Post
Topic
Board Economics
Re: Inflation and Deflation of Price and Money Supply
by
benzone
on 07/01/2014, 20:23:14 UTC
...

any quantity of money is sufficient for the money supply. prices adjust. inflation discourages capital formation, which, along with technology improvements, is what increases productivity, wealth and the standard of living for everybody. Capital formation is being destroyed by the fiat currencies and global productivity is slowing because of it.


I'm afraid you got it all completely wrong. Most prices (except high tech gadgets) are typically very rigid downward and mild, non-destructive inflation encourages putting money to use from passive cash to active capital form. Deflation on the other hand encourages being passive, holding on to cash, not investing, not taking loans and is as such quite devastating to any economy. Japan is a typical example where deflation alone has crippled a very healthy economic growth for decades.