Quote from: Alphakilo on May 01, 2024, 06:49:31 PM

Which of these economic situations would you prefer to find yourself in?

A- Your salary is stagnant but prices fall. Where this happens, your real purchasing power has increased. It's called constructive deflation. And even if your salary falls, but prices fall faster, you are still ahead.

Psychologically it's a good feeling when you have high purchasing power and it constantly increases because when you are used to spending for example 100$ per month, you feel more powerful when you buy much more with 100$ and when bad times come, you adapt to lower spending more easily.

Quote from: mindrust on May 01, 2024, 07:55:43 PM

A is impossible to have in practice. There is no such thing as constructive deflation. Human population is increasing so the money supply increasing as well and increasing the money supply drives the prices higher because the manufacturing can't keep up with the other two. As a result, somebody somewhere has to starve.

A is really impossible to have in practice but it's wrong to say that money gets printed because the human population increases. That's what they taught in universities but in practice, government doesn't print or burn papers because of the population. The human population increases but science develops too and manufacturing manages to keep up with the demand. If there weren't new iPhones, Pixels and Galaxy smartphones every year and instead if we were offered one good smartphone every 4-5 years that would work stable, that would be a better choice but modern capitalism pushes businesses and people to waste things.