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by imtringued 1709 days ago
Just think about what 0% inflation means. It means your money never loses value. That's frankly impossible. It's as if you built some sort of pocket dimension that can store everything without decay.

During recessions people will try to acquire this magical storage instrument to shield themselves from losses in the real economy because a yield of 0% is greater than a company stock that is crashing. The people who end up unemployed don't store their labor in money. That labor is simply gone and so is the value of the money and that loss must be represented through a negative interest rate.

1 comments

> "Just think about what 0% inflation means. It means your money never loses value. That's frankly impossible."

your causation is backwards. inflation is an emergent property of the economy, and can be negative or zero if it wants (e.g., japan).

> "That labor is simply gone and so is the value of the money and that loss must be represented through a negative interest rate."

this makes no sense. what interest rate must become negative when unemployment rises?