Post
Topic
Board Economics
Re: The Deflationary Spiral Argument
by
Beerwizzard
on 26/03/2022, 09:42:54 UTC
The scenario is with no other currency present, so your goods will cost the same as long as the manufacturing process is the same, bitcoin will no longer grow in price as there is no longer such thing as BTC price.
No. In such scenario we still got another currencies in another countries in order to have a global competition on markets. Therefore, exchange rates would remain.
it is highly unlikely that BTC become a single payment method worldwide, we shouldn't count on such scenario.


But if you accept only BTC then your products are rapidly getting more expensive.
The price of goods would likely decrease if people used solely Bitcoin. If the economy grew, but the money supply remained the same, then the exchange rate of goods would decrease.

So how should it decrease?
Imagine people in country A (this country already have its economy, production, import and export etc) decided to switch to BTC only. Since they are trading with another countries they have all production costs in BTC and they are selling everything for BTC while country B (which pays with their own money) is having continuously increasing prices. In the end, you only your products way overpriced in the world market just because you have switched to BTC.