Quote from: NoodlesJefferson on June 21, 2011, 06:51:22 PM

Quote from: SgtSpike on June 21, 2011, 06:26:23 PM

Quote from: NoodlesJefferson on June 21, 2011, 06:19:37 PM

Quote from: JoelKatz on June 21, 2011, 01:57:38 PM

Quote from: Richard at Wendel Services, LLC on June 21, 2011, 01:41:51 PM

The biggest problem with deflation is debt accumulation. With deflation any debt is more expensive to pay off than the value of the goods originally obtained with said debt.

Since the deflation in bitcoins is predictable, a bitcoin's value today already includes the present value of holding the bitcoin as it deflates. There can't be a significant actual increase in value just from predictable factors.

To give an analogy, suppose everyone knew for a fact that gold would hit $2,500/oz in two years. What would happen to the price of gold today? The assumption that something will go way up in value in the future will cause it to go way up in value today, preventing the future rise because it will have already happened.

So then would it be necessary for there to be a standard of living decrease? Or would jobs just hire you way under what your currently worth to try and get you to stay around? Either way it still seems like a problem similar to inflationary economies, just in reverse.

It's not a problem though. I don't know why you think employees deserve to be paid more than what their labor is worth. They don't.

An adjustment of wages towards cost of living is meant to give the employee the exact value of their labor. If the cost of living goes down, the employee's wages should go down according to a cost of living adjustment.

You can argue about it being a tough sell to employees all you want, but the reality is, if the employer had to reduce their wage due to a cost of living decrease, then other companies likely did the same, and jobs listed in the area for the same type of work would likely pay the same as the new wage rate. Even if the employee didn't like it, there wouldn't be anyone else willing to pay them more.

I'm not arguing that it would be a tough sell, though I do think that's a PR problem when trying to sell this idea. I am asking if job stability would suffer in a deflationary economy. It sounds like most people are saying that job stability would suffer and that shouldn't matter. Or that people would get use to it job instability or live with pay decreases.

Ah, ok.

Even still, job stability would NOT suffer.

If I hire you for picking cherries at $20/hr, and a year down the road, the same cherry picking job is only worth $18/hr, and you think, "Oh, that sucks they are only going to pay me $18/hr now, I'm going to go look for someplace that is still paying $20/hr." Well, you're not going to find it. That's because, for picking cherries, the going market wage is now $18. Every company that is looking for cherry pickers is now paying $18, even if they were paying $20 a year earlier.

So no, job stability would not suffer. All companies would adjust to deflation in their hiring wage rates, just the same as all companies currently adjust to inflation in their hiring wage rates.