This is not necessarily true. People can and will hold onto their cash negating any growth of the market in the face of job losses, its not a zero sum game. In fact job layoffs can increase panic and increase hoarding of capital.
> If you have 10 million dollars in the bank - you will be burning money just due to inflation.
1-2% deflation can be better in certain market climates than investments which create jobs, or you put it in a safe investment such as bonds which is in some sense hoarding, you don't take on significant risk to create anything you just park your cash somewhere that it will not suffer losses from inflation. Both of these circumstances do not grow jobs or the market.
Agreed. Return ON capital is different from return OF capital.
Yeah, I've heard people explain it to me before. I don't fully understand it but I appreciate the fact that inflation is not always a bad thing and neither are taxes.
For example, if the people who owned all the land wanted to leave it fallow then they'd have to pay the tax on it somehow so they have an incentive to not leave it fallow.
I guess similarly with inflation and capital. You can leave your money doing nothing but there is a penalty for doing so (because inflation).
The simple fact is - the world operates on a network of debt and saving. So 400 jobs lost at blackrocks - means 400 new opening for green jobs in Australia.
Capital really does not live to stay in one place - it always wants to work. If you have 10 million dollars in the bank - you will be burning money just due to inflation.