Why does Bitcoin subsidize saving? - page 6.

Timo Y

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bitcoin - the aerogel of money

Quote from: Coincomm on August 24, 2012, 05:59:46 PM

Isn't currency better spent than saved and hoarded?

It's not an either-or. 100% of all Bitcoins in existence are saved all the time. 100% of all USD in existence are saved all the time. The only difference is how fast they change the hands of savers.

There is no such thing as an arbitrary t="amount of time bitcoins stay in your wallet", below which it's magically not saving anymore.

A currency that isn't saved is a currency where t=0 which is clearly impossible.

You could argue that the rate at which money changes hands is lower for BTC, but I don't see why that is a bad thing.

Bitcoin doesn't subsidize (long term) saving, all it does is not penalize it.

Everyone has their own utility for deferred consumption. Inflation distorts this and takes away people's choice to defer consumption. Less choice = everyone is worse off.

bg002h

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I outlived my lifetime membership:)

Quote from: JoelKatz on August 24, 2012, 06:08:51 PM

Quote from: Coincomm on August 24, 2012, 05:59:46 PM

Isn't currency better spent than saved and hoarded?

No, this is a misconception that comes from the broken window fallacy.

Consumption is not good. If you purely consume something, it's no better than if you destroyed it. It's lost. If consumption was good, then someone who went around breaking windows would stimulate the economy because people would have to buy windows to replace the broken ones.

It is *production* that builds an economy. Production should be rewarded.

When you save money, you produce but do not consume. That's great. You deposit but do not withdraw, loaning everyone else use of the benefits of your labor. Deferred consumption should be rewarded as it's a form of investment.

+1 -- insightful. I feel rather stupid for not having realized this before. The implications are very widespread...it's like a cancer intermingled throughout civilization, ultimately causing us significant harm (I mean, we've even messed with the climate with our monetary subsidization of consumption).

There is nothing worse than subsidized consumption. Bitcoin is better because it subsidizes production.

Thank you.

sunnankar

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Quote from: Grinder on August 24, 2012, 07:11:28 PM

It's mostly investing that expands the economy, not consumption or saving/hoarding/whatever you call it. When most people just want to save the currency gets very valuable but the economy stops. This is unfortunately what's happening to Bitcoin.

There is no problem with a currency that is fixed in amount like bitcoin. If it gets more valuable then it merely shows time preference for cash balances due to the lack of attractive investment opporotunities in capital goods.

Raise the Internal Rate of Return from capital goods and then demand for cash will decline as demand for capital goods increases.

For optimal capital allocation the market should determine the interest rate on cash balances instead of the State because of the State's economic calculation problem.

Seriously, you should go listen to PraxGirl on Capital and give her a bitcoin tip.

FreeMoney

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Strength in numbers

Odd question since savers pay the subsidy to miners via Bitcoin's inflation.

Grinder

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Quote from: JoelKatz on August 24, 2012, 06:40:07 PM

How do you get the bitcoins you save without producing something?

How did anyone else get those bitcoins if nobody bought what they were producing? It's mostly investing that expands the economy, not consumption or saving/hoarding/whatever you call it. When most people just want to save the currency gets very valuable but the economy stops. This is unfortunately what's happening to Bitcoin.

Quote from: JoelKatz on August 24, 2012, 06:40:07 PM

If "producing" gives you trouble, think of it is deferring consumption instead. You could have bought a car and blew it up -- you had every right to destroy a car with those bitcoins. But instead you let someone else use that car. You didn't take what you were entitled to. And that leaves more for everybody else. (Not that it's a zero sum game, of course. If you did produce to get those bitcoins, that's where you added to the sum.)

If I didn't buy it there would just be one less car, because people generally avoid producing things that can't be sold. If someone else wanted a car too they would just make another one and earn even more money.

Coincomm

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Quote from: justusranvier on August 24, 2012, 06:48:03 PM

Quote from: JoelKatz on August 24, 2012, 06:08:51 PM

When you save money, you produce but do not consume. That's great. You deposit but do not withdraw, loaning everyone else use of the benefits of your labor. Deferred consumption should be rewarded as it's a form of investment.

No - deferred consumption should be encouraged, but not rewarded, because my friends and I want to enjoy the benefits of plundering that excess production.

If a buch of people don't produce more than they ultimately consume how else is a ruling class going to live like royalty without ever producing anything at all?

Bingo.

ElectricMucus

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Quote from: JoelKatz on August 24, 2012, 06:40:07 PM

Quote from: ElectricMucus on August 24, 2012, 06:12:13 PM

I noticed your avatar text, but saving bitcoins as producing something? I don't think so.

How do you get the bitcoins you save without producing something? If "producing" gives you trouble, think of it is deferring consumption instead. You could have bought a car and blew it up -- you had every right to destroy a car with those bitcoins. But instead you let someone else use that car. You didn't take what you were entitled to. And that leaves more for everybody else. (Not that it's a zero sum game, of course. If you did produce to get those bitcoins, that's where you added to the sum.)

No that would be simply not buying a car. A rock accomplishes the same thing, it is not buying cars.
In respect to the economy nothing can replace the part of production, not even as a metaphor.

A rock can hold bitcoins though if I engrave a private key in it. (scnr)

justusranvier

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Quote from: JoelKatz on August 24, 2012, 06:08:51 PM

When you save money, you produce but do not consume. That's great. You deposit but do not withdraw, loaning everyone else use of the benefits of your labor. Deferred consumption should be rewarded as it's a form of investment.

No - deferred consumption should be encouraged, but not rewarded, because my friends and I want to enjoy the benefits of plundering that excess production.

If a buch of people don't produce more than they ultimately consume how else is a ruling class going to live like royalty without ever producing anything at all?

JoelKatz

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Democracy is vulnerable to a 51% attack.

Quote from: ElectricMucus on August 24, 2012, 06:12:13 PM

I noticed your avatar text, but saving bitcoins as producing something? I don't think so.

How do you get the bitcoins you save without producing something? If "producing" gives you trouble, think of it is deferring consumption instead. You could have bought a car and blew it up -- you had every right to destroy a car with those bitcoins. But instead you let someone else use that car. You didn't take what you were entitled to. And that leaves more for everybody else. (Not that it's a zero sum game, of course. If you did produce to get those bitcoins, that's where you added to the sum.)

nedbert9

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Whooa. Highly controversial question.

Spending isn't bad. Spending more than income, debt-based consumerism, contributed to the Great Depression and the recent recession.

If debt-based consumerism is the sleeping dragon Bitcoin is a pretty nice utility to have when roasted by bad dragon breath.

Here's the really worrying thing about deflation. It's when the rich stop spending. As it stands currently it's more profitable, and popular, to invest in the financial sector in interesting securities than it is to invest directly in a business. If it became possible to have a return comparable to investing in a business or security just by holding currency guess what the rich will do.

On the other hand if a deflationary model is used and we are worried about money velocity an interesting way to counteract this would be more aggressive tax policy towards the rich especially for stagnant pools of money.

I'm not completely sure I'm happy with a system where our value store is steadily depreciating and by that fact we are forced to constantly push the envelope of consumerism.

BadBitcoin (James Sutton)

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Quote from: ElectricMucus on August 24, 2012, 06:12:13 PM

I noticed your avatar text, but saving bitcoins as producing something? I don't think so.

I think he was talking about lending bitcoins, or at least in that context.

ElectricMucus

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I noticed your avatar text, but saving bitcoins as producing something? I don't think so.

unclescrooge

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Quote from: JoelKatz on August 24, 2012, 06:08:51 PM

Quote from: Coincomm on August 24, 2012, 05:59:46 PM

Isn't currency better spent than saved and hoarded?

No, this is a misconception that comes from the broken window fallacy.

Consumption is not good. If you purely consume something, it's no better than if you destroyed it. It's lost. If consumption was good, then someone who went around breaking windows would stimulate the economy because people would have to buy windows to replace the broken ones.

It is *production* that builds an economy. Production should be rewarded.

When you save money, you produce but do not consume. That's great. You deposit but do not withdraw, loaning everyone else use of the benefits of your labor. Deferred consumption should be rewarded as it's a form of investment.

+1

So often forgotten...

JoelKatz

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Democracy is vulnerable to a 51% attack.

Quote from: Coincomm on August 24, 2012, 05:59:46 PM

Isn't currency better spent than saved and hoarded?

No, this is a misconception that comes from the broken window fallacy.

Consumption is not good. If you purely consume something, it's no better than if you destroyed it. It's lost. If consumption was good, then someone who went around breaking windows would stimulate the economy because people would have to buy windows to replace the broken ones.

It is *production* that builds an economy. Production should be rewarded.

When you save money, you produce but do not consume. That's great. You deposit but do not withdraw, loaning everyone else use of the benefits of your labor. Deferred consumption should be rewarded as it's a form of investment.

Coincomm

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Isn't currency better spent than saved and hoarded?

Topic: Why does Bitcoin subsidize saving? - page 6. (Read 8583 times)