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I don't think there is any reason to encourage saving money. Living within your means, yes, investing, yes, but saving under your pillow, especially if you had a non-inflating currency, isn't good for the economy.

Even if it should be encouraged, it doesn't matter the logic of it, people won't accept making less and less money over time. Non-fiat currency + population increase makes that inevitable.



> saving under your pillow, especially if you had a non-inflating currency, isn't good for the economy.

It actually is. It you earn $100, by producing $100 worth of goods for the economy, and you don't spend it, you're producing more than you consume. This increases the supply of all goods on the market, decreasing the price, effectively making the entire world richer by that amount. Other people can use that extra money partly to increase their consumption and partly for investment purposes. When you take your $100 out of your pillow and spend it, you're then having the opposite effect. So in the end, you're allowing people to consume more at an earlier time (when you put the money in) and less at a later time (when you're taking it out). This is a very valuable service, as shown by the fact that people are willing to take out loans where they pay money (interest) for the ability to temporally distort their consumption patterns in this way. Some people can even use the temporary possession of additional goods as capital to generate permanent wealth.

A constant pattern of people saving under their pillow will simply reduce prices by a certain percentage and hold it there. If deflation is small, then this secondary price reduction will be lower than the primary reduction and the economy will remain stable. The problem only arises when deflation becomes too high - then, the secondary reduction becomes greater than the primary reduction, and causes a still greater tertiary reduction, leading to a deflationary spiral (ie. bubble), which screws up the economy until it inevitably pops, but if deflation is within reasonable margins it should not be an issue.

> Even if it should be encouraged, it doesn't matter the logic of it, people won't accept making less and less money over time.

How do we know this? One could imagine a deflationary society where people ask how people could possibly stand their money buying less and less over time.


>Living within your means, yes, investing, yes, but saving under your pillow, especially if you had a non-inflating currency, isn't good for the economy.

It's good for the individual if investment opportunities aren't adequately regulated.




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