Quote from: toknormal on October 24, 2016, 09:41:37 PM

Quote from: Spaceman_Spiff on October 24, 2016, 09:23:01 PM

I disagree. Why would I as an individual hold anything else than the deflationary kind of money if it is equally easy to store and spend it as the inflationary type.

Because modern societies don't like prices floating all over the place due to a fixed supply monetary base. It makes it impossible to plan and you'd have loads of manufacturing businesses, for example, simply going bust. Even if you did have a fixed supply they'd just invest in a huge amount of hedging derivatives to minimise their exposure to price volatility and that would inflate the effective money supply instead.

As economies expand, demands for liquidity have to be met. They can either be met by expanding and contracting the money supply (and keeping prices relatively stable) or by price inflation - which will just carry a similar cost in terms of adverse commercial conditions, bankruptcies and localised losses. If you're a car manufacturer, you're more interested in the "stable price" type of money. If you're a long term saver then you're more interested in the "stable supply" type of money. There have always been these two types and always will be.

Thanks for the reply, I ll have to think this over.