Quote from: deisik on December 07, 2013, 02:15:40 PM

Quote from: Misesian on December 07, 2013, 02:02:51 PM

Quote from: deisik on December 07, 2013, 01:02:35 PM

And so what? This (and what you wrote after the emboldened text) doesn't change a thing about the fact - it's Bitcoin's volatility, not of the fiat currency you exchange it for. I have already written in my post that volatility (and stability for that matter) of a currency is predetermined by the size of the economy, i.e. the overall volume of goods and services that you can buy or have rendered to you. The money supply being constantly expanding doesn't affect the volatility of the currency (just in case that was your point)...

Of course expansion of the money supply affects the volatility of a currency, look at the exchange value of USD for oil or food it's constantly changing (or getting worse), money is just a means of exchange so increasing the amount in circulation reduces the exchange value for other goods and currencies. If you look at the price of oil in gold you can see it's barely changed, what can we infer from this? Expansion of the money supply increases the volatility of a currency.

At first you say that money supply is constantly expanding, then you tell me to look at the exchange value of USD for oil... Did you look at the dynamics of oil prices yourself before writing this nonsense? It cost somewhere above 140 dollars in 2008 (or was it in 2007?), now it is at 110 dollars for barrel and fell to 30 dollars somewhere in between. How can this ever be possible? To say that just increasing the amount of money in circulation reduces the exchange value for other goods and currencies is meaningless unless you account for other factors, which could make your assumption flat-out wrong in most cases. If the economy is expanding at a faster pace then the money supply, the currency could actually appreciate meaning that prices and axchange rates go down...

Sure oil prices have fell recently, but look at the 50 years graphs and tell me which currency is more volatile, I'm not sure about the dynamics of oil pricing so I cannot comment on recent changes but over the past 50 years oil priced in gold has remained steady wheareas priced in dollars it has increased substantially since 1998 (when the money printing really got going). How can oil prices fall 30 dollars despite rapid expansion in money supply? Perhaps efficiency gains in extracting oil or discovery of a new reserve, I honestly don't know but I never stated price rises always come about as a result of monetary inflation, it does however always leads to an upward pressure in prices that could be offset by other factors. You said "If the economy is expanding at a faster pace then the money supply, the currency could actually appreciate meaning that prices and axchange rates go down..." Yes this is true but the exchange value of money is lower than it could have been if monetary expansion never happened, you see what i'm getting at?