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Re: Why such agreement that Deflationary currency is a bad thing
by
townf
on 26/04/2013, 21:14:44 UTC
Ideally a monetary system should be neither inflationary nor deflationary. As someone pointed out, in general, one hurts savers, the other hurts producers. Not only that, inflation or deflation doesn't hit every sector of an economy at the same time, so for example inflation would not only hurt savers, but earners also, as the cost of goods rise sooner than people's wages. It helps the ones who get to use the money sooner, like borrowers.

Inflation and deflation are two sides of the same coin so to speak. Both are bad because they change the value of money, and since an economy isn't a homogenous spread of purely equal roles, this change in the value of money up or down is going to unfairly hurt some sectors and help others. It's not like inflation hurts all players in an economy and deflation helps all players in an economy. It doesn't work like that.

The best way to maintain a stable money supply is to have it grow in proportion to the population.