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> You are encouraged to buy and hold it because it will be worth more in the future relative to the cost of goods, services, and other fist currencies. A curre
by ric2b 9y ago
> You are encouraged to buy and hold it because it will be worth more in the future relative to the cost of goods, services, and other fist currencies.
A currency being inflationary shouldn't really affect spending because lots of different investments already exist, so you can make money holding them instead of the dollar. The dollar being inflationary (or shouldn't, for rational actors) incentivizes trading it for something else, but not necessarily increase spending in unnecessary, depreciating, products.
- smallnamespace 9y ago> lots of different investments already exist, so you can make money holding them instead of the dollar That's true, but someone has to end up holding the nominal assets. Like yes, a saver can trade all their fiat currency for real assets by buying a house or stocks, but then the person who sold them those stocks would get hit by inflation. At the end of the day, if the 'real assets' in the economy are worth say $10 trillion and there is $1 trillion of currency in circulation, then whoever is holding those dollars will pay for the inflation. Btw, the most common nominally-denominated asset is debt. Savers who hold debt (Treasuries, mortgages, etc.) get hit the most by inflation.