The digital currencies that matter
&gt; Sure. But most of savings are held by the very few. So giving up inflation is a boon to the holders of capital. That&#x27;s a fair enough opinion to hold, but I don&#x27;t understand why so many ordinary people with little or no capital (probably more debt than assets) champion this.<p>If you want to redistribute the wealth from the holders of capital, pass laws to do so directly. Doing it in in a roundabout way via inflation is a psychological trick - you are saying, &quot;Well, laws can&#x27;t be passed to do it, so we will use this crazy constant-devaluation of everyone&#x27;s money to accomplish it&quot; and the new money doesn&#x27;t go to the people you want to help directly. Furthermore, poor people with tiny amounts of savings can&#x27;t even begin to save as their money is constantly debased. I don&#x27;t see this as an argument against deflation.<p>&gt; I should have been clearer: I fully understand why citizens of failed (or failed-adjacent) states want to shy away from central bank control. My comment was meant to be about well-functioning liberal democracies.<p>It is matters of degree to me. The US has defaulted twice in the last 100 years, first with the confiscation of gold in the 30s and later with the outright withdrawal from the gold standard in the 70s. You can argue whatever you want, but that is a de-facto default when the rules that were promised are suddenly changed at gunpoint, and now past promises are now longer valid. I see the US and other &quot;well-functioning liberal democracies&quot; as easily able to slip into being monetary basket cases, as they have been several times over history. The 1970s&#x2F;80s had absurd levels of inflation in the US which shows the situation can change rapidly. I think there is a high-risk of 10%+ inflation in the US right now.<p>&gt; This seems like a wholly American perspective. I&#x27;ve never heard of anyone in Europe buying clothes on credit.<p>The finance sector in all western democracies is a large component of GDP - far higher than what it would be in a hard-money system IMO. Those closer to the money printer somehow get a larger share of it. Always happens.<p>&gt; I don&#x27;t think that&#x27;s an argument many people are making, is it? I&#x27;d say that moderate inflation is fine because it discourages hoarding (or &quot;saving&quot;, as you put it). Not because interests on hoarding&#x2F;savings outpace it.<p>I don&#x27;t see why we need to artificially encourage people to spend. People should spend if they want something, not because of seizing their money if they choose not to spend. As I said before, people will always need goods and services. &quot;Hoarding&quot; money is just someone choosing to delay their gratification, which I see as a good thing.<p>We haven&#x27;t discussed what a true private sector banking system would look like. There would still be investment in new businesses based on the assets of depositors. They just wouldn&#x27;t have the guarantee of bailouts, so depositors would be much more careful about who they deposit their money with.<p>&gt; Moreover, the falling prices in computer equipment come not from deflation, but from vastly improved production methods. This is A Good Thing.<p>My point is not to say why they deflated. My point is that there <i>was</i> deflation, and it didn&#x27;t cause any problems. Economists act like the sky will fall if deflation occurs. It happened in computers and it was awesome.<p>&gt; To me this sounds like a recipe for a barter economy. &quot;I&#x27;ll pay you 0.1% of my house and 1000 apples for that car&quot;.<p>I&#x27;m speaking more about large corporate financing. Right now, corporations issue junk bonds that barely pay above inflation and the central bank prints new money to buy them. It&#x27;s absurd! The fed is backstopping private business. This integration of big business and the state makes it harder for smaller businesses that can&#x27;t get cheap credit to compete. We are in a too-big-to-fail situation for our private sector!<p>&gt; You use a very loaded thing, war, as the item to be paid for. What about schools, hospitals, infrastructure? Should those always be paid for in full before they go anywhere, too?<p>Yes? Why should citizens-of-the-future pay for what citizens-of-the-now want? Actually paying for things would cause an honest discussion of what people are willing to pay for. If you tell people they can have everything they want for free, of course they want it. This is the weakest argument of all.<p>&gt; It does. I appreciate the explanation. But I do fear that what you propose would shift power away from the ordinary person and towards those that have managed to hoard a bag of ever-appreciating money.<p>You act is if the rich don&#x27;t accumulate capital now. I find this argument invalid. In reality it&#x27;s the poor that can&#x27;t easily escape inflation and lose their money, while the rich are able to continue to accumulate wealth above the rate of inflation using their vast array of wealth advisors and tax lawyers. The poor are the ones without an easy way to protect their wealth in an inflationary world.