4 ms·

Deflationary currency discourages spending, increases the value of debt, causes people to hoard cash, and potentially causes wage unemployment.

tapp 10y ago
What is the difference between "hoarding cash" and "saving" besides the fact that one sounds evil and the other virtuous? (I don't intend that as a rhetorical question - I'm sincerely asking.)
- wmf 10y ago
  "Saving" usually refers to investments which are then loaned out to increase the velocity of money while "hoarding" does not.
- lmm 10y ago
  Saving (as distinct from investment in productive things) is also bad for the economy. A small amount of buffer may smooth the working of the economy, but stored cash/assets are dead weight - it's better if people are spending immediately, keeping the cash circulating into productive things.
  - irln 10y ago
    > but stored cash/assets are dead weight Curious, are US treasuries or interest in a savings account considered "dead weight" in your definition?
    - lmm 10y ago
      Not completely dead but close to it. To the extent that they provide funding for government infrastructure, business loans and the like, they're productive. But AIUI that link is pretty thin these days.
      - irln 10y ago
        If investing in Treasuries and Savings accounts are considered hoarding or "dead money" that's +/-$13T to $19T depending upon how you look at it for Treasuries [1] and $8.6T for savings [2]. [1] http://treasurydirect.gov/NP/debt/current http://treasurydirect.gov/NP/debt/current [2] https://fred.stlouisfed.org/series/WSAVNS https://fred.stlouisfed.org/series/WSAVNS
dnautics 10y ago
Inflationary currency encourages consumption (and environmental destruction), decreases the value of debt (and causes people to pursue unsustainable risk on leverage), and cheats low- and fixed- income wage earners out of the value of their earnings disproportionately compared to the wealthy, necessitating minimum wage increases, which creates sporadic wage unemployment, which is more disastrous than gradual wage unemployment.

tapp 10y ago

What is the difference between "hoarding cash" and "saving" besides the fact that one sounds evil and the other virtuous? (I don't intend that as a rhetorical question - I'm sincerely asking.)

wmf 10y ago
"Saving" usually refers to investments which are then loaned out to increase the velocity of money while "hoarding" does not.
lmm 10y ago
Saving (as distinct from investment in productive things) is also bad for the economy. A small amount of buffer may smooth the working of the economy, but stored cash/assets are dead weight - it's better if people are spending immediately, keeping the cash circulating into productive things.
- irln 10y ago
  > but stored cash/assets are dead weight Curious, are US treasuries or interest in a savings account considered "dead weight" in your definition?
  - lmm 10y ago
    Not completely dead but close to it. To the extent that they provide funding for government infrastructure, business loans and the like, they're productive. But AIUI that link is pretty thin these days.
    - irln 10y ago
      If investing in Treasuries and Savings accounts are considered hoarding or "dead money" that's +/-$13T to $19T depending upon how you look at it for Treasuries [1] and $8.6T for savings [2]. [1] http://treasurydirect.gov/NP/debt/current http://treasurydirect.gov/NP/debt/current [2] https://fred.stlouisfed.org/series/WSAVNS https://fred.stlouisfed.org/series/WSAVNS

dnautics 10y ago

Inflationary currency encourages consumption (and environmental destruction), decreases the value of debt (and causes people to pursue unsustainable risk on leverage), and cheats low- and fixed- income wage earners out of the value of their earnings disproportionately compared to the wealthy, necessitating minimum wage increases, which creates sporadic wage unemployment, which is more disastrous than gradual wage unemployment.