Quote from: TCraver on February 21, 2014, 07:11:58 AM

Quote from: brush242 on February 20, 2014, 11:22:10 PM

... whether you give everybody $1mm, or mandate the minimum wage at $500/hr, or add a bunch of zeros before the decimal point, or any other way of handing it out, in essence a combination of two things will always happen. 1) You devalue money (call it hyperinflation if you will), and 2) demand skyrockets for everything. Instantly.

What that means is that in a matter of days, prices for goods and services will explode by approximately the same order of magnitude of the amount you skew the system. In other words, in no time flat, the price for a gallon of milk (hovering at say $4.00, today) will hover around $40,000. Which means that the net purchasing power of the poor hasn't really changed at all. This will happen for every single good and service at the same time.

THAT is the fundamental flaw with all of these schemes. Since supply and demand define equilibrium, and since all prices always hover around equilibrium (except when skewed by gov't force (law, regulation, import duties, et cetera) which never increases supply) no one is any better off than they were.

Keep this in mind: if you are going to have to force me to participate in your ideas, that means they suck. Badly. There is a ~reason~ that the pillboxes in East Germany were pointed inward.

First, this is a voluntary system - if you didn't want to take the coins, or even accept them in payment, no one would force you to. But many and probably most - including you eventually - probably would, precisely because it would NOT suck to get money for little or no effort. Even if you think the altcoin is going to drive up prices, it makes less sense to refuse them, than to take them to counter-balance the higher prices you project. So participation would likely be high, even if you were correct about the impact on prices.

The issue here is that a significant number of people will accept (from whatever authority) and spend them, but not contribute to creating them or accept them in trade. The effect is that, like with any outside regulation or interference, you skew the market, it corrects very quickly, and in this case, you either devalue money as a whole, or more likely, you end up with two different prices. One for the original currency, and one for the altcoin.

In essence, you aren't "counter-balanc[ing]" anything because all of the costs of all of the materials and labor that goes into all goods and services will skew as well, hence the $40K gallons of milk (If you handed everyone $1MM). Rest assured, the effect on prices has long since been proven.

Quote from: TCraver on February 21, 2014, 07:11:58 AM

Second, the number of coins per capita in circulation would rapidly approach a fixed level, as the number of new coins created is balanced by the decay of the larger number of coins already in existence. If the decay rate is 2%/week, the total number of coins in circulation would reach about 50 times the number paid out per week, and stay at that level.

This fails as well because the purchasing power of money always fluctuates in relation to the world around it. See, for example, how the purchasing power of the dollar has held up over the past 100 years. But more importantly, the costs of the labor and the materials that goes into everything that exists fluctuates as well because of labor shortages, labor gluts, scarcity, demand, consumer preference, technology advances, and on and on and on. The purchasing power of your outside factor is not immune, and if it is geared to lose value, that cant help.

Quote from: TCraver on February 21, 2014, 07:11:58 AM

Dollar circulation would slow somewhat, as people would prefer to spend those last. And sellers would prefer dollars - so prices in dollars would fall somewhat. However, by taking that and the expected rate of circulation of the altcoin into account, the "correct" value of the altcoin in terms of dollars can be calculated. At a rough guess, the dollar value of the distributed coins would be on the order of $10 per person per week. After some initial fluctuation, the altcoin's value relative to the dollar and to goods would end up close to the original estimated level, rather than inflating dramatically, as you speculate.

No. you cannot say prices in dollars would fall somewhat because you cannot possibly determine the aggregate outcome of the trillions of personal decisions. Another way to look at this is to assume your coin is a dollar for all intents and purposes. Just as a dollar comprises pennies, nickels, dimes and quarters (or tens, twenties, fifties) in your scenario, the dollar would comprise the normal divisions as mentioned, with the addition of altpenny, altquarter, atten, et cetera. Each of these would have their own value as well, meaning 10 altpennies to a penny, or whatever.

If you only intend to hand everyone $10 bucks a week, then prices will do exactly as I said they would, though they wont skyrocket. Instead, the price for a gallon of milk will hover around $4.40 instead of $4.00. The net result remains the same as prices will skew higher in close correlation to the amount of altcoin you inject into the system.