Author Topic: about inlfation of the dollar and bitUSD  (Read 2156 times)

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Offline Frodo

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ok guys i get all that, no need to convince me.... but no one has answered my question.... is bitUSD as open to inflation as the real dollar?

As I understand it, yes. If everyone decides that dollars aren't worth anything your bitUSD aren't worth anything either.
So if you get 2% yield on your bitUSD but USD has an inflation rate >2% your buying power will decrease over time.

Offline blahblah7up

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I think the easiest way to think about it is:

1 bitUSD = 1 USD always

That never changes because of the peg.  bitUSD just follows the COURSE of real USD.
If real USD is loosing value because it is being inflated, bitUSD will also reflect that loss in value.

Offline serejandmyself

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So then i get 108.5 USD, but inflation was 10%, so the vaule of my USD after that year is now 97.65 USD.

No, the value of your USD is 108.5 USD.  Only they buying power of that USD has changed.

by value io meant buying power - please see previous comment. Value = buying power
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Offline serejandmyself

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ok guys i get all that, no need to convince me.... but no one has answered my question.... is bitUSD as open to inflation as the real dollar?
and btw you can get more than 2% - example :

http://kapitalbank.ru/private/contributions/?utm_source=yandex&utm_medium=cpc&utm_campaign=context_tul - 5.5%

ok thats just one example, you can get up to 8% per year on your savings in USD in Russia.... (please refrain yourself from comments about developed countries and politics - keep the talk to Economics and bitUSD only). Im sure you can in
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Offline Empirical1.1

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I was asked a quetion about bitUSD i couldnt give a good answer to. It might have been discussed before but i cant see any info on that.
The question is how does bitUSD fight with the inflation of the real value of USD. In the sence of lest say i have 100 USD i put them into a bank (its 100% secure and safe - lets assume so) on 8.5% per year. So then i get 108.5 USD, but inflation was 10%, so the vaule of my USD after that year is now 97.65 USD.
Now i take 100 USD and buy 100 bitUSD + after a year i get 2.5% (we are taking todays situation), so i get 102.5 bitUSD and excnhage them back into USD + inflation .... so i got less

So what do i miss?

Well for one you can't get 8.5% in a bank on USD really anywhere. The yield you'll get on BitUSD will be better than nearly all banks can offer when the new system (of shorts competing on yield) takes effect.

Your USD can also be seized or confiscated in a bank and they are woefully under collateralised.

So really BitUSD is your best bet if you want to maximise the value of a USD.

However inflation is vastly understated so it's hard for any yield to compensate for the loss of value USD may experience in the medium term, so personally I'm not a fan of holding much value in it. But if you did, BitUSD is probably the place to do it. (Even though it's declining its relatively stable and is still the world reserve currency so will be the most popular for merchants and trade in general till it collapses.)

Offline Crossover

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There nowhere in developed economies interest deposit rates higher then 2%, only high risk high yield bonds could give >5%,
so bitUSD is very expedient
http:// www . deposits.org/world-deposit-rates. html

Offline blahblah7up

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So then i get 108.5 USD, but inflation was 10%, so the vaule of my USD after that year is now 97.65 USD.

No, the value of your USD is 108.5 USD.  Only they buying power of that USD has changed.

Offline serejandmyself

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I was asked a quetion about bitUSD i couldnt give a good answer to. It might have been discussed before but i cant see any info on that.
The question is how does bitUSD fight with the inflation of the real value of USD. In the sence of lest say i have 100 USD i put them into a bank (its 100% secure and safe - lets assume so) on 8.5% per year. So then i get 108.5 USD, but inflation was 10%, so the vaule of my USD after that year is now 97.65 USD.
Now i take 100 USD and buy 100 bitUSD + after a year i get 2.5% (we are taking todays situation), so i get 102.5 bitUSD and excnhage them back into USD + inflation .... so i got less

So what do i miss?
btsx - bitsharesrussia