181–190 of 306 posts
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It doesn't ecourage you, it forces you. Yet currency is misleadingly sold to society as a legitimate store of value.
Please cite one credible source of mainstream financial planning advice that suggests parking savings in US Dollars.
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The problem isn't the psychological effects of needing to constantly lower prices – this happens all the time in the tech industry, and everyone in that industry is doing just fine psychologically. Rather, it has to do with the fact that constantly down-shifting prices cause people not to buy nearly as often as they would if prices were stable or slightly inflationary. As a result of that, the economy slows down (som…
Rationally, people should wait as long as possible to buy tech because they'll get more later. Instead, they buy it at a furious rate. Why is that?
But if you're going to use it to generate value, you should buy it as soon as your expectation for the marginal value it will generate is greater than the price of the CPU.
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Note that people treating the Swiss Franc as a commodity is harming the Swiss economy. See http://www.npr.org/blogs/money/2011/08/19/139791374/the-frid... and http://www.npr.org/blogs/money/2011/09/06/140211340/swiss-to...
Yes, that's why I chose that example. The thing is, currencies are and have always been a commodity with many traders. Bitcoin being treated as a commodity does not prevent it from being a currency.
cube13's characterization is a simplification, but I think it still captures their intended uses. Bitcoin's deflation, and the Swiss franc's high value compared to other currencies, harm their ability to act as they were intended to. Right now, I agree with Duffy's original point, which is that bitcoin is more of a commodity than a currency.
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The problem isn't the psychological effects of needing to constantly lower prices – this happens all the time in the tech industry, and everyone in that industry is doing just fine psychologically. Rather, it has to do with the fact that constantly down-shifting prices cause people not to buy nearly as often as they would if prices were stable or slightly inflationary. As a result of that, the economy slows down (som…
The other big problem is that debt loads don't drop along with prices - which effectively makes them rise. Falling prices (which lead to falling wages) + stable debt loads make it far harder for debtors to pay off their debts, which puts even further drag on the economy.
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http://3.bp.blogspot.com/-_KuUh8iKx_c/TX_URc8gLpI/AAAAAAAAA6... Please cite a source on this "one rule of money" you're thinking of?
http://wiki.answers.com/Q/What_are_the_four_properties_of_mo... says one of the properties of money is that it has to be a 'store of value'.
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The problem isn't the psychological effects of needing to constantly lower prices – this happens all the time in the tech industry, and everyone in that industry is doing just fine psychologically. Rather, it has to do with the fact that constantly down-shifting prices cause people not to buy nearly as often as they would if prices were stable or slightly inflationary. As a result of that, the economy slows down (som…
The total number of bitcoins in circulation is capped, even though the total quantity of wealth in the world continues to increase. If bitcoins were the only currency used, then yes, this would cause hoarding problems. Does this mean bitcoins are flawed? No. It just means that there is a cap on how much wealth can be purchased with bitcoins.
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The problem isn't the psychological effects of needing to constantly lower prices – this happens all the time in the tech industry, and everyone in that industry is doing just fine psychologically. Rather, it has to do with the fact that constantly down-shifting prices cause people not to buy nearly as often as they would if prices were stable or slightly inflationary. As a result of that, the economy slows down (som…
The total number of bitcoins in circulation is capped, even though the total quantity of wealth in the world continues to increase. If bitcoins were the only currency used, then yes, this would cause hoarding problems. Does this mean bitcoins are flawed? No. It just means that there is a cap on how much wealth can be purchased with bitcoins.
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> Perhaps when Bitcoin reaches supply maturity the value will stabilize I absolutely hate Krugman, but this is Econ 101 and even he gets it right. Bitcoin was a flawed experiment from the start because it has an absolute supply limit. Reaching that limit won't help. It'll make things worse. The money supply needs to expand for healthy economic activity and growth. If it doesn't, weird shit starts to happen. Here's an…
> In a normal economy, the population is constantly expanding. That may be, but the western world is then abnormal. US population is projected to peak at 2030, and a number of countries already have negative population growth. Exponential growth assumptions should not be made for long periods ahead. http://en.wikipedia.org/wiki/List_of_countries_by_population...
We have never before experienced a reduction in the human population for any extended period of time.
I wouldn't count the US out yet, it can easily augment its population with immigration. So can all the other developed countries.
Anyway, regardless, making a currency with a fixed supply doesn't work under any scenario. With a constant or increasing population, you want to increase the money supply. With a decreasing population, you want to decrease it.
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It doesn't ecourage you, it forces you. Yet currency is misleadingly sold to society as a legitimate store of value.
Please cite one credible source of mainstream financial planning advice that suggests parking savings in US Dollars.
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The title is a reference to the book "Golden Fetters" by Barry Eichengreen which discusses the role the gold standard played in transmitting deflation during the Great Depression. Krugman isn't citing statistics because Eichengreen does the heavy lifting here. He's just reminding people that libertarians who attack the Fed because they want a new gold standard are basically crazy. I agree with his assessment (bitcoin…
Wait, the Fed is formed to finance WW1, goes on a massive inflationary binge through the 20s and causes the Great Depression, and the takeaway is that the gold is the problem? Genius.
For bonus points, read the actual book. Informed discussions are always more interesting.