Deflationary national currency, pros and cons

[Febo]

People dont spend, then Companies dont sell. then people dont get salaries. then people spend even less. Then companies sell even less. then people get even less salaries.  Deflation leads in spyrale. It happened in 1930ies and is happening now.

You have bitcoin Deflationary. How many people you know they say. I want to buy car, but will wait next bubble? If everyone would know bitcoin would be worth 55 less next year no one would think this way and all would spend and make economy rolling.

[1715502054]

1715502054

[1715502054]

1715502054

[Brewins]

main reason against deflationary currency is that people will just hold money and not spend or make other investiments, even ifmore profitable, because peopleare lazy.

And we live in a predatory consumption bubble, so it won't happen

[botany]

main reason against deflationary currency is that people will just hold money and not spend or make other investiments, even ifmore profitable, because peopleare lazy.

And we live in a predatory consumption bubble, so it won't happen

People are greedy. I am sure ponzi schemes will exist even in a deflationary scenario. 

[michaelwang33]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

Although this is true, it is much easier to keep inflation to be moderate and keep it moderate then it is to keep deflation to be moderate. It is also much easier to slow down inflation then it is to slow down deflation.

[Ayers]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

what is a stable currency for you? something in the middle?

[Mobius]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

Most currencies are generally stable by most economists' standards. Countries also generally try to keep their currency as stable as possible (expect when they run into money problems - Argentina). I don't this it is really very realistic to be able to make a country's currency have neither inflation nor deflation (and keep the value exactly the same) as there are too many market factors affecting the value of a currency.

[Keyara]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

Most currencies are generally stable by most economists' standards. Countries also generally try to keep their currency as stable as possible (expect when they run into money problems - Argentina). I don't this it is really very realistic to be able to make a country's currency have neither inflation nor deflation (and keep the value exactly the same) as there are too many market factors affecting the value of a currency.

Stability reduce the risk and ease the long term project economic calculation. A volatile currency is the sign of un-healthy economic system.

[polynesia]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

Most currencies are generally stable by most economists' standards. Countries also generally try to keep their currency as stable as possible (expect when they run into money problems - Argentina). I don't this it is really very realistic to be able to make a country's currency have neither inflation nor deflation (and keep the value exactly the same) as there are too many market factors affecting the value of a currency.

Stability reduce the risk and ease the long term project economic calculation. A volatile currency is the sign of un-healthy economic system.

Even a known and low inflation/deflation can be factored in to any economic calculation. It is the threat of high inflation/ volatility which is dangerous.

[Mobius]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

Most currencies are generally stable by most economists' standards. Countries also generally try to keep their currency as stable as possible (expect when they run into money problems - Argentina). I don't this it is really very realistic to be able to make a country's currency have neither inflation nor deflation (and keep the value exactly the same) as there are too many market factors affecting the value of a currency.

Stability reduce the risk and ease the long term project economic calculation. A volatile currency is the sign of un-healthy economic system.

This is true, but no currency is 100% stable in that it experiences zero inflation nor deflation. A currency that is "stable" usually has very mild inflation in the 2-3 percent range.

[zedicus]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

Most currencies are generally stable by most economists' standards. Countries also generally try to keep their currency as stable as possible (expect when they run into money problems - Argentina). I don't this it is really very realistic to be able to make a country's currency have neither inflation nor deflation (and keep the value exactly the same) as there are too many market factors affecting the value of a currency.

Stability reduce the risk and ease the long term project economic calculation. A volatile currency is the sign of un-healthy economic system.

This is true, but no currency is 100% stable in that it experiences zero inflation nor deflation. A currency that is "stable" usually has very mild inflation in the 2-3 percent range.

Since it is really not possible to have a currency that has zero inflation and zero deflation this is correct. If a central bank were to attempt this then the currency would often fall into deflation that is much more difficult to fight then mild inflation is and can easily get out of hand very quickly.

[botany]

I support neither inflation or deflation, because both have harmful effects. Both redistribute wealth and lead to market distortion. A stable currency is preferable in my book.

Most currencies are generally stable by most economists' standards. Countries also generally try to keep their currency as stable as possible (expect when they run into money problems - Argentina). I don't this it is really very realistic to be able to make a country's currency have neither inflation nor deflation (and keep the value exactly the same) as there are too many market factors affecting the value of a currency.

Stability reduce the risk and ease the long term project economic calculation. A volatile currency is the sign of un-healthy economic system.

This is true, but no currency is 100% stable in that it experiences zero inflation nor deflation. A currency that is "stable" usually has very mild inflation in the 2-3 percent range.

Since it is really not possible to have a currency that has zero inflation and zero deflation this is correct. If a central bank were to attempt this then the currency would often fall into deflation that is much more difficult to fight then mild inflation is and can easily get out of hand very quickly.

There are a lot of inefficient central banks in this world. Which is why it may be better to have a target of low inflation.

[painlord2k]

There are a lot of inefficient central banks in this world. Which is why it may be better to have a target of low inflation.

Low inflation like 2% year will leave you with 20% worth of saving after 40 years.
There is people understanding compounding interests and people doesn't.
You are in the latter.

1) Central Banks governed are not needed
2) a stable (as in supply stable) currency is desirable because it doesn't redistribute value from an actor to another.
3) a mildly deflating currency is better than a mildly inflating currency because it reward saving and not spending (and saving is more difficult than spending so it can use some help).
4) a mildly deflating currency reward prudent people (people investing what they can lose, investing minimising the risks and maximising the rewards), inflation reward imprudent people (people investing too much, what they can not afford to lose, etc.)

[botany]

There are a lot of inefficient central banks in this world. Which is why it may be better to have a target of low inflation.

Low inflation like 2% year will leave you with 20% worth of saving after 40 years.
There is people understanding compounding interests and people doesn't.
You are in the latter.

1) Central Banks governed are not needed
2) a stable (as in supply stable) currency is desirable because it doesn't redistribute value from an actor to another.
3) a mildly deflating currency is better than a mildly inflating currency because it reward saving and not spending (and saving is more difficult than spending so it can use some help).
4) a mildly deflating currency reward prudent people (people investing what they can lose, investing minimising the risks and maximising the rewards), inflation reward imprudent people (people investing too much, what they can not afford to lose, etc.)

Moderate inflation is not necessarily bad. Please note that if interest rates exceed inflation, your savings do not necessarily diminish.
It is unpredictable / run-away inflation which people hate. 

[painlord2k]

There are a lot of inefficient central banks in this world. Which is why it may be better to have a target of low inflation.

Low inflation like 2% year will leave you with 20% worth of saving after 40 years.
There is people understanding compounding interests and people doesn't.
You are in the latter.

1) Central Banks governed are not needed
2) a stable (as in supply stable) currency is desirable because it doesn't redistribute value from an actor to another.
3) a mildly deflating currency is better than a mildly inflating currency because it reward saving and not spending (and saving is more difficult than spending so it can use some help).
4) a mildly deflating currency reward prudent people (people investing what they can lose, investing minimising the risks and maximising the rewards), inflation reward imprudent people (people investing too much, what they can not afford to lose, etc.)

Moderate inflation is not necessarily bad. Please note that if interest rates exceed inflation, your savings do not necessarily diminish.
It is unpredictable / run-away inflation which people hate. 

Inflation cause, ALWAY - by design - transfer of purchasing power from old money holders to new money holders.
If interest rates exceed inflation, there is no reason for the government to print money.
In fact, inflation (of the money supply) increase just to keep interest rates down on the market.

What just happen is the government print more (a lot more) and take loans. The interest rate is raised to drain liquidity from the markets and people give loan to the government in exchange for 10-15% interest rates. These savings given to the government slow down consumption and keep some prices lows (not all). The government spend them in some silly way (like building infrastructures private enterprises could build with their money at their risks) and some prices normal people is unaware of rise a lot faster than inflation.
Then, a few years later, the government is unable to pay off its debts and continue to keep printing even more to paper the difference and make laws to raid private retirement funds, pay supplier later, raise taxes

I'm from Italy, I know how it work.
When Italy fought inflation in the '80s the government just stopped (slowed down) the printing presses and raised interest rates to gather funds from private investors in bonds. And in the 1992 it was on the edge of bankruptcy. CPI was low, inflation was lower, but the debts was exploding. They raided people savings, changed laws of retirements (dropping the bill on youngers generations), raise taxes from 33% to 43% of the GDP. Now, one generation later we have higher taxes, lower savings, more corruption, and we are back on the edge of bankruptcy.