[quote]Wreckless wrote:
orion wrote:
Wreckless wrote:
Link doesn’t work
Anyway, deflation IS falling prices and it should be avoided because it will encourage people to not buy stuff now, but next month, or the month after next month, or the month after that…
And if people don’t buy stuff, if companies don’t invest, the economy goes down the drain.
Um no and no, but very Keynesian!
Oh, but yes and yes and yes.[/quote]
In no way, shape or form.
There are simply so many false assumption in there that it would be impossible to address all of them.
It begins it with confusing falling prices with a strictly monetary phenomenon and completely ignores that people want to consume NOW.
If falling prices delay that for a while, the money is saved and ready to be invested into capital goods.
All that would mean is a shift towards saving and faster capital accumulation and that is what the US economy f.e is desperate in need of.
If you are even aware of your basic assumption just think about what “underconsumption” really means.
It states that it is not the entrepreneur who has misjudged the market, oh no, the consumer has failed in buying stuff he does not want.
So, we inflate the currency so that people are practically forced to take out loans to buy stuff they would not really want otherwise and companies invest on machinery to produce stuff that consumers would not buy otherwise.
When that bubble bursts, a lot of people sit on a lot of stuff they do not need, a lot of companies sit on machines that produce stuff nobody wants and everyone is up to their ears in debt.
That that sound vaguely familiar? Any chance we might be able to witness that anywhere right now?