/biz/ - Business & Finance

[Anonymous No.51325609]

is deflationary fiat a bad idea?
what did he mean by this?

https://youtu.be/MOtd1OepDPM&t=170

[Anonymous No.51325632]

NO NO NO GOY YOU CANT HAVE YOUR PURCHASING POWER INCREASE

[Anonymous No.51325736]

>>51325609
deflationary currency is bad because it encourages niggardly behaviour.
if a currency slowly becomes less valuable over time then you are more willing to invest so that your investment can counteract such devaluation.
if money simply becomes more valuable over time (aka is deflationary), then you'll never want to let it go, therefore you will not invest it.

[Anonymous No.51325899]

>>51325736
>proper usage of that word on /biz/ in 2022
I'm shocked.

[Anonymous No.51326262]

>>51325609
No it's fine over short terms and moderate amounts. Healthy even. I'd rather have 2% deflation than 10% inflation, and after several years of 2-4% inflation it's a good idea to flip to 1% deflation for a year to keep people thinking in terms of fundamentals.

>>51325736
When things are inflationary and GDP goes up for a long time, all that investment turns to malinvestment, which is worse than not investing at all. Zombie corps doing nothing but fucking up society on massive mountains of debt and investor cash are operational due to malinvestment and would collapse under a little credit crunch and monetary deflation.

[Anonymous No.51326503]

>>51325736
Yeah if deflation is higher than the expected returns of an investment, then you probably shouldn't invest in it anyway.
Even with 4% deflation, if you can find something that pays you more than 4% pa you're in the green, also keep in mind future revenues are more valuable.
Also if you look at the us history pre 1913 you'll see all deflationary spikes resolved themselves shortly.