Good ideas and conversation. No ads, no tracking. Login or Take a Tour!
Deflation is a major obstacle to bitcoin's adoption as a global currency. A small, consistent amount of inflation is necessary for economic growth for several reasons. One of the biggest is cash hoarding and the deflationary spiral - as prices go down, people say "I'll just wait a few months until it's even cheaper" which forces companies to lower their prices and reduce wages due to low sales. This was one of the causes of the great depression in the USA when the Federal Reserve reduced the money supply, sparking deflation. This is also a problem today where companies are hoarding cash because inflation is too low to force them to spend it. EDIT: Deflationary spiral: https://en.wikipedia.org/wiki/Deflation#Deflationary_spiral