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

I think it is useful to distinguish monetary inflation/deflation from price inflation/deflation. I think there is always some natural degree of price inflation/deflation.

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Price inflation/deflation is also known as how the markets figure out the value of something.

The alternative is planned economy.

“managing” the currency supply (inflation) is one such method and has always, without exception, led to collapse of said system. Communist style managing product prices is another method with the same purpose, and similar track record.

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NO INFLATION!!

It makes money not make sense anymore…

look at what it’s doing to the dollar, etc!

Why introduce it into a perfect system like safecoin???

This is completely true, and

This is completely true.

Please let this possibility of inflation (which comes only from fear, not logic) die out right now before it threatens to destroy our entire perfect economic system of safecoin here.

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Don’t worry about it…it’s natural conver-flation…seriously though, unless done to deliberately hijack a thread, it is quite natural to veer off-topic sometimes…I think its unavoidable…I think we might make too much of this really and posts/topics can be moved off-topic by mods if it’s ridiculous.
I don’t think I’ve actually had a simplified break down of likely negative consequences of deflation on the less well off,maybe self-employed “man on the Street” - rather than the technical larger economic effects. Could anybody do this? :smiley:
Edit:
Is it just that “things” get cheaper, eventually including my own services, but that the entire Capitalist Fiat system collapses around me and there’s a good chance crypto-currencies come into their own?
If so, it reminds me of something Ricky Gervais said once when asked if he liked a funny clip showing an incident involving a dolphin and a bikini clad trainer.
“It’s a dolphin removing girls’ knickers – what’s not to like?

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Potential reorganizations and bankruptcies because companies get into trouble due to collapses in demand and higher real value of debts, leading to lower wages or unemployment. If banks get in trouble, capital controls and potential bail-ins. Severe deflation may also cause trouble in supply chains, which can lead to scarcity of common goods. Unwise governments raising taxes to make up for losses on VAT and such.

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Deflation only becomes a problem when there is not enough supply to be usefull. One solution to this problem is inflation. Inflation increases the supply and weakens value. Another solution to solve the problem is divisibility. Divisibility increases the supply and strengthens value.

What is the perfect amount of supply of any currency? The answer is any amount, so long as it can be divided infinitely.

Is there no way to create a currency with a completely stable value? Crypto currencies offer the potential of programming that value. I see that some want a currency increasing in value to help fuel early adoption. But maybe it should never change.

We have a situation akin to not having a stable meter or inch.

It’s possible if you can force everyone to agree on what “stable” means.
Stable against what?

Because many in this cryptocoin space think they can do away with hard money.
Even gold isn’t “stable”, but it’s less unstable compared to other commodities, but for coins that’s even less possible because they cannot be trustlessly tied to a commodity or a basket of commodities.

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No, they don´t. Cryptocurrency offer the potential to deal with value decentrally, that´s an important difference. The value is defined by trading individuals, not by supply. Even if there are only very few tokens of one commodity that doesn´t mean they have to be valuable, it´s a simple convention. Actually cryptocurrencies demonstrate that graphically: If you think Bitcoin is too expensive, you could technically just fork Bitcoin and do your own thing -but would people buy it? The Altcoin history showed: yes, some do, but most of them are not in for the long run. It´s the network that makes is valuable, not the token itself. As @janitor says correctly, “stable” is a relational term. We will never have a stable currency. If a community comes together, it will find its stable currency.

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I agree here, in general at least.

I think where the problems are going to really show up is in the interface and conflict between an existing fiat/inflationary currency model, and an incoming deflationary model which is being adopted on a voluntary basis. The deflationary currency will tend to undermine and destroy the inflationary one, to the extent it is adopted and shows plainly the inflation of the fiat, upon which the whole current interdependency structure of exchange is built.

That is one reason introducing a deflationary currency is so scary: it turns existing relationships on their heads. This might unwind more smoothly, except that the lever-pullers will resist such adoption like crazy with capital controls, etc.

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I completely agree. You have a knack for explaining things into simple a way. :smile:

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It scares me that people are already trying to add inflation to Safe Networks deflationary currency and it is not even live yet. I say, “Give Deflation a Chance.”

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A functional currency that was stable would beat all other currencies. By stable, its value would not inflate and would not deflate. This would probably mean that once in circulation it could not practically or easily be traded for other currencies and at some point there might be no competitors. It might also mean that its supply would change to keep its value as stable as possible.

The idea of not being easily tradeable for other currencies may seem ridiculous. I give you my car and you pay me in Safe coin, then I buy another car with Safe coin. We dont trade Safe for fiat because we know its not good for a currency we want to succeed in part on the basis of stability. How powerful can this cultural agreement be? Who owns SAFE? You do, so don’t damage or diminish by trading it for manipulator currencies.

Some speculation would occur but good programming and informed culture might cancel its manipulation. This idea that SAFE bootstraps itself into wide circulation on the basis of increasing the value of a single coin seems like a speculator manipulation and a mistake. You know you wont get rich quick off the currency at all but that inspires trust, which is what we want out of money.

I thought the whole point if crypto currency would be to make a currency that was less prone to manipulation. States migh actually find such a currenct desireable. They had to manipulate to counter manipulation. An automatically stable currency would be more transparent, efficient and trust worthy and help smooth boom/bust.

You can have something like Nubits: https://nubits.com

They peg their currency against the USD: https://nubits.com/about/faqs#maintain-value

[Quote]
How do NuBits maintain their $1.00 US value?

  1. NuShareholders can increase the supply of currency at any time and in any amount, to prevent the NuBits price rising above $1.00 US by bringing as many of them to market as necessary to suppress the price.

  2. NuShareholders can pay interest to holders of NuBits who agree to take them out of circulation for a specified period, known as “parking”. The interest rate can be raised to whatever level is necessary to increase demand for NuBits enough to support a $1.00 US price.

  3. Liquidity is provided via a trading program called NuBot which will peg the price in the very short term, but long enough so the main mechanisms listed above can be engaged by shareholders.[/Quote]

So, you can try to track another asset or a pool of assets. Whether this is desirable is a different question.

Also, you have to question how the source data is pulled, whether it is secure, etc.

Okay you lost me here because this is utter nonsense. Safecoin is tied to value and a comodity (computer resources) and fiat money is based on debt. Of course one is going to be deflationary compared to the other. Deflation and inflation are like reletive speeds and trajectories of movement they are also based on how people value a currency. No currency is going to be absolutely stable because no one is going to have exactly the same opinion about the value of EVERYTHING.

If Gold was the currency discussed is Gold’s price deflating or is fiat’s price inflating? One currency’s value is diminishing and the other’s is increasing. If we look at the one that is increasing we call it deflation. If we look at the one that’s decreasing we call it inflation. The more supply of a currency you create relative to it’s value to society the less value it will have per unit. Conversely if you decrease the amount of a currency relative to it’s value to society or increase a society’s value of the currency it’s value per unit will rise. This is true of not just currency but any tradable substance since any tradable substance can be a currency.

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I propose that “stable” here has to mean “having consistent relative value.” Agreed?

If so, you may see the flaw in your statement. “Value” is and always will be a relative concept.

Inflation means that the currency has less relative value over time. Deflation means that the currency has greater value over time. Even with a value-based, limited supply currency, this relative value will shift depending on the social, political, environmental, technological, etc., factors in play. But generally it will tend to deflate, at least in the short and medium term. Eventually it might become fairly consistent in relative value.

The only way to have a really stable currency is to allow the currency to BE STABLE, and let other things adjust around it. Gold has been good at this throughout history, but it’s not very convenient. A fancy toga in ancient Rome and a fancy suit in modern times cost about the same in terms of gold.

Safecoin will be really good at this, especially after it’s had a time to stablize after early adoption. Keeping money from deflating is vital to keeping credit schemes from imploding. Why borrow when storing your money away will result in increased value over time?

The only way to have a “stable” currency otherwise is to adjust the supply arbitrarily. This ALWAYS leads to mischief.

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What happens when oil is scarce for example? Even your magic “stable money” will not buy as much as it used to because everything it needs to buy needs to be shipped using oil.

Or a salmonila outbreak changes the price of eggs. Or all of the forests in Washington State burn down and the cost of construction inches up. Or China bans rare earth exports and drives up the price of hard drive storage…

Currency is “the language of value” as values change, the language will change too. A chicken today may not be worth a chicken tomorrow. Nothing will every change that…

You could make a currency that doesn’t inflate it’s supply – but you cannot make one that doesn’t deflate it’s supply – you have know way to know if currency is stuffed under somebody’s mattress or if it is lost forever.

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I agree. Currency is just another exchangable good. Making a “stable” currency that won’t inflate or deflate is like creating food that won’t rot. Yes you can do it but it’s dangerous and kind of ignores the reason of WHY food rots in the first place: because we need the nutrients to return to the soil so we can grow more food. Likewise WHY do we need currency to be able to inflate or deflate? Because currency is just a word we assign to some THING we like to exchange a lot and use as a token of value. We could use pistachio shells as a currency if we wanted and could all agree that pistachio shells were of value tho I really don’t think we would. The reason gold or silver works as a currency is everyone uses it, or knows someone who uses it, and therefore everyone can agree it’s of value, it can be easily formed into uniform coins or bars that can be easily carried and it’s useful for other applicatons. Cryptocurrency is of value for much the same reasons. People agree it has value, it’s easily transportable and has many uses. But be it gold, safecoin or a bowl of nuts and you’re still bartering and trading stuff. See this is where people get confused. Quid pro quo > Barter > Monatary exchange commerce. But monetary exchange commerce is STILL a form of barter which in turn is still a form of quid pro quo. Get it straight people. Designing a value based currency that won’t deflate makes about as much sense as telling people they aren’t allowed to decide how much a product is worth. Safecoins already get destroyed when they get spent when buying from the network. That alone should stabailize things quite a bit.

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Hear, hear!

Related to that - this hasn’t occurred to me before - it’s kind of funny that this question is coming up now.
Now it should be too late for this question because the Project has committed to a certain approach (whatever it is, it doesn’t matter).

If we think that the plan is (or should be) open to discussion, then it makes sense to discuss the idea of rewriting the contract between the issuer and users. But Fergish’es quote about the stability also applies to instability - if any change becomes possible, there’s a chance of mischief. Perhaps we should first consider the conditions under which such change would be possible (for example, a certain percentage of all MAID token holders would have to be in favor).

If I’m not mistaken, once MAID is converted into SAFE, it would not be as easy to vote on that issue.

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It is too late. I don’t get that we’re arguing, here, to change anything, just to understand the pluses and minuses of the path we’re traveling, at least as far as this thread goes. Luckily, it looks like all pluses! :sunglasses:

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