Would widespread Bitcoin adoption reduce global economic growth? - page 3.

DigitalHermit

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Thank you! Thank you! ...

Quote from: go1111111 on November 04, 2013, 05:51:05 AM

Wow, I continue to be amazed by all the Bitcoiners who don't like economic growth. I guess you did pick the right currency to discourage growth though, so props for that.

I am curious though, if growth is so bad, do you want to stay at the steady state of how we live in 2013? Or maybe go back to 1950? (No personal computers), or maybe 1450? What is the ideal amount of wealth for you guys?

Development of new technologies is not the same as economic growth and it is not at all proven that one requires the other. Consequently you should avoid equating the two.

Since your understanding of steady state economics (organizing an economy to be stable or mildly fluctuating in size) seems to be lacking perhaps you should do some more research starting here before you write the idea off:

http://en.wikipedia.org/wiki/Steady_state_economics
http://steadystate.org/

Some basic principles for achieving a steady state economy are:

(1) Maintain the health of ecosystems and the life-support services they provide.
(2) Extract renewable resources like fish and timber at a rate no faster than they can be regenerated.
(3) Consume non-renewable resources like fossil fuels and minerals at a rate no faster than they can be replaced by the discovery of renewable substitutes.
(4) Deposit wastes in the environment at a rate no faster than they can be safely assimilated

Perpetual economic growth in an environment with limited/scarce resources stands at odds to these principles.

Miz4r

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I'm not really against growth if the growth is natural and not forced. Technology is the main thing that makes our lives better and easier and I'm sure we will continue to make advancements in that area even with bitcoin as a main currency. GDP growth right now is only making the banks and big corporations wealthier, not the middle class.

go1111111

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Wow, I continue to be amazed by all the Bitcoiners who don't like economic growth. I guess you did pick the right currency to discourage growth though, so props for that.

I am curious though, if growth is so bad, do you want to stay at the steady state of how we live in 2013? Or maybe go back to 1950? (No personal computers), or maybe 1450? What is the ideal amount of wealth for you guys?

Miz4r

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Quote from: LightRider on November 03, 2013, 08:18:52 PM

I hope so! "Economic growth" is a distracting and distorting metric that says nothing of the health of society nor its environment. In fact, the greater economic growth, the worse off the world is, because the system rewards inefficiency, overconsumption and severe deprivation and inequality. Bitcoin seems to discourage frivolous spending and since it's immune to inflation, can't encourage or create world economy destroying bubbles.

+1

Economic growth is a farce, we need a steady state economy where we live in balance with our surroundings. We only push for constant growth because governments have buried themselves so deep in debt that they need growth to be able to keep them and the entire system afloat. Very unhealthy situation and the sooner we get rid of that the better.

go1111111

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Quote from: Lethn on November 04, 2013, 03:12:12 AM

people will be able to afford houses for a couple of hundred Bitcoins and people would have to work less in order to afford what they want because the living standards would be so good since all the prices would be low. If you look at what we're trading in most like Electronics and Gold/Silver etc. you can already easily see the benefits, currently you can get a 1kg gold Bar for only 210BTC whereas with 'proper' money you need to have around £30,000 or so and then with electronics you could get a good computer easily for around 5BTC, in paper terms it would cost hundreds so that's taking out a big chunk of your cash but in Bitcoin it's barely anything.

It looks like you are confusing money with value. Money is just a unit of account. If everyone's amount of USD doubled or was cut in half tomorrow, it would make no difference.

A trend that I see here: people expect to become rich and basically get value just from holding bitcoin. With an inflationary currency, to get value you have to earn it -- you have to produce something. With a deflationary currency, you can get value by free riding on people who actually create things if you start out with a decent amount of money.

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Quote from: gannicus on November 03, 2013, 06:18:52 AM

actually if bitcoin is used by everyone we would see no growth at all. The world GDP would be forever no bigger than 21 million BTC, which would mean no wealth can be produced anymore and everytime you try to do some work some magic force will forbid you to do it because simply no wealth can be ever produced anymore

you would see in newspapers "china gdp decrease 0.1%, usa 0.3% - we are in the worst crisis after 1929 and 2008 combined"

hehehehe

Yep that sounds about right, pro-inflation economists and newspapers would be up in arms going "It's a disaster" meanwhile people will be able to afford houses for a couple of hundred Bitcoins and people would have to work less in order to afford what they want because the living standards would be so good since all the prices would be low. If you look at what we're trading in most like Electronics and Gold/Silver etc. you can already easily see the benefits, currently you can get a 1kg gold Bar for only 210BTC whereas with 'proper' money you need to have around £30,000 or so and then with electronics you could get a good computer easily for around 5BTC, in paper terms it would cost hundreds so that's taking out a big chunk of your cash but in Bitcoin it's barely anything.

I can't wait to see when we stop using paper currency for pricing because then we can finally start seeing the proper affects of a deflationary economy.

go1111111

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Quote from: balanghai on November 03, 2013, 06:55:25 PM

Yeah but its almost flat line because of the inflation that they did. $1,000 way back in 1920 right now would be $100,000 worth. So you can use the graph for paper, but what sucks the cash are the huge corporations having the proportion of the entire money pie a chunk bigger each year.

$1000 in 1920 has the buying power of $11,707 today. http://data.bls.gov/cgi-bin/cpicalc.pl

If you invested $1000 in the stock market in 1920, it would be worth $130,412. Even if you think the government's inflation stats are not accurate, there's no way that inflation has been anywhere close to stock market returns. http://stockcharts.com/freecharts/historical/djia1900.html

Quote from: vokain on November 03, 2013, 08:02:28 PM

What if we didn't need to keep growing but rather, become more efficient and start cutting costs?

Then we'd be poorer, would have to work more, and could do less of what we wanted to do. We would also be more diseased and unhealthy and would die earlier. No thanks.

Anyone have thoughts on ways to mitigate the issue mentioned in the original post?

LightRider

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I advocate the Zeitgeist Movement & Venus Project.

I hope so! "Economic growth" is a distracting and distorting metric that says nothing of the health of society nor its environment. In fact, the greater economic growth, the worse off the world is, because the system rewards inefficiency, overconsumption and severe deprivation and inequality. Bitcoin seems to discourage frivolous spending and since it's immune to inflation, can't encourage or create world economy destroying bubbles.

vokain

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What if we didn't need to keep growing but rather, become more efficient and start cutting costs?

balanghai

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Quote from: go1111111 on November 03, 2013, 06:49:11 PM

Quote from: p2pbucks on November 03, 2013, 06:34:05 PM

traditional fiat only made rich richer , no economy growth Grin

Yeah but its almost flat line because of the inflation that they did. $1,000 way back in 1920 right now would be $100,000 worth. So you can use the graph for paper, but what sucks the cash are the huge corporations having the proportion of the entire money pie a chunk bigger each year.

go1111111

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Quote from: p2pbucks on November 03, 2013, 06:34:05 PM

traditional fiat only made rich richer , no economy growth Grin

p2pbucks

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Evolution is the only way to survive

traditional fiat only made rich richer , no economy growth Grin

go1111111

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Bad news guys: I emailed Scott Sumner about this. For anyone who doesn't follow economics, Scott has been the one of the most influential economists in the world over the past several years. His thought was that "Your analysis sounds reasonably good" (referring to the exact analysis at the top of this post). I was hoping he'd find a problem with my reasoning, but now it's looking more likely that Bitcoin would be fairly destructive if it ever became the main world currency.

IMO there is a big opportunity to come up with a cryptocurrency similar to Bitcoin (maybe built on top of Bitcoin) which solves this problem.

go1111111

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Quote from: tutkarz on November 03, 2013, 05:47:18 AM

population of the planet is increasing and resources are limited.

You could have said the exact same thing at any point in human history, yet we continue to get richer and richer. Don't worry about it.

Quote from: atlosas on November 03, 2013, 10:02:08 AM

Bitcoin is in long term deflationary and that means people will tend to hoard it and not spend it. And that is bad for the economy.

I don't think personal hoarding is an issue for the following reason. Suppose I am thinking of buying a jacket from you for 1 BTC. But I think the price of BTC will rise in the future, so I have an impulse to hold onto it. The solution is simple: I decide I'm willing to pay 0.5 BTC for the jacket, to make up for the expected rise in BTC value. There is always some price at which people will spend their BTC. Think about if someone offered you a new Ferarri for 1 Satoshi. Even if you're very bullish on Bitcoin, you'd do it immediately. Spending BTC will only not happen if people fundamentally disagree about the value of BTC.

Quote from: kriwest on November 03, 2013, 10:11:25 AM

It depends. I would argue that even if people hoard 90% of their bitcoin holding until a large enough percentage of the world adopts it to increase the velocity and stabilize the price, if bitcoin enables countries without banking infrastructure to compete globally; it would actually increase economic growth. In other words; Bitcoin the enabler.

I agree that making transactions easier in the 3rd world will tend to increase GWP, all else being equal. But it would still be the case that in the long term Bitcoin would be worse for the economy than an alternative concurrency (probably based on Bitcoin) which was not deflationary.

alexeft

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Quote from: LiteCoinGuy on November 03, 2013, 06:26:59 AM

Quote from: gannicus on November 03, 2013, 06:18:52 AM

actually if bitcoin is used by everyone we would see no growth at all. The world GDP would be forever no bigger than 21 million BTC, which would mean no wealth can be produced anymore and everytime you try to do some work some magic force will forbid you to do it because simply no wealth can be ever produced anymore

you would see in newspapers "china gdp decrease 0.1%, usa 0.3% - we are in the worst crisis after 1929 and 2008 combined"

hehehehe

the only thing that grows endless is cancer.

Exactly!

kriwest

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It depends. I would argue that even if people hoard 90% of their bitcoin holding until a large enough percentage of the world adopts it to increase the velocity and stabilize the price, if bitcoin enables countries without banking infrastructure to compete globally; it would actually increase economic growth. In other words; Bitcoin the enabler.

I may hold more BTC than I spend, but you bet your ass if bitcoin enables a farmer in Africa to sell me cheaper goods than I can find at home, I will spend bitcoin to import it.

atlosas

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Bitcoin is in long term deflationary and that means people will tend to hoard it and not spend it. And that is bad for the economy.

LiteCoinGuy

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In Satoshi I Trust

Quote from: gannicus on November 03, 2013, 06:18:52 AM

actually if bitcoin is used by everyone we would see no growth at all. The world GDP would be forever no bigger than 21 million BTC, which would mean no wealth can be produced anymore and everytime you try to do some work some magic force will forbid you to do it because simply no wealth can be ever produced anymore

you would see in newspapers "china gdp decrease 0.1%, usa 0.3% - we are in the worst crisis after 1929 and 2008 combined"

hehehehe

the only thing that grows endless is cancer.

gannicus

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actually if bitcoin is used by everyone we would see no growth at all. The world GDP would be forever no bigger than 21 million BTC, which would mean no wealth can be produced anymore and everytime you try to do some work some magic force will forbid you to do it because simply no wealth can be ever produced anymore

you would see in newspapers "china gdp decrease 0.1%, usa 0.3% - we are in the worst crisis after 1929 and 2008 combined"

hehehehe

tutkarz

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population of the planet is increasing and resources are limited. I would worry more about this instead of what you are asking, especially that bitcoin to become worldwide currency is a matter of many years which means we could not live long enough to experience this.

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