After reading all the replies, I see there are two types of people here:
1. Who don't care what happens with their money. These are people who either already have everything they need and the squishing is nothing but another journey for them, or the people who don't actually have anything to lose.
2. Who really care for their hard-earned gold. Imagine a scenario where a person reached 4800g just before the squish-day and got shy of 200g to buy the fast flying mount. Next day, they will need not 200g but 2600g to get that mount.
The up-side to the squish as the staff said: Better Economy. As, not every person who's first character reaches 70 should be able to buy the fast mount.
The down-side: In the next few days, leading upto the squish-day, you will see an increased demand for primos, herbs, ores etc. People will want to invest in such non-liquid assets, making the prices for these things to go higher(Read, a primo that sells for 1.2k might go upto 2.4k). Post the squish-day, these people would start selling the items to recover their gold, creating a huge supply and lesser demand, making the raised prices to go down to normal(back to around 1.2k) price. The loser ultimately is the one who didn't invest in non-liquid assets.