You tell me. By the way, you still have not explained why a zero inflation is not preferable to some low inflation. You said:
"it encourages spending and investment and discourages hoarding cash."
But inflation discourages savings (as I said, critical for the banking system, and therfore impacting investment), and hoarding cash would be anyway discouraged in case you have zero inflation, because you would be able to place your money in portfolio to gain more than 0 on yearly returns (dividends at least). So there would be no net return in hoarding cash. Or are you saying you need inflation to have growth ? In that case you would be mistaken, there was ample growth even when the markets were following the Gold standards...
So I am not really sure where you come from to recommend "low inflation". Besides, who can ensure the inflation remains low, and who can control that there is no dumping of cash on the market when there is a central bank in charge, serving the current political agenda ?
Again, what's good with Bitcoin and Gold is that they are both neutral and relatively free of political control (well, at least for Bitcoin).
Don't conflate "zero growth of the money supply" with "zero inflation". Unless the population and amount of goods and services produced stays constant, these two won't correspond. With zero growth of the money supply, a growing population with a growing economy will experience deflation, which is what worries me.
> Why does deflation worry you? It's a good thing.
You haven't actually studied modern economics if you don't understand why deflation is worrisome and why the monetary policy we have now exists to prevent deflation to achieve this stability: http://upload.wikimedia.org/wikipedia/commons/2/20/US_Histor....
Try reading your own link, "It's important to note that this fallacy should not be used to dismiss the claims of experts, or scientific consensus.". You are trying to do exactly that. Pointing out that you are in conflict with basic economic knowledge is not an appeal to authority. You asked why he was worried about deflation, I showed you why, I wasn't making an argument, I was giving you the information you asked for. Ignore it if you like, I'm not interested in arguing with you.
It really seems to me you haven't studied economics at all. Zero inflation/deflation would be great, but it's simply not achievable in practice, the economy is not fixed in size. To maintain zero inflation/deflation would require the money supply to fluctuate at exactly the same rate as the wealth in the economy it represents, can't be done.
Inflation is not a measure of just the money supply, it's a measure of the size of the money supply to the size of wealth in the market, fixing the size of the money does not fix the size of the wealth it represents.
Wealth expands and contracts constantly and if the supply of money doesn't change accordingly you get either inflation or deflation. Well it turns out that doesn't work so well, the economy reacts much better and quicker to inflation than to deflation because prices rise easier than they fall. While on the gold standard the swings in the market were wild and depressions happened often.
Fiat money fixed that by allowing the supply of money to be managed to match the need for money in the economy. Money is just a tool after all, it is not wealth, just a means of trading wealth. By continually slightly inflating the money supply, the natural swing from inflation to deflation was pushed over to the inflation side avoiding deflation and all its ills. Since fiat money took over the economy became much more stable and those cyclical depressions under gold became cyclical recessions. Inflationary policy with fiat money simply works better.
Inflation does not discourage saving, it discourages saving cash, big difference that you keep ignoring. Bitcoin is doomed as a currency for the same reason gold died, it's vulnerable to continual and inevitable deflationary pressure. Every sudden jump in real wealth in the market will force bit coin into a deflationary period; this is very bad. It dries up the money supply and encourages hoarding of the tool meant for exchanging. Money is not wealth, it is not meant for saving, it's meant for spending. Treating it like wealth, and hoarding it, reduces the supply that's necessary to keep liquidity in the market and forces traders to trade with lesser amounts forcing suppliers to reduce prices, aka deflation.
Those who ignore history are doomed to repeat it. If the money supply cannot be rapidly expanded to meet the needs of increased wealth being created in the market, then the currency will suffer deflation and fail as a currency. There a reason the nations of the world have moved to fiat currencies, they simply make better more functional currencies.
"it encourages spending and investment and discourages hoarding cash."
But inflation discourages savings (as I said, critical for the banking system, and therfore impacting investment), and hoarding cash would be anyway discouraged in case you have zero inflation, because you would be able to place your money in portfolio to gain more than 0 on yearly returns (dividends at least). So there would be no net return in hoarding cash. Or are you saying you need inflation to have growth ? In that case you would be mistaken, there was ample growth even when the markets were following the Gold standards...
So I am not really sure where you come from to recommend "low inflation". Besides, who can ensure the inflation remains low, and who can control that there is no dumping of cash on the market when there is a central bank in charge, serving the current political agenda ?
Again, what's good with Bitcoin and Gold is that they are both neutral and relatively free of political control (well, at least for Bitcoin).