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The deflationary aspect of a fixed monetary supply is neither a feature nor a bug

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The deflationary aspect of a fixed monetary supply is neither a feature nor a bug

Pinotio.com
Apr 8, 2021
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The deflationary aspect of a fixed monetary supply is neither a feature nor a bug

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Some might fault a fixed monetary supply for the deflationary nature of prices in such a system. With prices falling some might argue that people will be reluctant to spend.

I counter that the price of technology has always been highly deflationary. Figure 1 is a clipping from April 2021 that shows a mobile phone from 1973, which cost almost $4,000 back then. Today, in 2021, we can buy mobile phones with orders of magnitude more functionality for an order of magnitude less money. Technology is highly deflationary when measured in fiat currency. Each decade we get much more functionality for much lower prices.

I make these remarks in the context of a currency of fixed supply that has already achieved stable adoption.

A photograph of the Irish Herald in April 2021, showing a phone from 1973

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The deflationary aspect of a fixed monetary supply is neither a feature nor a bug

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