The main problem with deflation is mainly not about holding M1 but promises of payments that are denoted in the currency. When currency inflates it’s relatively easy to raise the salary of employees to match the value of the currency. On the other hand when deflation happens, making salary cuts is much harder.
It’s possible to write laws that force salaries to be payed in the currency that’s preferred by the government for most legal employment.
You can write laws that make loans in crypto currencies not legally enforceable which prevents a lot of current loans that are backed by the governments power to seize future earnings of a person.
That said, even if you want to use crypto for denoting future payments of money using a stable coin like reserve makes much more sense then using bitcoin.
Thanks! Yeah, I don’t imagine that a currency that deflates will be used for everyday payments like salaries. Stablecoins or fiat seem more appropriate for that. But that doesn’t undercut the worry that a currency that deflates may be preferred over reinvestment and hence stall innovation – the scenario I sketch above. Or does it?
The main problem with deflation is mainly not about holding M1 but promises of payments that are denoted in the currency. When currency inflates it’s relatively easy to raise the salary of employees to match the value of the currency. On the other hand when deflation happens, making salary cuts is much harder.
It’s possible to write laws that force salaries to be payed in the currency that’s preferred by the government for most legal employment.
You can write laws that make loans in crypto currencies not legally enforceable which prevents a lot of current loans that are backed by the governments power to seize future earnings of a person.
That said, even if you want to use crypto for denoting future payments of money using a stable coin like reserve makes much more sense then using bitcoin.
Thanks! Yeah, I don’t imagine that a currency that deflates will be used for everyday payments like salaries. Stablecoins or fiat seem more appropriate for that. But that doesn’t undercut the worry that a currency that deflates may be preferred over reinvestment and hence stall innovation – the scenario I sketch above. Or does it?