Comment by oleganza | Hacker News Reader

Comment by oleganza | Hacker News Reader

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So Nintendo was losing money why exactly? Because Japan was not printing money as fast as US? Maybe the problem is in printing money at all?

Do you see a symmetry of products vs. money? Both are assets that some people need and some other want to give. If one is in deflation, then another is in inflation to another. Why don't you buy MacBook 2 years from now, when it'll cost the same, but will be more awesome? Because you have non-infinite "time preference": you want certain things today vs. tomorrow.

Why people want to hold money? Because it gives them ability to spend it anytime on anything - it's most liquid, most desirable commodity. This is big value in having something in your wallet - freedom to make decisions in face of future uncertainty. If you can freely choose between money which loses in value and money which doesn't, which one every person would put their savings in? Then, everyone spends according to his own time preference - amount of desire to enjoy stuff today vs. tomorrow.

http://blog.oleganza.com/post/43378777734/on-circulation-of-...

Here's also a thought experiment on deflationary spiral: http://blog.oleganza.com/post/66215430631/deflationary-spira...

> So Nintendo was losing money why exactly? Because Japan was not printing money as fast as US? Maybe the problem is in printing money at all?

Because Japan's currency deflated, while the US currency inflated. Printing of money is simply a means to control deflation or inflation.

All of the "thought experiments" on deflationary spirals ignore the fact that one happened: the Great Depression of 1930s. And back then, the US Monetary system was pegged to the Gold Standard.

We fixed the problem by getting off the Gold Standard. It turns out, basing your country's economy on a deflating commodity was not a good idea.

Did someone propose that BitCoin serve as the peg for a national currency? I must have missed that part.

Deflation is bad, we know its bad and when its bad. So should you peg a national currency to a deflationary commodity like BitCoin or gold? No. Can I use gold right now as a means of exchange? Yes. Does it happen all the time in regular life? No, because that would be a pain in the ass but if it were more convenient, it might. Well that is what BitCoin is, its gold but convenient to transfer.

Stop thinking of BitCoin as a national currency or a replacement for a national currency. It is a commodity like gold which can serve as a supranational currency or store of value, your national economy can still be inflationary.

People want BTC to be a currency. You clearly don't have that goal.

But when you see websites saying "Pay for stuff here using BTC", it is clear that they are trying to make BTC into a currency.

Those who wish to use BTC as a currency are discouraged from doing so, as long as this stupid hyper-deflation is occurring. No one wants to spend BTC on anything anymore.

> People want BTC to be a currency.

It is a currency. It satisfies the Coincidence of Wants, it is used as a means of exchange, that makes it a currency. Cigarettes have been used as a currency (in WW2 concentration camps, prison, times of famine or war etc.). But nobody suggested cigarettes or tobacco be the thing we pegged our national currencies on, its just a thing that represented value that people traded for goods and services. That's a currency, not a national currency though (because as you mentioned earlier, that's probably a bad idea which we know from history with gold).

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