[RhodoGSA]

My money SHOULD be worth more tomorrow than it is today. Tomorrow the economy is just a tad bit more productive, so my dollar should go further... Why is deflation a curse word nowadays? I feel one of governments only role is to ensure that the dollar is not being debased and slowly losing value of time or atleast at a rate that is known. When the FED prints an unlimited supply of money, it breaks down the social contract or useful fiction that we all accept about our money.

i've read some rhetoric somewhere that deflationary money is a terrible thing for the economy since it reflects in asset prices and makes you more concerned with saving. From my perspective, that's a very good economic consequence and would stop all these boom bust cycles that we seems to be creeping up at irregular intervals of massive spending.

A better system of stock trading would be bonding. When i buy a stock, the money is locked into a contract that is reimbursed to me after the purchase period. say i buy $100 worth of Tesla for a 1 year stock period. At the end of that lease, i will recieve my $100 back and Tesla may reward me with a % based on the performance of that year. I have no liquidity but my only 'Loss' is the loss of other rewards i could have gained by betting in another industry or company. Everything being completely liquid allows for HFT and the banking industry to drain our economic fecundity by placing it in the realm of fairy-land instead of investments in infrastructure, energy generation and manufacturing.

[rmah]

Having money worth more tomorrow than today is how you get a stagnant economy and misery for everyone but the very rich. It's how you depress consumption and investment. It's how you destroy a nation.

Money is not wealth. Money is a tool. The goal, at a macro level, is not to have people having big piles of money. Because money, in and of itself, is not that important. What matters is how the money is used. And the more it's used, the better. Money being used is consumption and investment.

What you call "a better system of stock trading" is called a "bond". It's debt and works similarly to how you described except the reward % is typically fixed.

[StandardFuture]

> Money is not wealth. Money is a tool.

Can you please stop making up your own economics? A currency is an asset. End. Of. Story.

Deflation is a directional property of an exchange rate between a pair of assets.

By "used" you mean traded. And yes trade increasing (of which consumer spending is a kind of trading) is a good thing. You only get that with volatility. This can be created through an inflation but dually it is also created through deflation.

There is nothing wrong or immoral about a particular asset going up or down in price relative to another asset.

This unscientific stance of considering all deflation as immoral is based on absolutely nothing except emotional propaganda.

You have provided exactly zero proofs verifying that any and all deflation in a currency is a bad thing. And you will never be able to provide such a "proof" because it does not exist.

Let's see if you are even capable of constructing a proper intellectual retort. My doubts run high.

[bananabreakfast]

If you need a concrete example of why deflation is crushingly terrible for an economy look no further than Japan after the asset bubble burst in the 90s.

Deflationary thinking meant everyone expects prices to be lower tomorrow, so no one spent money on needed items and simply waited to make purchases to save money. This slowed down the economy into a death spiral that they still are climbing out of. Mortgages became crushing. You can't get a raise. Interest and deflation work together to make debt nearly inescapable.

The point of money is to be spent, i.e. facilitate the simple transfer of value. An excellent example of the direct damaging effects of deflation is bitcoin. No one spends it. It has utterly failed at its goal to become a primary mechanism to transfer value. Everyone expects its value to keep increasing so it is almost never transferred (to the point that hodling and never spending became a meme). Slowing down the exchange of money is what kills an economy.

[zeusk]

But inflation is also no good if salaries don't rise with it.

The way inflation is calculated is quite flawed from my understanding (they don't include rent/mortgage payments or college tuition - prices of which have exploded in the past two decades).

[StandardFuture]

But if salaries actually rose with inflation then there would be no inflation.

You are fundamentally misunderstanding the purpose of the modern central banking nonsense that the parrots you are replying to merely repeat without any understanding whatsoever of how absolutely devastating it is to the economic stability of the middle class.

[warkdarrior]

> My money SHOULD be worth more tomorrow than it is today.

It is very simple why this is not a good policy.

Let's say you are a software engineer working on some software product/service. You are working hard on that software, adding features, fixing issues, maintaining it, etc. The buyer pays you $100 today for that software.

Tomorrow you release a new version, with lots of upgrades and new capabilities. The buyer for this software says "my money should be worth more tomorrow than it is today" so they offer only $80 for the new version. Boom -- your work is worth less every day!

[RhodoGSA]

Very good point and I think your right. Maybe deflationary pressures on the economy would only lead to more centralization of assets than we already have today. One pedantic point to make though; Technically, that $80 is worth more today so it's not like "Your work is worth less every day". it's the same exact thing in your example.

[StandardFuture]

> One pedantic point

Your point is not pedantic at all and in fact completely negates the other commenters counterpoint made to your initial argument.

The buying power of the entity you are exchanging in has changed -- for everyone. This absolutely does not diminish your work. It is literally equivalent to being paid in many more bitcoin in 2012 versus today.

I am sure there are valid critiques of allowing deflation. But, as of yet a solid one has not been provided in this thread.

It would be interesting to see if anyone can offer other sources or arguments against this pro-savings, deflation-allowable, economy.

Allowing natural volatility into the value of any asset that is traded, including the USD, likely resolves to a more natural equilibrium in the economy, no?

[pram]

Deflation causes many problems. For starters at a macroeconomic level it reduces money velocity and investment. If people will make a better return just holding onto their money, then they will be more averse to spending it obviously.

[StandardFuture]

> reduces money velocity and investment

Yes, this is because of the interchangeability of the value of an asset declining and the fact that no one is buying it. No different than a stock price in free fall. Why is it in free fall? Because no one wants it.

Artificial infinite inflation takes away from the buying power of especially younger generations (but average people in general). It inflates the supposed price of assets (in terms of the inflated exchange asset, e.g., USD) which makes it much more difficult for newcomers to gain access to the necessary amount of buying power otherwise.

Think of it like inflating bitcoin. True, bitcoin is worth more. But, it takes a lot more work and time to get more bitcoin. This actually causes deflation to people's labor value and thus their buying power and leverage.

And not all assets will inflate equally. And some assets will receive government subsidies (this is an increasing phenomenon due to the inflating economy) because they are considered "critical" to society e.g., gasoline, milk, and green energy.

Overall, allowing things to deflate and inflate more naturally actually increases volatility which is actually what will increase economic velocity. Trading will increase, and interest will increase because of profitable trading, and thus investment will increase.

So, no, the current artificial and centralized system that thinks it can outgame game-theory is just stupid.

It's just Neo-Liberal/Neo-Conservative hippie baby boomer nonsense to concentrate wealth and power into an aristocratic elite empowered by trillions of dollars of managed retirement portfolios. They simply do not want to allow for natural volatility so that their managed assets are always increasing. It's absolute insanity.

EDIT:

Not that my above comment was perfect, but let me attempt to be more succint.

> Monetary appreciation only helps

Appreciation of an asset only helps the holders of said asset. But "appreciation" is always an exchange rate. Appreciated relative to what?

> A deflationary environment explicitly benefits creditors.

And this is where my contention lies. This dogmatic condemnation of deflation ever being allowed to happen. Temporary deflation or even deflation for some extended period of time is not a bad thing.

Economic velocity runs on volatility and not what one currency or asset is doing relative to another. Inflating and deflating exchange rates only increase volatility. But, truly, only if both types of relationships are allowed and are not artificially snuffed out by government and/or central bank intervention.

And you assume that creditors are the only ones holding an asset? Credit is only one kind of exchange. Spending is another. Stock trading is another. They all depend on volatility.

Thus, I am not arguing for inflation or deflation. I am arguing for the greatest amount of allowance for natural volatility.

> in your proposed monetary environment.

I see that you assumed that I was arguing for constant monetary appreciation. I was arguing that there is nothing wrong with monetary appreciation.

It seem that you and others are deadset on arguing that all deflation is immoral.

My above comment mentions the common root of such views.

> Much like it's difficult for newcomers to buy large amounts of bitcoin.

Yes, I should clarify my bitcoin comments. Bitcoin is deflationary relative to USD (where most "newcomers" are coming from).

BUT, to add substance to my point it should also be noted that there are coins that outperform Bitcoin and are thus deflationary in their relationship to Bitcoin. A newcomer holding these would actually have more purchasing power.

I clarify this to stress that at the end of the day: consumer spending, loans, credit, etc. are all trading. And trading is what makes the economy go around. Volatility is good.

[pram]

I'm not really sure what you're arguing, I didn't say "infinite inflation" is good lol. Monetary appreciation only helps the buying power of people who already have money. A deflationary environment explicitly benefits creditors. It would be very difficult for a newcomer to get buying power, leveraged or otherwise, in your proposed monetary environment. Much like it's difficult for newcomers to buy large amounts of bitcoin.

[dgs_sgd]

This assumes the new version of the software has no added value from adding new features and fixing bugs, etc.

Even with your assumption suppose you accept their offer. The $80 received should in turn be able to purchase something that was worth $100 dollars yesterday. The nominal value may have gone down but the quantity of goods and services you can buy with it is the same.

[hungryhobo]

deflation is bad for the economy because it discourages spending.

Just for illustration, imagine if you know that you can buy 2 rolls of toilet papers 2 months later for the price of 1 toilet paper today, and you don't have an immediate need for toilet paper, then most likely you'd wait.

Spendings is what drives the economy and it's the circulation and liquidity that help the economy becomes more productive.

[StandardFuture]

> you can buy 2 rolls of toilet papers 2 months later for the price of 1 toilet paper today,

This is called a sale and happens all the time in consumer spending. It is a well known phenomenon that many people (not all) will wait to purchase when they have more purchasing power. But it is also well known that a subset of the population will not wait.

I am not sure how you perceive your arguments as being a rigorous support of your position or a rigorous critique against the opposing position. It is truly mysterious.

[Jommi]

If your money is worth more tomorrow than today why would you spend it today?