Intead we tried to deflate the economy and the result is that while assets lost value (and in the cypriot case even the savings), while the debts are not only stable but mounting as goverment increased taxation. So if we now magicaly switch to bitcoin even at a constant rate, situation will not revert only accelarate.
So your government tried to do excessive lending in a deflationary economy, and got burned. Why is anyone surprised?
BTW Banks dont have reason/opportunity to exist in an deflationary economy anyway.
Banks can provide extra security, or can provide investment services. People will just have to specifically state their intent to invest money in a possibly risky venture, as opposed to being told that they are putting money into safe savings accounts, while banks gamble with them without telling anyone.
So what we are only left is Investment Brokers : Investment Banks, Hedge Funds : The reason we are in this mess.
1) There can still be banks. Loans will just have to be short-term, and for things that are actually worth something...
2) Just In Time production is already almost a gospel in our economy...
3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation...
Nope forget about it can<>will, Banks are non entities in the Bitcoin economy. 2) Just In Time production is already almost a gospel in our economy...
3) Once deflation is stable, preorders, or sale prices, can be set to account for that deflation...
Christ you cant fucking JIT FOOD, OIL, get out of IT Industry mindset, there are TIME contrains that work against you in that model, that will get populations freezing, starving waiting for philanthropy by the OT devs.
Food is even more of a JIT thing that IT. IT takes years to develop (build new manufacturing plants), and takes months to become obsolete, while food takes months to grow, and spoils within weeks. With food, you also constantly have to adjust between growing too much, and letting it go to waste, or growing too little, and not having enough. Luckily, we've mostly had problems with the former.
What time constraints are you talking about exactly?
Trees, Vines, Livestock. you know waiting things to grow... Unless your plan is to only eat bread and noodles...
Not to talk about efficiency even, JIT means that you constanly flush the pipelines, I guess you know what that means...
If not ask a fabric manufacturer this question "Do you shut down machines for repairs if your product has faults?" take a wild guess at the answer.
What Incentive is there to JIT produce now rather than wait a day and screw the customers over?
A few. If you borrowed money to produce, your loan is getting more expensive to pay back. If you already produced the components that go into the final product, you don't want them sitting around losing value. And finally, if you don't produce now, your competitors will.
You cant borrow money
You will not have already produced/stocked/procured/preordered/repayed the said components
You have a contract/advance they cant go to competitors
The economy is not a planar graph to distribute the risk evenly accross the chain, It contains cycles, in that model all those cycles will be negative loops and phased out one by one until everyone is disconnected and becoming a single node of Producer-Consumer or a Planar graph with one way flow of capital : Mercantilism, expect peace to ensue
Sorry, no idea what you are walking about. What cycles? (annual, buy/sell, borrow/repay?) What negative loops? Caused by what? Disconnected from what?
the problem with chains is you know "the strength of the chain ...."
What happens if nodes accross that chain start to fail on deliveries, how can that happen?
Lets just say that a Coal provider needs a constant supply of steel machinery, A Steel Provider needs a constant supply of coal, without stocking up resources, not mentioning workforce here, they will quickly be deadlocked waiting for some external energy (money) to kickstart them. So In order to get a just a single steel pin, you have everytime to pay upfront the cost of kickstarting the whole coal-steel industry.
In simple words economies of scale rely on full Buffers, which you have just made uneconomic to maintain.
What is left ? want to have a pin?, make it yourself. Self-Production aka Disconnected.
Right now within greece the functional problem is deflation. Borrowing is the kludge.
Deflation is a shrinking amount of currency, or the economy expanding faster than the money supply (depending on whom you ask). Euro is not shrinking in supply, and Greece's economy is not expanding at all, from what I know. So your problem is that Greece took on too many loans, became way too risky, and now no one wants to lend anyone any more.1. Savings flights (especialy after what happend in Cyprus)
Why are people taking their savings out of the country? Are they expecting that Greece will try to pay off government debt by seizing savings? If that's the case, I think bitcoin would be a HUGE benefit, since even though it's deflationary, it will keep the money in Greece
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2. Investment flight (none is willing to invest with a negative outlook)
Isn't this also from excessive risk, both from concern that investments will be taken or nationalized, and from concern that too much was borrowed and it's risky to lend any more?
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3. Increasing Taxation to cover external loans.
More debt-related issues...
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4. No new internal loans by the banks as they are now zombies: no fractional reserve induced inflation (No savings, To many loans)
And again...
All those bailout money simply went to debt restructuring, nothing ended up inside Greek economy. Do the math
Math says your problem is 100% governmentdebt related, not deflation or inflation related. From what you describe, deflation is just a symptom of fear of future government policy. Get the government and the gov debt out, and outside investment will have no reason to stay out, and neither will savers have a reason to get their money out.
To sum up we agree that Greece is in Deflation ok?
That's what thoughtfan was saying. Taking money from savings to pay for government's debt mistakes doesn't help anyone, especially not the savers.
No he was saying that inflating the economy alleviates the Debtors at the expense of the Savers, which is not what happened in Cyprusas they got deflated and both were screwed
Inflating the economy (printing more money and making it worth less) DOES alleviate debtors (who's nominal loans are now worth less than before) at the expense of savers (who's nominal cash savings are nor worth less than before). That did not happen in Cyprus, as they didn't inflate. They simply took money from savers, and used it to pay their government debt's, not everyone's. I am sure if Greek government took money from savers, and used it to pay your debt instead of it's own, you are a debtor would feel alleviated, at the expense of the savers they took it from.
No in greece they use more indirect ways
Taxation (you see we opted for the slow Blues instead of Doom Metal, we are more romantic people)You were asking for anyone to say it, so I will: Deflation is good, inflation is bad:
In an inflationary economy, it is cheaper to borrow than to save....
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government...
Sure if you can withstand 80% UNEMPLOYMENT, Total collapse of the Middle class, Urban centers, Industry, and Return of the Feudal Landlords.In an inflationary economy, it is cheaper to borrow than to save....
On the other hand, in a deflationary economy, people are incentivised to save and become self-sufficient, instead of relying on government...
Why would there be 80% unemployment? If you can hire people at any wage you want, you will hire them. Everyone always needs something done. As for middle class, the opposite will happen. Right now poor class stays poor, because they can't save or do anything to get out. All they can do is work 8+ hours a day and buy everything on credit, and that's it. With deflation, their savings will start to actually add up to something, and they will be able to move to middle class much easier. When has economy collapsed from just deflation alone? (Great Depression was a debt spiral spurned on by deflation, just as your situation is a debt spiral spurned on by somewhat of a deflation).
With deflation everyone gets lazy and postpones to the future, ventures, investments, cunsumption. Do you find that healthy for the labour market?
Why hire personel NOW, when you can hire personel when you get an order even a preorder/advance, why consume now but when you get a job? shy even spend? just Hodl!
The poor... Ah the poor will start to mine bitcoins! oh wait they dont have asics bummer. They cant even afford power as power is now *based* on bitcoin's value, there is not enough anyway... BTC miners eat it all up....
So they will stay poor but now without credit, working by the minute, paid only after the customer had the good (regardless of advances), without welfare, power, sure maybe they can at least sleep warmly enough on faveles near the Miners's Heat Vents. Dreaming Red Dreams.