I'd think you'd generally rather not have all that much inflation or deflation... (Obviously particular parties would have interests to the contrary is specific circumstances, but outside of the short term single party advantage...)
If a specific good becomes cheaper because the means of production become more efficient, that's awesome.
If everything is becoming cheaper because everything is getting more efficient, that's super awesome.
If things are getting "cheaper" because the currency is becoming more valuable, that is a disaster. You have society-wide rent-seeking instead of wealth creation.
Well, that's exactly my point. In a system with a fixed money supply (all things equal) the only way to have price deflation is to have greater output, greater productivity.
Now tell me again, how this is awful?
EDIT: As for the rent seeking.. If you hold your money for a while, while the productivity soars, then after a while you can buy more stuff, but only because the stuff has become cheaper.
As a fraction of total buying power you are still were you were before. Do you really call it rent-seeking?
If the economy today is 10 billion quatloos, and it grows to 11 billion quatloos next year, you would also want the money supply to grow by 10% over the same period of time.
Capital can make money because it increases productivity. If you use your 10,000 quatloos to buy a machine that makes a worker more productive, your reward comes from the interest on that. Everyone can increase the value of their savings if everyone does this.
If everyone is hiding their quatloos in the mattress, there is no input of capital to increase productivity. Yet a deflationary spiral exactly encourages people to hide their quatloos in their mattress. Why bother taking even minimal market risks when you can make 10% from the growth of the rest of the economy?
And economies can grow not just from increased productivity.
EDIT: As a fraction of total buying power you are still were you were before.
This is a really, really, really bad idea.
If I have shillings equal to 5% of GDP, and I put myself into cryosleep for 100 years, there is no reason I should expect my uninvested shillings to still have 5% of GDP. This is a child's view of an economy.
What does exactly happen when an economy grows from 10 billion quatloos to 11 billion quatloos?
Until you tell me that, we are measuring woomdums in quatloos and while that can be kind of fun.. it not very rewarding.
If you speaking about physical output.. than the only way achieve this is to learn to produce woomdums cheaper.. Then there is no harm in selling them cheaper.
So do I want the money to grow to a degree that it will anihiliate the increase in productivity? Certainly not.
> If I have shillings equal to 5% of GDP, and I put myself into cryosleep for 100 years, there is no reason I should expect my uninvested shillings to still have 5% of GDP. This is a child's view of an economy.
Can your elaborate? Actually it an argument against the idea that hoarding gives some kind rent. It doesn't.
But again, can you elaborate? If own 5% of land and go to a cryosleep for a hundred years, how much of that do you expect to own when you wake up?
(I'm going to have to stop with this comment. Maybe you can find someone else willing to go over the basics of wealth with you.)
If you were to just abandon your land, there is no reason to expect it to belong to you when you come back 100 years later.
Instead, say you set up a corporation and hire people to use the money made renting it out to pay for taxes and management on it. You might still own the land in 100 years. Or not, if the people you left in charge of it couldn't manage it well enough. But people got to use the land in the meantime, so there was economic activity being assisted by your asset.
This would not, of course, give you any claim on any new land that is made, like new landfill in Boston.
Bitcoins sitting out on the chain while you are sleep do not provide any benefit to growing the economy. They have not bought any factory equipment. They have not trained any workers. They have not invented any new technology.
Any system in which people can end up with the same portion of an economy after sitting both their labor and their capital out on the sidelines for 100 years is fundamentally broken. Exactly how is an exercise for the reader, but like anyone purporting to have a perpetual motion machine, while the exact problem may be different from machine to machine, the laws of physics mean that there is some definite failure in it.
> Any system in which people can end up with the same portion of an economy after sitting both their labor and their capital out on the sidelines for 100 years is fundamentally broken.
Assertions. Words. Some of those strong..
To be frank, I'm disappointed, but.. I'll manage that, no need to worry.
This is why I don't have a computer, or phone, or any other electronic gadgets. The prices are falling so quickly that every time I think about getting one, I decide to put it off for a few months so I can get a better one instead.
(And before you ask, I'm posting this using pen and paper with IP-over-carrier-pigeon.)
a) Time preference (I guess you have a phone, even if..)
b) Marginal utility of every extra unit of money decreases when a person holds more of them. Couple that with falling prices and you have the killer of deflationary spiral.
A nice theory, though. The deflationary spiral one. But just a theory. Never happened.
Well, I disagree, with the interpretation of events known as Great Depression as a deflationary spiral.
Yes, there was a deflationary event. As there were many before, and the last one before in 1920-1921, when the wholesale prices fall by a whopping 40%. But a deflationary event does not make a deflationary spiral.
There were also a lot silly activism both from the part of the Hoover and Roosevelt. The later speaking, beside other things about outright nationalization, and driving thus the busyness investment into ground..
So a lot happened than which make the Great Depression Great but deflationary spiral is not THE explanation.
a) No, it's not different at all. If money is worth more tomorrow than today, that exerts negative pressure on purchases, suppressing the retail economy. People will still buy things, just less of them. What's so hard to understand?
b) I really have no idea where you're trying to take b.
"Is the last sentence some kind of "ad hominem"? Because, it would be a pity."
An ad hominem would be if I said your arguments were invalid because of who you are, that's what it means. I was making an observation about your ignorance based on the content of your arguments, entirely different.
Subdivision of BTC is irrelevant to talk about deflation. Talking about this (as the BTC wiki does) is just handwaving and does nothing to address the economics.
I thought one of the problems with deflation was that people used to hoard cash and there was not enough money availale to facilitate normal daily trades. Such thing won't happen with bitcoin.
It can't be a bubble if it's not inflated. There's no real inflation in bitcoin there is though deflation which is a great thing. It's how all monetary systems should be
If you're on your first VC-funded startup, you'll probably get torn up by liquidation preferences and dilution for executive hires (that you had no say in; they were VC injections) and various other things, and not get very rich. You could end up worse off than an employee (because they get to take real salaries; you're hosed if your equity gets zeroed). You'll have to play a second time (capitalizing on your reputation, having joined Those Who Have Completed An Exit) to get what you came to the game for. It's like the record industry: you make money on your second album, because the record company has leverage to screw you on the first one.
If you're a manager or executive-level hire, you're probably never going to get the investor contact you were promised and, if you do, you probably won't be allowed to say much, so the networking you were promised won't happen.
If you're an engineer, you're probably not going to get the "leadership" (executive) position you were promised. It'll be given to some external asshat when the company goes in to "scaling"/social-climbing mode and starts hiring "real X's" (i.e. not the fools who worked for 90 hours per week and 50% of market salaries, judged not to be good enough for prime time).
Only a tiny percentage of VC-funded startups have a real engineering culture (pre-apocalyptic Google) where you can do well as an engineer without becoming a manager. If that's what you want, your odds are better (not great, but better) at a place like Google.
Most VC-funded startups grow too fast to keep a decent culture, and the executive positions often get handed out by VC to their underachieving friends who couldn't make it on their own.
