This can make the 'rate of deflation' that occurs worse:
* https://en.bitcoin.it/wiki/Deflationary_spiral
* https://isps.yale.edu/news/blog/2014/06/the-perils-of-bitcoi...
* https://crypto.bi/deflationary/
† I am aware of satoshis.
And is deflation a good or bad thing for the livelihood and well-being of human beings?
How many people in the US has a mortgage or some kind of debt (student, medical)? Inflation makes the burden of debt easier, deflation makes it worse.
And the Top (0.)1% already has an easy enough time with parking/generating value. Deflation would only help them more (and make things hard for everyone under them).
Deflation inherently disincentivizes doing anything with the currency other than sitting on it. Want to buy something? You’d be better off waiting and buying it tomorrow because it will be worth less in your deflationary currency at that point. No one has an incentive to lend their money to others to use it more productively, so no growth occurs. No one buys anything, producers can’t sell anything, and no one can get capital to start any business ventures. The sole, viable way to accumulate wealth is to take the currency and stuff it under the mattress.
This results in a society much like Europe described in a Jane Austen novel, where wealth is simply inherited and the upper class doesn’t actually serve an economic function. They just exist to perpetuate their wealth and dole out subsistence wages to those who work their estates and have absolutely no chance of improving their station.
It’s an inherently broken system and a perfect example of Chesterton’s fence by tech types assuming they know better than everyone else.
Quite the opposite.
Deflation encourages hoarding of cash because it just sits there and increases in value. "If you want to retain the purchasing power of your money, it should participate in society via investment." — Nick Maggiulli