[mikedilger]

It doesn't limit the size of the economy. It incentivises saving over investing, since the value of the currency tends to increase as the economy grows. Modern fiat currency is designed to disincentivise savings and incentivise investing, in order to supercharge economic growth.

A counter-position from the Austrian/Chicago school is that supercharging growth drives malinvestment, and they can't be entirely wrong about that - I've seen tons of dumb money flow into dodgy companies during tech booms.

[arcticbull]

It incentivizes holding currency instead of making productive investments with your capital. Currency only has value when it moves, not lives under your grandma's mattress.

Inflation incentivizes investment because you are going to lose 2% per annum if you don't.

Fiat offers you the maximum flexibility because you can back your personal economy any way you want - if you want to back it with gold, just buy some. If you want to back it with crypto, bless your heart, buy some.

This is a false narrative.

[api]

Incentivizing investment is generally better from a national prosperity and power point of view in spite of the waste it creates.

Wealth is a verb, not a noun. The wealth of nations is measured in how much they do, not how much they have.

The US arguably defeated the USSR via looser monetary policy. China is now doing the same to the US.

[imtringued]

The current economic system is in trouble because people save too much damn money, that money has to go somewhere, anywhere, otherwise you get unemployment and underemployment.

Interest rates are low because everyone is saving, nobody is borrowing, nobody is investing.