Hacker News Reader

Comment by EugeneG | Hacker News Reader

I kind of agree. Money (e.g. the dollar) only has value because (1) we implicitly agreed as a society to have faith that it can be accepted by others for goods and services (2) the government requires us to pay a material part of our earnings as taxes which can only be paid using money.

If people lost faith, it would lose value.

Mild inflation (say 2-3pct a year) is considered generally good by economists. It’s an incentive to go and invest the money productively or spend that money on goods and services (which is good for growing the economy). Deflation in contrast would create an incentive to hoard money (just keep little papers with no productive value).

View on HN

> an incentive to hoard money

That’s a funny phrase and one that I think deserves ridicule.

Society should value savings, in fact historically prosperity is the result of savings and every fall from prosperity is accompanied by artificially low interest rates and low saving rates.

I don’t see how people would differentiate savings from hoarding when infinite compound debasement is supposedly the “smart” policy.

To be clear, I think people that say "hoarding" is bad, really mean to say that they think "saving" is bad and that they should identify as champions of consumerism.

You don’t have to spend your savings on trinkets.

If a company wants to expand and build a new factory (say to provide more, cheaper pharmaceuticals to more people), it needs capital. If you have cash but there’s deflation, you might just keep your cash under your pillow because it’s worth more every year. If instead we have an inflation, and so you have a disincentive to leave the cash under your pillow, you invest it (give to that company to fund its factory). That’s good for society.

> If instead we have an inflation, and so you have a disincentive to leave the cash under your pillow, you invest it (give to that company to fund its factory). That’s good for society.

There's a lot of "ifs" here with little evidence they're true or necessary.

Without examining all of the "ifs" let me just characterize the argument as fundamentally pro-corporation. I think it's better for society that corporations justify the money invested in them rather than artificially structuring the money such that people are forced to hand their money over to corporations as a form of wealth preservation because Paul Krugman said we'd have a Great Depression otherwise.

Reply on news.ycombinator.com