Reply To: Economic calculation and Bitcoin


Ok, that makes sense. I was sort of thinking the same thing but I didn’t know if it was correct.

“It may be that it’s current price is driven by what proves to be wild speculation”

– I am not too familiar with reading charts like this. How does the chart show wild speculation?

“Lending at a negative interest rate would be like selling a product at a negative price. No one would do so there would be no supply of credit at all and therefore no loans and no rate of interest at all. It could be the case, as you suggest, that the most urgent borrowers might be willing to pay an interest rate that more than compensates for the price deflation, say 10%. In this case, the inefficiency of an excessively deflationary money is partial instead of total. There are many willing lenders and willing borrowers at the pure rate of interest who would supply and demand credit and thereby, satisfy their time preferences. But many lenders will not do so given the extent of price deflation.”

– Where can I learn more about the affects of inflation/deflation on credit transactions?