[allendoerfer]

Because you liquidate all your assets if there is deflation. No companies, no jobs, no food.

Edit: Obviously I am speaking in very extreme terms and ignoring the fact that there is a government acting and that not everything will happen instantly. These are just long-term forces.

[tome]

Do I? Why? What can I do with all that cash that I got from liquidating my assets? I can't spend it on consumption all at once.

[allendoerfer]

You don't have to, it will be worth more next month. It would be stupid to invest into your retirement fund if cash is increasing in value faster, so you take the cash. It makes total sense individually, but when everybody does it, the system will collapse.

[tome]

Yes, I can see why a deflationary shock can cause behaviour that is individually rational but destroys the economy in the long term. I do not see why there cannot be a steady state with no growth. Presumably if this is widely accepted by economists there must be a standard textbook reference that you can give me?

[allendoerfer]

I am not an economist and would be interested in such a reference, too.

My guess is that as long as there is even tiny growth, central banks can react with negative interest rates/taxing cash. It will take quite a while until there is no growth at all on the whole world. I think even Western countries have room for growth by mandating green standards.

When less and less growth is possible any more, I imagine we would have to start socializing industries, which reached that point, so they are taken out of the equation. People would then get a basic income and use it to pay for state provided services, which would not deflate, because the state does not have to care about market prices, it can just regulate competition. I think the problem here is more to find the right time for it, not the solution itself.

[Kalium]

As I understand it, such a thing is hypothetically possible. However, as long as populations grow and people want change in their lives, it is not desirable.

[allendoerfer]

Then there would be growth. What we were debating was that we need growth, otherwise eventually the described things would happen.

That growth by population growth is not sustainable should be obvious, somebody in here made a good argument why this is true even if we populate the universe.