It incentivizes holding currency instead of making productive investments with your capital. Currency only has value when it moves, not lives under your grandma's mattress.

Inflation incentivizes investment because you are going to lose 2% per annum if you don't.

Fiat offers you the maximum flexibility because you can back your personal economy any way you want - if you want to back it with gold, just buy some. If you want to back it with crypto, bless your heart, buy some.

This is a false narrative.