Quote from: thefiniteidea on February 12, 2013, 01:47:46 AM

Here come the Keynesians... Cheesy

More like, someone who actually understands economics. Unsurprising based on your other definitions if that's your definition of keynesian.

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Money Supply Inflation refers to the devaluation of a currency due to the increase of the Money supply. Whereas, an increase in the Money Supply is exactly that, "when the total money supply increases". The former is an effect of the latter, and I wasn't referring to the latter.

Do you know what the word "inflate" means? Do you not realize that it means the same thing as increase? You are doing the exact same thing you accuse keynesians of doing. "THIS is what I mean, not THAT." I'm sorry but that makes you look like a total tool.

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In any real economy, there is no guarantee that demand exists (maybe in the keynesian paradise, but that's about it). However, there is a guarantee that the Money Supply will increase.

I assume you mean demand for new money, and I never said there was guarantee for new demand, only that if the supply is increasing with demand, there is not necessarily any change in value. It is very basic supply and demand which also applies to currency.

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Sure, they can offset when they're equal, but that doesn't mean inflation due to an increase in the Money Supply doesn't exist.

So I will argue that Money Supply Inflation does mean a change in the value.

Here you go again disagreeing with yourself. If you are going to create your own definitions for things, you ought to be very careful with the words you choose. You cannot say "A does not always follow B" then say "A follows B" as your statement of logic.

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Keyword "essentially". It happens, sure, but on a scale so small that it's negligible. The details here aren't a huge issue, I'll edit that to be more specific. Though, I think most other people get it... Undecided

Again, just pointing out that if you are making definitions, you have to be careful so as not to cause the same problems you blame keynesians for. And, if you want to get technical with real-world economic definitions (unimportant, I know), money supply inflation/deflation generally refer to currency in circulation. How, when, where, or why currency enters or leaves circulation is irrelevant to that definition. It is very relevant to the discussion, though, which is why you need to be specific and precise when talking about economic effects and their causes. Not making things even more hazy with wishy-washy redefinitions.

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That statement was regarding the exchange of FX for BTC ie demand for BTC that is greater, not faster. That one can be clarified, as well.

But you are making statements about things that have little to do with each other, and seriously confusing terms and/or economic cause and effect.

"That being said, there is a SET DECREASE in the generation rate of BTC, so you have sort of a "deflationary effect" in the value, as long as more exchange occurs for BTC at a rate which is faster than that set generation rate."

Read the bold part alone and the cause and (incorrect) effect are already there. The generation rate has nothing to do with the definition of money supply deflation. If you mention value anywhere in money supply definitions, you are defining them incorrectly, because the supply cares not for its value. Value comes from the combination of supply and demand.

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You're right, demand can increase the value of a currency... but someone has to have a supply for that demand... and god forbid the two got together to have an "exchange" *gasp*! They would have unknowingly increased the value of both items!

Tongue

You are not defining money-value deflation (whoops, that's price), so why then do you talk about exchange or value. You are making your definitions quite unclear, the exact opposite of your intended premise.

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So yes exchanging does increase value,

No, it doesn't.

If money is spent faster (increase V), without an increase in total goods and services in the economy (Q), the price level (P) actually goes up, a/k/a price inflation. Greater or faster, it does not matter, increasing the amount of money spent (exchanged for goods and services) over a set period of time can increase prices. *gasp* Believe it or not, price inflation can happen without an increase in the money supply.

Now if more goods and services become available for bitcoin, thus increasing its desirability, then the demand for bitcoins will likely increase, thus causing price deflation as the supply is inelastic. It is NOT the exchange itself that causes (price) deflation.

And if you want to redefine the word "exchange" to mean specifically "exchanging for other currency", be my guest, I'm sure it will be a useful add to the bitcoinomist's dictionary. But it still doesn't cause price deflation unless people want BTC more than fiat. Which, unless you are a tool, is not guaranteed.