Post
Topic
Board Economics
Re: Bitcoin major fail - doesn't allow credit creation (aka deflationary currency)
by
johnyj
on 03/11/2012, 12:35:56 UTC
If credit implies interest, then, it's a flaw in itself.  If interest are charged, the fund for paying back those interest just dont exist.  Eg : There is only 100 $ all around the world, and it's mine.  Someone borrow me that 100$, and I charge 1% interest.  This borrower would never be able to give me the 100$ + interest, because there is only 100 $ in existence.. 
That's why bankruptcy are built-in in this "credit/interest/fract-banking" system..

That built-in need for bankruptcy (interest) is a major cause of the faillure of the actual monetary system world-wide.

Perso, I dont wish to create a feature in Bitcoin that renders bankruptcy inevitable.

was my 2 satoshi

One easy to ignor aspect: Although there are only 100$ in existence, they can change hands many times, each time it changes hands, some goods change hand and get consumed (MV=PY)

Same when talking about fractional reserve banking: "With 10% reserve requirement, 100$ could create 1000$ loan after many times of deposit and loan process"

This 1000$ is very misleading, it is just a count of the same money multiple times in different time, the total available money at any given moment is always 100$