Nostr Web Client

Ok, but this would lead to decreased demand, which would imply supply needs to decrease as well to bring things into balance, which then means less economic activity, people losing their income, and the general prosperity decreasing.

Which may be a good thing. There are people actively calling for ‘degrowth’ due to environmental reasons.

But speaking purely from the economics point of view, this doesn’t seem that great. 🤔

vlada 2y ago

You would definitely have less zombie companies. In a deflationary world, there is no malinvestment because there is no credit to create an artificial boom.

An individual would have less units of currency, but due to the implicit deflationary nature of technology, your money will buy more stuff eventually.

What's the price of a calculator? It's practically 0 because most PCs and phones have it as a free app. Deflation is what true wealth looks like. You can do and buy more stuff today than a caveman can because technology has created real wealth, regardless of any monetary policy.

You're still thinking like a Keynesian. By that particular branch of economic logic, a person who breaks a shopkeeper's window has increased the demand for glass and repairmen, which is good for the economy (false).

Inflationary currency enables fake growth, deflationary currency encourages real growth.

Reply to this note

Please Login to reply.

Discussion

Janis 2y ago

Do you think the central banks could achieve a similar effect by having a negative inflation target? So, keeping the rates high enough to have inflation at say -2%?

That should also discourage superfluous crediting and encourage saving.

vlada 2y ago

Central banks couldn't even keep their touted 2% target. If central banks and people in general were trustworthy enough to not steal easily available money, we would still be on the gold standard and we wouldn't need bitcoin.