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I think [BitCoin will] definitely make for a better world

Bitcoin is inherently deflationary, which would be economically disastrous if it supplanted the dollar. Granted, I think bitcoin supplanting the dollar is unlikely, but it does make me question how beneficial bitcoin really is.

On top of that, bitcoin erodes transaction privacy. Is this really a step forward?




Bitcoin doesn't have to become the currency of daily use to change the world. In fact, to my knowledge, it would function better as a Bretton-Woods reserve currency in the style of gold or the "bancor". A healthy economy would mean most transactions take place in unpegged fiat currencies, but financial shenanigans would result in people hedging into Bitcoin.


> deflationary, which would be economically disastrous

Citation of deflation caused by an increase in productivity or population has caused an economic disaster?

I've searched and came up empty. Thanks in advance if you find something and reply.


There are a lot of economists that would argue that deflationary spirals don't actually occur, mainly Chicago and Austrian School economists.


In which case those economists are simply wrong.


Seriously, anyone who thinks deflation is good is either short sighted or stupid. Fundamentally, if my money is worth more tomorrow, I won't spend it today, and you halt the entire economic system like that.

I like peercoin, which is a bitcoin that can maintain wallets without the full block chain, do less expensive proof of work problems when the network is computationally competitive enough, and has a fixed inflation rate of 1%.

The only improvement I'd like to see is a currency that uses a coin generation algorithm based off recent monetary velocity, so that if exchange slows the inflation rate increases to stimulate more exchange, and if a lot of money is changing hands the inflation rate is slowed, with a targeted turnover ratio of the entire economy that is whatever is most economically healthy, it would require research.


How will we live if people aren't artificially pressured to consume their wealth as quickly as possible? And we know those 8,000 years of civilization using metallic money were not all "economically disastrous".

History gives us plenty of episodes of deflationary growth, such as America after the civil war during resumption of the metallic standard. Yes, a sudden collapse in a money supply is bad, but economies work fine under slow deflation.

Economists are the worst intellectuals. Their predictions are always wrong and their growth advice is ineffectual. I wouldn't take what you read from an economist in a newspaper op-ed page at face value.


"History gives us plenty of episodes of deflationary growth, such as America after the civil war during resumption of the metallic standard."

You're referring to the period known as "The Long Depression", from 1873 to 1896?

It had an extremely high unemployment rate during the quarter century that it lasted. Ten states went bankrupt. The US manufacturing output virtually stagnated, with periods of significant decline.


I find the "8000 years" claim in the parent comment to be interesting. My understanding is that it is false, and that metallic money is a way, in which armies impose themselves over populations. This talk by anthropologist David Graeber illustrates my point http://www.youtube.com/watch?v=CZIINXhGDcs


America during the resumption of the metallic standard underwent overall growth, but with frequent financial panics in which thousands of people lost everything, went bankrupt, and in quite a few cases starved to death cold and alone in a ditch.

That sounds like a great model /sarcasm!


Statistically, the American economy has not been more stable since the invention of the Federal Reserve. I think George Selgin has a paper on it.


Luckily, there are more things in Heaven and Earth than "Federal Reserve vs Ron Paul".




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