Deflationary money is a Good Thing

Deflationary money is a Good Thing

Original Postby ajtowns

Posted on: August 28, 2022 07:23 UTC

The discussion centers around the complexities and potential issues of operating with multiple currencies within a single market, highlighting the impracticality of neighboring businesses using different forms of currency such as AlphaDollars and BetaDollars.

This scenario complicates price comparisons and transactions, particularly when wages and purchases across these businesses are considered. The argument extends to the broader economic influence of having a single fiat currency over a large area, pointing out that control over this currency equates to significant economic power. Hence, the suggestion is made for some level of accountability through elected representatives to manage this power effectively.

Moreover, the conversation touches upon the legal frameworks necessary to support a unified currency system, including regulations mandating pricing in a singular currency and restrictions on the frequency of salary adjustments. These measures aim to ensure stability and fairness within the marketplace.

An additional layer of complexity is introduced with the consideration of cryptocurrency, specifically Bitcoin (BTC), in personal finance management. The distinction between investment assets, savings, and transaction funds is made to argue for a balanced approach towards holding cryptocurrencies like BTC. The idea is hedging against volatility by diversifying holdings between cryptocurrencies and more stable fiat currencies for different financial needs—investment, savings, and transactions.

Finally, the dialogue delves into the risks associated with central and private banking practices, especially concerning currency backing and systemic risk. The fear is that mismanagement could lead to undercollateralization of currency, presenting a dilemma between allowing banks to fail or devaluing the fiat currency to cover shortfalls, each with its own economic repercussions. This section underscores the delicate balance required in managing national and digital currencies to avoid financial instability and inflation, suggesting a preference for innovative financial instruments to mitigate these risks without solely relying on central bank interventions.