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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
(Score: 0) by Anonymous Coward on Thursday March 28 2019, @07:23PM (2 children)
i thought wealth is about how many slaves you can command not about a fictional number over which you have no control?
on a more serious side note, 95% of people don't understand economics including deflation and inflation
because they are not producers but consumers and "just shovel paper" inside a bubble.
to understand inflation/deflation look at what " physical things" make our form of society work.
lot's of it depends on energy. transport? energy. food? fertilizer thus energy? etc. etc.
of course there's no real value to anything but the value of work. some things we can do alone
and somethings are too cumbersome to do alone thus requiring a extra pair of hands.
how willing are these "extra hands" to be available?
as for value, gold is useless, aluminium is amazing and i am sure on some alien planet the shit is worth more then gold.
ofc only something useless like gold could be called precious because we are vanity animals ...
other things spring to mind that are actually required for our form of society to work but cannot really be precious because
the system would come crashing down: for example oil.
so, we the sheep (tm) cannot really comprehend economy. for me inflation is just a screw in the machine that gets (artificially) tightened if
"the hands required for work that cannot be done with one pair only" are not willing to .. uhm ..err... lend a hand :)
(Score: 1) by DECbot on Thursday March 28 2019, @09:28PM
To be fair, gold has better properties than aluminum or copper as an electrical conductor, but it isn't often used because of its cost.
cats~$ sudo chown -R us /home/base
(Score: 0) by Anonymous Coward on Thursday March 28 2019, @10:00PM
i mean yeah, this monopoly money is just good as long as the slaves keep believing in the economical system