Quote from: cutesakura on October 25, 2015, 04:35:38 AM

Inflation occurs when the price of goods and services rise, while deflation occurs when those prices decrease. The balance between the two economic conditions is delicate, and an economy can quickly swing from one situation to the other.

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The commonest causes are demand shocks, such as:

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Deflation can be triggered by an increase in supply. As business and consumer confidence in the economy declines, AD falls, resulting in recession.

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Obviously any rigorous analysis would be complicated, but voters can't and shouldn't have to understand the details of economic policy. In practice, this means that democracy has broken down in economics and policies are thus not necessarily designed to promote the public good.

There are, of course, natural causes to inflation and deflation, as you state. E.g. financial leverage *should* go up to support a rapidly growing real economy. The key is not whether asset and consumer prices go up or down, but whether the price movement is driven by market forces or state and central bank action. If I lend out a dollar in a totally voluntary manner, and the state is not guaranteeing the debt in any way, that dollar is more likely to drive real economic growth (since I'll lose it if it's invested poorly.) Unfortunately, a huge amount of assets are not totally free capital, and that has been the cause, over the last centuries, of the boom and bust cycles with their economic pain.

What we have in money and finance is central planning rather than a free market. Central planning claims to champion the interests of the average person, but a look at the unpayable national debts and the spectacular wealth of bankers tied into the state-bank alliance would tell you otherwise.