Quote from: JoelKatz on July 05, 2011, 04:30:09 AM

1) Inflation is good for holders of debt. Nonsense. Inflation makes interest rates higher, which is bad for holders of debt. Inflation makes it harder for people who hold debt to refinance and makes creditors want their money back sooner, which is also bad for holders of debt.

I think you're confusing nominal interest rates with real interest rates. Inflation increases nominal interest rates - the amount of interest charged in terms of the currency in question - which matter to savers but not debtors. Debtors care about real interest rates - the cost of the loan taking into account both nominal interest rates and inflation/deflation - because that's their actual cost of borrowing that they have to repay.

Quote from: JoelKatz on July 05, 2011, 04:30:09 AM

2) Inflation gives people an incentive to spend money. Nonsense. Inflation means you can get a higher interest rate if you save the money, giving you an equal incentive to save.

Inflation gives you an incentive to invest the money rather than just stuffing it under the mattress, either directly, by sticking it in a savings account where it's used to make loans, or by buying something that will give you future benefits.

Quote from: JoelKatz on July 05, 2011, 04:30:09 AM

3) Deflation gives you an incentive to hold money. Nonsense. You can just as easily sell the right to hold that money and get its value today rather than holding it yourself.

Why should someone buy it for more than it'd cost them to get the same amount of money right now, though?