I hope I'm not alone in not buying this whole "deflation is bad" argument. By your logic, Samsung should be broke because the SGS3 that used to retail for $800 is now available for $350. And by the same logic, I will never buy a computer because in a month's time it will always be cheaper than buying today.
Thats not currency deflation. Cellphones and computers actually are getting cheaper to produce. Its called an increased productivity and if that is what is causing the price deflation; then there is nothing wrong with that, on the contrary. We had the same during the industrial revolution; we got massive increases in productivity causing price deflation. But also causing more production of actual physical wealth because we produced more goods more efficiently. As a society we actually got richer and the increased purchasing power of our money was just a reflection of that. But you cant reverse that. Making money more scarce doesnt cause an increase in productivity or production, let alone wealth- anymore more than printing more money can make everyone rich.
Do you really want to hold 10 cars in your home because they are physical goods? Or you prefer to hold $200,000 in your bank account?
The biggest demand in the world is money. Modern economic school always try to twist the people's mind to deny their nature understanding of money, tell them that eventually it is the consumption matters. Even Ben has this false illusion. That is totally wrong, money means a store of value and spending power, the flexibility of usage and transfer, security, many things you name it, it is the ultimate form of wealth after thousands of years test. Just look at california gold rush, because gold was found, cities were built, industries were established, the economy center of US shifted towards the west coast
But unfortunately in today's inflationary monetary system, the value of money is decreasing constantly, so people do not have a good medium for saving
And even worse, those money are all debt based, that dwarfs all those concerns about deflation/inflation etc... A money can be deflative or inflative, but it should not be debt based (you must work to generate that money), it is this simple fact that Krugman don't get it