Post
Topic
Board Beginners & Help
Re: Why such agreement that Deflationary currency is a bad thing
by
bitchess
on 27/04/2013, 11:42:13 UTC
As somebody who has studied economics, can I just state that stable low inflation is the BEST course for any currency (whether virtual or fiat)?

Why else do the largest most established central banks try to achieve inflation rates of around 2%?

To slightly go into detail but not too much because I don't want to be pedantic.

Inflation encourages investment.  If on average you expect your holdings to be worth less in the future you will logically invest it to hedge against value loss.  Investment leads to economic stimulation in the real economy.  That is a positive cycle.  

Also, there is probably an optimal number for inflation that economies target to balance everything out.

I would include a link to a random article for support but I'm lazy.  Just google "optimal monetary policy".