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If the value of your currency kept going up people would be incentivized to keep it in their bank accounts rather than spend it and invest in their economy. Of
by ginko 6y ago
If the value of your currency kept going up people would be incentivized to keep it in their bank accounts rather than spend it and invest in their economy.
Of course this is certainly less of an issue than hyperinflation, but neither is great.
- tastyfreeze 6y agoThat argument always seemed weak to me. Keeping money out of the economy is a temporary effect as prices adjust. Once people have savings they would start looking for ways to employ that money. People are always going to do what will benefit them most. When people have savings they have more ability to risk loss by starting a business or investing. Having more people with the ability to risk loss is a very good thing for real growth. Now if deflation is higher than any possible investment return, then people will only horde money. The goal of most people is to accumulate value, not a specific currency. Inflation destroys value, deflation creates value.