notrealbrah on Nostr: #[0] demand for eating is higher than whatever incentive one has for saving

quoting nevent1q…upa7

Shrinking demand for transactions makes the lightning network inevitably useless

There are several reasons why deflation leads to a reduction in the number of individual transactions in an economy:

Hoarding of money: In deflationary conditions, the purchasing power of money increases, and people tend to hoard their money instead of spending it. This behavior leads to a reduced number of individual transactions in the economy.

Reduced investment: Deflation discourages investment as the fixed costs of production remain constant, but the prices and revenues generated from selling the products decrease. This creates a disincentive for business owners to invest, which leads to a decrease in the number of transactions in the economy.

Reduced demand: Deflation lowers the prices of goods and services, which may seem attractive in the short run. But it can lead to a reduction in demand as people wait for further price reductions before making purchases. This behavior, in turn, leads to a decrease in the number of individual transactions in the economy.

Increase in debt burdens: Deflation causes an increase in the real value of debt, which means borrowers need to pay more real money to repay their loans. This creates a disincentive to take out loans, which reduces individual transactions in the economy.

demand for eating is higher than whatever incentive one has for saving