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Re: Why such agreement that Deflationary currency is a bad thing
by
Francesco
on 07/05/2013, 11:52:12 UTC
I just don't understand where you guys take the idea that "in a deflationary world, free market will make interests negative"

Would you loan 100 BTC today, for the promise of 95 next year?
(if the answer is yes -we have a deal!)

In a deflationary world, you would have much less investment. No credit bubbles; but for that purpose, also all our current wealth is "bubble" -it has been made possible by debit expansion and state deficit spending. We would settle down to where a "solid" growth would have led us -that is, to a much poorer economy. Maybe then we would start growing "healthly" (albait for sure, much more slowly), but the transaction would be incredibly painful, destroying much of our productive system that simply cannot exist without easy credit and the compulsion to consume created by inflation.