What do you think happens when the profit incentive over any length of time is to neither spend nor invest and simply hold cash? It doesn't end well for that currency or the associated economy.
I don't believe that. The poor will always have an incentive to work hard to get rich. The poor will always keep the economy running. It would be easier for people to succeed (and more motivating) if they didn't have to compete against the massive capital of incumbents.
A deflationary currency only incentivizes the rich to stop working and stop participating in the markets... Which is fine IMO. They're rich, they don't need to work anymore. The best thing they can do is step aside and let someone else have a chance. Their massive capital, when put to work, would mostly serve to monopolize markets anyway... And it's a net negative for everyone.
There is a false belief that rich people are so essential that the economy would collapse without them... But if you look at history, you would see that educated poor people have repeatedly been able to pull themselves out of poverty... I.e. economic 'miracles' (e.g. Germany after WW2, Japan, South Korea...).
People should get rich and retire. There are always going to be plenty of younger motivated people with fresh perspectives to take their place.
> The poor will always have an incentive to work hard to get rich.
To get rich you need capital. But that is hard to get in a deflationary economy - the supply is finite, the rich have only a small incentive to invest since they get wealthier just by sitting on it risk-free.
As a result, getting access to capital would be very expensive with high interest rates. That applies to mundane things like mortgages as well - good luck getting a 30-year mortgage, you're destined to rent forever. Poor would stay poor, rich would get richer.
> To get rich you need capital. But that is hard to get in a deflationary economy
Believe me, it's nearly impossible to get capital in an inflationary economy so I don't understand this point. At least in a deflationary economy, it's equally difficult for everyone. In an inflationary economy, proximity to the source of inflation confers an advantage for some (Cantillon effect) so it's unequal and unfair.
I never mentioned anything about rich or poor. Workers can't work if nobody is hiring. Businesses can't borrow, and anyone who has borrowed faces a falling real asset value with a nominal debt accruing nominal interest. (See 2007 housing market crash for a very narrow example.)
A deflationary currency only incentivizes the rich to stop working and stop participating in the markets... Which is fine IMO. They're rich, they don't need to work anymore. The best thing they can do is step aside and let someone else have a chance. Their massive capital, when put to work, would mostly serve to monopolize markets anyway... And it's a net negative for everyone.
There is a false belief that rich people are so essential that the economy would collapse without them... But if you look at history, you would see that educated poor people have repeatedly been able to pull themselves out of poverty... I.e. economic 'miracles' (e.g. Germany after WW2, Japan, South Korea...).
People should get rich and retire. There are always going to be plenty of younger motivated people with fresh perspectives to take their place.