> Inflation incentivises investment and allocation of capital towards the most productive enterprises
This would be true with deflation, assuming returns from investing outpace the returns from doing nothing.
Inflation incentivises investing for returns that do better than the loss from inflation. It would incentivise investments that have a negative return, so long as that return is greater than the inflation rate.
> Why would you spend money today when it would be worth more tomorrow
Because owning a good today is worth more to you than having the same good in the future. Eg it’s better to have the iPhone 11 today than it is tomorrow, as you have it for an extra day.
Additionally there’s many things you can’t put off into the future like paying for food, water etc.
This would be true with deflation, assuming returns from investing outpace the returns from doing nothing. Inflation incentivises investing for returns that do better than the loss from inflation. It would incentivise investments that have a negative return, so long as that return is greater than the inflation rate.
> Why would you spend money today when it would be worth more tomorrow
Because owning a good today is worth more to you than having the same good in the future. Eg it’s better to have the iPhone 11 today than it is tomorrow, as you have it for an extra day. Additionally there’s many things you can’t put off into the future like paying for food, water etc.
[edit for typos, sorry, phone posting]