Topic: the huge Problem that most people doesn't really understand (Read 9472 times)

I have been reading posts on this thread I've created and I have been amazed!! I have to admit that I liked reading the different opinions  but I also have to admit that really few members here understood what I meant, or maybe I didn't express my thought the right way.

I was trying to find the right words and the right method to express what I think about saving in general and fiat money in this special case, but I failed until I saw a video of a guy with a close enough thoughts ( I really forgot what was the title I just came across it on the YouTube recommended videos.. 

so everything is based on trust, you have to trust the issuer to use it as a medium of exchange, Fiat and the paper it self has no value except that it was issued from your government and because of that you are somehow comfortable with exchanging it for goods because you trust your government, so think with me when you get a payment for a service/good/salary... you basically are not holding value but paper that supposedly have value based on your trust of the issuer, you hold value only when you exchange that Fiat (paper) into goods or services.

now people who work hard and save so little to be able to invest in companies/stocks/real estate and are forced to try to hold to that little cash that they still managed to save after spending on basic things, these people are the most effected, people who can not afford to buy houses and cars pay for high education .... and instead have to get a mortgage are effected even more.

what bitcoin solves Beside the technical side of it ( block chain solving the double spending) is instead of teaching your kids (the market) to get credits and mortgages to build their future is instead to save and spend later on important things first to less important things later, because that bitcoin that you are holding now will buy much more after 2 years than what that USD, EURO.... will buy you in 10 years

I still think that I didn't explain it in a good way , but I just hope that some of you there will get what I am trying to say here...

It would work (provided there is no limitation of another kind) only if lifespan were infinite (this is the crucial premise your assumption lacks)...

I believe that's very wrong for a several reasons:

* Income may be in food and shelter, non durable, not easily tradeable.
* Real cost of living and preserving health may already be higher than $2 for said child, spending any less would lead to sickness and costs far outweighing savings gains.
* Lack of access to safe keeping (banking) services and a hostile environment which does not respect your property.
* Even with access to banking, the % put away only builds exponentially if the saver has access to profit yielding invetments which beat inflation and investment risk. At the moment that's hard even in the "civilized" first world.

Likely there's more.

This is FUD. Bitcoin's money expansion encourages adoption away from the fiat based money system. This is true.  However, Satoshi isn't the Fed. Not even close. The big difference in bitcoin is that bitcoins must be spent to derive economic value.

In debt based fiat, people can borrow money which creates more money out of thin air which then inflates asset prices. They don't have to spend real money to derive economic value. They can simply manufacture more wealth out of the air, which widens the gap between rich and poor. For example, borrow a billion dollars to buy residential property to drive up house prices across the country. With increased asset values, the rich can draw out equity and capital gains to spend on their lavish lifestyles.

The debt based fiat system is sick and cruel. Bitcoin is not based on debt. The current wealth discrepancies in bitcoin is at least partially caused by the uneven wealth distribution in the fiat world in the first place. The rich can buy up more bitcoins because fiat made them rich in the first place.

However, over time bitcoin will be a much fairer monetary system compared to the debt based fiat system we currently have. Bitcoins have to be spent. You can't make more up out of thin air via money printing. It is also unlikely fractional reserve banking will work under bitcoin.

I have not been reading your posts for 4 years, I've read what you posted in this thread and that is all I'm going to read, unless your going to provide links.

Your inability to put your finger on what you want is just mind-boggling, again you leave me in the lurch and I am forced to interpret your rantings as 'any money created by and managed by government is unfair' and 'any money created and managed privately is fair'.  Do you agree with that?  If so you seem to be abandoning all economic arguments which have occupied half of this thread.  You will accept ANY type of inflation or deflation in a currency from any cause so long as the big bad 'gobemint' isn't the causing of it?

You've ceased to make an economic argument (notice the forum we are in) and just reverting to the standard libertarian nonsense that private anything trumps public anything.

I find your belief the BTC doesn't exist for the benefit of 'Banks' to be either fantastically Dishonest or hopelessly naive (I'll give the the benefit of the doubt and go with Naive).  We all know BTC and every similar coin exist to enrich the Miners, early adopters and the first-mover core businesses like exchanges (which are functionally banks), they all OPENLY admit they promote it for exactly that reason (with libertarian ideological window dressings of course).  YOU simply want to be IN THAT CLUB with them rather then outside staring in.  BitCoin's money expansion system IS exactly the kind of banana-republic kleptocratic Zimbabwean printing press you imagine the FED to be with Satoshi standing the the place of the FED chairman, the projection level here is STAGGERING.



P.S.  To return to a little point that got dropped a page back, you claimed that you could avoid interest by renting rather then owning a home.  Wrong again, rents though not rigidly linked to home costs DO reflect home costs and will include substantial pass through of interest.  In fact EVERYTHING includes pass through interest as I stated earlier.  Things vary in their amount of embedded interest, the longer the life-span of a product the more interest is in it, housing and infrastructure are naturally the worst in this regard.  But everything has interest costs in it to some degree and all FAR in excess of what inflation costs us.  Your far more easily able to avoid losing purchasing power to inflation then you can to interest, and their is nothing voluntary about it if you ever expect to spend your money in our economy.  Have a look at the research.

http://userpage.fu-berlin.de/~roehrigw/kennedy/english/Interest-and-inflation-free-money.pdf

I have been for four years, you just seem to be either impaired or intentionally thick.


You're presenting a false choice.  What I, or you, think is a 'fair' anything is irrelevant.  Historicly, money has always been the most marketable commodity available to a culture.  The point is that government manipulated currency is a recent invention, and was never instiuted for the reasons offiically presented.  The only 'fair' money is one that can be freely chosen without political pressures.  Bitcoin is that money in our information age, or some alt-coin that come and take the crown away.


Not good, but not theft.  Inflationary periods did occur, mostly by regions, during the gold standard.  During gold rushes, and during local monetary upheavals, for reasons entirely unrelated to artifical expansion of the monetary base. (I'm considering mining of gold a natural cause of expansion of a gold stnadard monetary base)  In almost all cases, these periods of inflation (and deflation) were regional to local in scope, limited in duration or reversed by other forces; or any combination of all of those things.  Overall, the (naturally occuring) gold as money age saw deflationary trends so mild, they were only identifiable over generations.  For that matter, silver has been so stable over the past 2K years, that it's actually experienced very slight inflation during that time compared to the cost of Judas's betrayal (http://en.wikipedia.org/wiki/Thirty_pieces_of_silver#Types_of_coin).  As another example, during the Roman Republic, prices were so stable for so long, that the price of a handmade iron nail became the unit for it's size; and that is a unit that we use (in American Standard).  We call it the penny, the English called it the Pence, but the Romans called it the denarius; so to this day nail a size 16 "penny" nail is written 16d.  No one really noticed the descrepency until the Roman Empire began to debase the silver content of the denarius.  You would argue that the wealthy would prefer to hide nails (or gold) under the matress, and thus no investment were possible, but of course the history of the world contradicts sucha theory.  Yes, some people did exactly this, and still do; but on the net, investments wtill occurred.  Even the wealthy guy who saved in nails intended to use those nails for some project down the line anyway, or use them to pay his workmen.


The Federal Reserve bank itself does not loan out money of any real nature, but you're right that (historicly speaking) most of the expansion of the monetary base has been due to the leanding reserve ration of member banks.  But the result is exactly the same as if the central bank had printed the money first because the US $ is a credit based currency anyway.  The only difference of note is that some portion of that inflation actually goes into private banks, becaues businesses are paying real interest on not-yet-existant dollars in principal.  And while that is true, it only confuses the issue of conceptualizing the reality that the spending power of the fiat currency moves from the existing base to the first users of new funds, which is the banks doing the lending, not the borrowers of not-yet-existing funds.  The Fed then uses the resulting demand for cash (because interest on not-yet-existing dollars is drawing the real cash out of the market and into banks) as the offical cause for creating more currency, and the cycle repeats at whatever rate the Federal Reserve deams ideal.  But ideal for whom?  Not the public, the Federal Reserve is neither beholden to you (or even us as a nation) nor does it exist for your benefit.  The Federal Reseve exists for the same reason all central banks exist, for the benefit and protection of member banks.  Bitcoin does not have that problem.

I am getting tired of trying to interpret your position so I want you to state it clearly.
If it was not obvious enough from my last post you were supposed to pick one of the 3 options I presented, that of deflationary, neutral or inflationary money.  Which do you think is the FAIR kind of money.

Your now saying that 'inflation is not necessarily bad' but only bad when the central monetary authority dose it, well this is absurd, how else do you expect inflation to occur, massive counterfeiting?  A collapse in available goods with no commensurate reduction in money supply?  Thous would be 'good' inflation?

Lastly you seem to be under the assumption that the FED expands the money supply by paying it's employees dump-trucks of money.  This is absurd, the FED is a bank and it expands money supply by the loan process to commercial banks which make loans to normal people, and by buying bonds.  If you think it is unfair for normal borrowers or bond holders to be the first recipients of that expanded supply that is one thing (my preference would be distributing it to charities) but your describing a fantasy Zimbabwean scenario in which the mint just delivers money to political cronies who live like kings.  Is this the kind of nonsense Ron Paul tells people about the FED?

It's okay. I like it here. Your explanation sucks and was inadequate so I helped it. Divisibility in bitcoin means that freicoin is a stillborn. Argue all you want but everyday the growth in bitcoin and the stagnation in freicoin will stare you in the face as a reminder that divisibility is better than demurrage.

Here, I'll help you a little more. The divisibility in bitcoin allows people to spend smaller units of bitcoin even as the value of one bitcoin rises. Hey presto, liquidity problem solved. All without inflation or demurrage.

Oh for crying out loud your bringing out the Divisibility Troupe, this is sad Lloydie, this is without a doubt the most ignorant thing said by BTC apologists.  A yard stick is infinitely divisible but it is still finite, just like the earth is finite, not expanding and infinity divisible.  Divisibility has no bearing on inflation or deflation and never has.  Gold and Silver coins have been highly divisible for ages and are still deflationary because deflation/inflation means a change in purchasing power and dividing a asset dose not change the owners purchasing power because they still have the same amount after division.

You should go back to your own thread, it's not like I was neglecting you.

Basically you need to understand the simple concept of DIVISIBILITY.

Your little mind needs to be expanded to understand that digital currencies are infinitely DIVISIBLE.

Therefore, there is a fourth category. Hard money that is infinitely DIVISIBLE, which is not like earth at all.

I have said no such thing, again you are misrepresenting my position.  I have stated that inflation, due to 'artificial actions' by people other than the owner, should not occur.  Stated another way, expansion of the monetary base by a central issuing authority is theft whenever such actions devalue the currency already in circulation not because inflation is necessarily bad, but because it's (almost) always involves the transfer of buying power from the diverse holders of the present currency base to a small group of people with first access to those newly created funds.  For the most part, that actually means employees and contractors of the Federal Reserve itself; so such inflation can be honestly compared to a tax, because the effects are the same.  However, this tax is imposed upon all of the currency users, regardless of consent or even democratic representation, so it's particularly insidious.  Of course, I regard income taxes as legalized theft as well, so take that wherever you like.

BTW, Bitcoin isn't immune to this effect, since it's currently quite inflationary.  However, the big difference is that 1) I can choose not to use Bitcoins and 2) the degree that inflation will effect my own position is entirely predictable and not influenced by political forces nor human error.  I don't have to trust that said transfer of buying power goes to support the infrastructure of the network, I can know it to be so.

Then please state what kind of nature you believe money SHOULD have, you have said you feel that money should never be diluted, even in the face of economic expansion and an increase in purchasing power.  The only thing that matches that description is the Earth itself.  Their are only 3 choices

Hard money:  Gains in value, can never be diluted, like the Earth
Neutral money:  Neither increases or decreases in value, supply will need to expand with economy
Soft money:  Declines in value like all man-made things, also experiences supply expansion and or demurrage

Everything you've said leads me to believe your defending Hard money and calling Neutral and Soft money 'theft', but for what ever reason your rejecting my assertion that hard money is analogous to land.  This is very odd from a historical perspective hard money advocates have understood and acknowledged the 'hard money is like land' argument and even promoted this as a 'natural' thing and as a 'sound basis' for money.

I've done no such thing.


https://yourlogicalfallacyis.com/strawman

You must of left planet earth long long ago my friend

Sure you can.
It's altogether common.
Freudians see it as a manifestation of the anal retentive complex, an infantilism related to the anal stage of human development.

You can't hoard money. There's no such thing as "hoarding" a currency, commodities are a separate matter all together.

Your switching to Natural Capitol now when I specifically addressed man-made capitol, which is by far the greater portion of what we trade and transact on a daily basis.  Money is not used just to buy land, it is used to buy everything.  Your arguing that money should now have the qualities of the Earth itself, literally be a claim on finite portion of the earth that can not be diluted. 

Perhaps this is where you libertarians get the idea that a fixed supply currency is appropriate because you think every coin is like owning an acre of the Earth and you miners are like some kind of homesteading pioneer planting your flag on virgin territory so they can then resell it to the next wave of settlers?  Basically the same thing that happened when the white settlers landed in America and Australia?

I specificly contested this claim, and provided examples of 'idle' resources that naturally maintain, or even improve, their economic usefulness over time.  I also specificly argued that, as money is an abstraction of such natural resources, no artificial (i.e. caused by the direct decisions of non-owning men) depreciation should be acceptable to any society, since (as such an abstraction) such artifical depreciation always has the net effect of transfering buying power from the owner|saver to someone else.  This is theft in any other context, there is no rational reason that it shouldn't be treated as such simply because the commodity being examined is regarded as 'money' by anyone.


Again, I have already provided examples of resources that for which we, quite literally, could "put under the matress" and expect equal or better utility at a later date.  While it may, or may not, be more efficient for a society to strive to employ all such capital "continually"; doing so doesn't lead to continuous economic growth, or even stability.  In fact, it's easily provable that resources kept in 'conservation', often as a direct result of the deflationary effects of hard monies prior to 1912, had a strong suppressive effect upon the magnitude (not the period) of the busniess cycle.  Put into a more modern context, speculative investing has a net effect of stablizing price changes in commodities and everything else over time.


The above two paragraphs are so far from reality as to not be worthy of response.

First off lets clarify a term,  "REAL CAPITOL FORMATION" is the process of stockpiling real things like a bag of corn so that some productive activity can be done with it in the future.  No one disputes that this is a necessary prerequisite for all productive activity, note that when the capitol is irrevocably committed to an activity (like planting the corn) THAT is investing.  But "SAVING" in this thread so far has been about the stockpiling of money which is very different, saving money dose NOT cause either real capitol formation or investing.  Saved money causes deflationary price changes in the market and deflation causes a drop in investment activity and a drop in future available capitol compared to a business as usual scenario.



MoonShadow:  You admit that money is  "an abstraction of wealth" and all man-made wealth and capitol be it a bag of corn, a tractor, or a shovel are going to decay even when not used.  We can not put these things under a mattress and expect to get the same utility from them at a later date.  Society must continually put it's capitol assets to work creating new capitol with them before they reach the end of their life-spans.  We could not walk away from these things and come back 30 years later and pick up where we were with no losses, we would be confronted with massive decay.

But you expect to do that with money, your 'abstraction' has a quality which the original lacks (timelessness), that makes it a poor abstraction dose it not?  You want money to be BETTER then real things.  Soft money (via inflation or demurrage) DOSE match the behavior of real capitol though.  Your desire for a magical time-capsule dose not make it a reality, or a morale imperative.  When money is made hard it comes at terrible costs to other people who actually need to labor and pay the hidden costs of running your time-capsule. 

When the operators of the central bank create modest inflation they are the ones acting correctly because they prevent a group of people (savers) from taking an unearned benefit at public expense.  If their is any flaw it is that they do not go far enough and completely eliminate interest largely due to limitations in the structure of our monetary system.

First, it doesn't matter if you "agree".  Your consent is not required.

Second, even in this context, savings in a monetary unit is still investing, in the sense that there is only one reason to 'horde' money, and that is for future consumption.  If saving surplusses in a monetary unitis the most efficient method, then that is the most efficient method.  Investing in other productive enterprises in teh internim may not be the wises path, as all investing comes with risk.  But for a central bank to inflate the currency unit, thus depreciating the small savings of individuals, is not a natural risk.  It's entirly an artifical one, and because that decision is made by men with theirown vested interests, it's theft and fraud no matter the scale.  You can justify it however you like, but it's still the transfer of spending power from the (monetary based) savings of all currency holders to those who directly benefit from the existance of the central bank, and without their consent.  (because consent is impossible)  If the value of the monetary unit flucuates for natural causes, beyond the direct control of a central bank, that's the risk of using that method to save.  Also, bear in mind that no matter how dilligent the individual investor may be about keeping as much of his savings in assets (instead of currency) there is always someone who owns those fiat units at any given time.  So whether or not it's wise to invest in other ways doensn't change the fact that, to a point, doing so completely is impossible.  Also, on a percentage basis, the largest holders of currencies are the middle class and the poor, so this method of buying-power-transfer is particularly harmful to the lower classes.