> If consumers expect future price drops, demand can dip significantly and induce further drops in price
Sounds awesome? Saves resources. People save money for a rainy day. Lending goes down.
Sounds awesome? Saves resources. People save money for a rainy day. Lending goes down.
How do we make sure that money cannot be abused to doom the rest of the economy into an inability to transact? You make people pay for the benefits they receive by holding onto money. People hate free markets, they are against paying for the costs they cause.
Not necessarily. Money is little more than a distributed IOU held from providing past benefit to someone else to be used in exchange for future benefit from someone else. Money records that I did work for you now and in return you will do work for me later, except given that the IOU is recognized in a distributed fashion the work later can also come from other people.
IOUs bring a lot of benefit, but aren't strictly necessary to conduct a transaction. I could work for you now and at the same time you could work for me to provide equal value. Since there is no delay between services rendered there is no need to record that the other party promises to provide a future benefit. The transaction is already complete in the moment.
Or they can wait more to buy cheaper. Sure, they won't do that if you sell carrots, but they will do if you sell cars.