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Old 12-08-2014, 10:26 AM  
AmeliaG
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Join Date: Jan 2003
Location: Los Angeles
Posts: 10,531
Quote:
Originally Posted by aka123 View Post
LOL. I have nothing against currencies, in case you think something like that.

Inflation is sought after. I figure it that how that all central bank leaders and leaders in economy say that they seek that and that kind of inflation. For example ECB has about 2 % yearly inflation goal. Not much less, but not more either. Small manageable and predictable inflation is good thing.

See it yourself, from ECB:

" Reasons for aiming at below, but close to, 2%
Inflation rates of below, but close to, 2% are low enough for the economy to fully reap the benefits of price stability.

It also underlines the ECB?s commitment to

provide an adequate margin to avoid the risks of deflation. Having such a safety margin against deflation is important because nominal interest rates cannot fall below zero. In a deflationary environment monetary policy may thus not be able to sufficiently stimulate aggregate demand by using its interest rate instrument. This makes it more difficult for monetary policy to fight deflation than to fight inflation.
take into account the possibility of HICP inflation slightly overstating true inflation as a result of a small but positive bias in the measurement of price level changes using the HICP.
provide a sufficient margin to address the implications of inflation differentials in the euro area. It avoids that individual countries in the euro area have to structurally live with too low inflation rates or"

https://www.ecb.europa.eu/mopo/strat.../index.en.html

Also, not all leaders are bolstering their currencies, contadictory. There are certain levels where the currency is in balance in terms of export and import. For example US has blaimed China for keeping it's currency as too low (from US perspective). For China, the lower currency brings competition advantage to it's export industry. Neither is too low currency good thing as import starts to be quite costly.

Baht is of course real currency. Bitcoin isn't as it isn't currency altogether, but it is real money, just like Monopoly money, sea shells or whatever.

Fair point regarding small consistent inflation, although this is only the case for central banks which use the interest rate as a lever.

While a few central banks manage for the export benefits you mention, most notably China, most are more concerned about managing for strength.

The Baht has been more volatile than Bitcoin. They are usable in different places. I live close to Thai Town in Los Angeles, so I could probably buy dinner with either Baht or Bitcoin here, but there are few places where both would be useful currency. I don't know of any place in 2014 where I could buy dinner for a particular denomination of sea shell, do you?

All currency is essentially an instrument which represents value beyond its intrinsic value. Being made of code doesn't strike me as making Bitcoin different from currency made of paper.

What is the difference?
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