Quote from: tee-rex on March 07, 2015, 07:19:33 AM

Quote from: johnyj on March 06, 2015, 10:46:23 PM

Quote from: tee-rex on March 06, 2015, 04:36:07 PM

Quote from: johnyj on March 06, 2015, 03:41:17 PM

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

I have just one question. What are you as a producer going to do with negative profit, i.e. a loss that you may incur as a result of decreasing prices? Remember that you have to pay wages from your income, and your employees don't care about your ideas (absolute measure of value and all that) but love cash.

Indeed, if you use cash as unit of value, you will have this problem. And Keynes said that people prefer a rising cash income and rising price over a dropping cash income and dropping price. It is this basic instinct make inflative monetary policy seems reasonable

So you deem that laying off people and closing business is an issue arising from people (or economy as whole) using cash as unit of value? In other words, it is human nature that is at fault here, and deflation would be good if people were not what they are?

I remember you saying quite the contrary earlier. Did you finally understand that "on enterprise side" deflation (due to demand collapse) is a bad thing?

Deflation is often a consequence of a lack of demand which means the economy is in a bad shape but deflation is not a bad thing in itself in the sense that it is a positive consequence of a lack of demand and helps people.
People don't buy less if they think the price is going to go down a little bit or even a lot, look at people buying with credit cards or buying iphones which will be half price in a year.