overcoming ecash deployment problems (Re: all about transferable off-line ecash)

[Marcel Popescu]

From: "Adam Back" <adam at cypherspace.org>

> Consider during periods of high inflation people don't like holding
> money, as it devalues too fast.  They will hold interest bearing
> deposits instead.

Agreed.

> During periods of high deflation, they will hold cash if it is the
> most attractive "investment".  The result will be shortage of cash,
> for people who actually want to use it to make purchases because
> investors will buy all of it.

Right. And a shortage of anything, cash making no exception, is solved
automatically (if the market is left alone). The value of a monetary unit
will rise until its price will be considered (by the cash holders) high
enough - that is, until they will value something else more than the cash.
Shortages are NEVER a problem if the market is left alone to clear it - they
simply indicate an undervaluation of the commodity.

> Perhaps there are some government monetary systems in history which
> had this problem.  For example gold with sudden shortage of gold
> supply, or similar.

Once you put the gov't into the equation, all bets are off :)

Mark