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by dragonwriter 2183 days ago
> Hypothetically, you could adopt an economic system that would not be affected by deflation,

You need money to expire (or, more specifically, lose nominal value faster than deflation reduces nominal prices) if not spent, then people have an incentive to spend their money as they receive it even though nominal prices are decreasing, because you can't hoard surplus to immediate need money for future purchases at lower prices.

1 comments

Normally, this is achieved by printing money, so they lose relative value, "expire". That is, bu running an inflation.
No, I'm talking about individual units of issued currency (e.g., physical bills in the simplest case) losing nominal value, which can be done while the underlying currency is gaining real value (in deflation).

Yes, obviously you can avoid deflation by creating enough money that you instead have inflation, but I'm talking about having a monetary system that avoids some of the negative incentives of deflation even when it occurs.