Quote from: JohnDoe on December 06, 2011, 07:21:39 PM

What is your opinion on the effect that a strong Swiss Franc has had on the economy of Switzerland? Don't you think that the same thing could happen to Bitcoin's economy?

This is not a very good analogy.

Switzerland is not as economically free as it looks. Sure, taxes are low, but the labor market is heavily regulated, heavier that in some "socialist" countries like Denmark.

It is almost impossible for employers to decrease nominal wages, even if the employees voluntarily agree to this. Also, firing and hiring at a lower nominal wage is difficult and costly.

Because of this inflexibility the Swiss economy reacts very differently to deflation than a free economy would react.

Prices in Switzerland are sticky. There are a few exceptions, such as electronics retailers, who are already used to sector-specific deflation, but most businesses are not willing or capable of lowering their prices.

The results have been twofold: People buying more stuff from neighboring countries such as Germany, and International companies (who make up a big part of the Swiss economy) have slowly started to relocate their workforce to cheaper European countries.

That is why the strong CHF is generally perceived negatively in Switzerland.

You can't really compare the bitcoin economy to the Swiss economy. The Swiss economy is static as treacle, and the bitcoin economy is dynamic and adaptive, and so far almost completely unregulated.

Until people earn a large proportion of their income in BTC, deflation is not an issue anyhow.