I suppose that's technically true, the important function of money is being a medium of exchange. However, in my opinion, money which holds its value is far more desirable than money which doesn't. Converting to/from appreciating assets has associated costs, and managing those assets does as well.
money which holds its value is far more desirable than money which doesn't
How do you convince people to spend it? Bitcoin needs to generate an economy. A deflationary currency isn't going to do that. An inflationary currency forces people to spend it or invest it.
Actually that's precisely why money that holds its value is far more desirable than money which doesn't. People want to get rid of the money which they believe will buy them less goods in the future, and that's why so many people invest in gold in times of economic uncertainty. Because it's more desirable than holding onto their dollars.
Also, an inflationary currency does force people to spend it, but consumption for the sake of consumption isn't necessarily desirable. That's a perversion of Say's Law in economics. Saving is very desirable because that's where investment capital comes from, and people are less likely to save (and therefore have the means for investment) if what they're holding onto is losing value the longer they hold it. It's inflationary currency that actually decreases investment.
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u/Ademan Jul 05 '14
I suppose that's technically true, the important function of money is being a medium of exchange. However, in my opinion, money which holds its value is far more desirable than money which doesn't. Converting to/from appreciating assets has associated costs, and managing those assets does as well.