"The markets will choose the currency, which they think is the best for them."
This is true, but that doesn't mean the currency will actually be better for them. Deflationary currencies are attractive to sellers and employees. They will choose them if given the option. The ill economic effects of deflationary currencies have been demonstrated.
Your phrasing seems to indicate that you believe that market-based outcomes are always ideal outcomes. I think that is incorrect.
> The ill economic effects of deflationary currencies have been demonstrated.
I'd be interested to know what you are thinking of here (as evidence). I view that claim with pretty strong skepticism. But I'd be curious to see the best argument/evidence for it.
Remember though that there are two sides to every transaction. Given a consistently deflationary currency buyers become increasingly unlikely to be willing to offer said currency as payment to sellers. Thus the liquidity of the currency will tend to dry up, especially when it is does not have legal tender status. In a single currency market this is disastrous, in a free currency market you just start using something else.
Of course, the value of the now illiquid currency will eventually become highly volatile likely ending in a crash. Hopefully after this happens several times most people would get the idea that investment in such things is not a good plan.
This is true, but that doesn't mean the currency will actually be better for them. Deflationary currencies are attractive to sellers and employees. They will choose them if given the option. The ill economic effects of deflationary currencies have been demonstrated.
Your phrasing seems to indicate that you believe that market-based outcomes are always ideal outcomes. I think that is incorrect.