Balaji Srinivasan

It would cause hoarding.

So therefore, a gradual amount of inflation, what they call the New Zealand 2% target every year, is good.

Because that allows the money supply to inflate, to accommodate for growth, and so on and so forth.

And what they mean by hoarding, by the way, is if your unit of account, let's say your dollar became more and more valuable every year.

OK, eventually you'd get to the point that to buy a house, you would have to be one whole dollar.

OK, and you'd have to you wouldn't be able to break it up into pieces or be one cent per house.

OK, and then they'd say, oh, that cent is too valuable.

Therefore, you know, we need to actually devalue it.

So now it's liquid enough that you can trade.

Right.

This may have been an argument in the past, but it's not actually an argument in the present, because in the digital era, you can just add a decimal place.

Right.

So you can get around liquidity traps.

So this is the whole argument for why they inflate or whatever, by simply adding a decimal place in the digital realm.

So anyway, that's a whole separate point.

Coming back, the premise of Keynesianism is that lots of inflation is bad.

But deflation is also bad.

And deflation, by the way, for the average person, under normal circumstances, they would think of deflation as good.

Why?

Things get cheaper every year because of technological improvements.