If you describe negative interest rates as "forcing people to invest their money", how would you describe deflation?

Money is debt. You hold something now and expect somebody else to give you something of value for it in the future. But the future is always uncertain. You may lose out on the deal by holding on to your money. But you seem to be demanding that somebody somehow should guarantee that people never do lose by holding on, no matter what. Who would that somebody be? How could that even work?

Money was debt. It's how it got invented after all.

It's not so clear cut anymore. Most currencies aren't backed by anything anymore nor are they tied to any yearly returns. They've become arbitrary numbers manipulated by central banks to control the economy.

You would have to back the money with something physical such as the Gold Standard. An Oz of gold today will still be an Oz of gold tomorrow. Furthermore, the rarity of gold makes the amount in circulation relatively constant.

The problem is that the purchasing power of gold isn't relatively constant: what you can buy with 1 oz. today and what you can buy with 1 oz. tomorrow are not necessarily the same — so you have much the same problem.

Moreover, the relative constancy of the gold supply is a problem, because as the economy grows that makes each unit of gold more valuable … which leads to deflation, which is far worse than inflation, and can lead to utter economic desolation.

I hate fiat money, I really do: I hate that governments can inflate their way out of debts and inflate away my savings. But gold — appealing as it is — is even worse.

1 oz. of gold doesn't change from day to day, rather, only people's opinion of it changes. In that sense, is there anything you can think of that people would want as much or more in the future than they do today? I can think of maybe 1 thing, sex, but I don't even want to begin to imagine how a system like that would work haha.

Ultimately I agree that fiat currency is a necessary evil because of the ability to expand with the economy.

Gold is essentially the same plus liquidity trap (think of Bitcoin and it's deflationary nature)

> So people should be forced to invest their money even if they don't think any of the ventures are worthwhile? And physical cash shouldn't exist either?

Physical cash is also debt (backed by the full faith and credit of the US government, in the case of the US, or the relevant issuer in the case of other fiat currencies).

Non-central fallacy: Yes, it technically meets one definition of "liability", and is therefore debt; it is not "being invested in a venture" in the sense of this discussion.

> Non-central fallacy: Yes, it technically meets one definition of "liability", and is therefore debt; it is not "being invested in a venture" in the sense of this discussion.

Except it is being invested. That's a major part of the role that the government plays when interacting with the macroeconomy.

Then let me try phrasing it a third way:

So people should be forced to invest their money beyond the extent to which holding that money inherently counts as an investment, even if they don't think any of the ventures that they directly invest in are worthwhile?

The fact that government "is debt backed by full faith and credit etc etc etc" does not answer the substance of the question I was actually asking, and which should have been clear from the context I was asking.

Your job as part of social contract of living in a market-based economy is to allocate capital in the most productive way possible to maximize efficiency of the whole. What this means, is that if you believe no ventures are valuable, you allocate your capital in cash. If you believe ventures will outperform cash, you invest in ventures. So you're "forced" in the same way you're "forced" not to be homeless, have a job, and not hit people. It's a way of life.

Physical cash should exist.

But your first question is much more interesting in what it seems to imply.

If i understand it correctly, the converse would be: entities are free to not invest their money when there are no worthwhile ventures.

This sounds all well and good on an individual level. But by what logic or mechanism can the ~200 countries that exist have the ability to 'hold' money and not 'invest' it?

Of course physical cash should exist. There just isn't enough of it and it isn't practical for large investors.