Is demurrage and inflation the same? If both are at 1% a day and today I have $100, tomorrow: - Under demurrage I'll have $99 - Under inflation I'll have $100, but that $100 will be worth only 99 of yesterday's dollars.

Either way, I end up with $99 in wealth.

So is there a difference between demurrage and inflation in their effect (end result)? Or is there a flaw with my thinking?

EDIT I'm not looking for an answer constrained to the example in my question. I'm interested in the question of inflation vs demurrage from the macroeconomic perspective. What would our economy be like if our money had demurrage instead of inflation?

closed as off-topic by mhoran_psprep, JoeTaxpayer Feb 9 '15 at 2:50

This question appears to be off-topic. The users who voted to close gave this specific reason:

  • "Questions on economics are off-topic unless they relate directly to personal finance." – mhoran_psprep, JoeTaxpayer
If this question can be reworded to fit the rules in the help center, please edit the question.


Yes, there's a difference. If you've borrowed $100, then under inflation your salary will (presumably) increase, and tomorrow your debt will only be worth $99. But under demurrage, you'll still owe $100.

Not the answer you're looking for? Browse other questions tagged or ask your own question.