Post
Topic
Board Economics
Re: Growth, Interest and Wage Inequality - To the austrian economists here
by
hugolp
on 14/07/2011, 09:43:50 UTC
Lowered prices don't stop consumption, falling prices do.

I dont see the difference. If prices are going down, they are lowered.

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Maybe the people who spend their bitcoins when their price in dollars rose were expecting the price to go down again.

Maybe, but they did not know. The probably just saw something cheap and bought it.

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You said yourself that falling prices promote saving.

Yes, but this does not mean a reduction on consumption.

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On the other hand, as you say, lowered prices (or more valuable products) lead to consumption.
I don't understand how can growth lower interest rates.
It is really a complex topic.

Once people have their basic needs covered they can start thinking more about the future, meaning they can start saving more, which in turn lowers interest rates. When production grows, f.e. there is more or better food, prices go down, people can access those basic goods cheaper. With what they have left they can increase consumption, increase savings (thus lowering interest rates and promoting investment) or a combination of both.