A whole bunch of questions...

stan.distortion

Well-known Member
Oct 30, 2014
867
513
163
What is it with economists and savings? You mentioned a few posts back that simple human nature can cause all sorts of problems for economists yet they keep trying to convince us savings are bad and there's about as much chance of that happening as convincing a squirrel not to store nuts in the autumn, a squirrel isn't going to take out a loan to get through the winter months and trying to force humanity to do so will only lead to unnatural tensions. Folks will try to save regardless of the difficulties imposed to prevent it and if that's not good for the economy then that's something wrong with the economy, not the individual.

That's what I mean about economies functioning more as intended in the Islamic world, technically fiat currencies are forbidden under Islamic law and the result is they're used for convenience but savings are in the form of gold or tangible assets, the money gets spent on gold, houses, cars camels, whatever, and stays in circulation but us poor dumb western fools upset economists by trying to save it up because we don't know any better. Just convert anything we try to save into megacorp shares or something instead and the problem is solved, now they can stop pretending the stuff is "money" and instead admit it's scrip and make it worthless a month or so after issue, we'll all behave like good little consumers and spend, spend, spend.

Back to the rest in a bit, busy at the mo but an interesting topic :)
 

Sapereaude

Well-known Member
Foundation Member
Apr 30, 2014
191
235
203
The key is not all saving is bad, but always saving is bad see Japan and it's deflation problems. Also note saving does not equal investing and I am talking about aggregate saving.

Edit- This may prevent us understanding each other, many times the words I use have very specific technical meanings related to my field and are not general terms.

Functioning as intended? by what definition?

They may be forbidden, but they sure use them a lot. It's like they are better than the alternative.

If savings are in houses, cars and camels then the money is no longer in circulation, it is just asset trading and most importantly the money is not being used productively.

You are constantly intermixing several distinct issues - money, the value of money, economic growth, asset values and the productivity of money. As well as others that are not related to economics, but let's take just one these, money itself. For something to be a defined as money it needs to satisfy three broad categories - accepted as a medium of exchange, be a unit of accounting, and a store of value. Money does not need to be backed by something, to be money... I cannot highlight this enough.
 
Last edited by a moderator:

jimbit

Well-known Member
Foundation Member
May 23, 2014
229
103
203
I was impressed with Bitcoin when I first heard about it. I was going to buy some until I realized that most of it's characteristics make it unsustainable. It has a limited supply, an unlimited blockchain size, a declining rate of production, and no means of recovering lost coins or preventing hoarding which is necessary when the supply is limited. It may be useful now but in the long run the scarcity will kill it.

Dash sound amazing but the current incarnation of Dash is also unsustainable. Doesn't anybody realize why fiat is inflationary? Because that is what's required to support savings. The mere act of saving money removes it from circulation and inflation is necessary to replace it in order to maintain the velocity and liquidity of the market. Inflation also increases the value of business inventory. Deflation reduces the value of business inventory which is one of the reasons merchants are reluctant to accept deflationary cryptos.

To be sustainable, a crypto needs to have the opposite set of characteristics of Bitcoin- an unlimited self-regulating supply, a limited blockchain size, a steady rate production, and a means for recovering lost coins.

It also needs a way to manage inflation and deflation without effecting the values of accounts. Inflation is what should happen when the supply becomes concentrated in a small percentage of accounts. Deflation is what should happen when the supply becomes evenly distributed among the majority of accounts. One way to do this is to introduce a new variant of the same coin with a different color association and exchange rate. This would not be a hard fork because it's the same coin. An exchange rate less than one to one, such as two to one, would decrease the supply thereby facilitating deflation while an exchange rate greater than one to one, such as one to two, would increase the supply thereby facilitating inflation. As long as merchants understand the color and exchange rate, the prices of goods should change accordingly and the value of accounts will be preserved.

edit: I replied to this post before reading all the others.. pardon me.

You should research other coins then.. for instance freicoin. I disagree with 'it should be inflationary'. scarcity will just make the value go up over time.

crypto currencies are NOT to replace fiat, but enhance them. (imo). the banks are printing plenty of fiat, that is your inflation.
 

stan.distortion

Well-known Member
Oct 30, 2014
867
513
163
edit: I replied to this post before reading all the others.. pardon me.

You should research other coins then.. for instance freicoin. I disagree with 'it should be inflationary'. scarcity will just make the value go up over time.

crypto currencies are NOT to replace fiat, but enhance them. (imo). the banks are printing plenty of fiat, that is your inflation.
Nothing to pardon, we've been stretching the original topic to breaking point so it's us that should be apologising, you're the one on-topic ;)

The key is not all saving is bad, but always saving is bad see Japan and it's deflation problems. Also note saving does not equal investing and I am talking about aggregate saving.

Edit- This may prevent us understanding each other, many times the words I use have very specific technical meanings related to my field and are not general terms.

Functioning as intended? by what definition?

They may be forbidden, but they sure use them a lot. It's like they are better than the alternative.

If savings are in houses, cars and camels then the money is no longer in circulation, it is just asset trading and most importantly the money is not being used productively.

You are constantly intermixing several distinct issues - money, the value of money, economic growth, asset values and the productivity of money. As well as others that are not related to economics, but let's take just one these, money itself. For something to be a defined as money it needs to satisfy three broad categories - accepted as a medium of exchange, be a unit of accounting, and a store of value. Money does not need to be backed by something, to be money... I cannot highlight this enough.
5 actually, portable and fungible too. Inflation casts doubt on the store of value aspect but anti money laundering measures break fungibility entirely and are actually self-contradictory, either fiat is scrip or Aristotle was talking BS. I'm not too sure about those technical meanings either, we're supposed to be talking about one thing here, money, but some savings are good, some bad, some kinds of spending ok, some not... how about the phase of the moon, does that come into it anywhere? That might sound like a stupid question but if something can't explain something in terms anyone can understand then it's likely they don't understand it clearly themselves and economists have proven that point time and time again, whatever economics are they sure 'aint science.

Take the 2 fundamental points, growth and employment. Both are a fallacy, we had to invent bureaucracy just to keep the second going and the lunacy of perpetual growth doesn't need pointing out, millions of hours spent every day on pointless tasks just to satisfy a long obsolete mandate and millions of tons of resources wasted every day on throwaway goods for the same. Economy implies efficiency but the pursuit of those 2 goals have created just the opposite, call that growth, productivity, whatever but at this stage they're just fancy terms for a waste of time and resources. That's how we seem to want economics to function, a new car or fridge-freezer every 5 or so years today, every 2 years tomorrow and every month before too long, that's not progress, it's insanity.

Want to see real economics, watch China. Their ideas for what's being termed as a credit rating system have the potential to re-write value, today we treat terms like economic value and social value as entirely different things but not so long ago that word "value" had a single meaning and it looks a lot like they're trying to turn that back around. Maybe I'm wrong about that and considering they're getting the financial sector to implement it then it's probably doomed from the start but it could sow the seeds for something even bigger than the idea of a peer to peer economy, hard to be sure from here but time will tell.
 

AnarchicCluster

Active Member
Dec 22, 2014
399
408
133
Dash Address
XgJkzjmW1onXH8EsaaZakN1GswjjnAYhUE
The mere act of saving money removes it from circulation and inflation is necessary to replace it in order to maintain the velocity and liquidity of the market.
I think you are overestimating the power of inflation. If I want to buy a coffee I will go ahead and buy it. I will not wait until tomorrow because tomorrow it will be a fraction of a cent cheaper. It applies to most cases you can imagine. At some point people and business decide that buying something now gives you more benefits than waiting with the decision a bit longer only because the value of money will slightly increase.
Inflation also increases the value of business inventory.
No it doesn't. It is the value of money that decreases not the other way round. Inflation hurts everybody and especially people on fixed incomes (e.g. pensioners)
Deflation reduces the value of business inventory which is one of the reasons merchants are reluctant to accept deflationary cryptos.
As I said before, it is false thinking, the value of money goes up not the value of inventory goes down. However even if it was true, the changes in value are tiny and are taken into account only in very long term projects. In this case if the deflation (or inflation) is stable it gets factored in the planning of long term projects anyway.
To be sustainable, a crypto needs to have the opposite set of characteristics of Bitcoin- an unlimited self-regulating supply, a limited blockchain size, a steady rate production, and a means for recovering lost coins.
Generally it doesn't really matter if it is deflation or inflation. As long as it is small and stable (no rapid changes) it gets baked into people's or business's expectations and their longterm plans stall. Here is a good take on why we should not worry about bitcoin's (and Dash's) deflation http://www.forbes.com/sites/jonmatonis/2012/12/23/fear-not-deflation/#401dc1cc29d0