71–80 of 116 posts
[1] http://www.guardian.co.uk/technology/2011/oct/18/bitcoin-val...
Earlier quoted context omitted.
When you have a growing economy but a fixed money supply, money will appreciate. When this happens, people will prefer to keep money rather than spend it, and you get deflation-induced recessions/depressions. See the latter part of the 19th century in the US for repeated examples of this.
Exactly, and I'd like to point out that you having to explain this goes to show we aren't teaching economics properly (or at all) in school. The school systems focus on make sure our children are well rounded in every way except financially.
This is like lamenting that kids don't know enough about Chaucer or don't understand that evolution only applies to populations, not to individuals.
These kinds of small details will be forgotten intentionally by most people within months of learning them.
Quite frankly: I don't care if kids come out of high school with a functional knowledge of the effects of an inflating currency: I'd rather they understand personal finance instead of macroeconomics.
Earlier quoted context omitted.
> Please explain how holding a piece of metal under mattress destroys someone else's wealth Inflation creates a strong incentive to allocate capital to productive investments. Inflation decreases the value of a currency, and therefore people attempt to allocate capital to investments that appreciate above the rate of inflation. Without inflation there would be less incentive to fund new companies, lend money etc... G…
Do you have a single rational standard of what's "productive" and "not productive"? Should you have moral right to enforce this standard upon everyone around you? If millions of tourists make millions of pictures of Eiffel Tower an buy millions of cameras and iPhones for that - is it productive? Should they be prevented from buying cameras and instead "invest" money in something more "productive"? My answer to everyo…
Yes. Trade is productive, it is the highest civic virtue. Hoarding is not productive, it makes us all poorer.
I'm not for banning the ownership of gold. I am just pointing out why the redirection of capital from bond markets, venture funds and lending into ownership of gold leads to reduced money velocity and decreases trade.
The story on why we should own gold is a highly pessimistic one. Goldbugs point to a collapse scenario as a reason to own gold. Mass economic collapse would make everyone poorer, even those with large gold reserves.
damn, I missed out on being a successful arbitrageur
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There's also a lot of early bitcoin that has been lost entirely, which probably skews the market a little bit.
I have a few on my old desktop in my parents garage from the CPU mining days. If bitcoins REALLY take off, I'm gonna have to recover them.
All else being equal, the more people who use Bitcoin (whether as a store of value or medium of exchange), the greater the demand for it -- and therefore the higher its price, because the supply is fixed asymptotically at 21 million bitcoins. In the long run, Bitcoin's price will be positively correlated with adoption.[1] -- [1] My thoughts on this haven't changed over the past two years: http://cs702.wordpress.com/2…
People will want to have it as an asset, not as a usable currency. Appreciating currencies are disastrous for any economy stuck with them, which is why we're no longer on the gold standard.
The US economy also had no problem growing fast during the 1990s, when the US Dollar was strong and had appreciated extremely strongly against gold over a 20 year period ($600 in 1980, to $270 in 2001).
China also dramatically counters this notion. The Yuan has appreciated significantly (for a currency) over the last decade, while they've simultaneously gotten far wealthier.
The disaster has been what has happened to our money since 1971 (specifically the 1970s and since 2001). The real cost of goods has gone parabolic.
1964, 5 silver quarters (90% silver, 10% copper) for a $1.25 minimum wage, now worth $25.90 ($5.18 each). That's pure destruction via inflation.
And that's not even getting into how the Fed + Congress funds insanity like endless war because there is no gold standard restricting their spending habits.
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We're no longer on the gold standard because it lead to hoarding and economic inflexibility. It doesn't destroy wealth, however when gold is your currency and people hoard gold (for any reason be it economic instability or as an investment in the future price increases) the economy loses that amount of circulating money and moving money is what makes an economy work, not stagnant saved money. So by signing that execu…
Do you say, if some people think you and your friends cannot play with certain non-harmful objects (e.g. gold bricks), it is morally alright to force you to go to prison or kill you if you try to protect yourself?
A better metaphor is water in a desert, except instead of being consumed it's passed from one person to another without loss and actually increases when it's transferred. The item itself isn't harmful but hoarding it is extremely harmful.
I sold at $22 thinking the bubble was going to burst soon. Damnit. There's an understanding that a few big players have a lot of the total amount of bitcoins in circulation. This price must be extremely tempting for them to sell at. That could cause a crash like last time. I would be careful of buying at the current price.
There's also a lot of early bitcoin that has been lost entirely, which probably skews the market a little bit.
Earlier quoted context omitted.
> Please explain how holding a piece of metal under mattress destroys someone else's wealth Inflation creates a strong incentive to allocate capital to productive investments. Inflation decreases the value of a currency, and therefore people attempt to allocate capital to investments that appreciate above the rate of inflation. Without inflation there would be less incentive to fund new companies, lend money etc... G…
Do you have a single rational standard of what's "productive" and "not productive"? Should you have moral right to enforce this standard upon everyone around you? If millions of tourists make millions of pictures of Eiffel Tower an buy millions of cameras and iPhones for that - is it productive? Should they be prevented from buying cameras and instead "invest" money in something more "productive"? My answer to everyo…
Hoarding does not make us all poorer. Your blanket statement is false.
If you're living in a country with a gold standard, and that currency appreciates, it means you can purchase more real goods, not less.
China's economy has seen its currency appreciate for the last decade, while they simultaneously get far richer. The same principle was demonstrated by the last manufacturing powerhouse: the USA.
If I hoard dollars under my mattress, which reduces circulation, then all the other dollars gain purchasing power in direct proportion to my hoarding: ie I make everybody else richer while I hoard. The exact same thing is true about gold: any currency backed by gold gains real purchasing power.
So when can we expect it to be $2 again this time? June? Maybe July? I think the last 90% drop only took about three months[1], so I'm gonna put my money on late June for this one. And by "put my money on" I really just mean "post this comment so I can quote it in June" . [1] http://www.guardian.co.uk/technology/2011/oct/18/bitcoin-val...
If you actually believed the Bitcoin market will crash in June, you would be buying futures or put options right now.