Deflationary spiral: Difference between revisions
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'''Deflationary spiral''' is an economic argument that propose that price falling below cost would eventually lead to the collapse of the currency. It is a common criticism made against the viability of [[Bitcoin]]. | '''Deflationary spiral''' is an economic argument that propose that price falling below cost in a runaway deflation would eventually lead to the collapse of the currency. It is a common criticism made against the viability of [[Bitcoin]]. | ||
==Economic history== | ==Economic history== | ||
The first deflationary economic growth is a phrase of economic growth caused by the slashdot effect. From there, we see the the price of bitcoin rose to 0.06 USD. This price level remain stable until early October, when a rally cause the price to touch .50 USD before settling at the .20-30 USD equilibrium. | The first deflationary economic growth is a phrase of economic growth caused by the slashdot effect. From there, we see the the price of bitcoin rose to 0.06 USD. This price level remain stable until early October, when a rally cause the price to touch .50 USD before settling at the .20-30 USD equilibrium. | ||
Revision as of 01:17, 17 December 2010
Deflationary spiral is an economic argument that propose that price falling below cost in a runaway deflation would eventually lead to the collapse of the currency. It is a common criticism made against the viability of Bitcoin.
Economic history
The first deflationary economic growth is a phrase of economic growth caused by the slashdot effect. From there, we see the the price of bitcoin rose to 0.06 USD. This price level remain stable until early October, when a rally cause the price to touch .50 USD before settling at the .20-30 USD equilibrium.
Counterargument
Opponents counter that the deflationary spiral is not possible because of the Time Preference theory and the necessary end goal of money; to purchase goods and services.