Quote from: JimiQ84 on July 04, 2013, 07:33:23 PM

Quote from: huhai0978 on July 04, 2013, 07:30:12 PM

Quote from: JimiQ84 on July 04, 2013, 07:21:32 PM

Quote from: huhai0978 on July 04, 2013, 07:13:02 PM

4) Satoshi is great. He solved one important technical problem. But, trust me, he doesn't know how money works. Why should we encourage hoarding? Why should we punish those who is spending? We, as bitcoiners, would someday come to a conclusion that let the total number of bitcoins increases 3% every year and make the mining a sustainable career.

Because BTC is opposite to FIAT money and that's exactly what FIAT is NOT doing - it's punishing hoarding and rewarding spending. Satoshi wanted something different.

FIAT means inflation. And inflation is not that bad. Inflation is compensated by interest. Have you ever thought where the interest come from? What we want is not deflation, what we want is freedom.

Interest is reward for lending money. That works even in BTC world, just look at loan section of this forum. It has nothing to do with inflation. If anything, it's other way around.

Okay, let me break this down:

If you're using a currency with 10% annual inflation, and Joe wants to lend Bob 100 currency units, then Joe will make no profit if he lends at 10% APR, since 110 units in a year will be equivalent in value to 100 units now. Does that make sense?

So Joe would have to lend at, say, 15% APR, and 15 - 10 = 5% profit that Joe wants. 15% looks like a lot to Bob, so he says "I'll borrow from someone else". Joe is in trouble; if he sits on his 100 currency units, they'll be worth less in a year. He agrees to loan for 10% APR so that he doesn't lose any money. Bob is happy because 110 currency units will be easy to pay off in a year.

Let's suppose we're now using a currency with 10% deflation. Joe wants to lend Bob 100 currency units. In order to make a 5% profit, this means Joe must lend at -5% APR.

Wait - that doesn't work! Bob could borrow 100 units, sit on them for a year, and return 95. Joe has made a 5% profit, but Bob has actually come out ahead!

So Joe could simply sit on his currency for a year, and make 10% profit instead of the 5% he'd make from a loan with 5% inflation-adjusted APR. In the inflationary scenario, Joe would have been willing to lend out his money at 0% inflation-adjusted interest just to avoid losing money from inflation!

Realistically, in a deflationary economy, this means that nobody wants to make loans, and in an inflationary economy everyone wants to make loans. Of course, too much inflation is bad because it destroys value, so the ideal situation is close to what you see in the fiat of most major, stable countries: a few percent (I personally would rather see 0%, but that's not practical for a number of reasons). It's enough to discourage hoarding and encourage lending (which enables business); but low enough not to seriously damage money as a store of value.