Quote from: BTC Economist on June 18, 2011, 06:07:23 PM

Quote from: Gabi on June 18, 2011, 06:04:10 PM

Well, then no country will be able to inflationate the currency by printing loads of money like they do now...

That is true. However, the USA sets a target of a little inflation for the reason that they want to encourage spending and keep the economy moving.

That's correct. But they set a target of little inflation by sucking up much of the increased value in the economy by printing money.

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With a deflationary currency, as you know, people are more inclined to save since their savings are growing in value.

No, that's false. A deflationary currency does not cause your savings to grow in value. A bitcoin today includes the right to hold onto that bitcoin and watch it appreciate in value. Thus the value of a bitcoin today includes the value of that right.

If you don't see why that is, consider a simple thought experiment. Neutronium sells for $1,000/oz today. And we all know it is going to deflate and will sell for $5,000/oz in a year. Does that seem possible to you? Wouldn't people who don't need their money for a while buy up lots of Neutronium today, knowing they could sell it for $5,000/oz in a year? So wouldn't the price today be really close to $5,000/oz?

If Neutronium will be worth $5,000/oz in a year, then its value per ounce today is the sum of the present value of $5,000 in a year plus any additional value from being able to sell it in less than a year should one wish to. The value of something today must include the present value of its future appreciation.