mister_monster on Nostr: Are you conflating capital with money? Think of it. In an inflationary system, your ...

Are you conflating capital with money?

Think of it. In an inflationary system, your money loses purchasing power as money is printed. Who receives that purchasing power? The person who gets the newly printed money of course. Where did that capital come from? It was siphoned from the productive people, because now it can be used to buy their goods with no effort.

In a deflationary system, your money gains purchasing power. Where did that gain in purchasing power come from? It came from the fact that more production is chasing the same amount of money. You gain capital produced by someone else.

Both of these have terrible secondary effects. Inflationary environments encourage production above market optimum, deflationary markets do the opposite.