Quote from: teukon on December 14, 2013, 01:49:01 AM

Don't worry, I was oversimplifying my point and I guess that led you astray. Some people have claimed that general coin loss causes people to hoard bitcoins but they fail to account the risk of personal coin loss faced by the hoarders.

I appreciate you clarifying your points from earlier, I now understand what you were aiming at and agree with you that this type of "problem" really isn't.

Quote from: teukon on December 14, 2013, 01:49:01 AM

However, I don't see how predictable monetary inflation (which is essentially predictable wealth redistribution) can fundamentally assist planning. In particular, how would having more money that expected impact negatively on a person's plans?

Maybe that is where my theory is wrong. I view the re-distributive power of monetary inflation as only occurring when it is not predictable (i.e. in the way the fed does it). If we were to know 100% for sure what the fed would do next week, there wouldn't be a problem being ready for it. In fact, we can see this type of preparation whenever the fed discusses tapering (or the converse, more "QE"). This type of knowledge would actually take the teeth out of monetary inflation, as prices would adjust before the new money could be spent. I could certainly have this wrong; any thoughts?

I'm not really sure it would have a negative impact, but it would certainly make planning harder (by at least a little bit).

Quote from: teukon on December 14, 2013, 01:49:01 AM

Coming at this from another angle: if price stability is the goal then why not price everything, including bitcoins, in terms of a more stable commodity (perhaps a basket of goods and services). Instead of having a fixed balance and falling prices, people will see their balances rise (like receiving interest) and enjoy stable prices.

Unfortunately, even a basket of goods is subject to changes in supply. As examples, natural disasters can decrease supply and technological innovation can increase supply. On the other side, demand can also change; people want bananas instead of oranges this month, next month they decide apples are the hot fruit (my wife is eating an apple right now, hence the fruit example Grin

).

Quote from: teukon on December 14, 2013, 01:49:01 AM

Thanks, I see. But if the unpredictability of coin loss is the problem, how would predictable monetary inflation help? Surely the sum of these two effects will be practically as unpredictable as the former.

I believe it would help because static inflation would offset, at least partially, the dynamic deflationary effects of coin loss. Doing so would give people a certain offsetting amount that they could plan against. Basically, given uncertainty in one direction certainty in the other direction helps balance things out, although admittedly not entirely.

There two other benefits I see as well and, although these are a bit off-topic for the purposes of this thread, I'll put them in here.
1) Miners would have further incentive to continue providing network security.
2) Fees could be kept low, as miners would will receive rewards from #1.

temp1029

Posts

Merits