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this post was submitted on 22 Jul 2023
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Asklemmy
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I've been taught that inflation deincentivizes hoarding wealth too, but seeing how wealth is still hoarded, I'm not convinced it's an effective tool.
That's the difference, they hoard wealth and not currency. The value of assets do not go down when currency loses its value with inflation.
Wealthy have little to no cash that would lose value with inflation, they just buy everything on credit and have their wealth tied to assets and investments that probably gain value at least at the pace of inflation.
It's still true that a deflationary economy would be a mess though. If we had deflation, the rich wouldn't even bother investing and would literally just sit on a pile of gold like Smaug. I know trickle-down doesn't work but an economy where nothing circulates would be hellish.
Wealth is hoarded; cash is not.