> Taxing savings encourages spending and helps the economy flow. When money is held outside of the economy it (say under your bed) it kills any benefit and creates depressions.

But that is a bad goal - we don't want to optimise economic flows, we want to optimise quality of life and standards of living.

The goal in this era of plenty shouldn't tend towards everyone teetering towards bankruptcy and wage slavery so that the politicians can talk about how the GDP is 2% higher. Everyone should have a reserve of real wealth in case they fall on hard times and the bigger the reserve the better as far as I'm concerned.

In my lifetime there have been a constant stream of inflationary collapses and a noticeable lack of problems caused by deflation. That theory is very popular with governments because it justifies the creation of money on a grand scale, but it has a certain lack of evidence. We've seen communism tried more often than deflation.