Comment by Thorrez

I still don't think it's a wealth tax. I guess you could say deflation is less good for the wealthy than inflation, but it still doesn't result in the wealthy losing anything, so I wouldn't call it a tax.

If the deflation rate is lower than typical stock market returns, the wealthy would keep their money in stocks, and their wealth would increase faster than a wageearner's wage. If the deflation rate is equal to or higher than typical stock market returns, the wealthy would keep their money in cash, and their wealth would increase at the exact same rate as a wageearners' wage.

The big downside of deflation is it discourages spending and investing. In "The Miracle of Worgl" it sounds like it solved their problem by encouraging spending and investing. If spending and investing is discouraged, the economy grinds to a halt, and unemployment rises. Instead of using some money to create a new business and hire people (aka investing in a new business), people are encouraged to just hold the money in the bank. That's why unemployment rises.