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scupperer

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Let's Debate Bitcoin vs. Other Moneys Reply to this Post
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To satisfy Erfan's demand to liven things up, I offer a debate. Bitcoin!

After suffering through hundreds of endless debates here against countless Keynesians, I now offer my services to use facts, information, and my hallowed opinion to debate the merits of Bitcoin against all other moneys, new and old, without resorting to personal attack.

Others can resort to personal attack; I might cry a bit and question the purpose of my life, but that's frequent enough since lockdown, so I'll be okay, I promise.

I don't remember anyone ever bringing up Bitcoin here, which is surprising, but, then, my memory really sucks, so maybe it happened and I dismissed it. Wish I had looked into it more seriously - if I'd gotten in 4 years earlier, I'd be doing much more than just looking at the charts endlessly, hoping I can retire by the end of this bull run. But, it has afforded me enough spare time to check the forums once or twice a week and see what's happening, so if anyone bites it might get a little more interesting in here.

You guys did introduce me to Dwarf Fortress, though. I remember that clearly, and it's still a blursing.

Anyway, since I'm borderline autistic and have been focused almost exclusively on Bitcoin for the past 4 years, I welcome any challenge:

Bitcoin is:
1. Scarce
2. Secure & Immutable
3. Decentralized & Trustless
4. Requires Consensus for change
5. Can be programmable & adaptable with 2nd layer solutions.
6. Has an insurmountable 1st-mover advantage over all other cryptocurrencies.
7. Is more energy efficient and clean than other moneys.
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Look for the ridiculous in everything and you will find it. - Jules Renard
[May 11, 2021 3:47:01 PM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
Quitex

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DOGECOIN is superior because elon mush said so
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Quitex, everywhere, mainly Ice.
Monarch of Cows
Joly wrote: 
Someone asked why Quitex would do this as a rogue. All I can say is, well, he's QUITEX! No one knows what he will do next, ESPECIALLY Quitex.

[May 12, 2021 8:28:31 AM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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Just in case anyone has been considering hopping on the Dogecoin train:

Dogecoin's bull run is a prime example of herd mentality insanity, but it's entirely unsustainable.

1. Dogecoin was created as a joke.

2. Dogecoin is designed to inflate. It creates 10,000 dogecoin every 10 minutes, forever. That's 5.2 billion new dogecoin each year (currently at 129 billion). That's 4.0% this year.

3. Almost half of all dogecoin is held in a dozen wallets; this can be a problem with market price manipulation (stop-loss hunting, buy/sell walls, etc.)

4. Dogecoin lacks technical development. There are very infrequent updates, a very small community of developers, and no plans for improving dogecoin.

If you were lucky enough to get into dogecoin before the WSB gang focused their attention, hold on to your luck and get out. This coin has no future, and the current hype will crash once reality begins hitting the financial world.

Elon Musk Says Dogecoin Tweets Are Jokes, He Is a 'Supporter' of Bitcoin
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Look for the ridiculous in everything and you will find it. - Jules Renard
[May 12, 2021 12:21:14 PM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
Minsiem

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I get mad that cryptocurrency exists. Then I get mad that money exists. I'm not going any further down this rabbit hole than that.
----------------------------------------
Minsiem the Mauvelous of Mischief Menagerie, à la Sushicide

Erfan flag officer chats, "let's cade a popular forage island"

[May 12, 2021 3:12:20 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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Jumping down the money rabbit hole:

First, there was bartering... this worked great for direct exchanges of every day goods and services, but it didn't work very well for larger purposes, like Ziggurat construction, or when those nomadic trade groups arrived. Plus, there were no standards. Is that giant clay pot of wine worth one goat or two? But this one's a fat goat...

So, commodities were then used. Salt, sacks of grain, rice and beans, and live animals. This solved some of the scale problems, but it created new problems: now, in addition to accepting your commodities, I need to store them safely and/or feed them. So I accepted six goats and five bags of salt for these delightful purple/black clothes that I made, but now I need to keep the goats alive and build a shed to keep the salt dry. Your money costs me money to save money! And thus, inflation was born.

Now I need to charge more goats, just to stay in business, but I'll need to spend more goats, since I have no way to feed them all.

Sometime around 2000 B.C., in Babylon we thinks, metal began being used as a currency representation, usually in the forms of knives, sometimes bars. There was no standardization, but it became extremely useful because metal can be stored much longer than animals or perishable goods, and with much less effort. It became a great way to store value over time, provided no one found your stash when they raided your village and burned it to the ground (if you survived).

In about 700-600 B.C., the very first coinage of metals happened, in Lydia; a suburb of Greece at the time, now in modern day Turkey. They started minting coins, and declared it had an equivalent value in goods. There is evidence it was worth about 11 sheep, but I think a baker's dozen of goats would have worked as well.

Everyone loved the concept; it made trade so much easier to accomplish, and the idea spread around the world. Metals could be recycled, restamped, and as the governments of the time soon discovered, debased.

Inflation was discovered again, most notably employed by Rome , who cut the amount of silver in their Denarius coins over the years with cheaper metals so they could stamp even more coins, from 90% to less than 5% silver at the fall of the empire.

So far as I know, this was the first recorded economic collapse due to hyperinflation. It involved a lot of goats.
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Look for the ridiculous in everything and you will find it. - Jules Renard
[May 13, 2021 4:32:56 AM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
Minsiem

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Yeah, I'm not actually here to debate. But the current evolution of currency and that which controls how it flows is disgusting to me. I'll admit I haven't delved the depths of the infoverse on it all, as I personally find it odious.

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Minsiem the Mauvelous of Mischief Menagerie, à la Sushicide

Erfan flag officer chats, "let's cade a popular forage island"

[May 13, 2021 3:18:15 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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But the current evolution of currency and that which controls how it flows is disgusting to me.


Bitcoin solves this: its evolution is determined by consensus, its value is determined entirely by the free market, and no one can control its flow.

 
Yeah, I'm not actually here to debate.


I'm just riffing, all comments add to the beat.
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Look for the ridiculous in everything and you will find it. - Jules Renard
[May 13, 2021 4:25:57 PM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
blackishroze

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I offer little to no input on bitcoin or dogecoin or wtfever coin, however bartering- thats some nice stuff i can get behind.

I make soap irl and almost all of my friends have accepted that this is how i will pay for things. flea market? we're trading soap for a trombone (real life thing and i love it) friend makes dinner? have some soap. i need a button replaced on a blouse that i dont feel skilled enough to do, thats worth at least 4 soaps.

bring bartering back.
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Lilmissemo of Cerulean
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"Is THAT a sword?!?"
"Why yes, yes it is."
P.S. I collect Barbels!
[May 15, 2021 12:53:32 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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How many soap for that trombone, btw?

I just bought myself a trumpet, not with bitcoin; it should be arriving this afternoon:



I haven't played one in 36 years, so I will have fun annoying the neighbors, dogs, squirrels, and chipmunks.

Uncertain if they will be less annoyed by my trumpet than my bitcoin ranting, though. May be a tie.
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Look for the ridiculous in everything and you will find it. - Jules Renard
[May 15, 2021 2:41:59 PM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
Quitex

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what if we start a new digital currency called POE huh
----------------------------------------
Quitex, everywhere, mainly Ice.
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Joly wrote: 
Someone asked why Quitex would do this as a rogue. All I can say is, well, he's QUITEX! No one knows what he will do next, ESPECIALLY Quitex.

[May 17, 2021 4:48:08 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
blackishroze

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How many soap for that trombone, btw?

I just bought myself a trumpet, not with bitcoin; it should be arriving this afternoon:



I haven't played one in 36 years, so I will have fun annoying the neighbors, dogs, squirrels, and chipmunks.

Uncertain if they will be less annoyed by my trumpet than my bitcoin ranting, though. May be a tie.



I LOVE that purple- i really have been contemplating a blue piccolo next

it was 8 soaps for the trombone!
----------------------------------------
Lilmissemo of Cerulean
Twicetwisted on Emerald

"Is THAT a sword?!?"
"Why yes, yes it is."
P.S. I collect Barbels!
[May 18, 2021 12:20:31 AM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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Quitex: what if we start a new digital currency called POE huh


When Three Rings introduced Doubloons, it was absolutely brilliant creating an exchange between Poe/Doubloons. Doubloons became a store of time & energy that one can trade for wealth, or game privileges. Doubloons stay a scarce resource by being burned on badges and purchases, and poe becomes the measure of value for that scarcity.

When there is less energy & time spent in the game, the doubloon value increases in price, ala Meridian. When players are plentiful, ala Emerald, the lower price reflects a greater gameplay, as more poe are generated.

And now you understand Bitcoin!

 
Blackish: I LOVE that purple

I got lucky; it was also the least expensive color! Now that I've been playing again for 2 days, I can definitively say: I don't know how I was ever any good at this. Thankfully, my next recital isn't scheduled any time soon.
----------------------------------------
Look for the ridiculous in everything and you will find it. - Jules Renard
[May 18, 2021 4:26:17 AM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
Quitex

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scupperer wrote: 
And now you understand Bitcoin!


I never expected to actually grasp bitcoin on the YPP forums. Thank you!
----------------------------------------
Quitex, everywhere, mainly Ice.
Monarch of Cows
Joly wrote: 
Someone asked why Quitex would do this as a rogue. All I can say is, well, he's QUITEX! No one knows what he will do next, ESPECIALLY Quitex.

[May 18, 2021 7:11:22 AM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
thomas10271



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This has to be a troll, BTC is a terrible currency.

First, the value is extremely unstable. Seriously, how can businesses accept BTC when the value of it can change by 5-10% per week.

Also, the deflationary aspect of BTC is terrible. It will neuter economic activity (trade) and investment. Here's why:

Nobody will spend their BTC. Why spend your BTC to buy a pizza when with the same amount of BTC you could buy a car in 5 years or a house in 10! This kills all discretionary spending and encourages hoarding. This is bad for the economy. (Has any BTC advocates taken economics?)

Secondly, nobody will be willing to finance new and amazing products, services, and technology, And here is why:

You lend a business 100BTC to startup. The loan has to be repaid over 10 years plus 1BTC interest each year, for a total of 11BTC repaid each year.

The business expects the net income to increase by 20% YoY for those 10 years. They also expect Y1 income to be 20 BTC. So you have 20 BTC Y1, 24 BTC Y2, 28.8 BTC Y3. (All in Y1 BTC value)

This looks good for both the lender and business. The lender gets their 10% return while the business is creating economic growth of 20% per year. Everyone wins, the economy grows, hurray.

What happens if the price of BTC increases (IE the currency deflates), by say 50% a year.

Y1 this business makes 20 BTC. Everything is fine, they have 9 BTC left after the loan payment.

Y2 the business makes 16 BTC. WAIT WHAT, I thought you said 24BTC. Well that was Y1 value BTC. 1.5 Y1 BTC = 1 Y2 BTC because of massive deflation. Now the company only has an excess of 4 BTC after the loan payment. (Payment doesn't change because the loan was made in the past)

Continuing the trend:
Y3: 12.8 (28.8 Y1 value)
Y4: 10.24 (34.6 Y1 value)
Y5: 8.19 (41.5 Y1 value)
Y6: 6.5 (49.8 Y1 value)
Y7: 5.24 (59.7 Y1 value)
Y8: 4.2 (71.7 Y1 value)
Y9: 3.4 (86 Y1 value)
Y10: 2.7 (103.2 Y1 value)

The business cannot meet its debt obligation even though it's growing by 20% per year, because the deflation is higher. The lender knows the deflationary aspect of the "currency" and will not make this deal.

No new business will be funded, no ECONOMIC value will be created during those 10 years, instead paper value will be hoarded by the lender.

DEFLATION encourages hoarding. INFLATION encourages spending.

In conclusion, having a stable and inflationary currency is what encourages healthy economic growth.
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Tomsid
[May 18, 2021 9:34:15 AM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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Not a troll, though I'm often accused.

 
BTC is a terrible currency.

Yes, it is currently a terrible currency for most uses. It is slow, expensive for smaller transactions, extremely volatile in value, and people are reluctant to spend it because it tends to increase in value over longer time frames (4 years).

I never made this argument; I said it was a good 'money', which is a distinction.

 
This kills all discretionary spending and encourages hoarding. This is bad for the economy.

Yes and no. It will certainly encourage 'thinking' about what one spends when the future value of your money is likely to be greater than the current value. Needs and desires don't vanish in the meantime.

The focus on spending will shift from dumping an inflationary currency on disposable goods, to seeking purchases and services of greater value with greater longevity. This will change the economy, and lead to less waste and useless consumer spending.

I consider this a good thing for the economy, even if, maybe especially if, it causes temporary harm to mass producers of junk items.

 
Secondly, nobody will be willing to finance new and amazing products, services, and technology, And here is why:


I'm not arguing that bitcoin will replace fiat currency, certainly not anytime soon, so I consider the rest of the argument not very applicable, though it would be easy enough to modify loans with interest rates based on the actual growth and value of bitcoin.

At the current moment in time, bitcoin loans are generally taken in the other direction. I stake bitcoin as collateral for a fiat loan, and then I either pay the fiat back, or sell some bitcoin to cover the loan. This has allowed me to 'inflate' my way out of about $60,000 in debt so far, at a cost of less than $20,000, by deflating the value of fiat against bitcoin over the past 6 months. Of course, do this at the wrong time in the market, or without enough leverage, then your bitcoin might get liquidated to cover the debt. Nothing in this world without risk.

There are some misconceptions about bitcoin to clear up, though.

Bitcoin is not currently deflationary; 6.25 new bitcoin are generated every 10 minutes. Every 4 years or so, this rate is cut in half, the next will be in 2024, and then 3.125 new bitcoin, every 10 minutes.

Once all of the halvings of reward are completed, in approximately 2140 C.E., then bitcoin will become stable, with only 21 million coins in existence.

The only deflationary pressure on bitcoin will be from "lost" coins that can no longer be accessed.

 
Inflation vs. Deflation

Once upon a time, Gold was the currency and money of issue, and it was relatively stable - inflation was based on how much was mined each year, with deflationary pressure from sunk ships and people forgetting where they buried it.

Worked fine for 5,000 years or so, and didn't seem to slow advancement. It still works great as a money, and hedge against inflation. In fact, the only times it didn't really work well was when inflation was introduced to the currency through debasement, to such an extent where the value became effectively worthless.

And while still a good money, Gold is now fairly worthless as a currency, unless you keep a scale and a bottle of acid behind your cash register.

I'm arguing that Bitcoin works better as a money than anything before it. It will be a good currency once it has stabilized, and 2nd layer solutions like Lightning are adopted, solving the scale/time/fee issues on Bitcoin core.
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Look for the ridiculous in everything and you will find it. - Jules Renard
[May 18, 2021 11:06:13 AM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
thomas10271



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I think the distinction between money and currency in the article you posted is archaic and vague. They are interchangeable in modern language. Even so, being nitpicky, the main distinction that article tries to make is that money has intrinsic value whereas currency does not. I think this is an effort by the gold and silver community (and BTC I guess) to try and entice people to move away from Fiat.

BTC, gold, and fiat all have the same intrinsic value and changes based on the supply of money. If the supply of money increases faster than economic growth, you have inflation. If the supply of money grows slower than economic growth, you have deflation. (More on this later) If that's what they mean by intrinsic value then they all have that.

If they mean by intrinsic value that gold has value as a manufacturing/jewelry material, then I guess that's an argument for using gold. I think that's counterintuitive for the BTC argument, it has less value than regular fiat currency. At least fiat currency can be used to make a fire (paper) or in manufacturing (coins). BTC is literally nothing.

On discretionary spending, that includes everything that is not absolutely necessary. That includes:
- Investing in the future
- Quality of life products and services
- Infrastructure projects
- Anything that is not food and shelter

Spending on these areas will not disappear, but severely decrease. There would be no incentive to invest in these things. You can hoard your money and it will naturally increase in value over time because of the deflation. Whereas, with inflationary money, you can't sit on your money. It will decrease in value over time. You need to invest in the economy to maintain/increase your wealth.

On deflation/inflation:

Just because more BTC are being mined doesn't not mean it isn't deflationary. Deflation is when the money is increasing in value. This happens when the economy grows faster than the money supply.

For example, there is exactly 1 BTC in the world. The world makes 1 apple per year. 1 apple = 1 BTC.

The economy grows and now 2 apples are made per year. .5 BTC were mined in the year. There are now 2 apples and 1.5 BTC. 1 BTC = 1.33 Apples. We have deflation while increasing the money supply, because the economy grew faster than the money supply. Deflation comes with all the negatives mentioned above.

Governments are constantly creating money to combat natural deflation and promote economic stability and growth through slow inflation.

Finally, onto gold. Gold is fine as long as gold is mined at about the same rate as economic growth. The pre-industrial world saw miniscule growth, so this was not as harmful. (Still bad compared to fiat) In the modern age, economic growth is much faster than our ability to mine gold. Using gold as a form of money is therefore not suitable for our modern age, it would be deflationary.

I also wouldn't say that gold/silver, were very 'stable' in the past. As mentioned, the Roman Empire used gold/silver. This was fine while the mines in Spain and Dacia were producing vast quantities of gold/silver. In fact, those allowed the Roman Empire to punch above it's weight for many centuries.

When the mine production started to trickle, that magical 'excess' wealth disappeared, and you see emperors debasing the money. I wouldn't say that inflation in the 3rd century was the cause of the economic woes of the Empire, more a symptom.

By the third century the Empire economy was bad. No new conquests means no new slaves/spoils, which the Romans relied heavily on. Combined with granting citizenship to everyone in the Empire meant many of the important but undesirable jobs were not being fulfilled. There was also a severe lack of manpower due to plagues. Essentially, the entire economy was trash for other reasons besides inflation.

While this was happening the Empire still had to protect it's borders. It still had to pay it's soldiers. But the economy sucked and tax revenue was way down. So that is when inflation started to occur, the administration just 'printed' money by debasing to pay it's soldiers.

Similar things can be seen with many Empires over history, Rome and Spain being the most prominent. (Spain was a little different, so much gold was coming in that inflation was rampant, another reason using gold or any mineable is a bad idea, you cannot control the flow of money)

Why do we use fiat? So governments can have better control of the supply of money. It removes the outside forces, the lack of or over production of gold. This way the government can create a healthy environment for business and growth to occur. Everyone can rely on that money to be worth roughly the same amount YoY. (With some inflation, which can be argued against for sure)

Leaving the supply of money to nature (either mother (gold) or manmade (BTC)) severely limits our ability to control the economy, to limit the boom bust cycle, and promote healthy economic growth.
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Tomsid
[May 18, 2021 1:16:40 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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intrinsic value

The intrinsic value of the dollar is backed by the U.S. military (brute force) and the U.S. economy. If these falter, the dollar will lose even more value than from the increased money printing still in progress.

Gold's intrinsic value is based on people's belief in Gold's value historically, and its general scarcity. Industrially, only 3% of the mined gold is used in production each year; the rest is either vaulted up or used for jewelry. Without that belief, more gold would be used practically, less would be mined, the price would drop.

Bitcoin's intrinsic value is based on its balance of security, decentralization, consensus change mechanism, scarcity, censorship resistance, inability to be counterfeited, and control by an open sourced algorithm with an open ledger.

I think the issue is boiling down to the desirability of inflation vs. deflation.

 
You can hoard your money and it will naturally increase in value over time because of the deflation. Whereas, with inflationary money, you can't sit on your money. It will decrease in value over time.


What I read is: with deflation I can hoard save my money, and it will be worth more over time, but with inflation, I have to spend money, even if I don't have it (debt), because its value will decrease be stolen from me by excessive money printing, making items of true value more expensive and less obtainable over time.

This is how I, and probably most people, see and experience inflation on the personal financial level.

 
You need to invest in the economy to maintain/increase your wealth.

You need to invest continue working your ass off at your 9-5, or find 3 part time jobs as a cog in the machine in order to increase your wealth tread water/pay back loans while someone else increases their wealth on the back of your work.

Again, just how I happen to read it.

In an inflationary economy, wealth concentrates to those who already have wealth, as they are the only ones capable of investing "in the future", and the primary ones who truly benefit from the returns. Everyone else; well, up yours .
 
discretionary spending


With a deflationary system, wealth begins to spread around to those who save. Those who are really good at saving eventually have discretionary wealth to spend.

I have this firm, if crazy, belief that without negative incentives to the contrary, people will invest in future oriented goals, like infrastructure, quality of life products, technological advancements - not because there is a profit motive, but because there is more than a profit motive.

I would consider inflation to be a very negative incentive, which eventually reduces all investment to nothing more than a profit motive, because the goal is only to keep up with inflation, and maybe get ahead of it if you're lucky. This means that infrastructure projects, quality of life projects, and any other future geared investments have become nothing more than fronts for naked profit, with only token advancements, of inferior quality. Except for military defense; we do need to protect the value of that dollar.

 
History Lessons + Why do we use fiat? So governments can have better control of the supply of money.

The average life expectancy of a fiat currency is 27 years . Government's are not good at controlling the supply of money. The hybrid Federal Reserve has been quite excellent at maintaining the stability of the dollar, if you consider a 95%+ decrease in value since the Fed came into creation to be excellent. Yes, the dollar is very stable in the short term, but over time it only goes in one direction.



I believe the Fed is losing their grip, and the next couple of years are going to be very unpleasant economically for many people.

I firmly agree with the founding principle of Bitcoin: to remove financial control of money from centralized authorities.
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Look for the ridiculous in everything and you will find it. - Jules Renard
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[Edit 6 times, last edit by scupperer at May 18, 2021 2:45:32 PM]
[May 18, 2021 2:16:49 PM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
thomas10271



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When someone 'saves' money, they are actively taking wealth out of the economy.

Spending actively reinvests wealth back into the economy. Spending doesn't equal throwing the money away on only consumer goods. Spending includes all the investing activities.

The excess wealth created by a growing economy has two options.

1. To be siphoned off and locked away because it is better to hold that wealth as it naturally increases over time

2. To be put back in the economy because otherwise it will eventually turn into nothing.

In situation 1 the economy stagnates, no growth occurs.

In situation 2 that wealth is put into action to create even more wealth in the future. This occurs because not all that wealth is spent on 'junk', the goal is to have it invested into new businesses and infrastructure.

Having a deflationary monetary policy actively promotes situation 1.

Wealth inequality is a huge issue but it has nothing to do with inflation. Inflation combats that. It forces the wealthy to invest back into the economy lest their wealth disappear over time. Of course, lots make so much that they do siphon off tons of wealth and don't reinvest it.

Your average person suffers from deflation harder than the wealthy. For example:

The cost of living is 10 BTC/year.

Person 1 makes 15 BTC/year. They save 5 BTC.
Person 2 makes 100 BTC/year. They save 90 BTC.

Person 2 has 85 BTC advantage

If the purchasing power of BTC increases by 10% over the year:

Person 1 wealth is now 5.5 Y1 BTC
Person 2 wealth is now 110 Y1 BTC
Person 2 has a 104.5 BTC advantage!

As you can see, deflation increases the wealth gap even more.

With inflation the opposite is true.

The concentration of wealth is in spite of inflation. The concentration of wealth occurs like this:

The cost of living is $10

Person 1 makes $15/year and saves $5
Person 2 makes $100/year and saves $90

Person 2 has a $85 advantage

The purchasing price of the dollar goes down by 10% in the year.

Person 1 wealth is now $4.5 Y1$
Person 2 wealth is now $81 Y1$

Person 2 only has an advantage of $76.50 now!

Where the wealth gap comes from is not inflation but INVESTING. For example, Person 1 and 2 both invest their savings into a company with 20% annual return:

Person 1 wealth is now 4.5*1.2 = $5.40 Y1$
Person 2 wealth is now 81*1.2 = $97.20 Y1$
Person 2 has an advantage of $91.80 compared to the original $85 even though there was inflation!

Now imagine your dad was getting paid 15 BTC a year. He was able to save that 5BTC per year for 10 years. He now has 50 BTC. (It would still only be 10BTC because nobody spends or invests when you automatically increase)

Assume the same increase 10% per annum. The purchasing power of 1BTC now = 2.59 Y1BTC. So his wealth is now 129.50 Y1 BTC. Pretty good for doing literally nothing with your savings.

Now it's the next generation. The cost of living has gone down to 3.86 BTC. (10 Y1 BTC divided by 2.59) But so has your wage gone down to 5.79 BTC (15 Y1 BTC divided by 2.59)

You are still making the same amount as your dad in value terms. But you are only saving 1.93 BTC per year.

At year 10 your dad has a 129.5 Y1 BTC advantage over you. Over the next 10 years you both save the same amount.

In absolute terms he has 50 + 19.3 = 69.3 BTC and you have 19.3 BTC.

In purchasing power he has 69.3 * 6.72 (BTC value vs Y1 BTC value) = 465.70 Y1 BTC.

You have 19.3 * 6.72 = 129.7.

The wealth gap between you is now 336 vs Y10 gap of 129.5.

So as you can see, deflation not only increases the wealth gap between high earner/low earner, but also increases it between generations.

Inflation does the opposite, though it's effects are completely overshadowed by the investment growth, but at least it's not compounding with deflation.

For your graph, notice the only period where significant deflation occurred, that's right, the Great Depression.

We do agree that the Fed have been doing a terrible job with their monetary policy this year, rabid inflation is just as dangerous as deflation.

I still don't believe implementing a deflationary monetary system is the answer. Having better controls and accountability from monetary policy makers would be much better.

As for wealth equality, that cannot be solved through monetary policy. Graduated taxes are the best way to combat that and obviously need to be harsher as you can see the wealth gap get worse and worse. (Trickle down economics are garbage IMO)
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[May 18, 2021 4:00:31 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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You're operating on some false premise, I believe.

 
When someone 'saves' money, they are actively taking wealth out of the economy.

So what? Isn't the whole purpose of money to represent energy over time? Eventually, the money gets used or passed on. People try to save money now, in hopes and prayers for a vacation, or heaven forbid, retirement. The problem is, the only path to such luxuries is by saving through investing, because money leaks energy over time through inflation. This forces investment choices to be made on the basis of profit return to match/beat inflation, and not on the promise or quality of the investment.

 
Spending actively reinvests wealth back into the economy.

Yes, it reinvests wealth back into those who control the money and investments, concentrating it. Prices are adjusted so nobody 'beneath them' can advance - they spend all their money on necessities.

 
1. To be siphoned off and locked away because it is better to hold that wealth as it naturally increases over time

2. To be put back in the economy because otherwise it will eventually turn into nothing.

This is a false dilemma - it's not an either or. I don't believe people's sole motive in life is to hoard money. I think the level of saving in a deflationary economy will be relative to a persons/family's needs to plan for the future, instead of relying on a credit card and debt. Once a level of safety is reached, people will spend their money on things they want, not just things that they need.

A lot of people do that, anyway, regardless of their level of income or safety margin, and contribute to inflation through bankruptcy. Why the hell not? You can't save your money.

I see the second option as a forced choice based on inflationary pressure that doesn't achieve the promised results and has disastrous consequences when it runs awry. And personally, I resent most things that are forced on me, particularly if it interferes in providing for my family and planning for the future.

 
deflation not only increases the wealth gap between high earner/low earner, but also increases it between generations.

Inflation does the opposite

Except historically; it hasn't; therefore, empirically, it doesn't - whatever the theory and examples; it ignores human behavior.

The sole premise that people will do nothing but hoard their money is false.

Person A has managed to save 10 bitcoin. He earns 5% interest on it by loaning it out to others, so that it covers his basic living expenses + taxes, and he can retire. By loaning it out to others, he's giving other people an opportunity to make money with whatever they plan to do with it.

But Person A doesn't want to watch TV all day - he wants to do what he loves.

Bitcoin goes up in value 200%. Person A now has twice as much money as he needs to maintain his lifestyle. So he spends 2 bitcoin on a 5-axis CNC machine and another full bitcoin on some beautiful wood and starts making furniture, which he hopes to sell. And his brother, who he loves, is a failure, so he spends another 1 bitcoin to cover those debts.

The final extra 1 bitcoin, he invests into a cultured-meat company, because he believes in reducing the impact of feeding & slaughtering animals, and catching fish. But the company he picked fails. He's upset, but not permanently hurt. The economy continues. He'll try again when bitcoin goes up in value again. He still has 5 bitcoin left.

Everyone's story is different. Sure, maybe someone's story is to hoard money simply for the sake of hoarding it, but that's less than a minority - those are crazy people; like the <1% who currently control money.

 
As for wealth equality, that cannot be solved through monetary policy.

No, historically, it's generally worsened by monetary policy, as per your examples with gold.

 
Graduated taxes are the best way to combat that

That, and fair pay so there's less wealth concentration by exploiting labor and raising the prices of necessary products?

I think an even better solution would be forced profit sharing with employees.

But that's neither here nor there. Governments have their place, but their control of monetary policy has never ended well.

Edit: and thank you for the involved responses - I love thinking over issues like this.
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[Edit 3 times, last edit by scupperer at May 18, 2021 4:58:57 PM]
[May 18, 2021 4:50:07 PM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
thomas10271



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Edit: and thank you for the involved responses - I love thinking over issues like this.

You too, I might make another post when I have some free time.
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Tomsid
[May 19, 2021 8:11:22 AM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
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Blackish: I LOVE that purple

I got lucky; it was also the least expensive color! Now that I've been playing again for 2 days, I can definitively say: I don't know how I was ever any good at this. Thankfully, my next recital isn't scheduled any time soon.


Ya got me. Today was super nice weather out and I took the saxophone and flute out and just had a chill jam session with a friend. Love to see it.

Bring those mad skills outside and let that horn blare ?
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"Why yes, yes it is."
P.S. I collect Barbels!
[May 19, 2021 6:54:24 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
scupperer

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Bring those mad skills outside and let that horn blare


I'm afraid to come out of my work-shed with it; I can barely do scales at this point, but I do feel more comfortable now that I can maintain an open C for more than a few seconds without cracking or filling it with air. I had to buy new mouthpieces because the 7c is just so puny; I'm still deciding between the 5c and the 3c - both are so much easier to play with.
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Look for the ridiculous in everything and you will find it. - Jules Renard
[May 20, 2021 4:07:14 AM] Show Printable Version of Post        Send Private Message    http://www.scupperer.com [Link]  Go to top 
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I'm afraid to come out of my work-shed with it; I can barely do scales at this point, but I do feel more comfortable now that I can maintain an open C for more than a few seconds without cracking or filling it with air. I had to buy new mouthpieces because the 7c is just so puny; I'm still deciding between the 5c and the 3c - both are so much easier to play with.



Thats fair, but congrats on progress! I used a 5c when i was in school, and i have a 3c for my trombone i think it is.
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Twicetwisted on Emerald

"Is THAT a sword?!?"
"Why yes, yes it is."
P.S. I collect Barbels!
[May 20, 2021 8:12:18 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
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blackishroze wrote: 
I make soap irl and almost all of my friends have accepted that this is how i will pay for things. flea market? we're trading soap for a trombone (real life thing and i love it) friend makes dinner? have some soap. i need a button replaced on a blouse that i dont feel skilled enough to do, thats worth at least 4 soaps.


Just jumping in to note that I would be willing to cook for soap 100% of the time. Of course I'm a terrible cook, so it's a blatant scam.
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blackishroze wrote: 
I make soap irl and almost all of my friends have accepted that this is how i will pay for things. flea market? we're trading soap for a trombone (real life thing and i love it) friend makes dinner? have some soap. i need a button replaced on a blouse that i dont feel skilled enough to do, thats worth at least 4 soaps.


Just jumping in to note that I would be willing to cook for soap 100% of the time. Of course I'm a terrible cook, so it's a blatant scam.


Customer: Wow Cronus, I didn't know you knew how to make charcoal soap
Cronus: Yeah, that's totally charcoal soap >.>
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[Jun 11, 2021 6:58:20 AM] Show Printable Version of Post        Send Private Message    first_majestrate    majestrait [Link]  Go to top 
blackishroze

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blackishroze wrote: 
I make soap irl and almost all of my friends have accepted that this is how i will pay for things. flea market? we're trading soap for a trombone (real life thing and i love it) friend makes dinner? have some soap. i need a button replaced on a blouse that i dont feel skilled enough to do, thats worth at least 4 soaps.


Just jumping in to note that I would be willing to cook for soap 100% of the time. Of course I'm a terrible cook, so it's a blatant scam.


Food that's made with love cant be *too* bad
right?
...right?

I'll trade you 1 candle and 2 soaps for a meal big enough to warrant leftovers.
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Lilmissemo of Cerulean
Twicetwisted on Emerald

"Is THAT a sword?!?"
"Why yes, yes it is."
P.S. I collect Barbels!
[Jun 17, 2021 10:02:21 PM] Show Printable Version of Post        Send Private Message [Link]  Go to top 
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