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How to explain that inflation does not grow the economy?

Bitcoin Reddit

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Hi yall. Some of my economist/entrepreneur acquaintances criticize bitcoin because it lacks inflation, which in their opinion makes the economy grow. They use the age-old argument that 2% inflation incentivizes spending and lending and thus new companies are funded and innovation takes place, but without inflation no one would have the incentive to risk by lending out their savings, so the economy would stagnate.

I have tried explaining that inflation only incentivizes needlessly risky investments;

That investing is based on saving, saving is based on low time preference and inflation raises time preference.

That since central banks have no idea how much money exists, they also don't have any way to know how much exactly to expand the money or control the expansion to achieve 2% inflation.
That inflation makes nominally productive investments that in reality destroy capital seem profitable;
I have explained that in the 19th century inflation was zero but amazing growth and innovation took place;

That when companies are given money that is not backed by saved capital, they will invariably discover that the capital the money should symbolize does not exist - foundations are built when everyone realizes that there is not enough bricks for the houses;

That we are living in a deflationary economy right now, measured in time-prices, and plenty of investing is taking place.

I have explained all the negative side-effects of inflation (Cantillon effect and all that jazz) but STILL - they assure me that without inflation, there is no economic growth and no investing, and that simply outweighs all the negatives.

Has anyone had luck convincing someone like that? Any argument that will put them on the spot? Any way that i can explaining this thing in the language of someone who is so stuck in keynesian fiat-economics?

submitted by /u/puukuur
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