Topic: Inflation and Deflation of Price and Money Supply - page 61. (Read 1273077 times)

What did you meant by inflation in EU is very low?.....you call inflation running at 10% to 20% very low. I think you were referring to CPI which IS not inflation. Companies can borrow from the bank via people's savings. Look at China and S. Korea.

I don't work. Real people do not understand inflation, they think CPI IS inflation when it isn't. Unemployment are caused by government interferences in the economy.

I'm sure this is a common question, especially since coin generators have been released. 

What's the speculation on inflation/deflation for all these new altcoins?  I'm sure they will continue to come like the open flood gates to a water dam.

As there is low inflation in Europe as you say, people don't complain about inflation. Instead they complain about poverty, unaffordable goods and rising property prices. These are all symptoms of the debt based fiat system artificially raising the prices of food, fuel and assets.

Borrowing is important to the debt based fiat system, however it perpetuates inequality. A new paradigm is dawning. Individually, we can choose to opt out of fiat and into bitcoin. We can rebuild the economy like the Germans did after WW2 on a bedrock of hard money. Bitcoin is harder than the Deutschmark. The euro was also meant to be hard like the Deutschmark but weak countries like Greece, Portugal and Spain incurred too much debt and are now trying to soften the Euro via ECB money printing.

Only weak uncompetitive countries in the EU want a soft currency.  They want more than they are entitled to. Strong countries like Germany, Finland and Austria do not fear a hard currency. They love it because it preserves what they are entitled due to their economic efficiencies.

No.

Inflation in EU is very low, monetary policy is restrictive and EU has significantly higher unemployment than any other major economy. I haven't heard a single unemployed person complain about inflation ever and I've been around a while (Yugoslavia with hyperinflation, Slovenia with own fresh currency and now €). Which 'real' people are you talking about?

You are also neglecting companies, business. They do most of the borrowing. People work in companies. Companies need to take loans (or issue shares) to grow business and offer jobs. If a company stops to borrow money it's usually a seriously bad sign, it means it has no idea, no room to grow and it will be overrun by competitors, people lose jobs.

Very well said!

No, actually the 1% hold a lot of assets, which are being driven up by the debt based system. Most of the 99% own a tiny amount of assets per person in comparison. They are creditors but not in any meaningful way.

The 99% will never be able to become the 1%. This is the system. It is unfair and it has been in place for the last fifty years.

99% of people you meet liking inflation indicates you are probably working in finance, economics or government. Real people with real jobs hate inflation. Especially the millions of unemployed people in the US and Europe.

Debt is just a civilised version of slavery. Maybe we don't need debt. At least now we have a choice in an alternate monetary system called bitcoin.

You have demonstrated a perfect example why many do not know how to use percentages properly. 60% - 58.8% - looks good, fooled the people, but the actual amount is what more important.

99% of the people i've met thinks inflation (in their mind CPI) is good as it makes the debts appear smaller and it is the creditors who suffer. Creditors are those who have a legal future claim on money. Hence those who lend out money as debt have a claim for that debt to be repaid in the future. What 99% do not understand is that they are also creditors, i.e. those who have insurance policies, pensions, savings.......people have a legal future claim on that money and they also suffer from inflation and not just those who lend the money out.

Economists are the types of pseudo-intellectuals that create mathematical models, which almost never work in the real world. Anyway, as far as my understanding goes, today we live in a debts-driven-and-debts-stimulating society, where inflation has a soothing effect. Let's say the GDP is €1 trillion, inflation is 2%, debt is €0.6 trillion, which is 60% of GDP,  and economic growth is 0% then next year GDP reads €1.020  trillion and debt is still €0.6 trillion, which has magically become 'only' 58.8% of GDP. Isn't that great ?! No, it isn't, because someone needs to pay the bill, at the end of the line. Debts do exist in the real world, but they are anonymous, transformed, transferred, disguised and encapsulated within the totality of the money-system and this results in an intrinsic value of contemporary conventional currencies; each coin (real or virtual) hides this shared debt proportionally.

Now, wouldn't the world change all that if we gradually change into a debts-discouraging society driven by a deflationary currency like Bitcoin?

Just stumbled onto this thread. Just don't listen to crappy economists in the (neo)-keynesian camp, politicians, news channels, or read newspapers. They all talk a load of tripe.

Inflation - increase in money supply, also known as monetary inflation. E.g money supply in UK £1000, fiat increase in money supply £100, new total money supply £1100 = inflation 10%.
Deflation - decrease in money supply, also known as monetary deflation. E.g money supply in UK £1000, fiat decrease in money supply £100, new total money supply £900 = deflation 10%. Note:- deflation on it own is bad for the economy but price deflation isn't. If price were falling faster than deflation then brilliant as purchasing power goes up. The government do not like it as the GDP goes down and leads to recession but that's a myth.

Price inflation - increases in prices of goods/services over a year. Tend to be lower than inflation due to currencies fluctuation and productivity. It would include 'increase' in price where the price remains the same but the good got smaller. E.g £1 for 200grams bar of chocolate and the following year £1 for 180grams bar of chocolate.

Price deflation - opposite of price inflation.

RPI - retail price index - weighted measured index of goods and services according to politicians desire to fool the people into thinking how brilliant they are.

CPI - consumer price index - weighted measured index of goods and services according to politicians desire to fool the people into thinking how brilliant they are and taken to another level of treating the people like idiots. In UK it doesn't include TV licence and council tax (another one but can't remember) thus Labour (ex-dictator Gordon Brown) were always boasting how low the CPI was, while council tax and TV licence were going up above CPI almost every year and wages kept up with CPI, thus slowly we all got poorer, then dolled out tax credits and fucking up the country.

My creation - personal price inflation - i kept a record for 2 years of the cost of food, energy, clothes, rent, everything i spent while i was a student and worked out my personal price inflation. It was 2 times higher than the RPI and just under the inflation itself. Took my spreadsheet to my professor and denounced the government official 'inflation', RPI as a load of bollocks. Needless to say my professor was shocked.

GDP- gross domestic production - formerly known as aggregated demand (Keynes) and still what it is. GDP has nothing to do with growth, that is a myth. Politicians use it to fool the people into thinking how brilliant they are. GDP=P+G+I+(X-M).....private consumption+government spending+investment+(exports-imports). Lets play with some numbers. Assume G, I, X, M are the same and prices of goods/services went up and the consumer had to spend more - P goes up, hence GDP goes up - politicians and people cheering that the country is growing (growth). All because of increases in prices, hahahahahahaha, 99% of the people fall for this crap all the time. GDP is useless and don't ever forget that. The next time politicians go on about the GDP and growing economy and 'we all better off', try not to throw your TV out of the window.

I'm afraid you got it all completely wrong. Most prices (except high tech gadgets) are typically very rigid downward and mild, non-destructive inflation encourages putting money to use from passive cash to active capital form. Deflation on the other hand encourages being passive, holding on to cash, not investing, not taking loans and is as such quite devastating to any economy. Japan is a typical example where deflation alone has crippled a very healthy economic growth for decades.

any quantity of money is sufficient for the money supply. prices adjust. inflation discourages capital formation, which, along with technology improvements, is what increases productivity, wealth and the standard of living for everybody. Capital formation is being destroyed by the fiat currencies and global productivity is slowing because of it.

If said "In inflationary system like we have today it's suggested that 2% inflation is "healthy" for the economy."
true, why we don't have inflation of bitcoins? Please correct me if i am wrong.   Bitcoins numbers will not rise in the far future. But demand will increase what can happen after that...

Unfortunately adoption of btc isn't at a level where meddling from humans is off the table, the economy in this regard is still a baby per say so until everything stabilizes and it's adopted on a wider scale we'll never know what will become of it.

I agree with the first bit you mentioned though, human entity can not be trusted.

This chart isn't accurate. There isn't exactly 52560 blocks in a year, and there never will be.

It is one of the dangers of deflation that people often don't take serious of fully understand. Once it sets in, it will go into ever deepening circles. Also note, that even 2% deflation is not a one timer...

In inflationary system like we have today it's suggested that 2% inflation is "healthy" for the economy. I can't imagine if inflation was 10% or more.

Can someone calculate or explain what % of deflation will be with Bitcoin currency once it stabilizes? I think If it's relatively low around 2% deflation then it's manageable and economy will have time to prosper. If deflation will be at much higher rate then economy will truly hurt because no one will be wanting to buy anything and it will be unprofitable for companies to produce goods because from the moment it's produced to get to shelves for customers the goods would decrease in price drastically.

Hope someone can explain this to me.

YEAAAH!

>>> It allows for rules to dictate how the Money Supply 'grows/shrinks/stays the same' so that no Human Meddling can take place.


Human meddling can take place.   As long as the majority of miners agree to change how bitcoin is mined, then bitcoin can change.   This is a very real possibility in the future when mining becomes less profitable.    I suspect the 21mil limit will be removed at some point.  But other changes may be necessary to prevent the 51% consolidation problem.

Bitcoin is a new 'Way of Money'.

It allows for rules to dictate how the Money Supply 'grows/shrinks/stays the same' so that no Human Meddling can take place.

When reviewing the Keynsian economic model the main criticism I see, is that 'The Government' or some other human entity cannot be trusted and just prints their way out of trouble.

What if you take the Keynsian logic and apply it to a crypto-currency, so that a mathematical rule is used, AND CANNOT BE FAKED by greedy humans, to regulate the money supply.

So.. What I am saying is,

If it were possible to tell how much the economy had grown, and if it were also possible to judge the Velocity of Money accurately, THEN would it be ok to grow and shrink the money supply in a cryptographically secure mathematical way across all TXNS, sort of like Friecoin but with increase as well as decrease, so that we had Price Stability ?
 
So that MV= PQ could be set correctly ? If we want P to stay the same, and can change M to do so..

No meddling Humans to muck it up. Just Maths. Would that not work ?

I am discussing this very thing in another post.. https://bitcointalksearch.org/topic/market-driven-money-supply-382204