. In an unregulated and deflationary economy employers couldn't drop the wages so low that people would be forced to work for longer without consequences to them personally, that and the limited nature of deflationary currencies wouldn't allow for it mathematics wise
Depends on "what the consequences are to them personally".
Deflation simply means that prices fall. Therefore it's not worth spending money today because things will be cheaper tomorrow. In other words, it encourages hoarding of money.
Now consider that one person's spending is another person's income. Say you are a business. You've made some goods and incurred some costs doing that (cost of materials, cost of labor). But no-one is buying, they are waiting for the price to drop. So you shave your margins. Soon you are selling at cost just to release the money locked in the inventory. But what if people refuse to buy goods at cost? Then you go bust. Your staff are fired. Forget decreasing wages, they have no wages, because there is no business, because no one will buy. As the numbers of people getting laid off increases, sales fall further because these people have nothing to spend. Prices get cut even further to try to attract the remaining business - but no-one is buying because a) they are waiting for the price to drop even further and b) they are scared they'll lose their precious job - so you get even more hoarding and even more businesses going bust and even more people laid off. In a downward spiral.
Eventually, after about twenty years, there are some goods that people absolutely have to have (medicine for example), and people will pay for that, but elsewhere the economy is a wasteland. People emigrate, but they find problems wherever they go because other people resent them moving onto their territory (they've become immigrants). You get starvation, you get riots, you get anti-semitism and racism, and you get people trying to exploit popular anger.
The long depression of the late 19th century, which lasted twenty years spawned two responses - some countries introduced welfare states to prevent the masses from rioting and dying, and other countries had revolutions (Russia) or fell to evil dictators (Germany and Spain in the 1930's).
If there hadn't been deflation during the late 19th century,
none of that would have happened - no welfare state, no revolutions and no mad dictators leading to a world war that saw about 30 million dead.
That's why the ideal is keeping prices rock steady - not inflating but not deflating either.
I think people on here are romanticising the desperation, starvation and sheer madness of the late 19th century and early 20th century simply because it has passed out of living memory and there is no family member left to speak of it's horrors. But read up accounts of people who were actually there. It was not a fun time to be alive.
Going back to your comment that "In an unregulated and deflationary economy employers couldn't drop the wages so low that people would be forced to work for longer without consequences to them personally" - it's happened before where people worked for a loaf of three days old stale bread, because the alternative was death. Don't be naive, of course employers can drop wages that low!!! They've done it countless times in history. The only time they haven't was during the Roman empire when the Emperor forced his law on wayward employers and in the last fifty years, which have been a bit of a golden age in the history of man.
Is bitcoin a deflationary currency? I hope it's just a steady one that allows commerce so we don't have to deal with banks. However, I can already see the hoarding tendency become dominant - the most developed parts of the bitcoin economy are those that encourage people to trade bitcoins for dollars - i.e. just like a stock rather than like a means of commerce.
