Quote from: vtlaloc on March 11, 2014, 04:31:33 PM

Quote from: pungopete468 on March 11, 2014, 01:09:19 AM

Bitcoin deflation != Historical deflation.

The difference is that when Bitcoin deflates it is instantaneous and world-wide (instant arbitrage opportunity). Bitcoin deflation encourages spending rather than saving because the global economy demands it, contrary to the past deflation of weighted coins, it created a position where the older coins were more valuable than the newer coins. Those coins were not likely to be spent because they were worth more than the face value of the coin.

When gold backed currencies where a "thing" no one much cared about the face value or even which country (as long as the mint was trusted) minted the damn things, indeed the face value was directly tied to weight. I'm not sure where you do the idea that they would deflate older coins by minting new ones with less weight and same face value, that's just daft. Your probably thinking of bullion coins being minted today with metal of value much higher than face...which is a post fiat construct, that has nothing at all to do with gold back currencies.

Bitcoin deflation would encourage spending in 2030 the same way that it does on these forums in 2014, which can be summed up in "I bought a 150k dollar pizza in 09' and we are the new wealthy elite". Any financial system with a highly deflationary currency like bitcoins would ball up and die, as no funds would ever move through the system; Inflation pushes smart money to invest in creating means of production, in to research, and building income producing properties while all that deflationary currency encourages is the building of Scroodge McDuck banks (which in the case of bitcoins you cant even swim through).

You're mistaken. You're looking at half the variables of a problem and then generating an answer...

The gold coins were debased regularly, new coins were constantly minted yet the values were decreased. People certainly cared about the face value because that was how the majority of people tendered debts; based on the face value established by the mint.

The wealthy were able to hoard coins and profit from arbitrage while the average user couldn't. The wealthy didn't care for face value because they could afford not to. Deflation was a problem because of the unfair distribution bias. Bitcoin deflation is universal affecting all other Bitcoins, essentially nullifying the deflation.

Sorry, but deflationary currency is only a negative when the value can be externally manipulated (unevenly devalued). Bitcoin will never deflate for the same reason that gold coin did... Once Bitcoin becomes deflationary, assuming it saturates the market, people hoarding Bitcoin will actually decrease the price. The price of Bitcoin will be reflected by the sum of GDP divided by the number of coins still left in circulation.

Bitcoin deflation != Historical deflation. Never before in history has something like Bitcoin been tested, and you can't introduce new variables to an equation and assume the outcome will remain constant.