In that case I assume you never brought a computer from 2000-2010, when you could wait a year or so to get twice the computation for the same price?

For that matter, would you even buy beer now, when you could instead invest the money risk-free in US govt. bonds so you could buy more beer in future?

I did, but during the years I certainly delayed the purchase of many technological goods because I assumed that waiting for their price to decrease or their performances to improve was a wise thing to do. Didn't you? Imagine how companies loved that, and imagine extending it to just everything, from food to housing.

However, with technological items there was always another side: the new ones were so much better than our current ones, ours were actually getting old faster, and we were driven to buy. The same won't happen with the other goods on the market.

The interest of gov bonds or of any other financial instrument afaik represents (and is proportional to) a risk of not getting repaid.

>I did, but during the years I certainly delayed the purchase of many technological goods because I assumed that waiting for their price to decrease or their performances to improve was a wise thing to do. Didn't you?

But you still purchased it eventually. In that sense a deflationary currency might change the balance of consumer spending vs saving in favour of more saving, but that doesn't mean a continuous downwards spiral in spending, it could just be a new equilibrium.

>Imagine how companies loved that, and imagine extending it to just everything, from food to housing.

Personally I'd absolutely love if house prices halved every year, as at the rate they're currently increasing it'll be a long time before I could afford even a tiny apartment anywhere near where I work.

>However, with technological items there was always another side: the new ones were so much better than our current ones, ours were actually getting old faster, and we were driven to buy. The same won't happen with the other goods on the market.

Would it be bad thing if it did happen to other goods on the market? If e.g. a 2005 car was better than a 2000 car to the same degree that a 2005 computer was better than a 2000 computer.

>The interest of gov bonds or of any other financial instrument afaik represents (and is proportional to) a risk of not getting repaid.

I was referring to https://en.wikipedia.org/wiki/Risk-free_interest_rate : "In practice, to infer the risk-free interest rate in a particular situation, a risk-free bond is usually chosen—that is, one issued by a government or agency whose risks of default are so low as to be negligible."

> But you still purchased it eventually

For the reasons I explained, and that apply only to a small subset of goods.

> Would it be bad thing if it did happen to other goods on the market?

That is definitely not decided by the currency.

> risks of default are so low as to be negligible

Those have also negligible interest rates, that is, ones that only repay you of the inconvenience of not spending your money now. You know, there's also a non negligible risk that you'll die before you get your money back.

He (and all the rest of them) dont understand the modern economy. It's like banging your head against a wall.

You explain the importance of monetary policy, why the gold standard is problematic, why this means Bitcoin will not replace modern currencies, yet they don't really hear. They just don't like "The System" and want to subvert it.

Bitcoin is great, but it will not change 'the system'. It is a novel and ingenious asset, nothing more.

This has been said many, many times, but I will say it again: the criticism of Bitcoin being deflationary would be valid only if Bitcoin was to replace the entire financial system. But it's perfectly fine for it to be deflationary if it's replacing only parts of the system.

Could you explain briefly why? I don't see how it can be deflationary and used as a currency, period, be it the whole system or part of it.

Can you give any other data-point that shows the dangers of deflation that didn't happen during during a world war and wasn't actually caused by fractional reserve banking and government interference?

Gold has existed for thousands of years, surely this commonly accepted idea is based on more than one or two heavily flawed data-points.

Or perhaps it is you that is wrong, and all the illusions you cling to amount to nothing more than the indignant declarations from seventeenth century clergy of the intolerable social consequences if it were to be widely accepted that god may not exist.

Things do not endure merely because some social engineer has a tortured explanation for them he trots out at every opportunity to justify the construct.

One thing we can be certain of, is that 'the system' will change.

I’m not sure why you are being down voted. What you are illustrating is the time value of money, a real economic concept. A deflationary currency like bitcoin encourages non productive hoarding at the expense of investment and commerce. It makes a great store of value, but a terrible medium of exchange. And when we say “currency” we are usually talking about the medium of exchange purpose of money...

That is the effect of our current financial system, where the use of debt to bid up the price of fixed assets has been labeled 'commerce' and 'investment'. The only effect of which has been the punishment of savers.

Bitcoin is that systems reckoning.

It also disincentivises investment, resulting in an economy less productive than it could be, and with built-in bias and stratifying wealth transfer, not unlike the system of bankers it seeks to replace.

That's assuming the return on investment is _always_ lower than the rate of deflation. Which is, nonsense.

The return on investment only needs to be lower some of the times for deflation to start hurting the economy

Do we have data on this or is it still just a theory?

It's the basis of mainstream economics, and the reason for the 1-2% inflation target that most central banks use.

I know this, but this doesn't answer my question

Edit: do we know if economies really behave like this under these conditions? Are we really using a scientific approach on this? Or are we holding these models as divine truth?

It’s a bit like asking if the Church-Turing thesis is true or not, and if we’re really using a scientific approach to answering that question. On the one hand.. I’m writing this on a computer, dude! There is a pragmatic sense in which the Church-Turing thesis is “scientifically true” in the amount of progress that has been made in the domain of computer science which it invented, which does follow a scientific process. It allows us to make accurate predictions and test them. But it is embarrassing to say the thesis itself is just that, an axiomatic assumption. (There are some pretender proofs out there, but not consensus that they are correct.)

The relationship between productivity plus inflation (both measurable) and economic growth is similar. It’s the bedrock of modern macroeconomic theory, which has largely been successful in both explaining and predicting the effect macro policy has on economic growth. The history of North American and Western European economies after going off the gold standard, and asian and Eastern Europe economies more recently all show these same correlations. Outside of external influence, economies which stray outside of the ideal parameters end up either stagnating (lack of investment) or experience dramatic boom-bust cycles (excessive poor investments). I’m on mobile but there’s a fair number of reports by Fed and other central banks justifying their choice of interest rate based on historical examples, and with the purpose of achieving certain productivity (capital investment) and price inflation (money supply). You could also pick up just about any macroeconomics textbook and chase the footnotes and references or spend some time on Google scholar.

> The history of North American and Western European economies after going off the gold standard, and asian and Eastern Europe economies more recently all show these same correlations.

So what you're saying is that it's all based on one data point, the second world-war. Gold existed for thousands of years, why is this incredibly bizarre period of history used as a proof of anything about the gold-standard?

Even worse, the gold standard wouldn't have collapsed if it weren't for the widespread use of fractional reserves banking, along with many government policies at the time that significantly worsened the situation.

The 40's, 50's and 60's were a period of unprecedented growth for the US, which was on the gold standard during that whole period, but no one tries to claim that the gold standard was responsible for that.

But I like beer. So that's why I buy them.

Don't buy them now, and you'll eventually get more. Damn, you can buy a villa and fill the swimming pool with beer, if only you can wait long enough.

But.... beer is delicious. In fact, I kind of feel like one right now.