Topic: = Grand Unified Solution to Lost Coins, Hoarding, Deflation, Speculation = - page 2. (Read 11146 times)

Do you seriously believe that BTC mining has contributed 1 BILLION dollars of goods and services to the rest of the economy?  Maybe their are some miners who eat Ramen so they can afford their huge electric bills but that's not decreased consumption, that's exchanging one consumption for another.  No one can point to any deferred consumption involved in making or hoarding BTCs.  The entire LIFETIME CONSUMPTION of the few thousands of elite miners doesn't come to a Billion dollars.

Your assumption that the entire 'surplus' of deferred consumption goes into productive investments is baseless.  The economy dose not make or not make investments by looking at if their exists a surplus of goods that could be invested, that's how a centrally planned economy might work.  In a free-market economy a surplus is a sign to produce less, not more.

You have not addressed in the slightest the price signals that run counter to I've identified and are just repeating a self justifying manta that's been discredited for ages.  What business is going to be investing when the price they get for their goods is declining AND volume sold is going down?  Maybe capital goods are down in price as well, but that's both unlikely (because the deferred consumption was in consumer goods not capital goods) but it's irrelevant too.  It just means producers of capital goods will ALSO be contracting their production.  Both of these are the effects we would see from hoarding, deferred consumption and deflation.  And no costs of raw materials will not go down to balance it all, the biggest cost is labor and wages are STICKY.

This is BASIC Adam Smith macroeconomics I'm talking here, supply and demand and price signals.  The 'paradox of thrift' and negative effects of deflation are not even Keynesian conclusions, they are the firm conclusion of EVERY the very earliest thinking in economics worthy of the term that date back to Dickensian England.

Bullshit.

The mattress stuffer first had to get the cash before they could hoard it. If they can't just print it out of thin air it means they actually had to go out in the world and trade for it, by producing valuable products and services. In order to still have the cash, it means they didn't spend it, which means they have consumed less than they produced. This is where the economic benefits of saving come from. The savers are investing, by adding their productivity to the economy while simultaneously limiting their consumption.

The harmful effects of hoarding that you're thinking of are when banksters and politicians just type new balances into their own bank accounts and spend without ever having to contribute any value in return. You're trying to blame deflation for the harmful effects caused by inflation.

Mining bitcoins isn't the same as saving as described above, but unlike government money inflation it is voluntary, limited, and transparent. It will become increasingly insignificant over time anyway so it's not relevant to a long term analysis.

I explained that.  I don't agree with the current system that, for example, forces savers in Cypruss to fund loans to Greece for consumption that will eventually default. The current system is corrupt. Since you appear to disagree with the current system as well, what do you propose as an alternative?


I didn't say that. You made that up.


I never said that, but matress stuffing is surely better than malinvestment. Keynesians always avoid addressing the issue of malinvesment. They think every investment is positive and hand wave furiously about money multipliers and such. Malinvestment wastes resources, period. Mattress stuffing allows deployment of resources at a more appropriate time.

FTFY & L2MacroEconomics.

My apologies if this has been mentioned, but if day trading causes the volatility and coins take at least a year to decay, how does that decrease day trading? 

Exactly. And who is to say which account is in use and which one is just lost and forgotten?

I still don't like the idea because in the end we can't see every effect. What if someone wanted to save Bitcoins in a cold wallet for their great grand kid's retirement?

You're still in a way of thinking that assumes a single monopolistic dominant currency.

Bitcoin is not even "deflationary", because it is not an enforced monopoly money. It is just an asset. It follows supply and demand. So you could ask even today, why should I lend someone my dollars, if I can buy bitcoins instead? Simply because bitcoins exist, you would therefore want to charge high interest even on dollar loans. Or would you? No, because, as we see, the value of Bitcoin fluctuates; it is therefore not deflationary. And even in an economy that is dominated by the Bitcoin currency, it will have to compete with other assets that may promise higher return. So the average interest rate in an economy that is not dominated by a central bank would have nothing to do with the mainly used currency. It will rather be the median of any assets out there.

Or to put it in another way: We could abolish the concept of a currency altogether. All we'd have is assets and price indices (baskets of goods etc) that all fluctuate in value against each other. And everyone would be responsible for themselves which assets they would choose to store the information of the value of their labor in.

What kind of non-sequiter is that?  Your paycheck is the valuation of your labor and uses the units of currency to denominate that value, the question is do you deserve to be given more, equivalent or less value by society then your labor was initially worth at a later date by just stuffing the currency token under a mattress.  You argue that your act of stuffing is somehow increasing societal wide wealth in the future and thus your somehow entitled to that increased wealth (which even your argument was made by someone else's investment and work).


Then you admit that investing and not saving is the source of future wealth?  If so then only the investor can make a claim to a have earned a surplus, aka a return on investment.  Even if saving (capital formation) is a prerequisite to investment it is not investing, no risk has been taken yet.  Show me ware BTCs are actually invested in anything productive (no mining or circulating more BTCs dose not count) and I'll admit the possibility that someone might have earned a return.


Again your trying to have it both ways, if BTC's are meant to be currency then hoarding them is removing currency from circulation, removing currency from circulation causes money to rise in value and goods to drop in price.  This sends price signals through the economy and it is not a signal that encourages anyone to invest, it tells producers they are making TOO MUCH and to make less instead. 

The actual demand removed from the economy is sending the same "Their is too much stuff" signal, but the money reduction is being multiplied by the velocity it previously had, the 1 currency unit would have circulated multiple times buying goods and services and would have supported prices even more, the longer the currency is not circulating the more purchases it is failing to influence.

An investment though IS spent, its just spent on capital goods.  This sends a signal that production of capital goods should continue or even increase.  If the investment improves production and lowers costs then the investor can sell at a lower price while still making a profit and then his lower prices can make other activities profitable.  When deflation occurs from reduction in consumption and money supply their is no business that benefits because they have unsold inventory that loses value on the shelf and can then never cover it's cost of production.  So business reduce production to match the lower demand.

The end result of deflation is always a destruction of capacity and capitol to the point ware goods become so scarce that they stop falling in price and the deflation burns itself out.  The greater the deflation the more physical capitol is wasted or lost.

I'd say we have another nice economic term for theft. Demurrage!!!!

I'd also say that producing for the sake of production adds nothing but loans and indirect slavery, as is proven these days.

1. what's wrong with taking control of the stored information of the value of my labor?

2. saving is merely a deferred form of investment. Saving up first will be preferred to loaning.

3. there is no value removed from circulation, especially if it's only the bits and bytes of a cryptocoin, and not silver that would actually perhaps be needed for other productive procession. If I die without passing on all my bitcoins, no productive value in society is lost. Bitcoins withheld from circulation merely raise the value of all others, until I spend them. At most this causes higher volatility than necessary. But with sufficient adoption, things will even out.

One idea that makes some sense might be to free up the BTC in wallets that are over say 127 years old. We can be certain that those bitcoins are truly lost as their owner would be dead. Those bitcoins could be added to the pool available for mining. Incidentally in 127 years it will be 2140, so it would be perfect timing for those lost BTC to serve as a reward for the future miners.

Anyone that inherits BTC would move it to their own wallet, so that the expiry limit would be reset for those BTC.

Stampbit: As we have repeatedly tried to explain to you on our forums, out demurrage code can NOT be subverted by transactions, even moving a coin every single block dose not stop demurrage because it is computer PER BLOCK.  If you want to make economic arguments against demurrage that is one thing, but do not comment on technical designs that you do not understand and appear to have spent no attempt to understand, our code dose what we say it dose.

bitrick:  Obviously loans that are only spent to consume are unsustainable and I never said otherwise.  The question to you is WHY THEY STILL EARN INTEREST when they create nothing?  Further more the whole basis of your argument that 'savings' represent a reduction in consumption and at the same time are 'invested' to create future productivity is trying to have it both ways.  If I literally just remove money from circulation and don't purchase consumer goods no investment is created by this, if anything is causes a decline in investment because demand is now lower and the decrease in circulating money has cancelled any cheapening of the remaining good that might have occurred, so now theirs just over capacity and some portion of existing capitol has to be abandoned.  If I instead Invest money either directly or by loaning it to someone then that investment IS consumption, it's just the purchase of capital goods rather then consumer goods and the total consumption has remained constant and merely changed in composition.

No one can make a rational argument that simply stuffing money under a mattress has a positive effect on the economy or increases future wealth in any way, it is instead a tax on productivity and this has been know for centuries.  Investment CAN be productive and every reasonable person can see how it generates real returns and increased wealth, but mattress stuffers can not claim those benefits as being caused by their actions.  BitCoins economy is pure mattress stuffing without a hint of productive investment (no before you ask buying an ASIC with BTCs is not a productive investment), and the nature of the coin guarantees it always will be hoarded, that is the flaw in deflationary economics.

These "time based" anti-hoarding penalty ideas IE freicoin, just dont work with bitcoin. Anyone can move their money from one address to another and skirt them.

Continuing to take on debt for non-investment consumption is not sustainable and probably not a smart loan to have made in the first place. This is what happens when you have unethical short-term bonus-seeking behavior on the part of bankers with unlimited printed money to play with.

The capital ideally goes towards productive investments. Unfortunately, since the banking system can print money to buy any "investment" (like no-Doc home loans in Detroit) they can find, that leads to loss of investment discipline, malinvestment, and economic contraction as the bad investments are written off. This is exactly what we are going through right now and it is going to get much worse in my opinion. The responses of the Keynesians to their obvious failure is basically, "Well, it's because we aren't making enough bad investments".

I think what you are missing is that savings that would otherwise go to pointless consumption does not bid away the goods and services that productive investments could use. That's a good thing.

This forum is quite a exception in this. Many people on many other discussion platforms would actually think this is a non-ridiculous good idea...

Haha! That second idea is just hilariously ridiculous.

Brilliant. You basically answered all my concerns.
The problem is scaling it with demand and other things but the premise is great.


Oh yeah like someone mentioned this still leaves the problem with mining. Generally speaking mining always creates the probem of people doing unproductive work getting payed for it because it is the only way to do it. What we have no is digging a stupid hole, filling it an digging it again.

But it's still better than just digging an ever smaller hole and hoarding money as output diminishes.

While in the case of fiat, the flow of interest goes to banks!!! Thus it is experienced as "necessary" decay by fiat money holders!!!

No thanks, I'd rather the interest is distributed among regular people rather than banks and there is no decay.