Quote from: Rassah on November 22, 2012, 04:38:34 AM

1% saving reward mean that no one will want to spend their money any more ever?

I repeat.
'Does it contain any abstract reasoning concerning quantity or number? No. ... Commit it then to the flames: for it can contain nothing but sophistry and illusion.'

Yes, rewarding saving can encourage hording. But numbers are important here. Let's think about the nature of a 1% per annum reward.

You could purchase a television now for $100, or you could purchase it one year from now for $99. You think that you will live in privation for the next year for the sake of a $1 discount?

The $1 discount is an upper bound, it would be much lower than this if other people also save. If so, there will be inflation at up to 1% a year. At the limit, if everyone saves, I get no benefit from saving at all. There is some kind of stable equilibrium in between. I'm not sure where.

As far as a deflationary spiral goes, it is really no different from bitcoin. The additional 1% per annum max is pretty trivial. We could go about analyzing it, but then you need a Keynesian model. I'm not going to do that here because it would be a charade. No one here is interested in Keynesian models (including me).

[Rassah also mentions a 3% fee, but I have no idea where this comes from so I ignore it.]