Of course that the lowering of the i-phone 5 price when the i-phone 6 comes out, has nothing to do with deflation, this is as clear to me as to you.

But the ARGUMENT you (and so many others) use against deflation is that the diminishing of prices make consumers delay their consumption.   That *argument* against deflation doesn't assume deflation or anything, but makes the assumption that if a consumer desires item X, and knows that the price of item X will be 2% lower next year than today, he will delay the acquisition of item X to next year.  The *reason* why that price is lowering for that hypothesis is not specified.  It is (erroneously) assumed that if desired-for items will lower in price, consumers will delay their acquisition to profit from the lower price.

And THAT hypothesis is contradicted by the i-phone example.

Because if it were true, people that KNOW that their desired-for i-phone 5 which costs them, say, $500 today, that exact same i-phone, will cost maybe only $380 when the i-phone 6 will come out next year, and will wait for it, to profit from the price drop.

So if that hypothesis were to hold, i-phone 5 would only massively be bought when the i-phone 6 would come out, because consumers would have delayed their acquisition to profit from the price drop (which, in this case, we all agree, has nothing to do with deflation, but is a price drop all the same).


Lowering interest to counter deflation is monetarism.  Lowering interest rates to try to stimulate the economy, on the other hand, I thought, was pure Keynesianism.