The answer is this - a slightly inflationary currency offers the greatest good for the greatest number. It encourages people to _invest_ their money so it doesn't lose value.
Deflationary currencies encourage people to _hoard_ money as a viable strategy, and the more people hoard, the more valuable it becomes.
In a society where the most profitable and safe strategy is simply to hold your money and do nothing with it, no business ventures will start.
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So many questions people ask about crypto could be answered in a first year economics course - or simply by sitting down for a while and working out strategies with poker chips.
If people weren't so pugnacious about their complete lack of knowledge of economics, it would be rewarding to explain to people why things are how they are.
I hasten to add that as a socialist, I have a lot of issues with modern economics, but pretending that it's nonsense or that its mathematical models aren't useful is just silly.
> a slightly inflationary currency offers the greatest good for the greatest number. It encourages people to _invest_ their money so it doesn't lose value.
>Deflationary currencies encourage people to _hoard_ money as a viable strategy, and the more people hoard, the more valuable it becomes.
What's the primary source for this theory?
I hear it espoused a lot but it seems counter-intuitive. People still have to buy food, shelter and clothing in a deflationary environment.
Maybe if I read the larger arguments in works that established the idea I can get a better grasp on it.
>Deflationary currencies encourage people to _hoard_ money
People hoard things regardless. Inflationary currencies cause people to hoard property and we're watching the destruction from that unfold in real time in the US.
Deflationary currencies encourage people to _hoard_ money as a viable strategy, and the more people hoard, the more valuable it becomes.
In a society where the most profitable and safe strategy is simply to hold your money and do nothing with it, no business ventures will start.
----
So many questions people ask about crypto could be answered in a first year economics course - or simply by sitting down for a while and working out strategies with poker chips.
If people weren't so pugnacious about their complete lack of knowledge of economics, it would be rewarding to explain to people why things are how they are.
I hasten to add that as a socialist, I have a lot of issues with modern economics, but pretending that it's nonsense or that its mathematical models aren't useful is just silly.