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Reply #133: True [View All]

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Nederland Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Dec-19-06 11:11 AM
Response to Reply #125
133. True
I am assuming that the Chinese wouldn't want a deflationary currency. That's simple common sense though. If your currency is deflationary, you have an incentive to hold on to cash because a year from now that cash will simply have more value. In those circumstances, everybody delays purchases and investment and slows your economy down. More importantly, a deflationary currency helps the rich (those with cash to hold) and hurts the poor (those who must spend money as soon as they get it to survive).
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