Comment by darkwater

> First of all, because not everyone starts with inherited wealth.

So how are you going to build the supermarket?

> Also because ideally running a supermarket should give you more money even in a deflationary world.

If it needs to give you more money than just saving the investment (which it should, you need to be rewarded for the risk or you would just save the money), obviously the profit margin has to be higher than it currently is, which would increase prices.

> First of all, because not everyone starts with inherited wealth.

So then you need an investment; you're going to have to return a multiple of the deflation rate since the risk of your supermarket shutting down is probably higher than the currency changing course.

But a deflationary system rewards inherited wealth. It's a pyramid scheme where the person at the top splits their big piles up into smaller piles, selling them to newer people, who then sell their smaller piles to newer people...

So you'd be working for 0.000000000000000001 coins per day at the amazon warehouse, while Bezos has 500000 coins because he was born with them. There would never be a way for you to get 500000 coins, because there are only 20m coins in existence.

But if sitting on a pile of cash provides returns, eventually all money will accumulate into the hands of a few ultra wealthy individuals. (Hmm...)

> Also because ideally running a supermarket should give you more money even in a deflationary world.

Running a super market involves owning physical goods for some period of time. With deflation, the price you can sell those goods for drops while you are holding them. In fact most economic activity involves paying for inputs (labor, materials, etc) and then later getting paid for your outputs. Deflation directly impacts profitability and can cause losses.

Since deflation causes demand to drop as economic actors wisely choose to start hoarding currency and buying less, this causes a feedback loop where deflation can spiral.

Similarly, inflation causes demand to increase since holding currency is unwise and it is better to spend or invest that currency than hold onto it.

These two patterns mean that the neutral state (no inflation or deflation) is unstable as any deviation above or below starts a feedback loop until things fall apart. This is the boom and bust economic cycle that modern monetary management is supposed to ameliorate.

Given that you want economic growth, the best solution is to try to stabilize around a small fixed amount of inflation. Arguing for the end of inflation is arguing for the end of economic growth.