Quote from: tee-rex on March 06, 2015, 04:46:00 AM

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If you give up the belief of absolute value of currency, then all the claimed problems of deflation will disappear: When price of something drops, the purchasing power of the currency is increasing, means productivity is higher thus everything become more and cheaper

Productivity, as per Wikipedia, is "an average measure of the efficiency of production. It can be expressed as the ratio of output to inputs [emphasis added] used in the production process, i.e. output per unit of input". As both output and input can be expressed in money terms, the money is effectively taken out of the equation, therefore the increase in the purchasing power has nothing to do with productivity.

Strictly speaking, it is not so simple, but your reasoning actually works against your assumption, i.e. it can be said that with the increase in purchasing power productivity is decreasing (since producers make less profit and can actually suffer losses).

Increased productivity means less value for produced goods, since the supply increased and demand does not change, this is the basic economy 123

Output and input should not be expressed in currency, since the currency's value is changing all the time (Ruble dropped 50% against USD in a year, is that mean Russian's productivity suddenly doubled?)

In fact, there is no good way to measure the value, fiat money usually were used as an approximation, the precision of this approximation is about +-20%, any deflation or inflation is much lower than that scale, the pro-inflation talk can be regarded as an excuse for banks to print more money for themselves to spend

Quote from: tee-rex on March 06, 2015, 04:46:00 AM

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just like when bitcoin reached $1200, the amount of spent bitcoin is highest

Yes, people got rid of their bitcoins in every possible way (probably the only chance in our lifetime at such rates). And don't confuse speculation with consumption, which would most likely account for the increase in bitcoin turnover, if it did happen at all.

Speculation is also part of the economy, and in fact majority of today's economy is driven by speculation on assets, all of the newly created money directly goes to assets, not consumption, it is also the speculation of those assets caused the financial crisis

Quote from: tee-rex on March 06, 2015, 04:46:00 AM

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On enterprise side, although the amount of currency they earn decreased, but currency appreciated, their real income will increase, salary become cheaper, they could hire more people and drive larger projects. This also happened when bitcoin price reached $1000+, lots of projects were setup back then

In real life, producers' profits may turn negative due to decreased prices. But negative is negative, and you can't do anything about it, deflation or not. What you say is probably the most common mistake people make when they discuss deflation "on enterprise side". In short, deflation is not a mirror reflection of inflation (as many erroneously believe).

Again, it is a common mistake by economists to use currency as an absolute measure of value. But I understand that it is extremely difficult for them to understand that currency's value fluctuates all the time, since they have been using currency to measure value since they barely can do 1+1. If they start from an international point of view by looking at FOREX market, then they will understand that currency's stable value is just an illusion. Get rid of that illusion, then people will not look at the numbers in their account to decide if they are profitable or not, they will look at what they really gain from a certain economy activity