having a chilling effect on economic growth as people refuse to invest in projects that are unlikely to provide better returns than the deflationary increase in value
That's backward. As the rate of growth in the bitcoin supply decreases to zero (or very slightly negative due to lost coins), any price deflation reflects existing growth in the economy—more demand (more to buy) for the same supply of coins makes the coins more valuable. Projects which don't provide returns greater than the rate of deflation are projects which would inhibit economic growth by consuming resources which would otherwise be available to the other, better performing, projects responsible for the deflation. If deflation prevents people from investing in those projects in favor of holding on to their coins and having them appreciate, that's a good thing. It prevents waste. Curtailing deflation, or even forcing inflation, would increase investment but decrease economic growth.
Obviously this doesn't apply when the price deflation is due to a sudden correction or credit contraction, e.g. the American Great Depression. The premise is that the effective money supply remains constant, leaving economic growth (or decline) as the dominant factor in determining the rate of deflation (or inflation).
Mergesort isn't all that difficult to explain either. Take your unsorted list and divide it into a bunch of single-element (trivially sorted) sublists. Divide the sublists into pairs, and merge each pair of sorted sublists into a new sorted sublist; to merge two sorted lists, repeatedly take one element from whichever list starts with the lowest value until both lists are empty. If you happen to end up with an odd number of sublists, hold the extra one for the next round. Repeat the pairing and merging until you're left with just one list.
In somewhat verbose Haskell:
mergesort:: Ord a => [a] -> [a] mergesort = head . merge_pairs . map singleton
-- Merge pairs of lists until less than two lists remain. merge_pairs:: Ord a => [[a]] -> [[a]] merge_pairs xs@(_:_:_) = let (ps, ys) = pairs xs in merge_pairs (map merge ps ++ ys) merge_pairs [xs] = [xs] merge_pairs [] = [[]]
-- Divide a list into pairs, with zero or one elements left over. pairs:: [a] -> ([(a, a)], [a]) pairs (x:y:xs) = let (ps, ys) = pairs xs in ((x,y):ps, ys) pairs [x] = ([], [x]) pairs [] = ([], [])
-- Merge two sorted lists into a single sorted list. merge:: Ord a => ([a], [a]) -> [a] merge (xs, []) = xs merge ([], ys) = ys merge (xs@(x:_), (y:ys')) | y < x = y : merge (xs, ys') merge ((x:xs'), ys) = x : merge (xs', ys)
-- Create a single-element list from a value. singleton:: a -> [a] singleton x = [x]
Protocols such as coinjoin or zerocoin don't solve the participation problem. There's still nothing in it for people with clean coin.
On the contrary, what they get out of it is privacy. Their bitcoins aren't "dirty" in the sense of being illegal, but they still don't want just anyone to be able to trace their history. So they participate in order to obscure their legal-but-private financial history, and that allows others to obscure their own history, legal or otherwise.
The question is whether the legal or illegal transactions will dominate. If CoinJoin et al. get a reputation for being used solely or predominately for illegal transactions, legal users will tend to avoid them, which in turn would render them useless.
A property transfer has three parties: the two people exchanging property, and the society which agrees to respect the property transfer as valid...
No, a property transfer has two parties. Society doesn't get a veto. If the first party is the legitimate owner—whether society recognizes that fact or not—that ownership includes the right to transfer to transfer the property to the second party without begging permission from anyone else. Society can make this easy or difficult, but others' recognition of the first party's rights of ownership, or lack thereof, doesn't change the facts.
There is significant value in getting others to recognize your rights of ownership, of course, but your rights are not dependent on such recognition.
So really we all agree: not ALL payments ought to be anonymous.
No, we really don't all agree. People have the right to keep all their payments anonymous.
It's impossible to ever prove cause and effect in such a scenario. Just which person, exactly, drove the car or ran the factory that emitted the precise particles of pollution that I had to breath while crossing the street in Shanghai?
Sounds like you need a class-action suit, all the victims vs. all the polluters. You may not be able to prove the specific case, but if you're so sure about the general cause and effect then it shouldn't be hard to prove that your group is being harmed by the actions of their group. Of course, if you can't prove cause and effect, even in the general case, then you have no business prosecuting anyone for harm which they may or may not have caused. As an alternative, social consequences (boycotts, peer pressure, ostracism) can be very effective in such cases, and don't require the approval of any court.
As a creationist with a scientific background, I don't have a problem with either Evolution per se or abiogenesis per se. Science is merely observing and attempting to explain with a best-fit model what is seen -- what's wrong with that?
Nothing. So why did you claim that Evolution does not make falsifiable predictions?
Instead, I have a problem with the religion of Evolution/abiogenesis and the battle of its priests against the church. I'm not claiming all or even most scientists fall into this realm, but the vast majority of the vocal anti-creationism crowd certainly does.
That's not my experience at all. I find that the vast majority of the vocal anti-creationism crowd is merely opposed to teaching religion in a science class. Clearly there is some overlap, as science and religion are both branches of philosophy. The problem is why one tries to advocate a scientific approach to spirituality or a religious approach to explaining the natural world. I have no problem with schools teaching both, provided they keep them separate and avoid bias regarding any particular religion (or non-religion, as the case may be).
It's not like there's much to teach regarding creationism in any case, from a scientific point of view. I'm imagining something like this: "Some people think that our universe was created by some external entity beyond our ability to directly observe. This theory, if 'theory' is truly the right word, makes no falsifiable predictions and thus tells us nothing useful about the physical world. Now open your textbooks to the section on evolutionary biology. Can anyone tell me how the Theory of Evolution can help predict which environmental factors tend to encourage the evolution of more virulent strains of common diseases?"
The only way to make tumblers work is to bribe the people with clean coin, give them a hefty premium for participating.
Perhaps, but you wouldn't have to be obvious about it. For example, consider a typical retail store where some items are priced a bit below market, while others are a bit above market. Ordinary customers buy the cheap items, attracted by the deals. Those wishing to launder money buy the more expensive items (which may or may not actually be delivered) in exchange for a share of the store's proceeds. The ordinary customers never need to know that they're facilitating a money-laundering operation, and there's no particular reason to question the way the store sets its prices.
Of course, nothing about this is specific to Bitcoin. It would work perfectly well with a traditional brick-and-mortar store operating entirely in USD.
There are also perfectly good reasons to "launder" money which have nothing to do with the proceeds of a crime. Financial privacy is a fairly big deal in cryptocurrencies, and there are proposals for protocols (e.g. CoinJoin) which would automatically combine transactions from unrelated users, obscuring each transaction's history. If such protocols become mainstream, traditional money laundering would become unnecessary.
... if you should find yourself in town court to contest a traffic citation or other minor offense you might be mistakenly charged with, would you not prefer a court whose priority is on providing a fair hearing over one who has a mandate to collect as much money as possible?
In shifting the goals to "collect as much money as possible", a strawman has been created. We would all obviously prefer a court which guarantees a fair hearing, as one without such a guarantee is useless as a court, but I for one would rather have a fair hearing in a court which manages to cover its own expenses out of court fees, even if that increases my costs, than one in a court which solves one externality only to create another.
The theory of Common Descent (Evolution) makes quite a few falsifiable predictions [1] consistent with observed evidence.
Of course, what the Creationists tend to have a problem with isn't Evolution per se (though that's where they focus their efforts), but rather abiogenesis, the concept of a lifeform coming into existence naturally from non-living materials. That is completely separate from Evolution, which is the concept that all life on Earth can trace its origins back to a single living organism (however it came to be here).
[1] Theobald, Douglas L. "29+ Evidences for Macroevolution: The Scientific Case for Common Descent." The Talk.Origins Archive. Vers. 2.89. 2012. Web. 12 Mar. 2012 <http://www.talkorigins.org/faqs/comdesc/>
Value has a specific definition, and it is not the same as price!
Indeed. Value does have a specific definition, and I never said it was the same as price. Value influences price, but they're not the same thing.
Value is, as I clearly stated earlier, cost of production + cost of distribution. That is its definition.
Perhaps according to Marx's long-discredited labor theory of value, but not according to any modern economic theory. The fact that you can easily spend a fortune making something that you have no use for and which no one else wants to buy (i.e., which has no value) should make that obvious. The value of a good, to you, is simply the most you would be willing to give up to get it; or if you already have the good, the least you would be willing to accept in trade before you would give it up. This is distinct from the price, which is what you actually gave up or accepted for the good at the time an actual trade took place.
The closest the real world approaches your definition is that no rational person knowingly produces a good which, at completion, will be valued less than the opportunity cost of its production and distribution. But people can be wrong, and goods which have already been produced are often worth less than their original cost.
What happens during deflation, in particular severe deflation is hoarding more than saving. Saving is setting aside some percent of your income for rainy day, and for later in life when you won't work. It's a negative feedback mechanism to put it in electrical engineering terms and, as with electrical circuits, it add stability to a system. With deflation what goes on is hoarding. People hold on to as much money as possible, spend as little as possible, because the money will be worth more in the future. That's very different than saving.
So you're saying that saving is setting money aside for a later time when it will be worth more to you, and hoarding is setting money aside for a later time when it will be worth more to you. The difference is so clear... as you say, the difference is all in the attitude, namely your bias against "hoarding".
Regardless of the "attitude", saving and hoarding have the same effect economically. You produced something, earning money, and you chose to save the money rather than claiming an equivalent amount of other goods for personal consumption or as an investment. That makes these goods available to others, reducing the demand and thus prices. If the general tendency is in favor of investment, and these investments happen to be good investments, the economy grows and more goods become available, increasing the supply and thus decreasing prices further. When you choose to spend your savings (or "hoardings") the lower prices are your reward for deferring consumption and making those goods available to others, essentially the interest on a loan you made to the rest of society.
Of course, if consumption and/or bad investments are the order of the day, the opposite will be true, and you should have chosen your own investments rather than hold on to depreciating currency. In either case, manipulating the rate of inflation or deflation by playing with the currency supply can only serve to discourage good investments (under-inflation/over-deflation leading to saving/"hoarding" when there are investments which would grow the economy more) or encourage bad ones (under-deflation/over-inflation leading to investment in underperforming ventures, diverting resources from better investments).
The "value" is, in general terms, approximately the cost of production and distribution.
The value of anything is determined by its buyers and sellers.
No, the PRICE is determined by buyers and sellers.
Both the value and the price are determined by buyers and sellers. The price is a rate of exchange mutually agreeable to both the buyer and the seller. At the same time, the buyer and seller each determine the value of the good to them. The price is always somewhere between the value of the good to the seller and the value of the good to the buyer.
Look, guy, let me put it a different way. Here's an example: you go in to Wal-Mart and buy an apple for, say $0.25. Then you go across the street to the Piggly-Wiggly and buy an identical apple for $0.35.
Does one of those two apples have more VALUE to you than the other? No. It is only the PRICE that is different.
All you can really say about the values of the apples to Wal-Mart and Piggly-Wiggly based on your example is that the former values an apple at no more than $0.25, while the latter values an identical apple at no more than $0.35. These values may be the same, or they may be distinct. Since you bought both, you valued two apples at not less than $0.60 combined. Again, the values of the two apples may be the same or different. You probably valued both more than $0.35, but not necessarily; for example, if you knew about the lower price beforehand (and P.W. only had one apple in stock at that price) you could have valued one apple at $0.35 and a second one at only $0.25. The values do not need to be the same even though the apples are objectively identical (c.f. the law of marginal utility).
There is no such thing as an objective value for an apple, independent of the prospective buyer or seller, based on its cost of production or otherwise.
What may be confusing the issue is that competition generally results in a price close to the cost of production and distribution. If people are actually willing to pay that price, then that sets a lower bound on the value of the good to them. However, a good's cost of production can easily exceed its value; that simply means that there is no profitable way to produce it.
The classic example is that it is illegal to falsley and intentionally yell "Fire" in a movie theater, which is a limit on freedom of free speech, a right guaranteed by the constitution.
This may be the classic example, but not in favor of censorship. It's a great example of how politics can interfere with the judicial branch and result in horrible precedents. The only reason this case turned out as it did is that the president at the time threatened to pack the court with partisan judges until they ruled the way he wanted. (At the time there was no limit on the number of judges on the Supreme Court.) The ruling was a blatant violation of the First Amendment, which does not set any boundaries on the content of protected speech.
This is not to say that any action which involves speech is automatically protected, but intent of the First Amendment was clearly to rule out any legal consequences for speech as such, regardless of the content. For the action to be illegal it would have to involve something other than mere speech. This is also consistent with the idea that the punishment should be proportional to the crime, which is impossible when the crime is speech and the punishment is just about anything else.
All those folks who like to blather on about negative rights rarely bring up the fact that, without strong and well-enforced environmental regulation, the air we breath, the water we drink, the food we eat, and the land upon which we live can be contaminated to the point that it will not sustain healthy life, and all of that is okay because air, water, food, shelter, and health don't fall into the category of negative rights, but are instead positive rights that restrict (often unfairly, in these people's minds) the rights of others.
I'm not sure who you've been talking with, but the cases you mention fall pretty clearly into the category of negative rights. Specifically, if you release contaminants into the air, water, land, food, or anything else which then proceed to end up in other people's bodies or other property and cause them harm, you've infringed on their negative rights the same as if you'd injected them with poison. It's indirect, and thus harder to trace back to the source, but those who are harmed by pollution can definitely claim damages against polluters. That was in fact how pollution used to be handled, before certain socially-minded judges decided that industrial development was a greater social good (read: paid more taxes) than strong property rights for individuals and stopped hearing such cases.
So, if a 4 GB data plan costs $200, that is equivalent to 80 minutes of voice for $1.
Voice requires consistently low latency to support two-way conversations, which makes it a completely different kind of service. You're comparing about 18 MB of plain data service, without any QoS to speak of, with 80 minutes of high-priority, low-latency voice traffic. Naturally the data service will be far cheaper.
Taxing a billionaire 10% and a homeless man 10% is NOT fair, and it's simplistic to think it is.
You're right, it's not fair. The billionaire actually values the money and worked hard to get it, and contributes far more in taxes than he'll ever see back in useful services, whereas the homeless man—given the more common chronic case, which owes more to psychological issues than economics or bad luck—clearly values money very little and would receive more tax money back in public services than what he paid even if the rate was 100%.
It's not the homeless you should worry about; most of them don't have much of anything to tax in the first place. The problem is those not already in the upper class with the drive and ambition to improve their status. "Progressive" taxes on higher incomes hurt them more than those who are already rich. Once you're rich, the majority of any increase takes the form of capital gains, which you don't even have to realize until you actually want to buy something. To get there, however, requires hard work and a correspondingly high income. The more you tax the higher incomes, the harder it is for someone in the middle or lower class to improve their status.
Because that would make it less usable. The Ctrl-C clipboard is meant for more permanent data, while the mouse selection is more transient (it changes whenever you select anything, even if you didn't want to paste it elsewhere). If you unified the clipboards, for example, then you couldn't copy something, select something else, and then paste to replace the selection.
You probably don't notice this problem with PuTTY because it's the only program updating the clipboard on mouse selection, and the only reason to select anything in PuTTY is to copy it to the clipboard. It might make sense to do the same in Konsole, though, or in other terminal emulators.
This is a common misperception - that inflation can lead to malinvestment because it incents people to take more risk than they otherwise would have, just in order to preserve capital.
Actually I wasn't saying anything about taking more risk. The argument was that currency inflation incents people to make investments (even low-risk investments) which appear to be profitable, but are actually below average and reduce economic output rather than contributing to growth. It's really no different than the argument commonly used against price deflation, that it prevents people from investing by raising the minimum return necessary for an investment to be better than saving your money and letting it appreciate. I agree with this argument, by the way. I simply hold that when the price deflation is natural rather than forced, saving the money is in fact the better choice, not just for the individual investor but for society as a whole. The same is true for natural price inflation. The problems associated with price deflation are really symptoms of currency deflation, which incents people to forgo good investments, just as currency inflation leads people to make bad investments. Monetary policy is just like any other subsidy or tax in this regard; whether you're encouraging spending and investment or discouraging it, you're moving it away from the optimal point determined through the market and causing either too much (inflation/malinvestment) or too little (deflation/underinvestment).
Imagine a world with no monetary expansion and zero inflation as far as the eye can see. If the market says you must pay me $101 today in order for me to give you $100 tomorrow, and that is the best deal you can get, then the real rate of return is -1%. Clearly this person is in the same situation as the person who can only earn a -1% real rate of return by investing 2% risk-free in a world with 3% inflation.
That's never the best deal you can get, because in the absence of price inflation or deflation you can stuff your money in a mattress and get a guaranteed 0% real return. That's better than the other case where the best you can get, risk-free, is really -1%.
The really interesting case doesn't even involve negative returns; that's the one where price inflation and currency inflation are not at the same rate. For example, if technological progress and/or improvements in economic efficiency would naturally lower prices by 2%, but there is a 5% increase in the currency supply over the same period. The net result is 3% price inflation, but an investment with a 5% nominal return, while higher than price inflation, is really a malinvestment because it's not producing any real improvement on the resources consumed—the 5% is entirely due to currency inflation—in a time where the average investment is giving 2% real returns. The 2% increase in purchasing power is due to other investments which led to a general improvement in the state of the economy, not that particular investment, which is dragging down the average. It would be better to save the money and not spend scarce resources on below-average investments, but the currency inflation makes that a losing strategy.
First, intertemporal comparisons may be of academic use, but economic actors can only decide between good a and good b contemporaneously; you can't choose between buying good a today and buying it last year.
True, but as you point out, you can choose between buying a good now and buying it a year from now. To predict the future price you need to be able to analyze past prices and understand the reasons for the changes.
It does matter when it is possible to choose between a good today and a good tomorrow, such as deciding whether to make a particular investment. But for low risk goods, where the rate of inflation will meaningfully affect real returns, they are typically liquid enough that the market appropriately prices in the expected inflation...
The market only factors in price inflation. You're still left with malinvestments which looked profitable on paper, even after factoring in price inflation, but are actually net losses because they are below the average real rate of return and draw resources away from other, more profitable ventures. Yes, investors should be looking to get the highest possible return for their money, but not everyone can find above-average investments, and for those who can't, inflation leads them to invest somewhere to avoid the inflationary loss even if the economy would be better off with them simply holding on to their money.
And for high risk ventures, whether the payoff is 50% or -50% is going to be determined by the success or failure of the risk, not the movement of the medium of account.
True, but only if you're talking about the actual payoff after the fact rather than the expected payoff prior to investing, and it's the latter which determines whether or not you choose to invest. Changes in the money supply affect all investments near the margin, whether low risk or high risk.
Lastly, a little money illusion can be a good thing.... The best example is unemployment. It is generally better for ten people to take a 10% real paycut than for 1 out of 10 to lose a job while the others keep their original pay.... Some inflation allows for real pay cuts in response to real supply shocks while mitigating the baseline anchoring bias.
Yes, that was one of the original arguments for inflation. It was an underhanded trick to begin with, playing on the average worker's supposed ignorance of basic economics to fool them into accepting lower pay than they thought they'd been promised. Well, that only works so long as your employees remain ignorant of inflation, which is a necessarily transient state. The workers figured out this little scheme and fought back by demanding inflation-indexed wages.
Once we reach the 21 million BtC cap, miners will stop mining them and will no longer be confirming transactions as a by-product of the mining process. The only possible way to continue will be to change BtC to raise the limits and get people mining again.
No, the mechanism for continuing is already built in: transaction fees. In addition to the reward for solving a block, the miner gets a small fee (determined by the sender) for each transaction. Miners will continue mining even as the block rewards fall to zero because they'll get paid out of existing BTC for processing the transactions. Also, the difficulty doesn't increase exponentially on its own, it's determined by the time between blocks, which in turn depends on how how much computing capacity is thrown at the problem. Arguably the "carbon footprint" problem, if there is one, is due to the block reward being way too high right now. As transaction fees become more dominant they will eventually provide a more flexible way of encouraging just the right amount of mining necessary to secure the network.
a mildly inflationary currency is still a perfectly good currency because it can still be a fine medium of exchange and account
Given a constant currency supply, changes in the prices of goods are indicative of the relationship between the good's supply and demand. When the currency supply increases or decreases, however, that affects the prices of goods independently of their supply and demand, which has implications for comparing prices over time, making the currency less suitable as a unit of account. You can try to compensate with something like CPI, but the CPI only looks at changes in price and doesn't distinguish between changes due to currency inflation or deflation and changes due other factors which affect the entire economy, such as taxes or transportation costs. If you compare the price of a good from ten years ago with its price today, you can see whether it costs more or less, but even after adjusting based on the CPI you don't know whether production of the good is more or less efficient than it used to be. If the adjusted price increased by 5%, is that because it costs 5% more to make the same good or because it costs 5% less, but there's 10% more money in circulation? Without knowing the actual change in the supply of currency there's no way to be sure.
There is already a vast commerce in the digital expression of any currency you want, which exists precisely because of the convenience and low energy cost of virtual transactions. If you want a currency whose supply is relatively fixed, gold has been traded for thousands of years. You can use it for anonymous transactions, and the rate of growth is very slow as new gold becomes increasingly difficult to find.
So why is Bitcoin needed, again?
The other digital systems are all centralized and subject to the whims of a particular service provider and/or the government it operates under, and to use a commodity like gold directly you need to actually store and transfer matter, not just bits. Bitcoin is the first system to combine the best of both worlds, a global and decentralized form of electronic money.
My main response to "but but but gold/silver/bitcoin" is to point and say
"Look! No government in the world does that anymore! It couldn't keep up!"
Sure, it couldn't keep up with the desire of every government ever to raise money by debasing its money supply. That's not exactly a ringing endorsement of the practice. It's good for the issuer of the money (until people lose trust and you get hyperdeflation); that doesn't mean it's good for the people who need to actually use the money.
I agree. There are plenty of units to go around. One thing I've always wondered, though, is why there are only eight digits. It's a 64-bit integer, right? That would allow for 2.1e18 units, or 21 million BTC to 18 significant digits, 11 of them after the decimal. What happened to the other three?
The rich can avoid debt and sit on their wealth while it accumulates.
If you earn money and simply sit on it, then you're not receiving any goods or services in exchange for what you've produced. In the mean time, others gets to enjoy the proceeds from that production. In effect, you've made them a loan of your purchasing power; the increase in value is merely the interest on that loan. It's certainly better than making sub-par investments with returns below the rate of deflation, which would slow economic growth. If you are competent at spotting the investments with above-average returns then you would still invest in them to get an even better return despite the deflation.
The poor however can watch as their mortgage increases with value alongside their wages rather than gradually getting smaller.
If history is any guide, under deflation wages increase faster than prices, so while the real value of the mortgage is indeed increasing, its value as a fraction of your paycheck is decreasing. Inflation has the opposite effect.
Deflation encourages hoarding wealth and inflation encourages investment and wealth creation.
You've got that backwards—or rather, sideways. The axis to look at is not inflation vs. deflation, but rather the degree to which the currency supply is manipulated. A monetary policy which causes deflation (or reduces inflation) by reducing the money supply discourages good investments and thus destroys wealth. A monetary policy which causes inflation (or reduces deflation) by increasing the money supply encourages malinvestment and thus destroys wealth. A neutral monetary policy (i.e. a fixed money supply), regardless of the rate of inflation or deflation, encourages good investments while discouraging malinvestment, and thus creates wealth.
Deflation causes people to hoard their money because it's basically an investment to keep it. That's not something that helps the economy (need them to spend money).
On the contrary, it can help the economy. If you want to grow the economy sustainably (and not just boost short-term metrics) then you need to expand its productive capacity through capital investment. You can't do that if everyone is focused on immediate consumption, so the first thing is to convince people to hold back on consumption and start saving instead. Deflation has that effect.
Once people have started saving, they can either hold onto the money or invest it somewhere. If they choose to hold onto the money, they may not be going out and actively picking profitable ventures, but neither are they using up any of the surplus production that money represents. Their "hoarded" money isn't competing with others' money for goods and services, which makes others' money that much more valuable. You can think of that as a sort of general loan, not of money per se but of purchasing power, part of which will go toward consumption and part of which will go toward investment. The portion of the decrease in prices (deflation) which results from those investments is the interest on the loan.
The interesting thing about a deflationary currency is the potential investments with nominal returns less than the rate of deflation, i.e. those which would naively seem to be profitable if it weren't for the deflation. If the change in prices is due to a policy of reducing the currency supply or a sudden, unexpected change in the demand for cash, that could be an issue, but when the deflation reflects changes in the natural price of money in the market—changes in the supply of goods and services relative to the (fixed) supply of money—then any investment which fails to beat the rate of inflation is a subpar investment, and would reduce economic growth, not increase it. The investments which don't take place due to inflation shouldn't take place, because they take productive capacity away from more profitable investments, even if the alternative is simply "hoarding".
If the deflation does happen to be due to a change in the demand for money, rather than economic growth, then that indicates an expectation there will be more need to spend money in the future more than there is now, which once again means that putting that money into lower-return investments now would be a costly mistake—it would mean wasting limited resources in the present when there will be more valuable uses for those resources in the future.
On the other hand, if the deflation is due to manipulation of the money supply, then that just comes down to sending false signals, and an economic loss should be expected. Deliberate deflation gives people an incentive to hold their money rather than make investments which would be better for the economy, just as deliberate inflation leads people to make investments whose low returns actually reduce overall economic growth.
To illustrate how currency inflation leads to malinvestment, let's say that annual growth in terms of purchasing power, the total supply of goods and services, is 3%. The money supply increases by 5% over the same period. Between the two, you should expect prices to increase by about 2%. Let's also say that there's an investment which pays 4% nominal returns. While obviously not the best investment out there (the average should be 8% based on the growth and inflation rates), it looks reasonable on paper—that's a 2% net increase in purchasing power, which is far better than the 2% loss you'd get from simply holding on to the money. However, the contribution to economic growth is actually -1%; 5% of that 4% nominal return came from the increase in the money supply. It only looks profitable because the economy was growing by 3% at the same time. Making this investment, or any other investment with less than 8% nominal returns, wil
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having a chilling effect on economic growth as people refuse to invest in projects that are unlikely to provide better returns than the deflationary increase in value
That's backward. As the rate of growth in the bitcoin supply decreases to zero (or very slightly negative due to lost coins), any price deflation reflects existing growth in the economy—more demand (more to buy) for the same supply of coins makes the coins more valuable. Projects which don't provide returns greater than the rate of deflation are projects which would inhibit economic growth by consuming resources which would otherwise be available to the other, better performing, projects responsible for the deflation. If deflation prevents people from investing in those projects in favor of holding on to their coins and having them appreciate, that's a good thing. It prevents waste. Curtailing deflation, or even forcing inflation, would increase investment but decrease economic growth.
Obviously this doesn't apply when the price deflation is due to a sudden correction or credit contraction, e.g. the American Great Depression. The premise is that the effective money supply remains constant, leaving economic growth (or decline) as the dominant factor in determining the rate of deflation (or inflation).
Mergesort isn't all that difficult to explain either. Take your unsorted list and divide it into a bunch of single-element (trivially sorted) sublists. Divide the sublists into pairs, and merge each pair of sorted sublists into a new sorted sublist; to merge two sorted lists, repeatedly take one element from whichever list starts with the lowest value until both lists are empty. If you happen to end up with an odd number of sublists, hold the extra one for the next round. Repeat the pairing and merging until you're left with just one list.
In somewhat verbose Haskell:
Protocols such as coinjoin or zerocoin don't solve the participation problem. There's still nothing in it for people with clean coin.
On the contrary, what they get out of it is privacy. Their bitcoins aren't "dirty" in the sense of being illegal, but they still don't want just anyone to be able to trace their history. So they participate in order to obscure their legal-but-private financial history, and that allows others to obscure their own history, legal or otherwise.
The question is whether the legal or illegal transactions will dominate. If CoinJoin et al. get a reputation for being used solely or predominately for illegal transactions, legal users will tend to avoid them, which in turn would render them useless.
A property transfer has three parties: the two people exchanging property, and the society which agrees to respect the property transfer as valid...
No, a property transfer has two parties. Society doesn't get a veto. If the first party is the legitimate owner—whether society recognizes that fact or not—that ownership includes the right to transfer to transfer the property to the second party without begging permission from anyone else. Society can make this easy or difficult, but others' recognition of the first party's rights of ownership, or lack thereof, doesn't change the facts.
There is significant value in getting others to recognize your rights of ownership, of course, but your rights are not dependent on such recognition.
So really we all agree: not ALL payments ought to be anonymous.
No, we really don't all agree. People have the right to keep all their payments anonymous.
It's impossible to ever prove cause and effect in such a scenario. Just which person, exactly, drove the car or ran the factory that emitted the precise particles of pollution that I had to breath while crossing the street in Shanghai?
Sounds like you need a class-action suit, all the victims vs. all the polluters. You may not be able to prove the specific case, but if you're so sure about the general cause and effect then it shouldn't be hard to prove that your group is being harmed by the actions of their group. Of course, if you can't prove cause and effect, even in the general case, then you have no business prosecuting anyone for harm which they may or may not have caused. As an alternative, social consequences (boycotts, peer pressure, ostracism) can be very effective in such cases, and don't require the approval of any court.
As a creationist with a scientific background, I don't have a problem with either Evolution per se or abiogenesis per se. Science is merely observing and attempting to explain with a best-fit model what is seen -- what's wrong with that?
Nothing. So why did you claim that Evolution does not make falsifiable predictions?
Instead, I have a problem with the religion of Evolution/abiogenesis and the battle of its priests against the church. I'm not claiming all or even most scientists fall into this realm, but the vast majority of the vocal anti-creationism crowd certainly does.
That's not my experience at all. I find that the vast majority of the vocal anti-creationism crowd is merely opposed to teaching religion in a science class. Clearly there is some overlap, as science and religion are both branches of philosophy. The problem is why one tries to advocate a scientific approach to spirituality or a religious approach to explaining the natural world. I have no problem with schools teaching both, provided they keep them separate and avoid bias regarding any particular religion (or non-religion, as the case may be).
It's not like there's much to teach regarding creationism in any case, from a scientific point of view. I'm imagining something like this: "Some people think that our universe was created by some external entity beyond our ability to directly observe. This theory, if 'theory' is truly the right word, makes no falsifiable predictions and thus tells us nothing useful about the physical world. Now open your textbooks to the section on evolutionary biology. Can anyone tell me how the Theory of Evolution can help predict which environmental factors tend to encourage the evolution of more virulent strains of common diseases?"
The only way to make tumblers work is to bribe the people with clean coin, give them a hefty premium for participating.
Perhaps, but you wouldn't have to be obvious about it. For example, consider a typical retail store where some items are priced a bit below market, while others are a bit above market. Ordinary customers buy the cheap items, attracted by the deals. Those wishing to launder money buy the more expensive items (which may or may not actually be delivered) in exchange for a share of the store's proceeds. The ordinary customers never need to know that they're facilitating a money-laundering operation, and there's no particular reason to question the way the store sets its prices.
Of course, nothing about this is specific to Bitcoin. It would work perfectly well with a traditional brick-and-mortar store operating entirely in USD.
There are also perfectly good reasons to "launder" money which have nothing to do with the proceeds of a crime. Financial privacy is a fairly big deal in cryptocurrencies, and there are proposals for protocols (e.g. CoinJoin) which would automatically combine transactions from unrelated users, obscuring each transaction's history. If such protocols become mainstream, traditional money laundering would become unnecessary.
... if you should find yourself in town court to contest a traffic citation or other minor offense you might be mistakenly charged with, would you not prefer a court whose priority is on providing a fair hearing over one who has a mandate to collect as much money as possible?
In shifting the goals to "collect as much money as possible", a strawman has been created. We would all obviously prefer a court which guarantees a fair hearing, as one without such a guarantee is useless as a court, but I for one would rather have a fair hearing in a court which manages to cover its own expenses out of court fees, even if that increases my costs, than one in a court which solves one externality only to create another.
How cute, you think evolution is falsifiable.
The theory of Common Descent (Evolution) makes quite a few falsifiable predictions [1] consistent with observed evidence.
Of course, what the Creationists tend to have a problem with isn't Evolution per se (though that's where they focus their efforts), but rather abiogenesis, the concept of a lifeform coming into existence naturally from non-living materials. That is completely separate from Evolution, which is the concept that all life on Earth can trace its origins back to a single living organism (however it came to be here).
[1] Theobald, Douglas L. "29+ Evidences for Macroevolution: The Scientific Case for Common Descent." The Talk.Origins Archive. Vers. 2.89. 2012. Web. 12 Mar. 2012 <http://www.talkorigins.org/faqs/comdesc/>
Value has a specific definition, and it is not the same as price!
Indeed. Value does have a specific definition, and I never said it was the same as price. Value influences price, but they're not the same thing.
Value is, as I clearly stated earlier, cost of production + cost of distribution. That is its definition.
Perhaps according to Marx's long-discredited labor theory of value, but not according to any modern economic theory. The fact that you can easily spend a fortune making something that you have no use for and which no one else wants to buy (i.e., which has no value) should make that obvious. The value of a good, to you, is simply the most you would be willing to give up to get it; or if you already have the good, the least you would be willing to accept in trade before you would give it up. This is distinct from the price, which is what you actually gave up or accepted for the good at the time an actual trade took place.
The closest the real world approaches your definition is that no rational person knowingly produces a good which, at completion, will be valued less than the opportunity cost of its production and distribution. But people can be wrong, and goods which have already been produced are often worth less than their original cost.
What happens during deflation, in particular severe deflation is hoarding more than saving. Saving is setting aside some percent of your income for rainy day, and for later in life when you won't work. It's a negative feedback mechanism to put it in electrical engineering terms and, as with electrical circuits, it add stability to a system. With deflation what goes on is hoarding. People hold on to as much money as possible, spend as little as possible, because the money will be worth more in the future. That's very different than saving.
So you're saying that saving is setting money aside for a later time when it will be worth more to you, and hoarding is setting money aside for a later time when it will be worth more to you. The difference is so clear... as you say, the difference is all in the attitude, namely your bias against "hoarding".
Regardless of the "attitude", saving and hoarding have the same effect economically. You produced something, earning money, and you chose to save the money rather than claiming an equivalent amount of other goods for personal consumption or as an investment. That makes these goods available to others, reducing the demand and thus prices. If the general tendency is in favor of investment, and these investments happen to be good investments, the economy grows and more goods become available, increasing the supply and thus decreasing prices further. When you choose to spend your savings (or "hoardings") the lower prices are your reward for deferring consumption and making those goods available to others, essentially the interest on a loan you made to the rest of society.
Of course, if consumption and/or bad investments are the order of the day, the opposite will be true, and you should have chosen your own investments rather than hold on to depreciating currency. In either case, manipulating the rate of inflation or deflation by playing with the currency supply can only serve to discourage good investments (under-inflation/over-deflation leading to saving/"hoarding" when there are investments which would grow the economy more) or encourage bad ones (under-deflation/over-inflation leading to investment in underperforming ventures, diverting resources from better investments).
The "value" is, in general terms, approximately the cost of production and distribution.
The value of anything is determined by its buyers and sellers.
No, the PRICE is determined by buyers and sellers.
Both the value and the price are determined by buyers and sellers. The price is a rate of exchange mutually agreeable to both the buyer and the seller. At the same time, the buyer and seller each determine the value of the good to them. The price is always somewhere between the value of the good to the seller and the value of the good to the buyer.
Look, guy, let me put it a different way. Here's an example: you go in to Wal-Mart and buy an apple for, say $0.25. Then you go across the street to the Piggly-Wiggly and buy an identical apple for $0.35.
Does one of those two apples have more VALUE to you than the other? No. It is only the PRICE that is different.
All you can really say about the values of the apples to Wal-Mart and Piggly-Wiggly based on your example is that the former values an apple at no more than $0.25, while the latter values an identical apple at no more than $0.35. These values may be the same, or they may be distinct. Since you bought both, you valued two apples at not less than $0.60 combined. Again, the values of the two apples may be the same or different. You probably valued both more than $0.35, but not necessarily; for example, if you knew about the lower price beforehand (and P.W. only had one apple in stock at that price) you could have valued one apple at $0.35 and a second one at only $0.25. The values do not need to be the same even though the apples are objectively identical (c.f. the law of marginal utility).
There is no such thing as an objective value for an apple, independent of the prospective buyer or seller, based on its cost of production or otherwise.
What may be confusing the issue is that competition generally results in a price close to the cost of production and distribution. If people are actually willing to pay that price, then that sets a lower bound on the value of the good to them. However, a good's cost of production can easily exceed its value; that simply means that there is no profitable way to produce it.
The classic example is that it is illegal to falsley and intentionally yell "Fire" in a movie theater, which is a limit on freedom of free speech, a right guaranteed by the constitution.
This may be the classic example, but not in favor of censorship. It's a great example of how politics can interfere with the judicial branch and result in horrible precedents. The only reason this case turned out as it did is that the president at the time threatened to pack the court with partisan judges until they ruled the way he wanted. (At the time there was no limit on the number of judges on the Supreme Court.) The ruling was a blatant violation of the First Amendment, which does not set any boundaries on the content of protected speech.
This is not to say that any action which involves speech is automatically protected, but intent of the First Amendment was clearly to rule out any legal consequences for speech as such, regardless of the content. For the action to be illegal it would have to involve something other than mere speech. This is also consistent with the idea that the punishment should be proportional to the crime, which is impossible when the crime is speech and the punishment is just about anything else.
All those folks who like to blather on about negative rights rarely bring up the fact that, without strong and well-enforced environmental regulation, the air we breath, the water we drink, the food we eat, and the land upon which we live can be contaminated to the point that it will not sustain healthy life, and all of that is okay because air, water, food, shelter, and health don't fall into the category of negative rights, but are instead positive rights that restrict (often unfairly, in these people's minds) the rights of others.
I'm not sure who you've been talking with, but the cases you mention fall pretty clearly into the category of negative rights. Specifically, if you release contaminants into the air, water, land, food, or anything else which then proceed to end up in other people's bodies or other property and cause them harm, you've infringed on their negative rights the same as if you'd injected them with poison. It's indirect, and thus harder to trace back to the source, but those who are harmed by pollution can definitely claim damages against polluters. That was in fact how pollution used to be handled, before certain socially-minded judges decided that industrial development was a greater social good (read: paid more taxes) than strong property rights for individuals and stopped hearing such cases.
So, if a 4 GB data plan costs $200, that is equivalent to 80 minutes of voice for $1.
Voice requires consistently low latency to support two-way conversations, which makes it a completely different kind of service. You're comparing about 18 MB of plain data service, without any QoS to speak of, with 80 minutes of high-priority, low-latency voice traffic. Naturally the data service will be far cheaper.
Taxing a billionaire 10% and a homeless man 10% is NOT fair, and it's simplistic to think it is.
You're right, it's not fair. The billionaire actually values the money and worked hard to get it, and contributes far more in taxes than he'll ever see back in useful services, whereas the homeless man—given the more common chronic case, which owes more to psychological issues than economics or bad luck—clearly values money very little and would receive more tax money back in public services than what he paid even if the rate was 100%.
It's not the homeless you should worry about; most of them don't have much of anything to tax in the first place. The problem is those not already in the upper class with the drive and ambition to improve their status. "Progressive" taxes on higher incomes hurt them more than those who are already rich. Once you're rich, the majority of any increase takes the form of capital gains, which you don't even have to realize until you actually want to buy something. To get there, however, requires hard work and a correspondingly high income. The more you tax the higher incomes, the harder it is for someone in the middle or lower class to improve their status.
Why on earth are these 2 clipboards not unified?
Because that would make it less usable. The Ctrl-C clipboard is meant for more permanent data, while the mouse selection is more transient (it changes whenever you select anything, even if you didn't want to paste it elsewhere). If you unified the clipboards, for example, then you couldn't copy something, select something else, and then paste to replace the selection.
You probably don't notice this problem with PuTTY because it's the only program updating the clipboard on mouse selection, and the only reason to select anything in PuTTY is to copy it to the clipboard. It might make sense to do the same in Konsole, though, or in other terminal emulators.
This is a common misperception - that inflation can lead to malinvestment because it incents people to take more risk than they otherwise would have, just in order to preserve capital.
Actually I wasn't saying anything about taking more risk. The argument was that currency inflation incents people to make investments (even low-risk investments) which appear to be profitable, but are actually below average and reduce economic output rather than contributing to growth. It's really no different than the argument commonly used against price deflation, that it prevents people from investing by raising the minimum return necessary for an investment to be better than saving your money and letting it appreciate. I agree with this argument, by the way. I simply hold that when the price deflation is natural rather than forced, saving the money is in fact the better choice, not just for the individual investor but for society as a whole. The same is true for natural price inflation. The problems associated with price deflation are really symptoms of currency deflation, which incents people to forgo good investments, just as currency inflation leads people to make bad investments. Monetary policy is just like any other subsidy or tax in this regard; whether you're encouraging spending and investment or discouraging it, you're moving it away from the optimal point determined through the market and causing either too much (inflation/malinvestment) or too little (deflation/underinvestment).
Imagine a world with no monetary expansion and zero inflation as far as the eye can see. If the market says you must pay me $101 today in order for me to give you $100 tomorrow, and that is the best deal you can get, then the real rate of return is -1%. Clearly this person is in the same situation as the person who can only earn a -1% real rate of return by investing 2% risk-free in a world with 3% inflation.
That's never the best deal you can get, because in the absence of price inflation or deflation you can stuff your money in a mattress and get a guaranteed 0% real return. That's better than the other case where the best you can get, risk-free, is really -1%.
The really interesting case doesn't even involve negative returns; that's the one where price inflation and currency inflation are not at the same rate. For example, if technological progress and/or improvements in economic efficiency would naturally lower prices by 2%, but there is a 5% increase in the currency supply over the same period. The net result is 3% price inflation, but an investment with a 5% nominal return, while higher than price inflation, is really a malinvestment because it's not producing any real improvement on the resources consumed—the 5% is entirely due to currency inflation—in a time where the average investment is giving 2% real returns. The 2% increase in purchasing power is due to other investments which led to a general improvement in the state of the economy, not that particular investment, which is dragging down the average. It would be better to save the money and not spend scarce resources on below-average investments, but the currency inflation makes that a losing strategy.
First, intertemporal comparisons may be of academic use, but economic actors can only decide between good a and good b contemporaneously; you can't choose between buying good a today and buying it last year.
True, but as you point out, you can choose between buying a good now and buying it a year from now. To predict the future price you need to be able to analyze past prices and understand the reasons for the changes.
It does matter when it is possible to choose between a good today and a good tomorrow, such as deciding whether to make a particular investment. But for low risk goods, where the rate of inflation will meaningfully affect real returns, they are typically liquid enough that the market appropriately prices in the expected inflation...
The market only factors in price inflation. You're still left with malinvestments which looked profitable on paper, even after factoring in price inflation, but are actually net losses because they are below the average real rate of return and draw resources away from other, more profitable ventures. Yes, investors should be looking to get the highest possible return for their money, but not everyone can find above-average investments, and for those who can't, inflation leads them to invest somewhere to avoid the inflationary loss even if the economy would be better off with them simply holding on to their money.
And for high risk ventures, whether the payoff is 50% or -50% is going to be determined by the success or failure of the risk, not the movement of the medium of account.
True, but only if you're talking about the actual payoff after the fact rather than the expected payoff prior to investing, and it's the latter which determines whether or not you choose to invest. Changes in the money supply affect all investments near the margin, whether low risk or high risk.
Lastly, a little money illusion can be a good thing.... The best example is unemployment. It is generally better for ten people to take a 10% real paycut than for 1 out of 10 to lose a job while the others keep their original pay.... Some inflation allows for real pay cuts in response to real supply shocks while mitigating the baseline anchoring bias.
Yes, that was one of the original arguments for inflation. It was an underhanded trick to begin with, playing on the average worker's supposed ignorance of basic economics to fool them into accepting lower pay than they thought they'd been promised. Well, that only works so long as your employees remain ignorant of inflation, which is a necessarily transient state. The workers figured out this little scheme and fought back by demanding inflation-indexed wages.
Once we reach the 21 million BtC cap, miners will stop mining them and will no longer be confirming transactions as a by-product of the mining process. The only possible way to continue will be to change BtC to raise the limits and get people mining again.
No, the mechanism for continuing is already built in: transaction fees. In addition to the reward for solving a block, the miner gets a small fee (determined by the sender) for each transaction. Miners will continue mining even as the block rewards fall to zero because they'll get paid out of existing BTC for processing the transactions. Also, the difficulty doesn't increase exponentially on its own, it's determined by the time between blocks, which in turn depends on how how much computing capacity is thrown at the problem. Arguably the "carbon footprint" problem, if there is one, is due to the block reward being way too high right now. As transaction fees become more dominant they will eventually provide a more flexible way of encouraging just the right amount of mining necessary to secure the network.
a mildly inflationary currency is still a perfectly good currency because it can still be a fine medium of exchange and account
Given a constant currency supply, changes in the prices of goods are indicative of the relationship between the good's supply and demand. When the currency supply increases or decreases, however, that affects the prices of goods independently of their supply and demand, which has implications for comparing prices over time, making the currency less suitable as a unit of account. You can try to compensate with something like CPI, but the CPI only looks at changes in price and doesn't distinguish between changes due to currency inflation or deflation and changes due other factors which affect the entire economy, such as taxes or transportation costs. If you compare the price of a good from ten years ago with its price today, you can see whether it costs more or less, but even after adjusting based on the CPI you don't know whether production of the good is more or less efficient than it used to be. If the adjusted price increased by 5%, is that because it costs 5% more to make the same good or because it costs 5% less, but there's 10% more money in circulation? Without knowing the actual change in the supply of currency there's no way to be sure.
There is already a vast commerce in the digital expression of any currency you want, which exists precisely because of the convenience and low energy cost of virtual transactions. If you want a currency whose supply is relatively fixed, gold has been traded for thousands of years. You can use it for anonymous transactions, and the rate of growth is very slow as new gold becomes increasingly difficult to find.
So why is Bitcoin needed, again?
The other digital systems are all centralized and subject to the whims of a particular service provider and/or the government it operates under, and to use a commodity like gold directly you need to actually store and transfer matter, not just bits. Bitcoin is the first system to combine the best of both worlds, a global and decentralized form of electronic money.
My main response to "but but but gold/silver/bitcoin" is to point and say
"Look! No government in the world does that anymore! It couldn't keep up!"
Sure, it couldn't keep up with the desire of every government ever to raise money by debasing its money supply. That's not exactly a ringing endorsement of the practice. It's good for the issuer of the money (until people lose trust and you get hyperdeflation); that doesn't mean it's good for the people who need to actually use the money.
I agree. There are plenty of units to go around. One thing I've always wondered, though, is why there are only eight digits. It's a 64-bit integer, right? That would allow for 2.1e18 units, or 21 million BTC to 18 significant digits, 11 of them after the decimal. What happened to the other three?
The rich can avoid debt and sit on their wealth while it accumulates.
If you earn money and simply sit on it, then you're not receiving any goods or services in exchange for what you've produced. In the mean time, others gets to enjoy the proceeds from that production. In effect, you've made them a loan of your purchasing power; the increase in value is merely the interest on that loan. It's certainly better than making sub-par investments with returns below the rate of deflation, which would slow economic growth. If you are competent at spotting the investments with above-average returns then you would still invest in them to get an even better return despite the deflation.
The poor however can watch as their mortgage increases with value alongside their wages rather than gradually getting smaller.
If history is any guide, under deflation wages increase faster than prices, so while the real value of the mortgage is indeed increasing, its value as a fraction of your paycheck is decreasing. Inflation has the opposite effect.
Deflation encourages hoarding wealth and inflation encourages investment and wealth creation.
You've got that backwards—or rather, sideways. The axis to look at is not inflation vs. deflation, but rather the degree to which the currency supply is manipulated. A monetary policy which causes deflation (or reduces inflation) by reducing the money supply discourages good investments and thus destroys wealth. A monetary policy which causes inflation (or reduces deflation) by increasing the money supply encourages malinvestment and thus destroys wealth. A neutral monetary policy (i.e. a fixed money supply), regardless of the rate of inflation or deflation, encourages good investments while discouraging malinvestment, and thus creates wealth.
Deflation causes people to hoard their money because it's basically an investment to keep it. That's not something that helps the economy (need them to spend money).
On the contrary, it can help the economy. If you want to grow the economy sustainably (and not just boost short-term metrics) then you need to expand its productive capacity through capital investment. You can't do that if everyone is focused on immediate consumption, so the first thing is to convince people to hold back on consumption and start saving instead. Deflation has that effect.
Once people have started saving, they can either hold onto the money or invest it somewhere. If they choose to hold onto the money, they may not be going out and actively picking profitable ventures, but neither are they using up any of the surplus production that money represents. Their "hoarded" money isn't competing with others' money for goods and services, which makes others' money that much more valuable. You can think of that as a sort of general loan, not of money per se but of purchasing power, part of which will go toward consumption and part of which will go toward investment. The portion of the decrease in prices (deflation) which results from those investments is the interest on the loan.
The interesting thing about a deflationary currency is the potential investments with nominal returns less than the rate of deflation, i.e. those which would naively seem to be profitable if it weren't for the deflation. If the change in prices is due to a policy of reducing the currency supply or a sudden, unexpected change in the demand for cash, that could be an issue, but when the deflation reflects changes in the natural price of money in the market—changes in the supply of goods and services relative to the (fixed) supply of money—then any investment which fails to beat the rate of inflation is a subpar investment, and would reduce economic growth, not increase it. The investments which don't take place due to inflation shouldn't take place, because they take productive capacity away from more profitable investments, even if the alternative is simply "hoarding".
If the deflation does happen to be due to a change in the demand for money, rather than economic growth, then that indicates an expectation there will be more need to spend money in the future more than there is now, which once again means that putting that money into lower-return investments now would be a costly mistake—it would mean wasting limited resources in the present when there will be more valuable uses for those resources in the future.
On the other hand, if the deflation is due to manipulation of the money supply, then that just comes down to sending false signals, and an economic loss should be expected. Deliberate deflation gives people an incentive to hold their money rather than make investments which would be better for the economy, just as deliberate inflation leads people to make investments whose low returns actually reduce overall economic growth.
To illustrate how currency inflation leads to malinvestment, let's say that annual growth in terms of purchasing power, the total supply of goods and services, is 3%. The money supply increases by 5% over the same period. Between the two, you should expect prices to increase by about 2%. Let's also say that there's an investment which pays 4% nominal returns. While obviously not the best investment out there (the average should be 8% based on the growth and inflation rates), it looks reasonable on paper—that's a 2% net increase in purchasing power, which is far better than the 2% loss you'd get from simply holding on to the money. However, the contribution to economic growth is actually -1%; 5% of that 4% nominal return came from the increase in the money supply. It only looks profitable because the economy was growing by 3% at the same time. Making this investment, or any other investment with less than 8% nominal returns, wil