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The problem with 0% inflation is that people with money have no incentive to risk it.

IMO you need a cycle of inflation between 2-7% to keep things healthy. Dollars stockpiled in some account are not doing anyone any good.




Dollars stockpiled in an account will be lent by the bank at a low interest rate (since they have to be invested with little risk). Dollars saved under a mattress actually lead to deflation while they aren't being used, which can mess things up even more.


>Dollars stockpiled in some account are not doing anyone any good.

Why is it that Keynesians believe that money just gets stuffed under a mattress or stockpiled somewhere? It is loaned out at X% interest rates to people who need present-day liquidity to fuel growth. What do you think the VC industry is based on, Keynesian economics?


The reality today is that most banks dump deposits into fixed income securities, the vast majority of which in 2014 are Treasury instruments.

VC investments are a completely different universe. None of the $7 trillion in deposit balance is going to a VC.

Right now, smaller businesses are starved of loan capital, and if you don't offer the high growth rates that VCs need to succeed, it is difficult to get loans.




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