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Comment by dragonwriter | Hacker News Reader

> Every article that portends doom via deflationary measures trots out the same 'ol tired arguments and examples (great depression, hoarders, etc.) You have to admit this is new ground.

In what relevant sense to deflation and its effects is it new?

> There are a lot of new ideas here (i.e. divisible to 8 decimal places, de-centralized, etc.)

How are any of these relevant to the incentives created by deflation?

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Bitcoin is an infant. Hoarders will happen, sure. We'll see what happens in the long term. Gold as a fixed medium may not be practical to slice to 8 decimal places, but then again...the central authority that is in charge of deciding that never tried. They just gave up and Keynes won. Let's see what happens.

I'm always peeved by this reference to Keynes. This is a topic that is universally recognized by almost all economists, with the exception of a few Austrians. In fact, the main proponent of this concept was a conservative economist from the University of Chicago named Irving Fischer. Because the Great Depression was a period of absolute deflation (falling prices and falling output), this was a central concern to Keynes as well. However, it was none other than Milton Friedman, a lead figure in the resurgence of neo-liberal (libertarian) thought in the mid 20th century. In fact, Milton Friedman's most famous work (the work with Anna Schwartz), was all about how the Fed caused the double-dip in the Great depression by enforcing the gold standard and contracting the money supply. See? Friedman (a libertarian) rose to fame for his claim that the Fed destroyed too much money during the Great Depression!

Edit: One quick thing I forgot. Keynesian economics is all about the idea that, if prices are "sticky" and cannot fully adjust in real time, then that leads to drops in output. The flip side of this, which is evident in the current crisis, is downward nominal wage rigidity. The fact that prices are slow to adjust partially mitigates the threats of deflation. So if anything, Keynesians have less to worry about from deflation than other factions of macroeconomists.

It isn't entirely clear to me what you're trying to say. With respect to Friedman and the Great Depression, he drew the conclusion that the Fed a) failed to act as a lender of last resort (i.e. they could have adjusted the price of gold -- which they never tried), but more importantly b) the crisis would have never occurred, and the economy as a whole would have been better off if the Fed were never created in the first place [1].

[1] http://www.fee.org/the_freeman/detail/the-great-depression-a...

Anyway, this is all taking a left turn here. It has been fun, but there are probably better forums than HN for discussing macro-econ. Maybe I'll see you in one of the subreddits, and we can debate it in more depth there.

Continuing to repeat "Bitcoin is new; Bitcoin is sudividable; Keynes bad; central bank bad" isn't actually an argument as to how any new features of Bitcoin, including its subdivisability, change any of the incentives related to deflation.

If you've got an argument, make it, but as far as I can see there's just conspiracy theories about the status quo and wishful thinking with no coherent basis for Bitcoin.

Sure, you can continue to try to discount the things I've already said, and tell the world none of it matters according to you, and yet here we are in an endless loop.

I am not discounting them, I am asking you to provide reasons to believe that they have some substance. I am interested in knowing whether there is any substantive reasoning behind the "but Bitcoin is new and different" response to deflation concerns, but from what I can tell from the responses of proponents of that position when asked for a rationale, it amounts to a bare article of faith, rather than a position with any rational support.

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