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posted by martyb on Thursday March 28 2019, @01:05PM   Printer-friendly
from the should-not-embrace-deflation-either dept.

Currently we can observe a general slowdown in the annual growth rate in price inflation across major countries around the world. [...] Most commentators are of the view that deflation generates expectations for a decline in prices. As a result, it is held, consumers are likely to postpone their buying of goods at present since they expect to buy these goods at lower prices in the future. This weakens the overall flow of spending and in turn weakens the economy. Hence, such commentators believe that policies that counter deflation will also counter the economic slump.

Inflation is not about general increases in prices as such, but about the increase in the money supply. [...] For instance, if the money supply increases by 5% and the quantity of goods increases by 10%, prices will fall by 5%. A fall in prices however, cannot conceal the fact that we have inflation of 5% here because of the increase in money supply. The reason why inflation is bad news is not of increases in prices as such, but because of the damage inflation inflicts to the wealth-formation process.

The economic effect of money that was created out of thin air is the same as that of counterfeit money — it impoverishes wealth generators. The money created out of thin air diverts real wealth towards the holders of new money. [...] So, countering a falling growth momentum of the CPI by means of loose monetary policy (i.e., by creating inflation) is bad news for the process of wealth generation and hence for the economy. [...] Furthermore, if a fall in the growth momentum of prices emerges on the back of the collapse of bubble activities in response to a softer monetary growth, then this should be seen as good news. The less non-productive bubble activities the better it is for the wealth generators and hence for the overall pool of real wealth.

https://mises.org/wire/central-banks-shouldnt-fight-deflation


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  • (Score: 1, Insightful) by Anonymous Coward on Thursday March 28 2019, @01:37PM (11 children)

    by Anonymous Coward on Thursday March 28 2019, @01:37PM (#821294)

    How does the Mises Institute deal with proletarianization [wikipedia.org]?

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  • (Score: 0, Troll) by khallow on Thursday March 28 2019, @01:52PM (10 children)

    by khallow (3766) Subscriber Badge on Thursday March 28 2019, @01:52PM (#821304) Journal
    Apathy is very effective for dealing with nonproblems in general. I imagine it would work just as effectively with proletarianization.
    • (Score: 3, Informative) by Immerman on Thursday March 28 2019, @03:09PM (6 children)

      by Immerman (3985) on Thursday March 28 2019, @03:09PM (#821345)

      So downward social mobility is not a problem? I'd be inclined to agree so long as it was balanced by an equivalent amount of upward social mobility, but that's decidedly not the case.

      • (Score: 1) by khallow on Thursday March 28 2019, @11:30PM (5 children)

        by khallow (3766) Subscriber Badge on Thursday March 28 2019, @11:30PM (#821563) Journal

        So downward social mobility is not a problem?

        Here, it's upward social mobility. You got the direction wrong.

        • (Score: 3, Insightful) by Immerman on Friday March 29 2019, @02:41PM (4 children)

          by Immerman (3985) on Friday March 29 2019, @02:41PM (#821815)

          Where is "here"?

          In the U.S. virtually the entire population is facing downward mobility as wealth concentrates amongst the top few percent.

          It's not about wealth, it's about power. Everyone can be getting wealthier, but if the rich are getting wealthier faster than everyone else, concentrating the wealth distribution, then they're also concentrating the power distribution, and democracy becomes more of a lie with every passing day.

          • (Score: 1) by khallow on Friday March 29 2019, @10:45PM (3 children)

            by khallow (3766) Subscriber Badge on Friday March 29 2019, @10:45PM (#822084) Journal

            In the U.S. virtually the entire population is facing downward mobility as wealth concentrates amongst the top few percent.

            Not true, even if the wealth in question were correctly valued and really was concentrating amongst the top few percent. Every one is getting wealthier, even if the rich might be getting wealthier at a rate you don't like. I use the term "might be" because wealth valuation of the sorts that the most wealthy own is notorious for being low value for the value and risk. Can't eat credit default swaps after all.

            • (Score: 2) by Immerman on Saturday March 30 2019, @12:03AM (2 children)

              by Immerman (3985) on Saturday March 30 2019, @12:03AM (#822129)

              Again - wealth concentration itself is is not the real problem. The real problem is power concentration.

              • (Score: 1) by khallow on Saturday March 30 2019, @03:45AM (1 child)

                by khallow (3766) Subscriber Badge on Saturday March 30 2019, @03:45AM (#822207) Journal

                The real problem is power concentration.

                Which let us note is more a problem of government. Wealth just isn't that powerful. In a conflict between a billionaire and a high level bureaucrat in US intelligence, for example, I'd bet on the latter.

                • (Score: 2) by Immerman on Saturday March 30 2019, @01:40PM

                  by Immerman (3985) on Saturday March 30 2019, @01:40PM (#822334)

                  How about the way the desires that large campaign contributors and lobbyists almost always find their way into law, while those of the working class almost never do? A great many of our laws were actually originally written by corporations as proposals, and then mysteriously are among the few that find broad cross-party support.

                  And then the bureaucrat implements the law.

                  The most potent power is not the ability to triumph in a head-to-head conflict - it's to be able to shape the environment so that the conflict never happens.

    • (Score: 1, Interesting) by Anonymous Coward on Thursday March 28 2019, @03:44PM (2 children)

      by Anonymous Coward on Thursday March 28 2019, @03:44PM (#821361)

      Wonderful. A nonreply from an oil shill. I wouldn't be surprised if you fully support fractional reserve banking to boot.

      Didn't we have some subscribers to the Mises Institute and Austrian School around here?

      It seems we cannot have capitalism without a perpetual world war/reconstruction cycle (war is peace, or maybe we can call it the law of the cycle) resetting the curve of capitalist development back towards early stage capitalism (bolded just for khallow). The looming next iteration of this cycle will include nuclear weapons, so it's a very concerning kludge.

      Is there a better way to deal with proletarianization and wealth stratification from a capitalist standpoint?

      • (Score: 1, Insightful) by Anonymous Coward on Thursday March 28 2019, @07:40PM

        by Anonymous Coward on Thursday March 28 2019, @07:40PM (#821472)

        "Is there a better way to deal with proletarianization and wealth stratification from a capitalist standpoint?"

        - No

        The entire point of capitalism is to lock down all profits and equity for a small group of people. The "market forces" that supposedly balance out capitalism and make businesses competitive are a generalization that doesn't hold up most of the time, hence why we have megacorps. The only way to balance capitalism's inherent proletarianization and wealth stratification is with regulation and socialized services to balance everything out. Also wealth limits for individuals, anti-monopoly regulation with automatic break-up of big business based on market control and/or absolute size.

        But those tactics would diminish the idiot billionaires who think that their excessive wealth somehow makes them better, more deserving people; and we can't have THAT now can we? The elite need to be constantly MORE elite every minute or the world will collapse! Fuckin' greedy bastards and their tax havens, enough is never enough...

      • (Score: 1) by khallow on Friday March 29 2019, @12:00AM

        by khallow (3766) Subscriber Badge on Friday March 29 2019, @12:00AM (#821580) Journal

        A nonreply from an oil shill.

        What reply is more useful than the one I gave?

        I wouldn't be surprised if you fully support fractional reserve banking to boot.

        Oh dear. You got me on that one.

        It seems we cannot have capitalism without a perpetual world war/reconstruction cycle (war is peace, or maybe we can call it the law of the cycle) resetting the curve of capitalist development back towards early stage capitalism (bolded just for khallow). The looming next iteration of this cycle will include nuclear weapons, so it's a very concerning kludge.

        Fortunately, we're in the midst of a huge counterexample to that assertion. Wars are at an all time low.

        Is there a better way to deal with proletarianization and wealth stratification from a capitalist standpoint?

        Than doing nothing about it? Not really. Proletarianization already is addressing wealth stratification BTW. Keep in mind that most of humanity was worse off than being a prole. Next step is becoming part of the global middle class - which incidentally is growing.