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If you describe negative interest rates as "forcing people to invest their money", how would you describe deflation? Money is debt. You hold something now and
by rags2riches 7y ago
If you describe negative interest rates as "forcing people to invest their money", how would you describe deflation?
Money is debt. You hold something now and expect somebody else to give you something of value for it in the future. But the future is always uncertain. You may lose out on the deal by holding on to your money. But you seem to be demanding that somebody somehow should guarantee that people never do lose by holding on, no matter what. Who would that somebody be? How could that even work?
- y4mi 7y agoMoney was debt. It's how it got invented after all. It's not so clear cut anymore. Most currencies aren't backed by anything anymore nor are they tied to any yearly returns. They've become arbitrary numbers manipulated by central banks to control the economy.
- blackflame7000 7y agoYou would have to back the money with something physical such as the Gold Standard. An Oz of gold today will still be an Oz of gold tomorrow. Furthermore, the rarity of gold makes the amount in circulation relatively constant.
- zeveb 7y agoThe problem is that the purchasing power of gold isn't relatively constant: what you can buy with 1 oz. today and what you can buy with 1 oz. tomorrow are not necessarily the same — so you have much the same problem. Moreover, the relative constancy of the gold supply is a problem, because as the economy grows that makes each unit of gold more valuable … which leads to deflation, which is far worse than inflation, and can lead to utter economic desolation. I hate fiat money, I really do: I hate that governments can inflate their way out of debts and inflate away my savings. But gold — appealing as it is — is even worse.
- blackflame7000 7y ago1 oz. of gold doesn't change from day to day, rather, only people's opinion of it changes. In that sense, is there anything you can think of that people would want as much or more in the future than they do today? I can think of maybe 1 thing, sex, but I don't even want to begin to imagine how a system like that would work haha. Ultimately I agree that fiat currency is a necessary evil because of the ability to expand with the economy.
- wetpaws 7y agoGold is essentially the same plus liquidity trap (think of Bitcoin and it's deflationary nature)