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Literally anything!? Like baseball cards and beanie babies? I am set! In all serious, why is a little deflation way way worse than inflation? To put it anot

by krupan 6y ago

Literally anything!? Like baseball cards and beanie babies? I am set! In all serious, why is a little deflation way way worse than inflation? To put it another way, if inflation is good and deflation is bad, why do I need to buy deflationary commodities as a hedge against it?

arcticbull 6y ago
Yea once you have beanie babies inflation doesn’t matter. What matters is it’s performance as an asset class relative to your other options. [edit] The point of inflation is manifold but to answer your question specifically inflation is meant in part as an incentive to invest. It’s function in a capitalist society is to encourage group evaluation of equities and help pick winners and trim losers. It sets the benchmark rate of performance for your investments. Money is only useful when it moves. If it’s not collateralizing loans, and changing hands, economic activity slows and stops. This economic activity is jobs people do day to day. Deflation slows activity because if your money is worth more tomorrow than today it encourages inaction. In its worst incarnation you get a deflationary spiral where prices fall to stimulate buying but deflation continues anyways, and so on. We can talk about whether that’s a good thing or not but it’s very much not what the coiners are advocating for.
- krupan 6y ago
  Very helpful. Thank you? ¯\_(ツ)_/¯ Oh, you added more after the beanie baby topic . Yes, I understand that inflation is a way to motivate certain behaviors. Some of us resent the coercion. I still don’t understand the extreme fear of deflation. Like, if the value of dollars increases over time, nobody will buy anything and the entire economy will collapse? I just don’t see that happening. People can’t eat dollars, or sit and stare at them in the evenings when they are bored.
  - arcticbull 6y ago
    Added a little more clarity.

by krupan 6y ago

arcticbull 6y ago

Yea once you have beanie babies inflation doesn’t matter. What matters is it’s performance as an asset class relative to your other options. [edit] The point of inflation is manifold but to answer your question specifically inflation is meant in part as an incentive to invest. It’s function in a capitalist society is to encourage group evaluation of equities and help pick winners and trim losers. It sets the benchmark rate of performance for your investments. Money is only useful when it moves. If it’s not collateralizing loans, and changing hands, economic activity slows and stops. This economic activity is jobs people do day to day. Deflation slows activity because if your money is worth more tomorrow than today it encourages inaction. In its worst incarnation you get a deflationary spiral where prices fall to stimulate buying but deflation continues anyways, and so on. We can talk about whether that’s a good thing or not but it’s very much not what the coiners are advocating for.

krupan 6y ago
Very helpful. Thank you? ¯\_(ツ)_/¯ Oh, you added more after the beanie baby topic . Yes, I understand that inflation is a way to motivate certain behaviors. Some of us resent the coercion. I still don’t understand the extreme fear of deflation. Like, if the value of dollars increases over time, nobody will buy anything and the entire economy will collapse? I just don’t see that happening. People can’t eat dollars, or sit and stare at them in the evenings when they are bored.
- arcticbull 6y ago
  Added a little more clarity.