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So say your country produced 5% more goods, and the bitcoin supply increased 1% or even decreased. Production is higher than monetary supply increase. Seems to
by montaguy 9y ago
So say your country produced 5% more goods, and the bitcoin supply increased 1% or even decreased. Production is higher than monetary supply increase.
Seems to me that sure, the cost of investment would rise in this deflationary scenario, but to assume this results in no investment is a foregone conclusion. Wouldn't you just get a new investment vs savings equilibrium? One that may be more aligned with responsible investments and purchases? Why is it a downward spiral? If saving is greater than investment than production wouldn't stay at 5%, it's ostensibly fall, reducing deflation, and making investment more appealing relative to saving.
Doubtless this 'target inflation' debate has raged for the past century. Does anyone have any book recommendations that explore these ideas?
- taw55 9y agoDebts are denominated in money, if that money becomes more scarce, people will spend a lower fraction of their income on consumption articles out of fear of not making ends meet. At any point in time total spending equals total income, so this will reduce total demand inside the economy. If people's income diminishes, their debt-to-income ratio rises. This results in what is called a debt-deflation spiral.