In an inflationary Keynesian economic system, governments target low inflation to ensure a healthy economy and steady growth; however, inflation functions as a hidden tax on savings. Inflation also leads to a drop in purchasing power which drives the incentive to spend and invest rather than save.
Deflation, the opposite to inflation, is when the price of a basket of goods and services drops. Unlike inflation, deflation means the purchasing power of your savings increase over time and therefore, incentivises saving as opposed to spending.
Many traditional economists see deflation as dangerous as people will reduce spend with an expectation of products becoming cheaper, but this leads to an economy based on growth at any cost. Jeff Booth, author of The Price of Tomorrow: Why deflation is the Key to an Abundant Future presents an alternative argument.
In this interview, I talk to Jeff Booth, and we discuss the current economic & social situation, how an inflationary system has caused inequality & division and how Bitcoin & deflation can fix this.