Careful with reading bias into what I have written.
I have not said deflation is good, or said that it is not bad.
I have merely stated it creates winners and losers, and that inflation isn't automatically better. The same as a 'high' or 'low' currency - the goodness or badness depends on the reference frame.
The assumption that inflation is automatically better is 'common knowledge' based on theories of economics developed that classify savings as bad, and spending as good, based on the assumption that deflation will cause consumption to be postponed, but which hand-waves away the problem of inflation bringing forward consumption with the trite statement of 'in the long run we are all dead'.
My point is that deflation isn't the bogeyman many have been trained to believe it is. Spending-based assumptions of economics have led the world down a garden path of unsustainable debt in the name of endless 'stimulus' and inflationary policies. Periods of mild deflation and creative destruction would have served the world better than endless shots of new cheap money.
>"The assumption that inflation is automatically better is 'common knowledge' based on theories of economics developed that classify savings as bad, and spending as good, based on the assumption that deflation will cause consumption to be postponed, but which hand-waves away the problem of inflation bringing forward consumption with the trite statement of 'in the long run we are all dead'."
That's only part of the argument.
Another part is that wages also must decrease with deflation (wages are an input price). And that's very difficult to pull off in a modern economy, and leads to unemployment. We are seeing that right now.
The fact of the matter is, we should be indifferent to either inflation or deflation, as long as we can see the changes coming and adjust quickly enough. In reality, we can't. Hence an ever-increasing money supply (to coincide with an ever-increasing demand for money) is the best bet.
>"based on theories of economics developed that classify savings as bad"
I've never encountered that argument.
>My point is that deflation isn't the bogeyman
Look at this thread. Look at Seeking Alpha. Look at Reddit. You think people are over-reacting to deflation? People everywhere are hyperventilating over out of control inflation, when, in fact, our current problems are associated with a deflationary event ($3.5TT wiped from the collective financial sector sheets).
I have not said deflation is good, or said that it is not bad.
I have merely stated it creates winners and losers, and that inflation isn't automatically better. The same as a 'high' or 'low' currency - the goodness or badness depends on the reference frame.
The assumption that inflation is automatically better is 'common knowledge' based on theories of economics developed that classify savings as bad, and spending as good, based on the assumption that deflation will cause consumption to be postponed, but which hand-waves away the problem of inflation bringing forward consumption with the trite statement of 'in the long run we are all dead'.
My point is that deflation isn't the bogeyman many have been trained to believe it is. Spending-based assumptions of economics have led the world down a garden path of unsustainable debt in the name of endless 'stimulus' and inflationary policies. Periods of mild deflation and creative destruction would have served the world better than endless shots of new cheap money.