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The ideal currency does not inflate at all

Let me stop you right there. You may want that, but that's just, like, your opinion man. Most people, like 99% of people, do not want hard money and the tradeoffs it entails.




It has nothing to do with "hard money" if you mean physical currency. People want wealth, period.

The problem with the idea of inflation (read: "scarcity") to drive monetary velocity is it messes with investment. There is no shortage of people wanting to invest capital for increased returns in the future. But if you force consumption without a plan, you're consuming in the present for the sake of it.

A farmer can plant seeds and return an investment on that, or you can eat your seed crop. Forced inflation is forced returns in the present for lower returns in the future. Due to prices functioning as a regression between the exchange of goods and services, this one-to-one mapping is not as obvious, but it is definitively what happens.

You cannot consume what you do not produce. And investment requires deferred consumption. Forced monetary velocity is forced consumption at the expense of investment.


Assuming the parent poster means neither inflation or deflation (read: platonic, theoretical, likely impossible) then that's good, it means the economy is getting distributed in an seamless and unbiased manner.

That means it doesn't matter if you happened to have most of your economic assets in cash, or in potatoes, or in uranium ore, or in a house, etc. It means that there's no weird externality which is tipping the scales or "choosing" winners and losers.

Slight inflation isn't better than perfect balance, it's just a reluctant compromise, since it's the safer direction in which to fall when dealing with an unstable equilibrium.


To be fair - most people, like 99% of people, do not understand monetary policy or any of the potential tradeoffs.




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