Topic: Inflation and Deflation of Price and Money Supply - page 3. (Read 1424268 times)
Unfortunately there is no chance to avoid inflation and we all need to think about a) what swe should use as an inflation hedge to protect our savings b) how to live with inflation.
We are in inflationary-deflation due to many factors. Inflation primarily from money printing and low rates. Deflation due to lock-downs and problems caused by the virus. The only thing missing is velocity of money. Once velocity spikes, its game over for the USD and probably the current financial system as a whole.
That is well stated - I liked how you have made a combination of Inflationary - deflation. Although inflations plaguing the entire world. Everyone is in serious trouble in particular the people of underdeveloped country. The after affect of COVID are now obvious - may this crisis end soon we all see yet a progressive economy. Amen
So fascinating to read economic talk in these forums. Beautiful to see the bitcoin economy grow. Very interesting that those skeptical about bitcoins economics back in the day are the very same arguments we hear today. Keynesian thinking 
BTC
BTC 
is there any reason to try to delay the inflation driven recession? are not all measures just postponing and later on amplifying the inevitable recession?
I think the best way to address Inflation is to reduce money supply and FED has already taken a strong step in this direction by increasing interest rate by 0.25% but is negative for stock market and economic growth. The second reason is sky rocking price of crude oil which has increased inflation all over the world, i am quite sure it will come down if Ukraine issue is resolved and a Nuclear deal is signed between USA and Iran that will quickly bring down the crude oil price.
is there any reason to try to delay the inflation driven recession? are not all measures just postponing and later on amplifying the inevitable recession?
The two concepts are wroth studying extensively because it determines our success in labour market. No one prays for deflation but it is inevitable so all we need to do is to be vigilant and study the labour market, then will be go home smiling all the way.
We are in inflationary-deflation due to many factors. Inflation primarily from money printing and low rates. Deflation due to lock-downs and problems caused by the virus. The only thing missing is velocity of money. Once velocity spikes, its game over for the USD and probably the current financial system as a whole.
From my learning, in school about economics, I know that there is an inverse relationship between Price and Money Supply. Inflation also deals with an increase while deflation deals with a decrease in the price of goods and services. The topic really broaden my knowledge with the relationship with bitcoin.
You are absolutely right . This happens because an abundance of money supply leads to an increase in demand for goods and services, while a scarcity of money has the opposite effect and increase in supply of money is main cause of increase in inflation but this is one side the of story about inflation. Inflation causes increase in demand of goods and services that means escalates economic activity and creates new job opportunities. Deflation in any country means slow down in economic activity. This is the reason Governments in office try to keep inflation low but never like deflation to happen in economy as it it increases unemployment and reduces their popularity. This is why I think inflation is bad but unemployment is worse.
https://www.bing.com/search?q=his%20is%20mainly%20because%20an%20abundance%20of%20money%20leads%20to%20an%20increase%20in%20demand%20for%20goods%20and%20services%2C%20while%20a%20scarcity%20of%20money%20has%20the%20opposite%20effect.&form=IPRV10
Hi! http://adfoc.us/72448882069993
Sorry for posting in English. My Swedish works fine for reading, so feel free to comment in Swedish Smiley.
I was wondering if someone can give me some more detailed insights in how mining is taxed in Sweden from a private or company perspective.
I understood so far that small scale mining is seen as "inkomster från hobbyverksamhet" similar to selling honey etc.
I have some questions that I did not completely understand.
Is is possible to measure the electricity the miner uses and deduct that from the revenue?
Do I calculate the tax when I receive the mining reward or when I sell it?
Does the tax depend on the tax of my regular income (30%/50% etc)?
Is there any advantage of creating a company (enskild or aktiebolag) do run the activities?
Thank you for reading Smiley
Sorry for posting in English. My Swedish works fine for reading, so feel free to comment in Swedish Smiley.
I was wondering if someone can give me some more detailed insights in how mining is taxed in Sweden from a private or company perspective.
I understood so far that small scale mining is seen as "inkomster från hobbyverksamhet" similar to selling honey etc.
I have some questions that I did not completely understand.
Is is possible to measure the electricity the miner uses and deduct that from the revenue?
Do I calculate the tax when I receive the mining reward or when I sell it?
Does the tax depend on the tax of my regular income (30%/50% etc)?
Is there any advantage of creating a company (enskild or aktiebolag) do run the activities?
Thank you for reading Smiley
Well, all depends upon what goes trading. These ups and downs are directly related to what people observe and what they make their mindsets against them. Yes, I do agree on the term of Demand and supply but here in digital currency trading, the scenario gets changed.
There was a time when the people weren't sure and had no trust in bitcoin but as you can see the current exchange rate of bitcoin it's way too high. As it depends on the market trend and purchasers' views about the goods.
There was a time when the people weren't sure and had no trust in bitcoin but as you can see the current exchange rate of bitcoin it's way too high. As it depends on the market trend and purchasers' views about the goods.
I’m sharing this file in the topic. I am starting to notice that my fellow plebs in the forum are taking a fascination in the topic of inflation, and hyperinflation.
Everyone should read this, https://recision.files.wordpress.com/2010/12/jens-parsson-dying-of-money-24.pdf
The Central Bank of every nation-state needs a Volker.
Everyone should read this, https://recision.files.wordpress.com/2010/12/jens-parsson-dying-of-money-24.pdf
The Central Bank of every nation-state needs a Volker.
I think the investment of USD into the crypto market is the only thing keeping inflation from spinning out of control. However, the fiat money that is "invested" into the crypto markets is centralized into a handful of exchanges that have no real utility except as a "virtualized store of wealth" Crypto has no real-world use. None of these projects have solved any of the real world problems that fiat created. It's all just speculation in relation to fiat. With that being said, if the "price" of crypto in relation to fiat moves significantly enough in either direction in a relatively short timespan, alot of '"investors" will withdraw their fiat into the real world. This brings fiat back into the economy and then the real inflation will set in. If it is done so on a large enough scale that is a recipe for hyperinflation.
Can't, I don't have enough merit for images.
Still, the fact that people are talking in fiat doesn't exactly bode well for Bitcoin.
BTC is and has been abiding well, paper dollars on the other hand? Not so good.
Not really.
It is only good in a speculator's sense along with Beanie Babies and rare Pokemon Cards, not in a 'useful for exchange of goods and services' sense.
As a currency, there are more things to consider than how much inflation it gets like being useful for buying goods and services.
Can't, I don't have enough merit for images.
Still, the fact that people are talking in fiat doesn't exactly bode well for Bitcoin.
BTC is and has been abiding well, paper dollars on the other hand? Not so good.
You could have just been brave and posted that photo in this forum (no one's gonna downvote you here ;-))
Right click image---> copy image address ----> choose the little picture button and paste in between the brackets.
"I can explain it to you but I can't understand it for you"
Can't, I don't have enough merit for images.
Still, the fact that people are talking in fiat doesn't exactly bode well for Bitcoin.
You could have just been brave and posted that photo in this forum (no one's gonna downvote you here ;-))
Right click image---> copy image address ----> choose the little picture button and paste in between the brackets.
"I can explain it to you but I can't understand it for you"
An area dedicated to discussing the differences of these two terms and the theories supporting them.
I'm looking forward to an in-depth discussion on the subject! I've noticed that confusion between the two seems to come up quite a bit on the forum, and thought it may be reasonable to dedicate a thread on the matter.
Pulled from a discussion in Wall Observer
Price-Deflation is what you are used to hearing about in Bitcoin. That term is used to describe the prices of goods/services as they decrease, because the value of Bitcoin goes up.
Price-Inflation is the opposite. When prices of goods/services increase because the value of Bitcoin goes down.
So, when dealing with Price-Inflation or Deflation, there is an inverse relationship of price and value, in regard to goods/services and Bitcoin.
Example: As the Bitcoin price goes from $10 to $20, the prices of goods/services goes down from 20BTC to 10BTC. As the Bitcoin price goes from $20 to $10, the prices of goods/services goes from 10BTC to 20BTC!
Why does the price of Bitcoin go up and down? The price of BTC goes up and down based on the exchange rate, or market price, which is set by buyers and sellers, or traders. They directly trade the Bitcoin currency with all sorts of other currency, and even some with gold; the most popular being the USD (US dollar). They set the price when executing orders to buy or sell. I will get into the actual reason of why the price fluctuates in the last section.
Now that we've gone over PRICE Inflation and Deflation (which honestly, to me, is a term made popular by Keynesian's to hide the real facts, as price inflation/deflation is simply the market exchange rate, reflective of the money supply into a currency from itself and other currencies), let's go over the REAL inflation/deflation of a currency (otherwise known by many as Monetary Inflation).
MoneySupply-Inflation is when the value of Bitcoin decreases when the total supply of Bitcoin increases. In our current state, this is at a generation rate of 25 BTC every 10 minutes.
MoneySupply-Deflation will essentially never occur. It is when the value of Bitcoin increases when the total supply of Bitcoin decreases. This may happen, say, when someone loses their private key and all the BTC associated with it are lost. This effectively "makes the rest of us richer". That being said, there is a SET DECREASE in the generation rate of BTC, so you have sort of a "deflationary effect" in the value, as long as more exchange occurs for BTC at a rate which is faster than that set generation rate.
When all 21 million coins are produced, the MoneySupply will be neutral, and the value will continue to increase (prices will decrease, consequently), as long as people continue to exchange in BTC.
This leads me to the last section.
What determines the PRICE of Bitcoin? The VALUE of Bitcoin at a particular moment.
What determines the VALUE of Bitcoin? The SUPPLY and DEMAND of Bitcoin in the economy.
What determines the SUPPLY of Bitcoin? Currently, the MoneySupply-Inflation rate of 25 BTC every 10 minutes, and traders willing to SELL Bitcoin to BUYERS in exchange for other supplies of money (currencies).
What determines the DEMAND of Bitcoin? Traders willing to BUY Bitcoin from SELLERS in exchange for other currencies.
Therefore: BUYERS, SELLERS, and MONEYSUPPLY-INFLATION (miners) determine the VALUE of Bitcoin, which determines the PRICE of BTC as BUYERS and SELLERS trade based on that VALUE (or supply and demand) of Bitcoin.
We don't exactly know the totality of the supply and demand. Sure, we could try and aggregate data from all the exchanges, but we will never be accurate as there are exchanges which can not be accounted for (OTC). The cool thing is that we DO know the MoneySupply rate, and we DO know the exchange rate. From this, we can determine a real value of Bitcoin when simply multiplying the two factors; a sort of inflation-adjusted view of the currency.
Effectively, the quantitative analysis of supply and demand is really what the currency exchange traders attempt to accurately determine which is conveyed through buying and selling of Bitcoin, setting a VALUE via the PRICED exchange rate of the currency. On a side note, most of the big Market Makers (FX Traders) use this price movement as a way to make a profitable living, as well. Especially when price fluctuations are a consequence of hype or fear (bubbles, cliffs), not factual supply/demand data, and are wildly out of the real price range.
Thus, if you analyze the proper macroeconomic data in an attempt to forecast future DEMAND for more Bitcoin (price increase), you will realize some very interesting things, and have a more accurate picture of where the price is going...
Happy trading!
I'm looking forward to an in-depth discussion on the subject! I've noticed that confusion between the two seems to come up quite a bit on the forum, and thought it may be reasonable to dedicate a thread on the matter.
Pulled from a discussion in Wall Observer
Price-Deflation is what you are used to hearing about in Bitcoin. That term is used to describe the prices of goods/services as they decrease, because the value of Bitcoin goes up.
Price-Inflation is the opposite. When prices of goods/services increase because the value of Bitcoin goes down.
So, when dealing with Price-Inflation or Deflation, there is an inverse relationship of price and value, in regard to goods/services and Bitcoin.
Example: As the Bitcoin price goes from $10 to $20, the prices of goods/services goes down from 20BTC to 10BTC. As the Bitcoin price goes from $20 to $10, the prices of goods/services goes from 10BTC to 20BTC!
Why does the price of Bitcoin go up and down? The price of BTC goes up and down based on the exchange rate, or market price, which is set by buyers and sellers, or traders. They directly trade the Bitcoin currency with all sorts of other currency, and even some with gold; the most popular being the USD (US dollar). They set the price when executing orders to buy or sell. I will get into the actual reason of why the price fluctuates in the last section.
Now that we've gone over PRICE Inflation and Deflation (which honestly, to me, is a term made popular by Keynesian's to hide the real facts, as price inflation/deflation is simply the market exchange rate, reflective of the money supply into a currency from itself and other currencies), let's go over the REAL inflation/deflation of a currency (otherwise known by many as Monetary Inflation).
MoneySupply-Inflation is when the value of Bitcoin decreases when the total supply of Bitcoin increases. In our current state, this is at a generation rate of 25 BTC every 10 minutes.
MoneySupply-Deflation will essentially never occur. It is when the value of Bitcoin increases when the total supply of Bitcoin decreases. This may happen, say, when someone loses their private key and all the BTC associated with it are lost. This effectively "makes the rest of us richer". That being said, there is a SET DECREASE in the generation rate of BTC, so you have sort of a "deflationary effect" in the value, as long as more exchange occurs for BTC at a rate which is faster than that set generation rate.
When all 21 million coins are produced, the MoneySupply will be neutral, and the value will continue to increase (prices will decrease, consequently), as long as people continue to exchange in BTC.
This leads me to the last section.
What determines the PRICE of Bitcoin? The VALUE of Bitcoin at a particular moment.
What determines the VALUE of Bitcoin? The SUPPLY and DEMAND of Bitcoin in the economy.
What determines the SUPPLY of Bitcoin? Currently, the MoneySupply-Inflation rate of 25 BTC every 10 minutes, and traders willing to SELL Bitcoin to BUYERS in exchange for other supplies of money (currencies).
What determines the DEMAND of Bitcoin? Traders willing to BUY Bitcoin from SELLERS in exchange for other currencies.
Therefore: BUYERS, SELLERS, and MONEYSUPPLY-INFLATION (miners) determine the VALUE of Bitcoin, which determines the PRICE of BTC as BUYERS and SELLERS trade based on that VALUE (or supply and demand) of Bitcoin.
We don't exactly know the totality of the supply and demand. Sure, we could try and aggregate data from all the exchanges, but we will never be accurate as there are exchanges which can not be accounted for (OTC). The cool thing is that we DO know the MoneySupply rate, and we DO know the exchange rate. From this, we can determine a real value of Bitcoin when simply multiplying the two factors; a sort of inflation-adjusted view of the currency.
Effectively, the quantitative analysis of supply and demand is really what the currency exchange traders attempt to accurately determine which is conveyed through buying and selling of Bitcoin, setting a VALUE via the PRICED exchange rate of the currency. On a side note, most of the big Market Makers (FX Traders) use this price movement as a way to make a profitable living, as well. Especially when price fluctuations are a consequence of hype or fear (bubbles, cliffs), not factual supply/demand data, and are wildly out of the real price range.
Thus, if you analyze the proper macroeconomic data in an attempt to forecast future DEMAND for more Bitcoin (price increase), you will realize some very interesting things, and have a more accurate picture of where the price is going...
Happy trading!
Maybe it is the normal way to see it, the economy/economics & GDP. But what about the equipment required to make Bitcoin possible? (asics) the demand is high and higher every day but prices still the same.
these two concepts are closely related, but have completely different definitions. inflation is an economic phenomenon, and deflation is one of the measures taken to get out of a difficult economic situation such as inflation. inflation is the depreciation of paper money, and deflation is the removal of excess money from circulation in order to increase its purchasing power.
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