Is the Safecoin Economy Deflationary and would it be better with Inflation built in?

Inflation is the worse thing ever existed. It makes product more expensive, and the currency less value. It encourages you to spend it now, rather than save. Saving is GOOD for the economy but when living in inflationary world, it is better to spend it on commodities that is deflationary such as precious metals.

There are two ways I could see safecoin end up…

One would be the economical value of the coin. Proof of Resource. Since it is finite, the value of the coin will always be above 0. People could live off of safecoin like what bitcoin users are currently doing.

Or the safecoin would be worthless due to dividing up safecoin, and it is inflationary. It will always be at zero however it is still functional. It is basically a encrypted packet inside of encrypted network. Think like TCP/UDP. It sends packets from one end to another. This means that safecoin name needs to be changed to safepackets.

However, if you take the second strategy, then we need another (bitcoin like) inside of network. The second option also removes the concept of assets. Since coin itself can be as asset given any time. But how does one purchase data? Or how does one buy property? What about proof of resource? It gets thrown out of window because there is no value. I can’t trade you 1 safecoin property for 1000 safecoins. It is not fungible. Rather I have to trade you 1 safecoin property for 100btc since btc has value.

I say keep safecoin as it is. Then create division assetcoin for messaging/email coin, and other purpose. Thus, keeping safecoin value for purchasing products, apps, and harddrives.

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Dividing a currency into smaller amounts is not inflationary. The sum value of those smaller parts does not change.

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If you’re saying 1safecoin can be divided up by 8 digits, then yea I know what you mean. But I am talking about infinity.

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I don’t think dividing to infinity was ever a suggestion.

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This is all because the system is hierarchical and based upon debt rather than value. It also pushes people to borrow rather than save for what they want to build in the future. Prior to the death grip of central banks, companies accumulated capital in anticipation for expansion. Families and individuals the same way. What better reason to save than that your money will be worth more later if you defer spending it now. When you want something enough, you’ll spend the money, but business-wise, only if it will help you be more productive. On the family/personal basis, the incentives may be different, but the effect the same.

The reason the powers-that-be are terrified of deflation is that it makes their racket impossible. It will also explode their game. When that happens, everybody will feel the explosion. The only reason it will be bad is that the inevitable has been postponed over and over and over, till the adjustment can’t help but be catastrophic.

But currencies based upon value are the only long-term way out of the hole. Until such currencies stablize, they will certainly be deflationary. No way around it.

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If a currency just exists, and is not being pumped and dumped by some central bank or other issuing authority, the decimal point oughta float naturally… You don’t divide it to infinity just for sport – the economy is x big and the number of units of currency is y big, and the values float proportionally, without intervention.

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Imagine you need to go to the toilet that collects fees in a deflationary environment :smile:

People believe that deflation indefinitively postpones spending. That’s not true.
After a while your shoes fall apart, your HDD fails, etc. And if you need something, like food, you don’t wait just because it’ll be cheaper 3 months down the road.

@seneca and others made very good comments about that.

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I agree with this point (that spending won’t be delayed indefinitely) but I still question the degree to which economies can be controlled (whether debt based or not). So I’m still not clear if ultimately we can stop boom and bust. I do believe that we can make it better or worse.

Indeed, it’s called time preference in ecomomics: Time preference - Wikipedia

I have the impression that this postponement of spending argument against deflation is mostly used in easy explanations to the general public. I personally never see it mentioned in academic papers and the like. There the increase of the real value of debt is always the main reason why deflation is considered dangerous.

If the debt deflation theory is correct, the current crisis will go like this:

  • Debt liquidation leads to distress selling and to
  • Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes
  • A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be
  • A still greater fall in the net worths of business, precipitating bankruptcies and
  • A like fall in profits, which in a “capitalistic,” that is, a private-profit society, leads the concerns which are running at a loss to make
  • A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to
  • pessimism and loss of confidence, which in turn lead to
  • Hoarding and slowing down still more the velocity of circulation.
  • The above eight changes cause complicated disturbances in the rates of interest, in particular, a
    fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.

I feel like we’re between step 3 and 4 for a long time already due to quantitative easing (reflation), which it seems at best only suspends a debt crisis rather than stopping it. In relation to crypto-currencies, the big question is if the banks all over the world are going to get into real trouble, which would lead to capital controls and then either to bank collapses or bail-outs and/or bail-ins. If that happens, crypto-currencies may have their shot at mainstream adoption.

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Governments and central banks use inflation to steal, so they love it. All they do all day is think up new excuses to print and spend more of our unborn children’s money. So deflation has to be presented as an enemy. Bankers talk about the evil horrors of deflation long before there is any real deflation. That’s the cover they use to print more money. Safecoin does not need to be inflationary.

PS. I’m not this grumpy in real life.

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I get this impression too…not really my area though, but I know that in my position, inflation would be bad…I can see all the ways it will impact me quite soon, but I struggle to see how deflation is all that bad, if not in fact desirable.
I wonder if @Seneca or someone could explain in simple terms the negative impacts on a person who’s income is roughly equivalent to their expenditure, who worked for themselves and say on a lowish wage? I mean could deflation even actually result in more people like me being around as a knock on effect and would this be a good thing really ? :smiley:

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Why would one (assuming you’re NOT a banker or associated elite) want debt based currency? Why would you defend the concept of money = debt? There is more national debt to the banks than there are resources on the planet or that one could EVER pay off. The concept of money = debt is not mathamatically feasible. It’s insane! P = P + I does not work! If safecoin makes banks around the world collapse I say it’s the best thing that happened to humanity. It’ll have done what whole nations and wars have failed to do. It’ll do what civil wars and great patiots of various nations have failed to do and that is take down the banks. Fiat currency and the banking cartel have resulted in mass corruption and the usurping of power and oppression of multiple nations around the world for CENTURIES and here we are debating whether deflation or inflation is better? Forget anyone or any nation that wants to keep using fiat currency! Let them rot and go bankrupt for they deserve it. Safecoin offers an easy safe alternative and function entry point for the use of cryptocurrency and value based assets. The banks must burn! We cannot continue on like this. We need value based currencies. So what if there’s deflation? That’s just the currency value returning to normal. Compare the value of things (like a loaf of bread for example) back in the thirties, or even the 70s, or even 1990s, to what it is now and you’ll see the inflation and rise in cost. now imagine the reverse. Imagine spending a couple cents (or a fraction of a safecoin) for a sandwich or whatever. Imagine the reintroduction of the millray (or a crypto value equivalant). Are we so used to being sick we’re now afraid of being healthy?

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The question is “controlled by whom?”

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I moved 10 posts to a new topic: Climate change

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On the other hand one could argue that inflation is a mechanism which allows succeeding generations to participate in the economy the same way their parents and grandparents did. In a deflationary system the advantage for those joining the system first can be enormous. So it’s not all black and white.

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Not to mention the urge to buy new stuff. Have a look at elecronic products like computers, smartphones and so on. Even if people can expect that a certain gizmo will be cheaper in six months or two years (in inflation-adjusted prices), they will eventually buy it earlier. Be it because they have to or because they want.

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EVERYONE PLEASE KEEP THIS TO THE OP

Thanks.

The question is “controlled by whom?”

That’s an important question, but also going away from my question.

The early responses were very relevant, so if I had time I’d delete much of what had followed. If another mod would like to step in and clear out the rubbish, be my guest. :smile:

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Actually I think the control-issue is the answer to your question. Is deflation a problem? I´d say: yes, at some point it can become a real problem. The same way inflation can be really problematic, but it´s not a problem by itself.

Individuals can evade money politics, while a society can´t. I liked the idea that people can vote with their coins on inflation and deflation, because it allows the user to deal with monetary related social issues depending on their share. Still, if it becomes a real problem, people can always introduce a new currency, so it is no ultimate problem for society, only for the currency which is dropped.

We should leave currency manipulation to those who govern using force.

The only real benefit of inflation is that it achieves invisible taxation.

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There is a difference between natural inflation and artificial inflation and natural deflation and artificial deflation though.

Before the advent of cryptocurrencies most all money was artificial… The Central banks would set the money printing policy, and if it was right, you would be somewhere in the “low inflation” and if the policy was wrong, it would go nuts either way…

But with Cryptocurrencies it will be a natural inflation or deflation… It will naturally be slightly deflationary…(Coins get lost etc) but the value of the money will be floating simply because it floats, not because somebody set it someplace.

In an open source economy slight deflation ought to be okay because most things are always getting cheaper… Cryptocurrencies are a “language of value” and so far as it accomplishes that goal it is useful and effective.

[quote=“reivanen, post:35, topic:4799”]
The only real benefit of inflation is that it achieves invisible taxation.
[/quote] It also encourages spending today instead of tomorrow, which provides paychecks for the guy you buy from. Artificial demand for growth is not natural either though. It has environmental impacts and sustainability issues…

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