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Deflationary currencies shouldn't be an issue if real prices adjust at a similar pace. The theoretical problem with deflation is mostly that wages are sticky an
by lazerpants 5y ago
Deflationary currencies shouldn't be an issue if real prices adjust at a similar pace. The theoretical problem with deflation is mostly that wages are sticky and you can't lower someone's pay very easily. But if everyone has the expectation of deflation it would probably work fine.
Expectations about inflation/deflation are important drivers of these phenomena (not the only ones of course) and if we break the paradigm with cryptocurrencies then it's possible the stickiness problems of deflation could be solved.
- Nursie 5y agoNone of that addresses the parent's concerns that idle cash grows in value, effectively benefiting from the economic output of others without even the need for investment.
- lazerpants 5y agoIt doesn't grow in value if real prices are adjusting simultaneously.
- Nursie 5y agoBut you’re talking about a deflationary currency, by definition prices fall compared to currency units.