Topic: Only an economist could think themselves into such a hole (Read 1327 times)
1000 flowers and all, but Bitcoin's intrinsic value (transactions use as a currency, not hoarding) depends on Gresham's Law being false.
The reason fiat has inflation built in is that the government wants to encourage it being spent. They want it being spent because they want economic activity they can tax. The standard orthodoxy among economists is that this is actually an inherent good in and of itself. Yes, it does work for something like USD, encouraging its use as an index currency and the US has been able to parlay that into worldwide economic dominance.
However, BTC doesn't "care" in the least whether you spend it. Nor, despite economists, is a commodity/currency that is deflationary inherently bad. In fact, Satoshi designed this feature in. Yet, economists and the public (ignorant in different ways) seem to act like it was some kind of accident from it being badly designed. It isn't a bug. It is a core feature.
Arguably, in a world where nothing but deflationary currencies existed, this would lead to a boom and bust cycle that would be destructive. However in a world economy where Bitcoin is merely one of many kinds of currency, it provides a safety valve, a hedge investment, a form of currency for people who prefer its features, and a competitive pressure against the worst forms of abusive use of fiat by governments.
Let a thousand flowers bloom.
(But not tulips. If I hear the word "tulip" one more goddamn time I am gonna cut a bitch.)
However, BTC doesn't "care" in the least whether you spend it. Nor, despite economists, is a commodity/currency that is deflationary inherently bad. In fact, Satoshi designed this feature in. Yet, economists and the public (ignorant in different ways) seem to act like it was some kind of accident from it being badly designed. It isn't a bug. It is a core feature.
Arguably, in a world where nothing but deflationary currencies existed, this would lead to a boom and bust cycle that would be destructive. However in a world economy where Bitcoin is merely one of many kinds of currency, it provides a safety valve, a hedge investment, a form of currency for people who prefer its features, and a competitive pressure against the worst forms of abusive use of fiat by governments.
Let a thousand flowers bloom.
(But not tulips. If I hear the word "tulip" one more goddamn time I am gonna cut a bitch.)
The problem with refuting the OP is he has already demonstrated that it would be next to impossible to explain it to him.
Sometimes we just have to let people learn by shutting our mouth. So I hereby refuse to refute the OP.
Sometimes we just have to let people learn by shutting our mouth. So I hereby refuse to refute the OP.
So you choose to shut your mouth by opening your mouth?
You sound like you will get along well with the economists described in the OP.
Stating that he is wrong, but I am not going to be able to prove to someone who has no logic skills, is the only logical rebuttal.
How can one argue with someone who can't do basic logic on mutual exclusion.
The problem with refuting the OP is he has already demonstrated that it would be next to impossible to explain it to him.
Sometimes we just have to let people learn by shutting our mouth. So I hereby refuse to refute the OP.
Sometimes we just have to let people learn by shutting our mouth. So I hereby refuse to refute the OP.
So you choose to shut your mouth by opening your mouth?
You sound like you will get along well with the economists described in the OP.
The problem with refuting the OP is he has already demonstrated that it would be next to impossible to explain it to him.
Sometimes we just have to let people learn by shutting our mouth. So I hereby refuse to refute the OP.
Sometimes we just have to let people learn by shutting our mouth. So I hereby refuse to refute the OP.
Bitcoin-critical layperson: "Bitcoin will keep dropping in value until it hits 0."
Bitcoin-critical economist: "Bitcoin will keep rising in value until it hits 0."
They sure are an imaginative bunch.
Bitcoin-critical economist: "Bitcoin will keep rising in value until it hits 0."
They sure are an imaginative bunch.
The only reason pro-inflation arguments are still used is the perception that the state can hold a monopoly on currency-- an assumption that Bitcoin is proving incorrect.
Soon actual options will become apparent, and the pro-inflation folks will have an opportunity to stand up for what they believe in by opting to hold their wealth in a currency that loses value!
...or they'll switch to Bitcoin.
Soon actual options will become apparent, and the pro-inflation folks will have an opportunity to stand up for what they believe in by opting to hold their wealth in a currency that loses value!
...or they'll switch to Bitcoin.
One of the most ridiculous arguments I have seen against bitcoin stems around the deflationary spiral myth. The idea is that when something rises in value... people hold it and so they stop spending and as that happens the situation escalates because of even more hoarding.
Here is why it's not a very intelligent argument. Ask the person asking it if they have invested in bitcoin? Surely if something only rises in value then you would be stupid not to have invested in it already. If they haven't invested in it then they would be throwing an opportunity away. But wait.............. the real reason they haven't invested in it is because they don't believe it will keep rising.
Wait what? If your argument is that something is bad because it only rises in value how could you possibly simultaneously think that it's bad to get in because it will lower in value? How can you think two completely opposite things?
The truth is that if something only rose in value... it's chart would look like a straight line. Bitcoin doesn't have such a chart.
The truth is that the hoarding problem is proven wrong every day...... right in your face. When a trade happens on an exchange , on one end somenone is buying bitcoins and on the other end someone is selling bitcoins for currency. Selling your bitcoins for currency is the same thing as "spending" . You are simply spending your bitcoins and trading them for something else of value. There are only 2 reasons why you sell your bitcoins..... You want to buy something, or you think the price is going to go lower. Both of those reasons are incentives to spend. When the price rises on exchanges you don't see trading come to a halt... or stop. Even during the last few weeks with a huge increase in popularity you don't see trading come to a stop. So even at times when bitcoin is at it's most extreme, temporary deflation........... spending doesn't stop (trading would start approaching a complete halt if the "spiral" part of the deflationary spiral problem was true).
Now that I have taken care of the "spiral" part of the argument.... I'll address the deflation part. Even at times of bitcoins most extreme deflation... people still spend. But could it be argued that during those times.... less people are willing to spend their bitcoins? Of course it could be argued that because that is the whole reason the price rises drastically in the first place. Is it a problem, however?
Consider this...... if a merchant accepts dollars and bitcoins... then they could not be negatively effected by a sudden rapid deflationary period in bitcoin. When the price of bitcoin rises... that increased amount of dollars that are spent for them are given to someone new. Those dollars aren't consumed. They are still floating around in the economy , waiting to be spent and are no more or less likely to be spent than before they were traded. A merchant allowing payment in bitcoins is adding to their potential earnings so it is a win -win for them regardless of possible periodic deflationary periods.
Could it be argued then.......... that a bitcoin-only merchant would be negatively affected by one of the rapid deflationary periods? Before you answer that question though you must ask another...... why would a merchant only accept bitcoin? And the answer is......... because bitcoins allow that merchant to do something or operate in a way that they could not in dollars........ or it's because of the benefits bitcoin provides in payment and fraud superiority.... so if that bitcoin merchant is hurt in some temporary rapid deflation... you couldn't really say bitcoin is bad as a currency because the reason they exist as a bitcoin only merchant in the first place is because of other advantages gained from using bitcoin in the first place.
Here is why it's not a very intelligent argument. Ask the person asking it if they have invested in bitcoin? Surely if something only rises in value then you would be stupid not to have invested in it already. If they haven't invested in it then they would be throwing an opportunity away. But wait.............. the real reason they haven't invested in it is because they don't believe it will keep rising.
Wait what? If your argument is that something is bad because it only rises in value how could you possibly simultaneously think that it's bad to get in because it will lower in value? How can you think two completely opposite things?
The truth is that if something only rose in value... it's chart would look like a straight line. Bitcoin doesn't have such a chart.
The truth is that the hoarding problem is proven wrong every day...... right in your face. When a trade happens on an exchange , on one end somenone is buying bitcoins and on the other end someone is selling bitcoins for currency. Selling your bitcoins for currency is the same thing as "spending" . You are simply spending your bitcoins and trading them for something else of value. There are only 2 reasons why you sell your bitcoins..... You want to buy something, or you think the price is going to go lower. Both of those reasons are incentives to spend. When the price rises on exchanges you don't see trading come to a halt... or stop. Even during the last few weeks with a huge increase in popularity you don't see trading come to a stop. So even at times when bitcoin is at it's most extreme, temporary deflation........... spending doesn't stop (trading would start approaching a complete halt if the "spiral" part of the deflationary spiral problem was true).
Now that I have taken care of the "spiral" part of the argument.... I'll address the deflation part. Even at times of bitcoins most extreme deflation... people still spend. But could it be argued that during those times.... less people are willing to spend their bitcoins? Of course it could be argued that because that is the whole reason the price rises drastically in the first place. Is it a problem, however?
Consider this...... if a merchant accepts dollars and bitcoins... then they could not be negatively effected by a sudden rapid deflationary period in bitcoin. When the price of bitcoin rises... that increased amount of dollars that are spent for them are given to someone new. Those dollars aren't consumed. They are still floating around in the economy , waiting to be spent and are no more or less likely to be spent than before they were traded. A merchant allowing payment in bitcoins is adding to their potential earnings so it is a win -win for them regardless of possible periodic deflationary periods.
Could it be argued then.......... that a bitcoin-only merchant would be negatively affected by one of the rapid deflationary periods? Before you answer that question though you must ask another...... why would a merchant only accept bitcoin? And the answer is......... because bitcoins allow that merchant to do something or operate in a way that they could not in dollars........ or it's because of the benefits bitcoin provides in payment and fraud superiority.... so if that bitcoin merchant is hurt in some temporary rapid deflation... you couldn't really say bitcoin is bad as a currency because the reason they exist as a bitcoin only merchant in the first place is because of other advantages gained from using bitcoin in the first place.
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