Deflationary Currency Debate
The cluster centers on debates about whether deflation in currencies like Bitcoin or gold is economically harmful—due to encouraging hoarding, reduced spending, and potential spirals—or beneficial for increasing purchasing power and incentivizing saving.
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you guys know that deflation is bad right?
Please explain why deflation is worse.
What are the cons of a deflationary currency?
Deflation mostly matters with currency. Deflation of products is a good thing.The problem with deflating currency is that it encourages you to sit on it. Economists don't want you sitting on a hoard like a dragon. In the extreme case, GDP goes to zero today because everybody is expecting prices to be cheaper tomorrow. Then all the workers get fired because there's nothing to produce. Now they have no money, and buy nothing, so it gets even worse.Obviously the extreme case doesn&#
Er, Gold was a currency for a few thousand years. Deflation is a good thing in a currency since it increases it's value when you aren't spending it. I've heard some argue that that might be bad for the economy at a large enough scale, but at an individual level that is certainly a positive.
How does Bitcoin help? Deflation is actually bad for the economy because people hoard money. It would be stupid to buy things because money gets more valuable over time while things depreciate.
Deflation is a problem, but not for the reason mentioned there. The reason deflation is an issue is because it makes holding cash into an investment strategy. If the price of goods is dropping, the value of money is rising, so the more cash I hold the richer I get. This obviously dissuades people with cash from investing their cash into actual productive work, which means fewer jobs. There was a small deflationary bump in American history around the 1930s that helps to illustrate what can happen
Sounds like currency deflation. There are winners in deflation too.
Deflation by definition implies means that stuff will be worth less in future than it is now.This is bad for investors and producers spending money now in the hope of earning more money in future.On the other hand, simply holding onto cash is risk free, and that cash will have increased purchasing power in future (at the expense of the producers forced into offering lower prices to get money circulating again)An economic system which deters investment, production and consumption but rew
It sounds like you aren't familiar with the anti-deflation argument. I've summarized it in https://news.ycombinator.com/item?id=44471609, which you will probably want to read.