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Bitcoin exchange rate reached $100 USD per BTC

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Re: Bitcoin exchange rate reached $100 USD per BTC

#591

Post by tatsuke95 »

solistice wrote: post #502
tatsuke95 wrote: post #484

Earlier quoted context omitted.

> "In fact we see deflation in specific markets like housing which helps to clear out the bad decisions and mistakes and set the base for future expansion." Periods of asset deflation after over-investment/economic distortions may act as a balance, but it isn't "good". Having your net worth halved is crippling. > "The simple fact is that no economy and social order has ever imploded due to deflation" No economy implo…

I'm actually genuinely curious what research and theory you are referring to, and I wouldn't know where to start looking. Could you give me some pointers?

You can start with anything by Bernanke related to the subject, both writings and speeches.

Re: Bitcoin exchange rate reached $100 USD per BTC

#592

Post by tatsuke95 »

brc wrote: post #510
tatsuke95 wrote: post #484

Earlier quoted context omitted.

> "In fact we see deflation in specific markets like housing which helps to clear out the bad decisions and mistakes and set the base for future expansion." Periods of asset deflation after over-investment/economic distortions may act as a balance, but it isn't "good". Having your net worth halved is crippling. > "The simple fact is that no economy and social order has ever imploded due to deflation" No economy implo…

Careful with reading bias into what I have written. I have not said deflation is good, or said that it is not bad. I have merely stated it creates winners and losers, and that inflation isn't automatically better. The same as a 'high' or 'low' currency - the goodness or badness depends on the reference frame. The assumption that inflation is automatically better is 'common knowledge' based on theories of economics de…

>"The assumption that inflation is automatically better is 'common knowledge' based on theories of economics developed that classify savings as bad, and spending as good, based on the assumption that deflation will cause consumption to be postponed, but which hand-waves away the problem of inflation bringing forward consumption with the trite statement of 'in the long run we are all dead'."

That's only part of the argument.

Another part is that wages also must decrease with deflation (wages are an input price). And that's very difficult to pull off in a modern economy, and leads to unemployment. We are seeing that right now.

The fact of the matter is, we should be indifferent to either inflation or deflation, as long as we can see the changes coming and adjust quickly enough. In reality, we can't. Hence an ever-increasing money supply (to coincide with an ever-increasing demand for money) is the best bet.

>"based on theories of economics developed that classify savings as bad"

I've never encountered that argument.

>My point is that deflation isn't the bogeyman

Look at this thread. Look at Seeking Alpha. Look at Reddit. You think people are over-reacting to deflation? People everywhere are hyperventilating over out of control inflation, when, in fact, our current problems are associated with a deflationary event ($3.5TT wiped from the collective financial sector sheets).

Re: Bitcoin exchange rate reached $100 USD per BTC

#593

Post by cmccabe »

dragontamer wrote: post #582
cmccabe wrote: post #580

Earlier quoted context omitted.

According to wikipedia: "The core CPI index excludes goods with high price volatility, such as food and energy. This measure of core inflation systematically excludes food and energy prices because, historically, they have been highly volatile and non-systemic. More specifically, food and energy prices are widely thought to be subject to large changes that often fail to persist and do not represent relative price cha…

So... what does "Core CPI" have to do with anything? I have never used that value in my argument, and have instead preferred CPI-U and CPI-W. These CPI are used for Social Security, Minimum Wage calculations, and so forth. You're creating the ultimate strawman. You're ignoring the statistics I've presented (statistics using "real" CPI which include food values), and then criticizing statistics that I'm not using. Why…

What does this have to do with anything? Let's ask wikipedia.

The Federal Reserve's policy of ignoring food and energy prices when making interest rate decisions is often confused with the Bureau of Labor Statistics' measurement of the CPI. The BLS publishes both a headline CPI which counts food and energy prices, and also a CPI for All Items Less Food and Energy, or "Core" CPI. None of the prominent legislated uses of the CPI excludes food and energy.[9] However, with regard to calculating inflation, the Federal Reserve no longer uses the CPI, preferring to use core PCE instead.

So the people making the monetary policy decisions are ignoring food and energy prices, and hence, in my opinion, underestimating inflation.

Anyway, as someone else said in this thread, everything is a good investment at some period in time. The question is whether we are in that period of time.

Re: Bitcoin exchange rate reached $100 USD per BTC

#594

Post by bigdubs »

nas wrote: post #239
bigdubs wrote: post #224

Earlier quoted context omitted.

inflation is an absolutely necessary force in an economy; without inflation there is little incentive to spend money and as a result there is no real liquidity. tl;dr; money is useless if no one spends it, that's the whole point. another way to think about it is a stock. if a stock is priced, and no one is buying or selling at that price, is that price really valid? whats to keep another actor in the economy from pri…

> inflation is an absolutely necessary force in an economy I don't think there is good evidence of this "fact". Economics is not a hard science. A few points, one, you can't argue that bitcoin deflates and therefore is worthless. The is an obvious inconsistency there. Second, imagine if bitcoin had built-in inflation. What would happen if someone would release bitcoin+ with inflation equal to zero (i.e. current bitco…

there are no real facts in economics, but there are some pretty easy concepts to grasp. here is another explanation:

"Inflation is bad, but deflation is worse. The reason is that in a deflationary environment, no one spends money — because whatever you want to buy is sure to become cheaper in a few days or weeks. People hoard their cash, and spend it only begrudgingly, on absolute necessities" from https://medium.com/money-banking/2b5ef79482cb

Re: Bitcoin exchange rate reached $100 USD per BTC

#595

Post by jwallaceparker »

jvm wrote: post #565
jwallaceparker wrote: post #560

Earlier quoted context omitted.

I don't know how you can look at your chart and say gold has not maintained its value. Your chart shows gold holding steady with two upward spikes during 1980 and now as hedges against fiat. Also, I don't know what "real gold price" means. Some details of the measurement would help. > also has the added benefit of a much higher long-run rate of return When measured in dollars, which have lost 98% of their value since…

"Real" prices are almost always measured in CPI terms, although sometimes the GDP deflator is used (it was CPI in that chart). The real value of gold was (relatively) flat until gold convertibility ended in 1971 because the price was being fixed by the western powers under Bretton-Woods. Ever after it's been on a non-stop roller-coaster ride. If you bought gold in 1980, far from its value being "stored" it would have…

Okay. I'm clear on the "real" price in the chart.

But still, gold has never dipped below its 1918 low on that chart. Twice it shot up as a hedge against paper inflation, but it never went below where it started.

Isn't that a terrific store of value? I'm talking about a time frame of centuries here. Not just a few years during a bubble.

And before you counter that we're currently in a low inflation period - we're not. If the CPI was measured using the same metrics that the government used itself in the early 80's, inflation would be running at 9% annually.

Re: Bitcoin exchange rate reached $100 USD per BTC

#596

Post by stouset »

dreamdu5t wrote: post #504
zanny wrote: post #461

Earlier quoted context omitted.

Money you are saving that isn't being used for monetary exchange is effectively dead weight in an economy. Due to modern inflation rates, nobody really "saves" in any modern economy by just hoarding fiat currency - and because of this, the vast majority of the monetary supply is being used for exchange and commerce, and you get peak utility of the currency that way. If you sit on money you get from the economy, you a…

That money sits... forever? Prices don't respond to money being removed? Savings would still be invested with a fixed money supply, because investment provides a return whether nominal prices are falling or rising. Sound investments will account for either inflationary or deflationary trends, just as they do now.

Savings would be invested significantly less with a fixed money supply, because every possible alternative investment is statistically guaranteed to have a lower expected value than simply holding onto your money. Obviously, there are still going to be people who attempt to beat the market. But it will happen significantly less often since the "default" of holding onto your money is both the safest possible investment and the most optimal.

This is clearly the case when nominal prices are falling. But when prices are rising, the reason they are rising is a contraction of the economy… and again, your money is still best left alone. Because while your investments might pay off when the economy rebounds, you'd still be statistically better off with your money sitting under the digital equivalent of your mattress; when the economy rebounds, prices will fall again, and your untouched money will be worth more in direct proportion to how much the economy has rebounded.

Re: Bitcoin exchange rate reached $100 USD per BTC

#597

Post by csense »

tatsuke95 wrote: post #590
csense wrote: post #584

Earlier quoted context omitted.

> Having your net worth halved is crippling. "Having your net worth halved" happens in the inflation scenario. Deflation increases your net worth. If you have $10,000 and there's inflation, then eventually it will only buy half as much stuff. If you have $10,000 and there's deflation, then eventually it will buy twice as much.

> ""Having your net worth halved" happens in the inflation scenario. Deflation increases your net worth." Interesting. We've been in a positive inflation environment since I've been born, and my net worth has increased exponentially. Deflation will increase the purchasing power of your money due to the fall in prices, but decrease the value of assets you own priced in that currency. Something people seem to be forget…

> Did it become easier for other people to spend their dollars on homes at the new low prices?

Why is the answer to this question "no"?

Re: Bitcoin exchange rate reached $100 USD per BTC

#598

Post by Houshalter »

klipt wrote: post #573
Houshalter wrote: post #524

Earlier quoted context omitted.

Deflation generally benefits almost everyone. Things get cheaper and cheaper over time, while the amount of money you make stays the same. Technology is a beautiful example of this. Almost every year technology gets cheaper and cheaper, and better and better for the same amount of money spent. And of course this is great for everyone and I don't think many would dispute that. Imagine a world where that wasn't true. I…

> Things get cheaper and cheaper over time, while the amount of money you make stays the same. This can't be universally true. If food gets continually cheaper, unless the cost of owning land and farming it goes down by the same amount, farmers must eventually make less money than before (or be driven out of business entirely). And I don't quite buy the comparison between technological progress (where things get chea…

>This can't be universally true. If food gets continually cheaper, unless the cost of owning land and farming it goes down by the same amount, farmers must eventually make less money than before (or be driven out of business entirely).

Or the same farmer could be producing more food than before, but at a reduced cost. He would make the same amount but the price of food would be lower.

>And I don't quite buy the comparison between technological progress (where things get cheaper due to massive amounts of competition and research) and switching to a fiat currency which is arbitrarily limited (bitcoin). Using bitcoin doesn't guarantee technological progress.

No but technological and economic progress is almost guaranteed anyways. A currency like bitcoin means you actually get the reward from it in the form of cheaper prices over time.

>Yes, printing money is in effect a government tax for usage of that currency.

Exactly. In that sense bitcoin and currencies like it are free of that form of taxation which is a good thing for everyone using them.

Re: Bitcoin exchange rate reached $100 USD per BTC

#599

Post by al1x »

cjg wrote: post #557
al1x wrote: post #442

Earlier quoted context omitted.

This seems a natural consequence of bitcoin's adoption and growth. I see virtually no barriers to entry here, no limit to the number of competing currencies that could be introduced, and as a result no real value to bitcoins. How long can one cryptocurrency expect to be allowed to grow before another comes along and dilutes the market? What factors prevent the average consumer from considering them substitutes? Bitco…

The barrier to entry is in gaining the adoption.

then spread awareness -- https://bitcointalk.org/index.php?topic=134179.0

Re: Bitcoin exchange rate reached $100 USD per BTC

#600

Post by cjg »

al1x wrote: post #599
cjg wrote: post #557

Earlier quoted context omitted.

The barrier to entry is in gaining the adoption.

then spread awareness -- https://bitcointalk.org/index.php?topic=134179.0

Awareness doesn't imply adoption.

What is the incentive for merchants to start accepting litecoin? Why not just bitcoin? Litecoin won't give them lower transaction fees (over bitcoin), it won't give them more customers (anyone who can pay in bitcoin can pay in litecoin).

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