Can you please roughly describe the issue with deflationary currency? I’ve only looked into it briefly but I just found people saying it encourages saving, not spending, which isn’t exactly a bad thing.
What happens to the acute price of a currency when holders overwhelmingly decide to save rather than spend? Too much friction for the price of the currency to go up. Crypto is a zero-sum game.
I view it more as a financial instrument with unique properties. You don’t necessarily have to use it as a day to day currency. But if you want something in your portfolio that is a hedge against inflation then it certainly has it’s place.
We know that people don’t stop spending when saving generates more wealth, because:
The vast majority of people spend most of their money on necessities, so they can’t save more than they spend by default.
Those with additional wealth can choose to invest it for a greater return than inflation, essentially being in the same position as having deflationary wealth, and instead still have a social life, hobbies, entertainment, vacation, impulsive spending, and needless waste.
People will still spend on these things. Those that care about finances more than the above are already investing rather than spending.
I’m talking deflationary currency as an idea, but specifically about crypto as I don’t know enough to say.
Can you please roughly describe the issue with deflationary currency? I’ve only looked into it briefly but I just found people saying it encourages saving, not spending, which isn’t exactly a bad thing.
What happens to the acute price of a currency when holders overwhelmingly decide to save rather than spend? Too much friction for the price of the currency to go up. Crypto is a zero-sum game.
I view it more as a financial instrument with unique properties. You don’t necessarily have to use it as a day to day currency. But if you want something in your portfolio that is a hedge against inflation then it certainly has it’s place.
We know that people don’t stop spending when saving generates more wealth, because:
The vast majority of people spend most of their money on necessities, so they can’t save more than they spend by default.
Those with additional wealth can choose to invest it for a greater return than inflation, essentially being in the same position as having deflationary wealth, and instead still have a social life, hobbies, entertainment, vacation, impulsive spending, and needless waste.
People will still spend on these things. Those that care about finances more than the above are already investing rather than spending.
I’m talking deflationary currency as an idea, but specifically about crypto as I don’t know enough to say.