Quote from: Red on August 03, 2010, 02:58:44 AM

Expanding upon "bunk"

Quote from: Insti on August 02, 2010, 08:19:02 AM

As a simple example:

Say 1 bitcoin buys you 1 loaf of bread, and the entire economy is based on comparisons to loaves of bread.

Scenario 1:
At the start of the year I have 1000 bitcoins, I lend out 100 for 1 year at -50% interest.
This stimulates the economy to grow 100%
At the end of the year, I will have 950 bitcoins, but they are worth 1900 loaves of bread.

Scenario 2:
1000 bitcoins, I lend out 0.
The economy doesn't grow at all,
At the end of the year, I will have 1000 bitcoins, but they are still only worth 1000 loaves of bread.

There is a lot more math you can do to cover more complex scenarios and make more acurate estimates of growth, but I think this illustrates the general principle.

Lending 100 BTC and having it double the economy is an example equivalent to saying, "And then monkeys fly out of my butt..."

So here's more monkeys!

Scenario 1:

YOU:
At the start of the year you have 1000 bitcoins, you lend out 100 for 1 year at -50% interest.
This stimulates the economy to grow 100%
At the end of the year, you will have 950 bitcoins, but they are worth 1900 loaves of bread.

ME:
At the start of the same year I have 1000 bitcoins. I lend out 0.
You stimulate the economy to grow 100%
At the end of the year, I will have 1000 bitcoins, but they are worth 2000 loaves of bread.

I win!

Scenario 2:
Neither of us loans coins.
The economy increases
We tie in value.

Or the economy is stimulated less than usual, and you end up with less total wealth growth between the two of you.