, I'd like to see whether the BTC/USD price will keep on rising and then suddenly crash or it will just keep going the way of the Zimbabwean Dollar and whether the counterparts to the dollar like the pound or the euro will go the same way either.

Yes, selling things does seem to be difficult but the market is small and there are lots of newbies poking around and I see more and more businesses opening up so as the paper currencies get worse things will likely get better for Bitcoin, I'd just rather place my bets on the thing that's worth $34 than save up and waste all that time just to get something that's worth several fractions of that.

You are assuming that the changes in prices between, bitcoins and dollars, euros, etc. are entirely due to the decrease in value of the latter. This is patently false. The BTC/USD cross has gone from $14 to $34 in about 8 weeks, a change of 243%. Yes, the USD is decreasing with value over time, but nothing like that (there would be chaos and pandemonium in the streets if it really were that.) Rather, the phenomenon is almost entirely intra-Bitcoin. Thus, you cannot avoid it by avoiding other currencies, and many merchants have indeed complained that it is very difficult to sell anything for Bitcoin at times like this. I have tried to sell a few things on Bitmit recently, and even at what I would consider reasonable prices, it seems to be a tough sell--a "hot" auction may be any one with even 1 bid.

If you're like me and you can't help but look at the markets and everything just to see what's going on and why things are the way they are in our economies you'll have noticed that because of Bitcoins recent rise in value those merchants who have bothered to adjust for the rise have lowered their prices. What this does simply confirms the suspicions I had about inflationary currencies all along except before I didn't have any life examples to go by aside from very localised examples like the technology sector or Switzerland. What's even more interesting though, is the way that the supporters of are current systems or people who just don't understand how economics work ( likely both ) are screaming to the world about how it's going to become too 'expensive' if Bitcoin keeps rising and things of that nature, honestly, I can't vouch for accuracy because I think It's bullshit and that tends to just filter through my brain without thinking, I honestly don't pay attention much to people like that who don't give reasoning in their statements.

The reason it is bullshit is because Bitcoin itself and products that are sold only through Bitcoin are only expensive for people who deal in paper money, for people who want to deal only in Bitcoin, everything just keeps getting cheaper, this is how deflationary currencies work, you work for less hours for more, you gain more for less. If anything, this shows up inflationary currencies for what they are and I believe they're merely a scheme to force people to keep working for as little and for as long as possible. Why do you think the Federal Reserve drummed out gold and silver as an official part of the American currency? It was making them look bad and showing how inflationary paper was, it's probably going to happen with Bitcoin but I doubt they'll be able to stop it any more than Hollywood stopped Bittorrent.

If things are getting too expensive for you Bitcoin wise, then maybe you should consider trading goods for Bitcoins rather than just speculating with paper money I suspect it's going to get even more expensive soon for the paper bugs