Re:How to Get Started with Bitcoins
by grantbachman on Sunday December 12, 2010 @07:29PM
(#1998644)
The problem with deflation though is that it encourages people to save them and not spend them. Why would you create a currency which is meant to deflate? In most cases, deflation is worse than inflation.
[ Parent
| on HN ]
That's because in a debt based economy, deflation means a shrinking of the money supply, and a shrinking of the money supply means less money is being lent, and less money being lent means economic stagnation.
An economy based on bitcoins couldn't work like this - because deflation doesn't shrink the money supply, and doesn't necessarily have anything to do with less money being lent.