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Fear Not Deflation

forbes.com

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Re: Fear Not Deflation

#21

Post by josephlord »

jerguismi wrote: post #13
josephlord wrote: post #8

Earlier quoted context omitted.

Up voted. Would add that in a deflationary environment no one will want credit so really you have to print money and give it away (or just print it and spend it).

But what about free currency competition? Allow all kind of currencies co-exist. Those who want inflation can use the inflatable currencies, the people demanding deflation can use more deflationary currencies.

Of course everyone wants to borrow and spend inflating currencies and earn and save deflating currencies and it just adds another issue to negotiate in every deal.

I don't see any major harm but I don't see any benefit either. In fact you can currently choose from many global currencies now including the Yen that has deflated over the past decades.

Re: Fear Not Deflation

#22

Post by jerguismi »

pash wrote: post #14
eli_gottlieb wrote: post #4

This has got to be one of the dumbest fucking things I've ever seen. Its only real point is that commodity-based currencies and deflations weaken government. Furthermore, its idiotic praise of societal-level saving is pure nonsense. My income is someone else's expenditure, my credit is someone else's debt. Money can obscure this fact, not alter it. In order for me to save, someone else must spend. Do they have to spe…

> This has got to be one of the dumbest fucking things I've ever seen. It's pretty dumb. Really, thoroughly dumb. But you've added some real bloopers of your own: > If we have a standard-issue modern currency, ie: slow but steady rate of inflation targeted by a central bank, then some amount of new money enters the economy each year. As long as total new savings in the year don't exceed this amount, then and only the…

> What I find really funny when I hear Ron Paul or somebody advocate a return to the gold standard and the abolition of the Federal Reserve is that they're really arguing for handing over monetary policy to the mining industry!

Not really, mining industry still can produce only fixed amount of gold, while central bankers can potentially print infinite amount of paper money.

(I'm not advocate of gold standard)

Re: Fear Not Deflation

#23

Post by yxhuvud »

I really wish Ripple got more press. Instead we get stupid articles like this that is downright painful to read. Eli explained why it was stupid way better than I ever could, so read that comment for motivation.

Basically Ripple is the anti-thesis of bitcoin as it works solely on trust between the participant and does therefore catch the essential mechanism of how all fiat economies work.

Re: Fear Not Deflation

#24

Post by jerguismi »

josephlord wrote: post #21
jerguismi wrote: post #13

Earlier quoted context omitted.

But what about free currency competition? Allow all kind of currencies co-exist. Those who want inflation can use the inflatable currencies, the people demanding deflation can use more deflationary currencies.

Of course everyone wants to borrow and spend inflating currencies and earn and save deflating currencies and it just adds another issue to negotiate in every deal. I don't see any major harm but I don't see any benefit either. In fact you can currently choose from many global currencies now including the Yen that has deflated over the past decades.

> it just adds another issue to negotiate in every deal.

Not really. We have this thing called technology, which allows people to automate things. And it is very much possible to automate almost everything related to currencies and payments.

If merchant wants to hold currency A, but can gain customers from currencies B, C, D, F, he can just implement some payment processor which does all the legwork for him with 1% fee.

> I don't see any major harm but I don't see any benefit either.

It is pretty difficult to see benefit why someone would want to use for example dollars compared to euros. It is mostly where you happen to live and to what currency you are used to. But I would bet my ass that people would after all like to decide themselves what currency to use, instead of someone else to force them to use specific currency (however still most people would probably just use the currency they are used to).

Re: Fear Not Deflation

#25

Post by AnthonyMouse »

eli_gottlieb wrote: post #11
josephlord wrote: post #8

Earlier quoted context omitted.

Up voted. Would add that in a deflationary environment no one will want credit so really you have to print money and give it away (or just print it and spend it).

Or you'll have to allow some form of fiat currency as an alternative currency. Or you'll have to more-or-less allow the entire real economy to collapse as the exponentially dropping remnants of actual aggregate demand become utterly unable to facilitate, or rather justify , real trade. One last point: deflation always favors whoever, in a transaction, is the creditor/seller. In a certain sense, this is not only econo…

>If the currency is deflating, even predictably, then whoever gets paid has an automatic advantage over whoever does the paying.

If the value of the currency is changing predictably and the date of the future payments is known then it can be taken into account in determining the amount of the payments. However, the purchaser does benefit if the seller doesn't know enough to account for it or is timid and fails to assert the demand, etc.

Re: Fear Not Deflation

#26

Post by josephlord »

jerguismi wrote: post #18
josephlord wrote: post #10

Earlier quoted context omitted.

People would spend for food but save as much money as possible making the economy contract with demand in a depression. Hopefully the government would turn on the printing presses and step in as spender of last resort before the food ran out.

People probably wouldn't do anything else than just buy that food, and wait for the world to end? LOL

Oversimplified. This is an HN comment not a Economics paper. Discretionary spending reduced, borrowing falling leads to deflationary cycle with shrinking economy unless action is taken.

I thought it would be obvious I didn't mean absolutely all spending will stop.

Re: Fear Not Deflation

#27

Post by [deleted] »

gojomo wrote: post #16
markpercival wrote: post #12

Since neither Forbes nor the author, Jon Matonis, saw fit to point this out, I will. This is an op-ed piece, written by a board member of the Bitcoin Foundation. Regardless of the merit of the article, it should have been explicitly stated in the piece.

The prominent author bio in the right column discloses his Bitcoin Foundation affiliation, and as a signed 'contributor' piece, it's 'opinion' by format and convention. (They also include a "The opinions expressed are those of the writer" note under the bio.)

[deleted]

Re: Fear Not Deflation

#28

Post by goodcanadian »

Personally, I don't consider mild deflation to be any worse than mild inflation. A stable currency is better for everyone. Things get increasingly bad as the rate moves away from 0% in either direction, especially, if it occurs in an unpredictable way.

As it happens, most central banks aim for a stable currency with a slight tendency towards inflation. My policy change would really only be minor: make the inflation target -1% to 1% rather than 1% to 3% (I didn't completely pull that number out of my ass; apparently, that is the Bank of Canada target range).

Re: Fear Not Deflation

#29

Post by RockyMcNuts »

tell it to the guy who goes from an 80% loan-to-value on his house to owing way more than the house is worth.

who's going to build a factory if building the factory is going to be significantly cheaper next year, not to mention everything it produces?

who's going to hire anyone if you can hire them cheaper next year?

especially in a country like the US, where everyone is in debt up to their eyeballs, deflation is a disaster.

Re: Fear Not Deflation

#30

Post by josephlord »

jerguismi wrote: post #24
josephlord wrote: post #21

Earlier quoted context omitted.

Of course everyone wants to borrow and spend inflating currencies and earn and save deflating currencies and it just adds another issue to negotiate in every deal. I don't see any major harm but I don't see any benefit either. In fact you can currently choose from many global currencies now including the Yen that has deflated over the past decades.

> it just adds another issue to negotiate in every deal. Not really. We have this thing called technology, which allows people to automate things. And it is very much possible to automate almost everything related to currencies and payments. If merchant wants to hold currency A, but can gain customers from currencies B, C, D, F, he can just implement some payment processor which does all the legwork for him with 1% f…

For instant one off transactions it is simple. For delayed (when order is delivered) or repeated/recurring (salary, installments, ongoing fees) to cancel the currency risk you need to also have futures or options and deal with counterparty risks and have the reverse risk if the order is cancelled and you still have the matching future.

It gets really complicated quickly and for most people best just to get the one most aligned with their costs/spending and then they can enter currency speculation if they want to.

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