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this post was submitted on 24 Dec 2023
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Yes, short sighted people might choose to treat their savings accounts like how saving accounts used to work, and reap a yearly 3% or whatever net gain from allowing banks to loan it out to people trying to buy homes or start businesses.
A business already reduces your salary automatically under inflation.
Yes, the inequal negotiating power will always exist under a capitalist system.
Not sure why you think that's a point worth bringing up for this discussion, but on that topic maybe consider who controls the people who have assured you that the system that provably primarily benefits the oligarch class is necessary to make line go up and think more critically about exactly how necessary inflation is to an economy.
And yes, I am aware that economists have extensively looked at, for example, Japan's deflationary periods and wrung their hands over their continued economic growth and rising standard of living despite growing competition and an aging population.
It was all that damn deflation's fault that their numbers didn't skyrocket indefinitely, surely. .
People with large amounts of capital are focused on capital retention and not growth, so it is not short sighted for them to leave there capital in a deflationary currency. It is a low risk investment that will beat inflation by default. It is actually a great investment for them. Normally the rich would use treasury bonds that will beat inflation instead. Lowering the interest rate of treasury bonds forces the rich to risk their capital in the market where they could lose it. They reduce this risk by diversification of stocks, but it is still riskier than a treasury bond or deflationary currency which they would prefer.
I bring up the unequal negotiating power because wages not keeping up with inflation is the core complaint you had. Regardless of inflation or deflation the business owners will try to reduce costs and will often screw over the working class. If the currency inflates than they don't give you a large enough raise. If the currency deflates than they will have to reduce your wage and will find a way to justify it. In both situations the business owner will screw over the working class because of unequal negotiating power.
Basically using deflation to fix worker compensation is like using a hammer on a screw. A screw looks like a nail, but a hammer is not the right tool for this problem. Unions are the drill that fix unequal negotiating power and the US has been undermining them for decades at this point. Inflation is a tool to force the rich to invest and risk their capital while deflation benefits the rich and their ability to maintain their status. If you want to imagine a society without capital then fine, but no such society has ever replaced currency which is just an abstraction for work done, but payment not yet redeemed. Gold, coupons, and dollars can all be currency. It is bad for a society if individuals can horde a currency and deflation makes it extremely easy to do so. As long as currency exists it is better to force the wealthy to risk their capital in the open market where they will lose some or all of it.