Bitcoin - Till Alla Naysayers

Ovanstådende inlägg är ett åter igen ett exempel på nedanstående "argument":

• Fri marknad kommer lösa allt (Förklara hur, annars är det bara ett mantra)

• Bitcoins är inte fiat och därför gäller inte allt vi vet idag (Förklara vad skillnaden är mot guldstandard, där tanken är att du har en begränsad resurs som motsvarar världsekonomin)

• Dagens teorier fungerar inte på Bitcoins (Lägg upp en teori som fungerar för Bitcoins, men som även förklarar varför saker blev som de blev historiskt)

• Ni är dumma och ser inte potentialen i innovationer som jag gör (Först och främst, inte ett argument, sedan, förklara potentialen istället för att kalla folk dumma)

Scenariot vi diskuterar är att Bitcoins ska utgöra grunden för världsekonomin och att det enligt dig är önskvärt, vilket medför att du argumenterar för att deflation är önskvärt. Detta är makroekonomiska ämnen.

Det du gör med deflation är att minska incitament för all investering, även sådan i "riktig" innovation.
Valet här är inte mellan "riktig" innovation och "falsk" innovation.
Valet är mellan pengar på hög eller investera alls.

Det enda de inte kommer ha kontroll över är penningpolitiken. Men å andra sidan är den konstruerad för att gynna de som redan har pengar. Så vad blev egentligen bättre här?

Hur då?
Genom att de som har stora mängder BTC väljer att donera dessa till de fattiga bara för att de är snälla? Att de fattiga helt plötsligt får det bättre bara för att de kan vara sin egen bank?

Titta en variant av:

• Ni är dumma och ser inte potentialen i innovationer som jag gör (Först och främst, inte ett argument, sedan, förklara potentialen istället för att kalla folk dumma)

Så kan du förklara så att man förstår vad du menar då?

In the article posted here in the BTC subreddit, http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-..., Krugman has 3 points which he proposes are the reasons why "deflation" is bad...

So first of all: when people expect falling prices, they become less willing to spend, and in particular less willing to borrow.

A second effect: even aside from expectations of future deflation, falling prices worsen the position of debtors, by increasing the real burden of their debts.

Finally, in a deflationary economy, wages as well as prices often have to fall – and it’s a fact of life that it’s very hard to cut nominal wages — there’s downward nominal wage rigidity.

I'll address these points in the order above.

People being less willing to exchange their money for goods under the expectation that goods will be relatively cheaper in the future is not a problem. Let's look at the obvious examples where Krugman is incorrect. Computers, TVs, technology in general... If i buy a computer today for $2000, i got a reasonable laptop by today's standards. However if i wait until 6 months from now and spend the same $2000, i get a much more powerful computer (relatively) because of the progression of technology over that period. So essentially, i'm getting more for my money by waiting. Same applies for TVs and lots of other goods.

If Krugman was right, why would ANYONE buy a computer today? we would all wait for 6 months, but under that rationale, no one would EVER buy a computer because they would be waiting for the next better one to come out. Obviously this is not the case, there is replacement cycles and economic life to assets which need to the replaced. Someone is always willing to exchange their work (money) for goods, the exchange rate is simply a function of supply and demand.

Willingness to borrow in my opinion shouldn't matter because the same rationale above applies. When i decide the price is right, i will buy something. If i think the price is too high, I will wait. This is how a competitive economy is meant to function.

Deflation is a natural process in the business cycle in a correctly functioning economy. Deflation signals that there is too much production, and not enough demand. Deflation leads to lower prices on goods which will drive the less competitive businesses out of the market. Once they're out of business because their costs of production are too high, supply will have been reduced in the sector, and prices will reach a new equilibrium. On the flip side, inflation is an indication of demand outpacing supply, prices increase, leading to more companies entering the sector, which increases supply, putting a halt on the inflationary pressure, (basic supply and demand).

IMO, the only things which would naturally be in a state of inflation would be rare non renewable commodities without a substitute. Oil is a somewhat rare non renewable resource, but at the right price, a switch to Natural gas will occur, and as non renewable fuel sources become more scarce, their price increases will simply lead to a higher value for alternative energy sources (i.e. solar, nuclear, hydro electric, wind...). If there is a demand for a product or service, there will always be a price for it, as I want to exchange my "work" for that of someone else. Deflationary spirals are only an issue for over leveraged systems (like ours), but it is not an issue with deflation, it's our current system which is in error. Don't hate deflation, hate the system.

Worsening the position of debtors without the offsetting positive of creditors. This is not a problem. It's a signal that debtors took on too much debt or the wrong type of debt (variable vs fixed) without a long term perspective on interest rates or the economy.

In a REAL economic system, interest rates are the Traffic Signals for the economy (read Jim Grant). When there is a glut of savings, rates should go down, which will cause some people to save less and spend more, balancing out the economy. Vice versa, when there is insufficient savings, rates should rise, stimulating people to save more which would balance out the pressure on the interest rate rise over time. This would occur naturally because people would understand that investing their money at 2% for an investment they perceive to be risky would not be sufficient reward for the risk of their savings. Thus people would say no, we want >2% to compensate for their investment (parting with their savings).

In a properly functioning economic system, there would be no interest rate fixing by central banks or governments, savers and borrowers would face supply and demand for their money and borrowing costs. Artificially low borrowing costs at the expense of savers does the most terrible thing possible, causes mis-allocation of capital. Instead of slowing down the growth of sectors of the economy which are not sustainable, NZIRP (near zero interest rate policy) and rate fixing pushes more money into these sectors as the companies try to invest more in capital to try to lower their costs or increase efficiency. The supply of credit is not able to change due to interest rate fixing and money printing.

Over-investment in capital and industries without sufficient demand for their goods causes a net loss to the overall economy (i.e. housing, US auto makers, Solar Cell companies...) as the same capital should have been invested in other projects or companies which would pay sufficient returns to compensate for their risks (new industry, technology...).

Wages, there's nothing wrong with dropping wages when overall prices are dropping. If you believe in a "minimum wage", then you shouldn't advocate for a true market system because in the market system needed to have deflation, prices of wages would have to change along with the economy in general.

Deflation of wage prices would occur when there is a glut of workers willing to work for less than the current salaries. On the flip side, when there is a worker shortage, wage inflation would occur, something you would see in specialized industries experiencing growth.

As overall population growth occurs, there would be a natural trend of deflation on wages in "low skill" jobs. This is kind of a moot point though, as anyone who looks at the statistics will see, the minimum wage in the 60's is equivalent to $10/hr in inflation adjusted dollars today, where the US gov's is suggesting $9/hr in min wage today.

So we're ALREADY experiencing relative wage deflation, this should be a natural trend in an economy where the supply of labor (population), is growing compared to the demand for labor. Nothing wrong here. Nominal wages are hard to cut, I agree, but right now the government just stimulates inflation instead to cause the EXACT SAME OUTCOME. In a market system, all prices would be simply a reflection of supply and demand, wages, interest rates, medicine, computers, food...

Deflation is a natural force, embrace it and we can all be more prosperous. Government mandated inflation is an indirect tax on the economy.

I won't get into the whole thing, but #1 is even easier to refute than you make it out to be. You are of course, correct, but there is an easier way to do it.

The anti-deflation people say, "If you think the price will decrease tomorrow, you won't buy today."

Well... in an inflationary environment, why can we not simply say, "If you think you may charge more tomorrow, you won't sell today." We see that this statement isn't true, logically or empirically in the current environment, so why would the first statement be any more true? If the deflation or inflation is predictable (like Bitcoin is) neither statement is true to the degree necessary to make the argument that either is catastrophically for the economy.

Sellers will sell in an inflationary environment and buyers will buy in a deflationary environment. The question then becomes, what if we take these to the extreme... which is preferable? One encourages debt and the other encourages saving. Seems like a clear choice to me.

Okay, to begin...

A currency where monetarist theory can't be used due to loss of money supply and interest rate manipulation is the death knell for the Keynesians. Their entire temple and priest structure is built around fractional reserve banking and its resultant credit structure, and their ability to manipulate the economy for the leaders of their countries.

So they have a lot riding on this, and Bitcoin is the abomination (a type of money that they can't "magically" multiply and manipulate) that they thought they had eradicated with the end of the gold standard.

So they are going to be seriously MOPEing (Management of Perception Economics) on this by using some seriously dis-logistic terms.

First up, the use of the term "deflation". Formally, there are two types of deflation. Monetary deflation (shrinking money supply) and price deflation (shrinking prices). To a Keynesian, they are pretty much the same thing, since they believe that one invariably follows another. (Strange though, that they believe that price inflation can be controlled even in the face of monetary inflation, but that's a debate for another day.) They also associate price deflation with depression, since that is their nightmare scenario in Keynesland, a "liquidity trap" where banks won't lend, credit stalls, demand plummets, and prices then fall like a stone.

But neither the current Keynesians, nor the current Austrians (OP excepted) seem to understand the third type of deflation, efficiency deflation, where prices against a fixed currency fall because it costs less for the manufactures to produce items through increased efficiency, and a portion of those reduced costs are passed on to the consumer in the form of lowered prices.

(Please and thank you! This would be a paradise for the general citizen. Dropping prices and rising value for their savings.)

But, it does come with a cost. Credit under such a system is difficult. You won't have banks that can take someone's $1 and then lend it out 8.5 more times at 10x the interest, each time, so there will be vastly fewer loans available. Generally, this will be made up by the savings factor, but in specific cases it can be catastrophic for the individual. Additionally, many current and popular governmental social programs would be simply unaffordable under such a system.

And I'm sure that there will be a lot more miss-namings in the future as the Keynesians struggle to MOPE their way out of anyone trusting Bitcoin.

Now, on to the final point. Bitcoin isn't deflating, it is revaluing itself against the other currencies. Since its current and potential usefulness as both a savings vehicle and as a unit of trade is generally greater than any other fiat currency, it is gaining in value against them. This makes it look like it is deflationary, when it is in fact, simply finding its natural value. It may eventually become a deflationary currency, but that is a very long way down the road.

There's actually a century old debate over this between the Keynesians and the Austrians, but Keynesian economics is what is taught in schools, what creates good borrowers and consumers, and what earns grants, so finding the Austrian viewpoint is difficult. Most economists are personally conservative by nature, so you won't find many of them breaking ranks. They'll admit that it's an alternative theory, but most will tow the party line.

The argument itself stems from whether or not the theory that deflation is bad is actually a post-hoc fallacy.

Keynesians: Deflation is bad because it represents a failure of liquidity in the monetary and the credit system, and everything possible must be done to restore that liquidity.

Austrians: Deflation is a symptom of an economy that is trying to correct miss-allocated resources into a more productive arrangement after a period of government and monetary largesse caused money to be so inexpensive (interest rate wise) that the natural mechanism for allocating resources was overridden by those who's incentive to speculate was increased by that cheap money.

So the basic argument stems from whether, in essence, deflation is like a fever your body uses to get rid of a flu, or the flu itself. This debate has been going on for a century. But I can say this, I believe that Keynes' famous quote "In the long run, we are all dead.", stemmed from Hayek's observation that a monetarist system cannot be sustained in the long run, due to the drags it puts on an economy and the stability of its currency.

As to your "deflation is always bad" statement, there's really no way to weigh the evidence in this case. Prior to the Federal Reserve Act in 1913, the gold standard kept prices nearly flat, and most deflationary events happened due to bank runs, after which things balanced out. The Fed was proposed after the man that congress sent to investigate whether the banks were intentionally causing credit gluts and crashes for profit spent some time in Europe talking to said banks, then proposed that they be given control of the money supply so they could ensure that the smaller banks always had liquidity.

I can say that, the gold standard served America extremely well until the Fed came online and instituted a tiered fractional reserve system that effectively increased the credit supply significantly.

I'll leave it up to the readers to think about whether the Great Depression was a correction from this huge increase in credit, or whether it was a lack of liquidity that caused it like the Keynesians believe.

Jag tycker faktiskt att ni som talar er varma för Bitcoin får skaffa lite fler källor till era påståenden, inte bara hänvisa till bitcoin sidor. Konstigt att dom skriver att allt "guld och gröna skogar" Det skulle ju vara intressant om jag tex i en diskussion mellan Samsung S4 och Iphone 5s, bara hänvisar till Apples egna hemsida, "men det står ju att det är den snabbaste och mest avancerade" det fungerar ju inte det förstår ni nog själva. Det skapar ingen vidare trovärdighet.
Lite kritiskt tänkande skulle ju inte vara helt fel.

Star Citizen var inget högriskprojekt. Det är ett spel, det tar upp till fem år att utveckla ett spel. Efter några år skulle alla som har köpt in sig få ett spel. Slut.

Läkemedel (och mycket annat som behöver forskas fram) tar årtioenden. Det är inte ett "investera nu, få en spruta om tre år"-situation. Det kräver uthålliga investerare som kan skjuta in mycket pengar över lång tid i hopp om utdelning efter 10-15 år. Du kan inte jämföra den typen av investeringar med att sätta $30 för att få ett spel om några år.

Du fortsätter att prata om att Bitcoins på något magiskt sätt inte skulle påverkas av deflation eller att deflationen skulle vara minimal, men du presenterar inte ett enda argument varför det skulle vara så.

Vill du att någon ska ta dig seriöst får du presentera dina argument, och inte posta en massa citat där vi inte har någon aning om vad det är du påstår eller vad du vill ha svar på. Gör om, gör rätt.

Men okej. Förklara varför vi inte har sett inflation (ta t.ex. USA, det är lätt att hitta siffror på det) fastän pengabasen har utvidgats senaste 6 åren. Eller ännu bättre, gör ett påstående som sedan kan falsifieras.

Exempel, om Spanien i dagens läge drar ner på de offentliga utgifterna kommer det att minska på skatteintäkterna. Det är mitt påstående.

Läkemedelsforskningen blir dyrare, inte billigare. Utvecklingstiderna blir längre, inte kortare. Det är trenden vi har, det är den trenden jag följer för att kunna göra en kvalificerad gissning över vad som kommer att hända i framtiden. Du gissar hej vilt, antar att deflation är irrelevant och att vanligt folk kommer att kunna fylla den roll som kapitalstarka investerare har idag.

Nej, det har du inte gjort. Varenda källa du har lagt fram är antingen packad med ideer som strider mot existerande ekonomiska teorier (utan att förklara varför dessa teorier inte skulla gälla) eller behandlar Bitcoins som de ser ut idag - där de inte är en valuta. Jag misstänker att du saknar ekonomisk kunskap och därför fortsätter att slänga fram blogginlägg och videoklipp som inte svarar på några av de frågor som ställs. Läs dina källor (istället för att säga åt oss att läsa dem) först och presentera väsentlig information med dina egna ord istället. Jag har läst alla dina inlägg och ingenstans förklarar du varför existerande ekonomiska teorier inte skulle gälla i fallet för Bitcoins. Du förklarar inte varför deflation vore något positivt i ett Bitcoin-samhälle. Du ger inte något tillfredsställande svar på vem som ska göra tunga, långsiktiga investeringar med hög risk när man lika gärna kan samla pengar på hög (som då ökar i värde) helt utan risk.

Kanske något att som ni bör läsa om Bitcoin

http://www.affarsvarlden.se/hem/nyheter/article3804721.ece

Du behöver förklara varför en Bitcoin-ekonomi inte skulle ta skada av deflation. Det duger inte att säga "vi får se i framtiden, men jag tror inte att deflation kommer att vara ett problem." På följdfrågan "varför?" kan inte svaret vara "därför". Vi har förstås inte alla data eller all fakta på området, men du presenterar bara dogma från en samling ekonomiska idéer som inte fungerar