The Roman Empire had a pre-industrial economy and the value of their currency was tied directly to the amount of precious metals in their coins.
Worked very differently.
Or like with bitcoin slowly decrease the rate of printing on a schedule.
However deflation is actually bad for a national currency, as it encourages people to hold their money and not spend it.
Inflation actually encourages people to spend their money.
> Inflation actually encourages people to spend their money.
Is that just because now they have to use more of it to get the same stuff they bought before?
Is there more to it?
You don’t want to hold a currency that deflates, so you invest that money in the stock market or other investments and purchases.
You wouldn’t want to have swimming pools full of cash, because it’s not doing anything and is decreasing in *value*.
Like you could invest it with a bank in a savings account, but that’s also good economically because it helps keep the banks afloat, so people can borrow money for example for a mortgage.
No.
Say you want to buy a car. If you buy today, you'll pay 40,000
If you buy after 1 year, you'll pay 43000. Worth noting today.
Now imagine if you wait 1 year and it will cost only 38000. Then you'll just wait to buy as much as possible.
If everyone waits as much as possible then sales go down
No, people who have savings hold onto their money and put off purchases.
Not people expecting income.
People who owe debt will have problems paying them back under deflation because they used to sell 1000 widgets for 100 each, for an income of 100k, but now they sell only 500, and the widget is only 50 since the price is lower, so they make only 25k but their debt payment is the same.
If that business owner has to cut costs to stay alive he is likely to fire workers, who will find out any new job they get is lower pay.
Notable periods of general deflation include the Great Depression and the panic of 1876
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Inflation properly understood is the increase in the supply of money. As such Bitcoin is currently disninflationary, but does eventually become deflationary (as another responder notes) once more coins are lost per year than new coins issued.
Deflation is not bad, however, in a sound money system. In a fraudulent fiat system such as we are in, deflation causes a lot of problems.
Excess savings helped caused the Great Depression as rich people and poor alike took their money out of circulation and put the money under their mattresses.
At least the lack of food woukd solve obesity.
When yu deposit money in a bank, they can loan up to 90% of that to someone else. So you give them $100, the loan someone $90. You still have the $100 recorded in your account, but now $90 just got created from no where
What you're talking about is the reserve ratio in fractional reserve banking. The current reserve ratio is 0%. The bank is not required to keep any of your money in reserve.
Declare the United States of America has been overthrown and is now “Unified States of America”
Issue a new currency and tell all creditors to go pound sand
Same damage as simply handing over a 37T dollar bill to the debtor... actually, pay it first in useless money, then rename yourself. New nation will definitely not carry the burden at all.
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If you had a money printing machine in your basement, and it produced *perfect undetectable bills*, would YOU be able to resist using it?
Nobody else can either.
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