Why Governments Are Afraid Of Deflation

Hey Jessoviet Union

Money printing has become the order of the day as governments try to battle the so-called health crisis which is code for our financial crisis. The Ponzi scheme has been stretched to the limit and to ensure we keep the plumbing going we need to continue stuffing cash into the system. Our debt run economies of scale were grossly out of hand for years, and it wasn't going anywhere.

This may have happened in 10 or more years from now, the virus just brought the inevitable forward a few years, and instead of taking medicine, we're taking the drugs that made us sick in the first place. The world economy had a compromised immune system and thinks that instead of fixing the overall health, let's just wear masks and financially distance ourselves from the poor through money printing.

So why exactly are governments so scared of deflation?

What does deflation do?

Deflation is when the prices of goods and services get cheaper when compared to the money you own. Money and currency increase in value and allows you to buy more of the market in exchange for this value exchange medium. Deflation is excellent for the consumer and the little guy as their money goes further and they can acquire more for their money which can allow businesses to be run more efficiently and consumers to improve their standard of living.

We've been sold the idea that deflation is bad because deflation doesn't allow for people to print money and control the economy the way it is done now.

Have you ever wondered why governments have inflation targets? Because they need to know how far they can push money printing without you waking up and saying hey this is theft.

So if deflation is good for the people, why aren't we calling for it?

Image source: - cointelegraph.com

Deflation punishes debt holders

The reason we don't want deflation is that we are a debt-driven world, we live on debt, countries, corporations and individual have cumulatively created trillions of dollars worth of debt that is supposed to be repaid with the production of future generations.

Deflation would mean that we would never be able to pay off the debt, not that we can now, we're looking to inflate the debt away by printing more money to service the debt.

I'll give you a simple example you own a home of $100 0000, and you have to pay off $500 each month. You could pay it off in around 15 years or so, but due to deflation, your home is getting cheaper.

Your home is now worth $80 000 after five years. So why would anyone take out debt if they can save money and buy a house instead? Deflation would destroy the need for debt in many cases.

When it comes to more substantial sums of debt like government and corporate, the problem here is that with stronger money, it means they have to charge lower prices to sell goods. Lower prices mean less money in nominal terms, less money in nominal terms means, they will never be able to pay back the debt.

All nations hate deflation

Since all countries currencies are pegged to the dollar, they are all the same and run on debt. Each nation is simply on a different step on the same ladder, and some will collapse sooner than others. The only country that doesn't care about deflation is the Bitcoin nation.

Its citizens actively embrace deflation, we welcome it, we allow the market to set the price over time which is why it's 9 million % up in its lifetime and the best performing asset of the decade.

Bitcoin doesn't create market forces, it accepts it, it understands that anything of value can be compared to Bitcoin, and eventually it will outstrip it.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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