1) Increase in money supply >>> 2) Higher demand for goods and services >>> 3) Higher demand = price level increase in short term >>> 4) Price increase = Inflation
Good summary. Essentially, any currency is only worth as much as you can get for it.
Topic: Inflation and Deflation of Price and Money Supply - page 28. (Read 1424547 times)
Good summary. Essentially, any currency is only worth as much as you can get for it.
legendary
Activity: 2520
Merit: 3238
The Stone the masons rejected was the cornerstone.
Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.
Very well said...the book when money dies does a fantastic job in showcasing a real life scenario in Weimar Germany on Hyperinflation etc etc
Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.
a very simple explanation, but easy to understand. thank you sir already share knowledge about inflation and deflation. because before, I only know that inflation is the value of a rising currency only, but not yet fully understand his description in detail.
Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.
yes inflation and deflation of price and money supply is just always to happen every now and then..traders,investors are getting some ways to do to let there market still be on the top 
Yes deflation and inflation will always happen in a economy where business is fluid there are lot of activities done by traders, investors and even they will create a scenario that make their business on top and all of these will only follow the natural law of economy which is the law of supply and demand.
Inflation is caused when goods and services are in high demand, creating a drop in availability while Inflation occurs when too many goods are available or when there is not enough money circulating to purchase those goods,money supply includes safe assets, such as cash, coins, and balances held in checking and savings accounts that businesses and individuals can use to make payments or hold as short-term investments.
yes inflation and deflation of price and money supply is just always to happen every now and then..traders,investors are getting some ways to do to let there market still be on the top
You guys can't really believe it works like this, can you? Deflation over 2 years vs. inflation over 100 years is not even close to a fair comparison, to start. Secondly, deflation of this scale discourages an active economy (as we've already seen with BTC) and makes it worse, especially with a limited currency like BTC. People sit on their BTC and don't spend it because it's an investment. Third, cost of goods/services and salaries are (though sometimes poorly) adjusted for inflation. If you got paid $10/hr in 1929 you were doing really, really well. If you get paid $10 in 2017 you can barely make ends meet. Finally, you can't honestly believe that deflation will continue at the rate it has been with BTC forever.
This, exactly. If people just sit on it, you're creating a stagnating economy with that currency. I just wish we had a better solution than the current tx fees.
Hello there,
Can we ralete the price and money supply of BTC to the political movement of US with other countries?
Not that really, maybe yes or maybe know. Look on what recently happened to China, they banned ICOs and closed exchanges and it's obvious the effect of it. The price was affected and we have seen on how fast the price of bitcoin stumbled with a follow of Dimon's statement about bitcoin fraud. But now, it's a good thing that we are now pumping up.
Does this price inflation and deflation depend fully on Bitcoin days destroyed? I guess it also plays an important role because one may send his own coins between different addresses trying to show the network that several transactions are being made?
Inflation occurs when there is a sustained increase in the general price level. Traditionally high inflation rates are considered to be damaging to an economy. High inflation creates uncertainty and can wipe away the value of savings.
Advantages of Inflation
Deflation is potentially very damaging to the economy and can lead to lower consumer spending and lower growth. For example, when prices are falling, consumers are encouraged to delay purchasing.
A moderate inflation rate reduces the real value of debt. If there is deflation, the real value of debt increases leading to a squeeze on disposable incomes.
Moderate rates of inflation allows prices to adjust.
Moderate rates of inflation is sign of a healthy economy. With economic growth, we usually get a degree of inflation.
Disadvantages of Inflation
High inflation rates tend to cause uncertainty and confusion leading to less investment. It is argued that countries with persistently higher inflation, tend to have lower rates of investment and economic growth.
Higher inflation leads to lower international competitiveness.
Menu costs. – Costs of changing price lists.
Inflation and stagnant wage growth leads to declining incomes.
Inflation can reduce the real value of savings, which might particularly affect old people who live on savings. However, it does depend on whether interest rates are higher than the inflation rate.
While deflation
Low prices for all
This means that low income earners will be able to afford essential items, so they'll be escaping the poverty bracket.
Also, because prices are low, workers may behave rationally and accept wage cuts, decreasing the costs of production for UK firms.
Thats all I can think of from the top of my head.
You guys can't really believe it works like this, can you? Deflation over 2 years vs. inflation over 100 years is not even close to a fair comparison, to start. Secondly, deflation of this scale discourages an active economy (as we've already seen with BTC) and makes it worse, especially with a limited currency like BTC. People sit on their BTC and don't spend it because it's an investment. Third, cost of goods/services and salaries are (though sometimes poorly) adjusted for inflation. If you got paid $10/hr in 1929 you were doing really, really well. If you get paid $10 in 2017 you can barely make ends meet. Finally, you can't honestly believe that deflation will continue at the rate it has been with BTC forever. Advantages of Inflation
Deflation is potentially very damaging to the economy and can lead to lower consumer spending and lower growth. For example, when prices are falling, consumers are encouraged to delay purchasing.
A moderate inflation rate reduces the real value of debt. If there is deflation, the real value of debt increases leading to a squeeze on disposable incomes.
Moderate rates of inflation allows prices to adjust.
Moderate rates of inflation is sign of a healthy economy. With economic growth, we usually get a degree of inflation.
Disadvantages of Inflation
High inflation rates tend to cause uncertainty and confusion leading to less investment. It is argued that countries with persistently higher inflation, tend to have lower rates of investment and economic growth.
Higher inflation leads to lower international competitiveness.
Menu costs. – Costs of changing price lists.
Inflation and stagnant wage growth leads to declining incomes.
Inflation can reduce the real value of savings, which might particularly affect old people who live on savings. However, it does depend on whether interest rates are higher than the inflation rate.
While deflation
Low prices for all
This means that low income earners will be able to afford essential items, so they'll be escaping the poverty bracket.
Also, because prices are low, workers may behave rationally and accept wage cuts, decreasing the costs of production for UK firms.
Thats all I can think of from the top of my head.
the price inflation and deflation depends on peoples holding it in their wallets i mean not the fishes in the sea am talking about the big whales of bitcoin, and stays increasing by time that's the algorithm of bitcoin, but sometimes we see a small decreasing that because of the demand and such, anyway we can't predict bitcoin scam but make sure that bitcoin never goes down down.
There is always going to be more money supply than demand, that is why there is inflation in almost all the countries, and when the countries start printing more bills, the massive inflation starts, just like what happened on venezuela, the government could not stop printing bills, and now 1 peso of them are less than the value of a satoshi. But in bitcoin this works different, because it has a fixed quantity and nobody can create more or less than the fixed supply.
Greetings everyone,
...little confession here, I think I may be a Keynesian ...
...little confession here, I think I may be a Keynesian ...
I doubt Keynes himself would approve of what central banks are doing today. I think he would likely say something like "no no you missed my point and went too far".
Even Keynes knew he was offering a pyrmid scheme and knew full well he would be dead before it collapsed. His famous statement "But this long run is a misleading guide to current affairs. In the long run we are all dead". Well, in 1971 Nixon turned over the US monetary system to the ideas of Keynes. Here we are approaching 50 years and the system is under major stress and yes, in the long run it will be dead only I don't think it will be that long. Those who will be dealing with the aftermath in the not so distant future, won't have much good to say about Keynes. That is those who didn't buy bitcoins instead of whole life insurance thinking it was an investment.
Today it costs the US mint 6 cents to make a 5 cent nickel, will it cost 1 dollar 10 years from now? AND a penny is 99 percent zinc with a bit of copper plating. I still have 95 percent silver 10 cent coins which are now worth almost 2 dollars while a new dime is 10 cents which won't buy a loaf of bread but, the old ones are still good for a loaf of bread.
Like Gold as the evergreen asset for the investors during the inflationary period, is it possible can bitcoin be the better asset for the hedging instrument? Always we face the situation of inflationary period but what about Deflation. Is that occur in real life ever anybody heard?
Deflation in the traditional financial ecosystem is a bad thing. Then again, cryptocurrencies such as bitcoin cannot be compared to any other currency in the world, thus making it a rather moot point. It is also a clear indication of how most economists are stuck in their old ways of thinking. Deflation is often associated with economies that not performing all that well. In most cases, deflation leads to falling prices. If that were to happen to bitcoin, things could go from bad to worse rather quickly.
Hello there,
Can we ralete the price and money supply of BTC to the political movement of US with other countries?
How big efforts to take Bitcoin down, as strongly will be the price recovery, if it happens (we believe that will).
Governments are trying to control and desestimulate people to buy btc, but i think it's the future of all fiat money is vanish and the BTC will remain as money.
Governments are trying to control and desestimulate people to buy btc, but i think it's the future of all fiat money is vanish and the BTC will remain as money.
Government economies have various tools to stimulate or cool down the economy. Bitcoin has none of this and it will go wherever people and their emotions take it. It's a scary thought.
If all Governments decide to get rid of bitcoin then they can get it or at least greatly weaken it.It is enough to look at the situation with China.
I am sure that many investors from the government invest millions in BTC. But I believe that it will grow more and more.
useful informations about how the price and value of bitcoin go up and down in the market.
but as of now the market is driven by the big players or big whale as we called them. they are the one that control the market now.
bitcoin is a very volatile but as of the moment, bitcoin is the best investment portfolio.
i experienced it myself.. started from january this year. and have a 2000% gain from my capital.. hehe. hope we see one more bull run this year! 10,000$/Bitcoin .. HERE WE COME!! hehehe
but as of now the market is driven by the big players or big whale as we called them. they are the one that control the market now.
bitcoin is a very volatile but as of the moment, bitcoin is the best investment portfolio.
i experienced it myself.. started from january this year. and have a 2000% gain from my capital.. hehe. hope we see one more bull run this year! 10,000$/Bitcoin .. HERE WE COME!! hehehe Jump to: