Quote from: Erdogan on January 25, 2015, 06:52:16 PM

Quote from: twiifm on January 25, 2015, 06:02:45 PM

Quote from: dinofelis on January 25, 2015, 05:28:18 PM

Quote from: twiifm on January 25, 2015, 04:08:35 PM

Except we've never seen this case. You are ignoring market psychology as determinant factor. Things like sticky wages

Actually we do have seen this. Computers ! Computers have been getting cheaper and cheaper the last 15 years. According to Keynesian logic, nobody is going to buy computers, because next year you get not only a cheaper one, but also a more powerful one !

Turns out that the computer market is one in which the turn-over has been one of the highest.

We observe a similar behavior in cellular phones. They get cheaper and cheaper (except for i-phones, which are transiting to a luxury item). And the market explodes.

So no, lower prices in the future do not stop people from spending.

That has to do with scale and manufacturing within one industry as it goes from infancy to maturity not macro issues.

Also your analysis is flawed. Take Samsung for example. Their top of the line model keeps increasing in price after each generation at the onset of release. S5 at release costs more than S4, costs more than S3, etc. It's just that they discount the previous generation after the initial R&D are recouped. They depreciate the capex over the life cycle of product

If your proposition is that lower prices defer buying, he needs only one counterexample to negate it, and he has given it.

LOL no. Only if you don't understand macro principles. Deflation is falling prices in aggregate not because of one sector. You have to use CPI

Also I just made an example he he percieved the price is falling, yet in actuality they are not.

It's also easy to refute that notion. If you are looking to buy an iPhone 5s and you know the price gets marked down in 6 months when iPhone 6 is released you might defer your purchase. However this isn't the point