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I don't believe in money without inflation, such a system is not stable. Every physical asset depreciates (loses its use value), due to physics. So if money, wh
by js8 6y ago
I don't believe in money without inflation, such a system is not stable. Every physical asset depreciates (loses its use value), due to physics. So if money, which can be exchanged for something of value, wouldn't depreciate, the corresponding value not lost would have to be created just for the money holders. So it wouldn't pay off to give money away and the economic activity would decrease. The result would be deflation.
So I believe some inflation rate is natural, by virtue of money being medium of value exchange. Now if the economy is exchanging more goods and services, i.e. growing, it is certainly possible for the government to increase amount of money temporarily without causing additional inflation. But in general, it requires exploitation of some new resource that was previously unexploited, so it cannot be done indefinitely and it's often hand-waved away by assuming equilibrium.
However, during economic recovery, the economy is not in equilibrium, the crisis by definition creates untapped resources, such as unemployed labor, and new possibility to grow again, so the government can apply this as an economic policy.
- aeternum 6y agoInteresting point of view. What about land? It typically does not depreciate, especially if nothing is built on it. One can often make money by purchasing a plot of empty land in a growing city and doing nothing with it while the city grows around it. Property tax is typically quite low on unimproved land.